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China Animation's 2016/17 Annual Revenue up 41.4% to HK$771 Million

(July 04, 2017)


- Indoor Theme Park Revenue Soars 5.6 Times to HK$221 Million
- Profit from Core Businesses Surges 36.5% to 126 Million
- Four Major Businesses Fully Forging Forward 'Ca Sega Joypolis + Wonder Forest + Vr Games + Super Ip'
- To Create a World-Class Multimedia Animation Empire


HONG KONG, Jul 4, 2017 - (ACN Newswire) - China Animation Characters Company Limited ('China Animation' or 'the Group;' stock code: 1566), a multimedia animation enterprise in China, has announced its audited annual results for the year ended 31 March 2017. During the year under review, the Group recorded a revenue of HK$770.6 million, representing a year-on-year increase of 41.1%. Gross profit increased by 58.1% to HK$260 million. Gross profit margin increased by 3.7 percentage points to 34.5%. Profit from core businesses rose 36.5% to HK$130 million. The Board of Directors recommended the payment of a final dividend of HK2 cents per share.

During the year under review, the indoor theme park and multimedia animation entertainment businesses performed particularly well, and became the major growth driver of the results. Benefitting from the full operation of Shanghai JOYPOLIS and the acquisition of the indoor theme park business of SEGA, the revenue from the indoor theme park business significantly soared year-on-year by 5.6 times to HK$220 million. The number of tourists also skyrocketed 9.2 times to 2.19 million. Besides, the revenue from the multimedia animation entertainment business increased notably by 48.3% to approximately HK$4.4 million because the tickets of the VR Game Center and event activities were well-received.

On 1 January 2017, upon completion of a strategically significant acquisition the Group holds 85.1% equity interests in SLC, a company under Tokyo-listed SEGA SAMMY ('SEGA') (6460.JP). The remaining 14.9% stake continuing to be held by SEGA, SLC has later been renamed as CA SEGA JOYPOLIS LTD. ('CA SEGA'). The Group controls SEGA JOYPOLIS, a global indoor theme park under SEGA, animation VR games and hardware, software R&D and IP and operation of the park, etc, through this acquisition, making it the leading industry chain developer and operator of large-scale indoor theme parks and VR theme parks in the world.

Profit of the Group's core businesses has undergone outstanding growth. However, because of the professional fees resulting from the acquisition of SLC and the loss incurred on investment of certain Hong Kong-listed securities recorded according to accounting principles in the year, profit attributable to owners of the Company has dropped by 14.1% to approximately HK$94.8 million. These securities are held as long-term investment and have strategic significance in its business cooperation, as can be seen in one of the partners starting work with the Group in developing its indoor theme park business during the year.

Mr. Zhuang Xiangsong, Chairman, Chief Executive Officer and Executive Director of China Animation, said, 'China Animation has built four leading business segments covering a wide swath across the industry: the top indoor amusement park - CA SEGA JOYPOLIS; top indoor children's amusement park - CA SEGA Wonder Forest; virtual reality theme park - CA SEGA VR theme park and its other well-known businesses encompassing all aspects, main and peripheral, of the entire IP-protected animated game industry chain. These four major segments complement each other and generate synergies.'

CA SEGA JOYPOLIS: Focusing on the Mainland China market

China Animation currently has a controlling stake in CA SEGA, which owns the world's No.1 large-scale indoor theme park operating in five major cities around the world, namely Tokyo, Shanghai, Osaka, Qingdao and Dubai. CA SEGA also calls on 66 years of experience of SEGA in the development of electronic entertainment technology and operation. Before China Animation acquired CA SEGA, the Group was the first licensed operator of JOYPOLIS of SEGA in China and set up a JOYPOLIS indoor theme park in Shanghai. Shanghai JOYPOLIS fully opened for business on 6 February 2016. Its total area reached 8,239 sq.m, and later further scaled up to 8,499.64 sq.m. on 30 July 2016.

