Hony Media Group Releases 2025 Annual Report: Key Developments and Financial Review

Executive Summary and Strategic Developments

• Organizational Restructuring and Cost Optimization: Hony Media Group undertook significant organizational restructuring and talent optimization in the first half of 2025. This resulted in a substantial reduction of long-term core fixed expenses without compromising the company’s innovation capabilities, sustainability, or core competitiveness.
• Regulatory Environment and Industry Outlook: The pharmaceutical industry faced intensified regulatory oversight in 2025, particularly following the introduction of the “Compliance Guidelines for Pharmaceutical Companies to Prevent Commercial Bribery Risks”. This has led to stricter compliance requirements, a transformation in marketing models, and a temporary delay or postponement of some digital marketing projects. However, the long-term policy direction mandates digital and traceable operational systems, which is expected to provide sustainable growth momentum for Echartnow, Hony Media’s healthcare digitized operations arm. Management anticipates business recovery and renewed growth by 2026.
• Business Portfolio Changes: The “Meerkat Health” smart healthcare platform was disposed of in January 2026, and the Group is now focused on “Echartnow” (digitized healthcare operation services) and “Entertainment and Media”.
• Entertainment Segment Losses Narrowed: Entertainment and Media revenue fell sharply to HK\$230,000 (2024: HK\$3,056,000), with a segment loss of HK\$2,756,000 (down from a HK\$85,698,000 loss last year). The prior year included a large impairment provision for HB Entertainment. The reduced loss was mainly due to the absence of the impairment charge.
• Strategic Investment Focus: The Group is prudently evaluating new growth areas, with a focus on AI, new media, and Web 3.0 business models, especially those integrating AI with cultural content (e.g., AI + micro dramas, AI + movies, content globalization).

Financial Performance and Capital Management

• Revenue and Profitability: Group revenue for 2025 was HK\$570.1 million, down from HK\$1,018.5 million in 2024. The consolidated net loss attributable to equity holders was HK\$66.7 million (2024: HK\$163.5 million loss). The loss was reduced mainly due to lower segment losses and ongoing cost control measures.
• Adjusted Loss: The Group reports a non-HKFRS “adjusted net loss” as a management measure. The adjusted loss for 2025 decreased due to restructuring and expense controls. However, investors should note that this metric is non-standard and may not be comparable with peers.
• Balance Sheet and Capital Structure:
  • Net current liabilities at year-end: HK\$84.1 million (2024: net current assets of HK\$2.8 million).
  • During 2025, the company issued 63.8 million new shares via subscription and 59.82 million shares via partial conversion of convertible bonds.
  • No final dividend is recommended for 2025, and the company has no distributable reserves as accumulated losses (HK\$1,487.6 million) exceed share premium.
• Major Suppliers and Customers: The top supplier accounted for 59% of costs, and the five largest suppliers combined for 82%. The top customer accounted for 15% of revenue, and the five largest for 40%. No directors or substantial shareholders had an interest in these entities.

Corporate Governance, ESG, and Risk Management Highlights

• ESG Initiatives: Full ESG structure implemented with Board-level oversight, an ESG Working Group, and integration of sustainability into all business and functional units. Six high materiality issues identified for management focus: environmental protection, climate change, workforce management, working hours & holiday management, product quality & safety, and information security & privacy protection.
• Climate Change Scenario Analysis: The Group conducted its first comprehensive climate scenario analysis, identifying four key climate-related risks and opportunities. No material financial impacts identified at this time, but efforts are underway to enhance data collection for future quantitative disclosures.
• Internal Controls and Disclosure: Systems reviewed semi-annually by the Audit Committee and independent internal audit function. No material deficiencies in risk or internal control systems were identified in 2025.
• Remuneration and Employment: No share options or awards were granted to Directors or Senior Management in 2025. The Group’s five senior managers (excluding the President, who receives no salary) received remuneration ranging from HK\$1 to HK\$4.5 million.
• Related Party Transactions: Cost of services and promotion fees paid to a related party service provider (51% owned by an associate of a connected person) amounted to HK\$15.3 million in 2025. No director had any material interest in any transaction, arrangement, or contract of significance.
• VIE Structure Risks: The Group’s VIE (variable interest entity) contractual arrangements in the PRC carry regulatory, economic, and enforceability risks. These are regularly reviewed, and independent directors and auditors confirmed compliance during the year.

Other Key Points and Shareholder Matters

• Share Consolidation: A 10-to-1 share consolidation was implemented on 11 December 2025. The authorized share capital became HK\$3 billion divided into 15 billion shares of HK\$0.20 each. This consolidation did not require an amendment to the Memorandum and Articles under Cayman Islands law.
• No Dividend for 2025: The Board does not recommend paying a final dividend for 2025. The dividend policy remains to declare reasonable dividends based on financial performance and other relevant factors.
• Major Subsequent Events: In January 2026, the company extended the maturity date of its convertible bonds (see Note 35). The “Meerkat Health” business was disposed of in January 2026.
• Going Concern: Despite the net loss and negative working capital position, management and auditors have concluded that the Group remains a going concern, based on cash flow projections, funding sources, and operational improvement measures.

Potentially Price-Sensitive and Shareholder-Relevant Items

• Disposal of Meerkat Health: The disposal of a major business segment may impact future revenues and business focus.
• Continued Losses and No Dividend: The Group remains loss-making and is not recommending a dividend, which may affect investor sentiment.
• Share Consolidation: The 10-for-1 consolidation alters the share structure and may impact share price volatility and liquidity.
• Convertible Bonds and Share Issuance: The partial conversion of bonds and new share issuance in 2025 have diluted existing shareholders and provided new capital.
• Regulatory and VIE Risks: The Group’s continued reliance on VIE structures in China carries ongoing regulatory and legal risks, which are closely monitored but could significantly affect future operations.
• Strategic Refocus on AI and Digital Healthcare: The Group’s intention to pivot toward AI-driven cultural content and digital healthcare could be transformational, but carries execution risk.

Conclusion

Hony Media Group’s 2025 Annual Report details a year of transition, significant restructuring, and cost control, with a focus on digital healthcare and potential expansion into AI-driven media. While losses have narrowed and the Group’s balance sheet has been bolstered by equity issuances and bond conversions, shareholders face continued uncertainty due to ongoing losses, the recent disposal of a core segment, and regulatory risks in China. The strategic pivot towards AI and compliance-driven digital healthcare offers growth prospects but also introduces new operational risks.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should consult professional advisors and review the official documents in full before making investment decisions. The information herein is based on the company’s published Annual Report and may be subject to updates or corrections.

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