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UNIVERSE ENTERTAINMENT AND CULTURE GROUP COMPANY LIMITED 寰宇娛樂文化集團有限公司 (Incorporated in Bermuda with limited liability) (Stock Code: 1046) INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 31ST DECEMBER 2019 The board of directors (the “Director(s)”) (the “Board”) of Universe Entertainment and Culture Group Company Limited (the “Company”) announces the unaudited interim results of the Company and its subsidiaries (collectively, the “Group”) for the six months ended 31st December 2019 (the “Period”) as follows: UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Unaudited For the six months ended 31st December 2019 2018 Note HK$’000 HK$’000 (Note) CONTINUING OPERATIONS Revenue Sales of goods – video distribution, optical products and watches products 24,915 17,352 Income on film distribution and exhibition, licensing and sub-licensing of film rights 191,934 3,710 Income from other businesses 7,404 7,209 Total revenue 4 224,253 28,271 – 1 – Unaudited For the six months ended 31st December 2019 2018 Notes HK$’000 HK$’000 (Note) Cost of revenue Cost of inventories sold (16,234) (10,269) Related cost on film distribution and exhibition, licensing and sub-licensing of film rights (106,712) (3,595) Cost from other businesses (3,257) (345) Total cost of revenue (126,203) (14,209) Selling expenses (6,133) (5,446) Administrative expenses (43,517) (35,034) Change in expected credit loss (15,444) (1,828) Amortisation of other intangible assets (73) (74) Other gains/(losses) – net 7,445 (3,228) Other income 484 5,321 Gains/(losses): Fair value change on trading securities – (2,777) Fair value change on other financial assets at fair value through profit or loss 2,600 (17,347) Finance income 472 1,546 Finance costs (273) – Share of losses of associates (1,085) (499) Profit/(loss) before tax 5 42,526 (45,304) Income tax credit/(expense) 6 105 (935) Profit/(loss) for the Period from continuing operations 42,631 (46,239) DISCONTINUED OPERATION Profit/(loss) for the Period from discontinued operation 13 935 (3,418) – 2 – Unaudited For the six months ended 31st December 2019 2018 HK$’000 HK$’000 (Note) Profit/(loss) for the Period 43,566 (49,657) Other comprehensive income: Items that may be reclassified to profit or loss: Currency translation differences 162 65 Other comprehensive income for the Period, net of tax 162 65 Total comprehensive income/(loss) for the Period 43,728 (49,592) Profit/(loss) attributable to owners of the Company: – from continuing operations 42,966 (46,150) – from discontinued operation 935 (3,418) Profit/(loss) for the Period attributable to owners of the Company 43,901 (49,568) Loss attributable to non-controlling interest: – from continuing operations (335) (89) – from discontinued operation – – Loss for the Period attributable to non-controlling interests (335) (89) Total comprehensive income/(loss) for the Period attributable to: Owners of the Company 44,063 (49,503) Non-controlling interests (335) (89) 43,728 (49,592) – 3 – Unaudited For the six months ended 31st December 2019 2018 Notes HK$’000 HK$’000 (Note) Total comprehensive income/(loss) attributable to owners of the Company arises from: Continuing operations 43,128 (46,085) Discontinued operation 935 (3,418) 44,063 (49,503) Earnings/(loss) per share attributable to the owners of the Company for the Period (expressed in HK cents per share) From continuing and discontinued operations – basic and diluted 7 4.84 (5.47) From continuing operations – basic and diluted 7 4.74 (5.09) Note: The Group has initially applied HKFRS 16 at 1st July 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. See note 3. – 4 – UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET Unaudited Audited As at As at 31st December 30th June 2019 2019 Notes HK$’000 HK$’000 (Note) ASSETS Non-current assets Property, plant and equipment 5,574 4,649 Right-of-use asset 20,521 – Investment properties 31,460 31,460 Other intangible assets 2,314 2,387 Film rights and films in progress 231,950 235,304 Interests in associates – 1,085 Loans receivable 9 1,461 – Loan to an associate – 4,288 Film related deposits 64,106 74,426 Deposits paid 1,971 1,596 Deferred tax assets 281 341 Other financial assets 13,516 9,574 373,154 365,110 Current assets Inventories 11,885 9,217 Accounts receivable 10 85,266 11,161 Loans receivable 9 43,822 61,630 Amount due from an associate 239 – Deposits paid, prepayments and other receivables 39,582 87,501 Trading securities 8,691 8,691 Contingent consideration receivable – – Tax recoverable 2,242 2,242 Tax certificate – 45 Bank balances and cash – trust accounts 782 869 Cash and cash equivalents 184,394 178,228 Total current assets 376,903 359,584 Total