Latest developments

The Group will focus on expanding CA SEGA JOYPOLIS in the Mainland China market and is now planning the layout of projects on Hengqin Island of Macau as well as Changzhou in Jiangsu and Wuxi City and Dingxing County in Hebei Province. The project of JOYPOLIS indoor theme park on Hengqin Island, Macau is a joint development of China Animation and We Park (Hengqin) Development Company Ltd. The site has been selected and the feasibility report is currently being compiled

Phase I of JOYPOLIS in Jiangnan Global Harbor in Changzhou, Jiangsu is expected to open in the New Year's Day in 2018, and Phase II is expected to open during the summer holiday in 2018. The Group has signed a project agreement with Wuxi Transportation Industrial Park on 26 May 2017 to jointly develop the approximately 88,000 sq.m. large commercial building at Wuxi Central Station into China Animation Technology and Innovation Industrial Park and high-tech CA SEGA animation amusement park in Eastern China, which are to be held and operated by China Animation. This project is to house a JOYPOLIS indoor theme park highlighted by globally renowned IP brand stores, animation technology companies and innovation brands.

China Animation will also cooperate with the Dingxing County People's Government in Hebei Province to build China Animation Technology and Innovation Industrial Park, which will house a large-scale JOYPOLIS indoor theme park, a children's amusement park, a large VR theme park, as well as the VR aerospace engineering training center and VR military simulated combat base, with an aim to help the county develop an international cultural brand that complements China's aspiration for Beijing-Tianjin-Hebei integration and development strategy for the Xiong An New Area.

CA SEGA Wonder Forest: Entering first-tier cities in China

CA SEGA Wonder Forest is an intelligent and innovative parent-child amusement park designed for children 3-12 years of age, and a new international brand under CA SEGA JOYPOLIS. It is expected to expand to 100-150 units within three years, mainly in first-tier cities within China, with an average floor area of 600-1,200 sq.m. per unit.

China Animation has entered into a strategic cooperation agreement with Yitian Group in May 2017, and signed an agreement for the establishment of the CA SEGA Wonder Forest project on 3 July (today). The two parties are to set up a joint venture, in which China Animation will hold a 51% stake, to promote the nationwide network of children's amusement park projects. CA SEGA Wonder Forest is to be introduced into Shenzhen Yitian Holiday Plaza and is expected to open by the end of September. The plaza is an international shopping center with multiple experiences, which is strategically located, being close to the Window of the World and Happy Valley in Shenzhen, and combines a global cuisine menu and leisure and entertainment in one wonderful facility.

CA SEGA VR: Setting up offline and online channels

The Group uses VR technology to create an animated game world, which is an operation mode with huge development potential and boasting strong impetus for growth. As of 31 March 2017, 1,200 game experience centers in China have purchased VR devices with the game content provided by the Group, leading to a marked increase in the revenue of the multimedia animation entertainment business.

At the same time, the Group has opened VR gaming experience centers in Shanghai, Changzhou and Shenzhen Central Book City, offering VR games and wearable devices that feature its proprietary animation characters. In August 2016, the Group has further expanded the VR gaming experience center business in Shanghai by opening another center name 'V-PARK'.

The Group also plans to co-operate with third parties to run VR gaming experience centers. In addition, users can purchase VR wearable devices and download game applications from the Group's exclusive websites to enjoy new VR interactive experiences at any time.

Latest developments

The publicly popular VR shooting game Mortal Blitz VR will be officially operated in Shanghai CA SEGA JOYPOLIS on 20 July. China Animation is at present the only commercially operated Walking War Game VR Park of Mortal Blitz VR in the Greater China Region. This game has ranked first in downloads in North America and Japan during April-May 2017.

IV. Super IP: Growing popularity over multimedia commercial channels including movies, TV and the Internet, as well as through VR technology

Braced by its core animation and animation character toys business, the Group is stepping up commercialization of its animation characters through different channels. In July 2016, the Group participated in the Shenzhen Cartoon Animation Festival, the China Digital Entertainment Expo & Conference and ACGHK at which it actively promoted 'Violet', VR animation games and other animation characters.

