|Corporate Profile ||Business Summary: |
The Company is principally engaged in investment holding. The principal activities of the Group include film production and distribution, the provision of management services to artistes, and operations of film studio and hotels.
Performance for the year:
During the year under review, the Group reported a revenue of approximately HK$40 million, a increase of 162.4% as compared to the turnover in previous year for the continuing operations.
For the year ended 31 December 2015, the Group recorded a net loss of approximately HK$264.83 million as compared to net loss of the preceding year of approximately HK$148.91 million.
Xiqiao National Arts Studio Project
Located in Foshan city, Guangdong province, the Group’s Xiqiao National Arts Studio Project has a total developed land area of 444,000 square metres and is a unique studio which incorporates tourism and recreational facilities such as film shooting areas, theme parks, hotel and performing arts complexes.
Xiqiao National Arts Studio officially opened in October 2015. It is believed that the Studio will become one of the hot tourist spots in Guangdong province which could attract tourists and provide them with immersive entertainment experience.
In connection with this, the Group entered an exclusive selling agreement with a travel agency, which is a wholly-owned subsidiary of a Hong Kong listed company, to promote the travel packages and Greater China packages of the National Arts Studio, and to promote the wedding photo shooting area through the introduction of National Arts Studio wedding photography, travel and accommodation package in order to attract different groups of customers.
Following the grand opening of the Studio, a series of festival celebrations, mega events and concerts featuring popular singers were held in the Studio, attracting a considerable number of tourists and gaining a significant level of media exposure. Several large events are under progress which it is expected to pull in more visitors. Besides, the National Arts Resort Hotel also came into operation officially in November 2015. With the sound accommodation service supporting, every customer can enjoy a life-enhancing experience visiting the Studio.
Film Shooting Base
The film shooting base is the core project of the Xiqiao National Arts Studio Project and equips with the most excellent and comprehensive ancillary facilities featuring the most realistic and delicate details in the South China.
The film shooting base covers 374,000 square metres, including a lake of 120,000 square metres.
A series of festival events were held in the Studio which drew a significant number of visitors into the Studio. Over 16,000 and 14,000 visitors were recorded in the music carnival and the Halloween celebration respectively. These mega events successfully raise the Studio’s brand awareness and arouse a heated discussion in the city.
The shooting scenic spots have been completed and are officially opened to production crews for leasing. Several films and TV series were produced here by virtue of the extensive choices, supreme geographical location and multifunctional ancillary services of the shooting base. On 11 January 2016, the Group has entered into a rental agreement, taking the role of rental agent, with a wellknown company renting film shooting equipment. The plentiful props, attires and high-tech shooting equipment provided by the partner, coupled with advanced filming supporting service and scenic spots of the Studio, are expected to attract more medium and large size of production crews. Furthermore, the Group is considering inviting famous retail organizations to set up their retail shops in the shooting base to provide necessary commodities to guests.
Apart from that, a number of high-profile indoor film studios will be created to enrich the choices of scenic spots for crews searching for indoor filming locations. The high-profile studio has been commenced its construction in the 1st quarter of 2016.
With the full opening of the Studio and collaboration with the above resourceful companies, it is believed that it will generate a favorable income and bring substantial gain to the Group as enormous synergistic effect will be created and more tourists will be attracted.
A 5-star hotel next to the Studio and facilitated from deluxe suites to economic standard rooms to cater to tourists’ needs has been officially commenced its operation in November 2015. The Hotel features a modern European design with luxurious fabrics and hues of yellow and gold, the suites are lavishly furnished with a collection of furniture in grand design. The Group acts ahead in providing thoughtful services to meet the needs of the guests such as SPA, Business Centre, Modern Swimming Pool and Shifter Kart which allow our guests to have a splashing good time.
350 suites would be provided and it is one of the most luxurious and distinctive hotels in the region. The Group would seek opportunities to provide comprehensive services with additional facilities to cater tourists’ needs.