assets 750,057 724,694 – 5 – Unaudited Audited As at As at 31st December 30th June 2019 2019 Note HK$’000 HK$’000 (Note) EQUITY Equity attributable to the owners of the Company Share capital 9,066 9,066 Share premium 35,013 35,013 Other reserves 546,629 546,467 Accumulated losses (165,414) (209,315) 425,294 381,231 Non-controlling interests (632) (297) Total equity 424,662 380,934 LIABILITIES Non-current liabilities Lease liability 8,783 – Deferred tax liabilities 89 90 8,872 90 Current liabilities Accounts payable 11 18,421 10,821 Amount due to an associate – 2,725 Other payables and accrued charges 115,547 74,610 Contingent consideration payable 20,400 20,400 Contract liabilities 127,291 193,454 Deposits received 16,451 34,923 Lease liability 11,982 7 Taxation payable 6,431 6,730 Total current liabilities 316,523 343,670 Total liabilities 325,395 343,760 – 6 – Unaudited Audited As at As at 31st December 30th June 2019 2019 HK$’000 HK$’000 (Note) Total equity and liabilities 750,057 724,694 Net current assets 60,380 15,914 Total assets less current liabilities 433,534 381,024 Note: The Group has initially applied HKFRS 16 at 1st July 2019 using the modified retrospective approach. Under this approach, comparative information is not restated. See note 3. – 7 – NOTES: 1. GENERAL INFORMATION The Group is principally engaged in video distribution, film distribution and exhibition, licensing and sub- licensing of film rights, money lending, leasing of investment properties, entertainment business, securities investment, trading, wholesaling and retailing of optical products and watches products, and provision of type-setting, translation, printing, design, distribution of financial print products and other related services (“Financial Printing Services”). The Group ceased the business of China Jianxin Financial Services Limited, an indirect wholly-owned subsidiary of the Company, which was principally engaged in the business of securities brokerage and margin financing (“Securities Brokerage Business”) with effect from 30th June 2018. The Company is a limited liability company incorporated in Bermuda. The address of its registered office is Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. The address of the principal place of business of the Company is 18th Floor, Wyler Centre Phase II, 192–200 Tai Lin Pai Road, Kwai Chung, New Territories, Hong Kong. The Company’s shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”). This unaudited condensed consolidated interim financial information is presented in thousands of units of Hong Kong dollars (“HK$’000”), unless otherwise stated. This unaudited condensed consolidated interim financial information has been approved for issue by the Board on 27th February 2020. 2. BASIS OF PREPARATION This unaudited condensed consolidated interim financial information has been prepared in accordance with the Hong Kong Accounting Standard (“HKAS”) 34 “Interim Financial Reporting” issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”) as well as the applicable disclosure provisions of the Rules of Governing the Listing of Securities on the Stock Exchange (the “Listing Rules”). The unaudited condensed consolidated interim financial information has been prepared on the historical cost convention, as modified by the revaluation of financial instruments that are measured at fair values at the end of each reporting period, contingent consideration receivable, contingent consideration payable and investment properties, which are carried at fair value. The unaudited condensed interim financial information has been prepared in accordance with the same accounting policies adopted in the Company’s consolidated financial statements for the year ended 30th June 2019, except for the accounting policy changes that are expected to be reflected in the Company’s consolidated financial statements for the year ending 30th June 2020. Details of these changes in accounting policies are set out in note 3. The preparation of interim condensed consolidated financial statements in conformity with HKAS 34 requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses on a year to date basis. Actual results may differ from these estimates. – 8 – The unaudited condensed consolidated interim financial information contains selected explanatory notes. The notes include an explanation of events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the annual financial statements for the year ended 30th June 2019. The unaudited condensed consolidated interim financial information and notes thereon do not include all of the information required for full set of financial statements prepared in accordance with the Hong Kong Financial Reporting Standards (the “HKFRSs”).