The Group is currently promoting the products derived from 'Violet' outside China through different media and music as well as VR and MR technologies. Capitalizing on the growing popularity of 'Violet' in China and Hong Kong, a movie, 'Galaxy Girl' starring 'Violet' in the leading role is currently under production and expected to be completed in 2018. In addition, a 20-episode 'Galaxy Girl' animation television series is in planning, expected to be completed in 2018, and will be shown in China and Japan. The Group has also invested in and co-produced the animation movie 'Project Egg' which was released in China in the first quarter of 2017. And, via online channels, the Group has launched 12 animation games featuring 'Violet' and 'Han Ba Gui', of which nine were VR games, two were mobile games and one was an online Internet game. 'Violet' has been appointed as a tour guide and an image ambassador of CA SEGA JOYPOLIS indoor amusement parks in China and has been globally introduced to the digital VR stage of CA SEGA JOYPOLIS.

Latest developments

Multimedia animation television series 'The Reflection': Marching into the animation markets in Japan and America

China Animation, as a 22% interest shareholder, will cooperate with Studio Deen from Japan and nine organizations and individuals from the U.S. to present a large-scale animation television series production 'The Reflection' in 12 episodes, with original screenplay and original animation created by Stan Lee, the Father of American Animation. The animation television series will premiere at NHK channel in Japan from 22 July. Tokyo pop group 9nine will sing the television series-ending theme song, and has also performed in the animation television series.

Regarding the business strategy, Mr. Zhuang said, 'The Group has well-defined and clear plans and has achieved them in a deliberate fashion. On the one hand, through the acquisition of CA SEGA, the Group is expanding its indoor amusement park business presence and facilitating the integration of the super IP and VR industry with the SEGA JOYPOLIS brand. On the other hand, the Group continues its active efforts in raising the awareness of 'Violet' and other animation characters so as to further its market penetration. Meanwhile, through self-development and strategic cooperation, the Group is enhancing the content and value of the products and boosting its overall competitiveness across different fields, particularly the VR technology and animation entertainment business.'

Mr. Zhuang concluded, 'There is a strong demand for the cultural and entertainment industry in China. We may develop theme parks in China's major cities by way of licensing and cooperating with land developers. The introduction of CA SEGA's JOYPOLIS, Wonder Forest and VR theme parks in first-tier cities such as Beijing and Shenzhen can accelerate the expansion of our business presence and significantly drive China Animation's continued robust growth.'

About China Animation Characters Company Limited
China Animation Characters Company Limited is the first multimedia animation enterprise in China to list on the Main Board in Hong Kong (stock code of 1566.HK). In January 2017, the Group acquired controlling stake in CA Sega Joypolis Limited from Japan and became a world-leading indoor theme park operator with R&D capabilities and ownership of SEGA JOYPOLIS, the world's number one large-scale indoor theme park currently located in Tokyo, Shanghai, Osaka, Qingdao and Dubai. The Group operates four industry-leading business segments including the top indoor theme park - CA SEGA JOYPOLIS; the top children's amusement park - CA SEGA Wonder Forest; a virtual reality theme park CA SEGA VR; and the business that covers all aspects, main and peripheral, of the entire IP-protected animated game industrial chain.

China Animation owns the intellectual property rights to a number of popular animation characters including two top 10 national cartoon characters - 'Han Ba Gui' and 'Violet,' as well as characters from movies and animated dramas such as 'The King of Tibetan Antelope,' 'Project Egg,' 'Animal Conference on the Environment' and 'Amazing UU.' The Group also owns all copyrights to the well-loved overseas IP 'Aoki Lapis' in Asia and enjoys close cooperative relationships with many world-leading IP brands such as 'Transformers' in the US, SEGA Sonic the Hedgehog, Initial D, Crayon Shin-chan, etc.

Virtual artist 'Violet' is an animation star and Super IP created by China Animation. The Group has held a number of 3D Holographic Concerts for Violet in Shenzhen and Hong Kong since 2015.

Media enquiries
Strategic Financial Relations (China) Limited
Ms. Anita Cheung Tel: (852) 2864 4827
Ms. Janice Au Tel: (852) 2864 4874
Ms. Karen Li Tel: (852) 2864 4837
Ms. Phoenix Fung Tel: (852) 2864 4850
Ms. Angel Li Tel: (852) 2114 4954
Email: sprg-animation@sprg.com.hk




Copyright 2017 ACN Newswire. All rights reserved. www.acnnewswire.com

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