As to the film production segment, the Group made cooperations with New Culture (新文化) and Cayie Movie & Video Communications Co. Inc (凱羿影視傳播) in the production and distribution of Golden Brother (男人唔可以窮) which is adapted from a novel. The production of this inspiring movie was completed and was shown in cinemas in Hong Kong and PRC in July and December 2014 respectively. Apart from that, the Group invested in the productions of First of May (十七歲) and Si Dang (死黨). First of May was shown in cinemas which received great feedbacks from the audience. And Si Dang is now under progress which will shown in cinemas. It is believed that it will generate a favorable income. To enhance the film production process, the Group upgraded and acquired more shooting equipments. Five micro films, which were Daddy I’m So Sorry, Mommy Happy Birthday, Hotel Ironwoman, Speedy Fighters and Conscience, were produced at high quality with these advanced equipments.
National Arts Films Production Limited (“NA Films”), an indirectly wholly-owned subsidiary of the Group, collaborated with its joint venture for the development of cinema business in a large shopping mall in a transportation hub area of Zhu Hai.
NA Films held 60% equity interest in the joint venture. The cinema boasts eight screens and a total of more than 730 seats, and had commenced its operation since May 2014 which supports further comprehensive development of the Group’s entertainment and culture business.
Subsequent to the completion and commencement of operation of the Studio, and with the huge market of domestic movies, the Group will recruit more artists with potential in the future to cope with the demands in the vast market. Apart from the films produced by the Group, our artists Rose Chan, Brian Yuen, Rachel Chau, Kitson Shum, Lemon Yip and Marvel Chow will also perform and participate in different shows and events. Besides, the Group will identify suitable institutions for them to serve as spokespersons and participate in advertising photography. The Group will continue to recruit artists with potential and expand the artiste management segment, hoping that it will become one of the major income sources of the Group.
The Group reached an agreement with a renowned domestic wedding photography chain group in the fourth quarter of 2013 to develop its new wedding photography business. Through which, the Group leased the Studio with an area of approximately 20 mu (13,333.33 square metres) for a term of 12 years and the wedding photography company invested RMB10 million for the construction of scenic spots in different styles such as European, Korean and Japanese styles and guarantee there will be at least 28,800 couples taking wedding photos in the scenic spots per year. The annual income of this arrangement will be no less than approximately RMB1.2 million starting from 2016. According to figures by 2015, there were over 29,000 pairs of couples took their wedding photos in the Studio during the year as anticipated.
According to a statistics published by Renmin Wang, the total tourism revenue in Guangdong province was RMB1,036.5 billion (approximately HK$1,239.54 billion) in 2015 (2014: RMB922.7 billion), total visitors attained 360 million people which was the highest across the PRC and representing an increase of 12.3% compared with the previous year. The rank of Guangdong province in China in terms of total tourism revenue was again the first this year. The Group believes that its new tourist substance and excellent ancillary facilities will become a bright point of the tourism industry in Guangdong province.
The first phase of the Studio project was completed and the second phase starts as originally planned and now at the stage of generating feasibility report. To support further development of the project, the Group has acquired a piece of 368.33mu land in April 2015. While earthworks of the land are nearly finished and other infrastructures are successively being established with the help and coordination of the Xiqiao government, it is expected that the Studio project will continue to enlarge its scope and create more business opportunities.
As for the film production industry, according to the statistics published by State Administration of Press, Publication, Radio, Film and Television, the box office receipts in Mainland China in 2015 reached RMB44.07 billion (equivalent to approximately HK$52.70 billion), representing an increase of 48.7% from the previous year, indicating that the PRC film industry remained at a stage of rapid growth in 2015.
Seeing the opportunity in the growing movie and television industry, other than traditional film products, the Group will produce, promote and deliver new film products, implementing an “Internet plus” strategy so as to utilize more of the internet and information technology in the productions. Furthermore, aiming to attract more filming crews, 2–3 high-profile studio will be built to satisfy the needs of them to shooting indoor scenes. The existing cost advantage, combining with extensive choices of shooting studios and the partnership of renting film equipments, will raise the Group’s competitiveness among the industry and bargaining power in dealing with large scale media platform.