Due to cryptocurrency impairment Meitu expects first half net loss to expand 99.6% to 154.1% year-on-year

On July 4, Meitu announced on the Hong Kong Stock Exchange that it expects the Group may record a net loss between approximately 274.9 million yuan and 349.9 million yuan for the six months ending June 30, 2022, compared to a net loss of approximately 137.7 million yuan in the same period last year, expanding by approximately 99.6% to 154.1% year-on-year. The expected increase in net loss is mainly due to the impairment of purchased cryptocurrencies.

According to the previously disclosed announcements, Mito had announced the purchase of a total of approximately 31,000 units of ethereum and approximately 940.89 units of bitcoin on March 7, 2021, March 17, 2021 and April 8, 2021 for a total consideration of approximately $50.5 million and $49.5 million, respectively.

As of June 30, 2022, the fair value of purchased Ether and purchased Bitcoin, based on market prices at that time, was approximately $0.5 million and $49.5 million, respectively.

The fair value of purchased Ether and purchased Bitcoin as of June 30, 2022 was approximately $32.0 million and $18.0 million, respectively. Under IFRS, Mito expects to recognize impairment losses of approximately $18.5 million and approximately $27.1 million for purchased ethereum and purchased bitcoin, respectively, in the Group’s upcoming interim results for the six months ended June 30, 2022.