UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 6-K

 

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of July 2024

 

Commission File Number: 001-40463

 

 

 

AMTD Digital Inc.

(Translation of registrant’s name into English)

 

 

 

66 rue Jean-Jacques Rousseau

75001 Paris

France

(Address of principal executive office)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ☒      Form 40-F ☐

 

 

 

 

 

 

EXHIBIT INDEX

 

Exhibit No.   Description
99.1   Audited consolidated financial statements for the years ended April 30, 2021, 2022 and 2023 and the six months ended October 31, 2023 of AMTD Digital Inc.

 

1

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  AMTD Digital Inc.
     
  By: /s/ Feridun Hamdullahpur
  Name:  Dr. Feridun Hamdullahpur
  Title: Director

 

Date: July 26, 2024

 

2

 

Exhibit 99.1

 

AMTD DIGITAL INC.

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

  PAGE(S)
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 6783)   F-2
   
Consolidated Statements of Profit or Loss and Other Comprehensive Income for the years ended April 30, 2021, 2022 and 2023 and six months ended October 31, 2023 F-3
   
Consolidated Statements of Financial Positions as of May 1, 2020, April 30, 2021, 2022 and 2023 and October 31, 2023 F-4
   
Consolidated Statements of Changes in Equity for the years ended April 30, 2021, 2022 and 2023 and six months ended October 31, 2023 F-5
   
Consolidated Statements of Cash Flows for the years ended April 30, 2021, 2022 and 2023 and six months ended October 31, 2023 F-6
   
Notes to the Consolidated Financial Statements F-7

 

F-1

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Shareholders and the Board of Directors of AMTD Digital Inc.:

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated statements of financial position of AMTD Digital Inc. and subsidiaries (the “Company”) as of April 30, 2021, 2022 and 2023 and October 31, 2023, the related consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for each of the three years ended April 30, 2021, 2022 and 2023 and six months ended October 31, 2023 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2021, 2022 and 2023 and October 31, 2023, and the results of its operations and its cash flows for each of the three years ended April 30, 2023 and six months ended October 31, 2023 in conformity with generally accepted accounting principles in the United States of America.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

/s/ Assentsure PAC

Singapore

July 26, 2024

PCAOB No: 6783

 

We have served as the Company’s auditor since 2024.

 

F-2

 

 

AMTD DIGITAL INC.

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

(All amounts in thousands of United States dollars (“US$”), except for share and per share data)

 

      Year ended April 30,   Six months ended
October 31,		 
   Notes  2021   2022   2023   2023 
      US$   US$   US$   US$ 
Revenue from contracts with customers  5   25,251    25,271    33,066    8,673 
Employee benefits expense      (6,193)   (9,293)   (9,868)   (3,074)
Advertising and promotion expense      (328)   (522)   (655)   (177)
Premises and office expenses      (674)   (741)   (996)   (1,486)
Legal and professional fee      (883)   (3,010)   (2,891)   (1,338)
Depreciation and amortization      (631)   (846)   (1,312)   (1,441)
Finance costs  7   —    —    (1,195)   (3,403)
Other expenses      (430)   (405)   (2,442)   (4,586)
Changes in fair value on financial assets measured at fair value through profit or loss (“FVTPL”)  8   9,063    16,940    15,386    16,279 
Other income  9   171    867    16,052    8,988
Other gains and losses, net  10   (39)   609    153    14,342 
Profit before tax      25,307    28,870    45,298    32,777 
Income tax expense  11   (3,173)   (3,030)   (4,485)   (1,991)
Profit for the year/period  12   22,134    25,840    40,813    30,786 
                        
Other comprehensive (expense) income for the year/period:                       
Item that will not be reclassified to profit or loss:                       
Exchange differences on translation from functional currency to presentation currency      (574)   (4,145)   (30)   1,168 
Items that may be reclassified subsequently to profit or loss:                       
Exchange differences arising on translation of foreign operations      107    (106)   (960)   (956)
Share of other comprehensive expense of joint ventures      —    —    377   126 
       107    (106)   (583)   (830)

Other comprehensive (expense) income for the year/period

      (467)   (4,251)   (613)   338 
Total comprehensive income for the year/period      21,667    21,589    40,200    31,124 
Profit (loss) for the year/period attributable to:                       
- Owners of the Company      22,937    27,493    42,059    31,940 
- Non-controlling interests      (803)   (1,653)   (1,246)   (1,154)
       22,134    25,840    40,813   30,786 
Total comprehensive income (expense) for the year/period attributable to:                       
- Owners of the Company      22,421    23,294    41,889    32,563 
- Non-controlling interests      (754)   (1,705)   (1,689)   (1,439)
       21,667    21,589    40,200    31,124 
Earnings per share  13                    
- Basic (US$)      0.43    0.41    0.57    0.42 
- Diluted (US$)      0.43    0.41    0.57    0.42 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

F-3

 

 

AMTD DIGITAL INC.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONS

(All amounts in thousands of US$)

 

      As of
May 1,		   As of April 30,   As of
October 31,		 
   Notes  2020   2021   2022   2023   2023 
      US$   US$   US$   US$   US$ 
ASSETS                       
Non-current assets:                       
Goodwill  17   —    7,557    7,477    —    — 
Property, plant and equipment  18   —    20    16    134,027    69,592 
Intangible assets  19   —    5,205    4,640    311    279 
Prepayments, deposits and other receivables  21   —    2,011    —    —    — 
Financial assets at FVTPL  20   26,928    37,858    19,130    5,170    288 
Interests in joint ventures  16   —    —    —    24,597    16,775 
Total non-current assets      26,928    52,651    31,263    164,105    86,934 
                             
Current assets:                            
Accounts receivable  21   1,428    8,941    5,039    9,803    934 
Prepayments, deposits and other receivables  21   5,316    2,468    36,941    7,678    35,827 
Amount due from AMTD Group (as defined in note 1)  29   303,541    275,442    321,438    126,444    195,278 
Amounts due from fellow subsidiaries      98,597    —    —    —    — 
Amount due from a non-controlling shareholder  29   —    —    —    539    — 
Financial assets at FVTPL  20   —    —    —    9,243    5,723 
Fiduciary bank balances      2,746    1,874    1,487    785    913 
Cash and cash equivalents      25,317    53,631    14,337    152,930    134,843 
       436,945    342,356    379,242    307,422    373,518 
Assets classified as held for sale  15   —    —    —    12,081    77,045 
Total current assets      436,945    342,356    379,242    319,503    450,563 
Total assets      463,873    395,007    410,505    483,608    537,497 
                             
EQUITY AND LIABILITIES                            
Current liabilities:                            
Clients’ monies held on trust      1,296    1,173    847    428    814 
Accounts payable  22   7    14    10    493    69 
Other payables and accruals  22   48    5,007    3,447    3,253    18,914 
Bank borrowings  23   —    —    —    65,803    65,565 
Amount due to a non-controlling shareholder  29   —    —    —    53,803    53,389 
Amount due to immediate holding company      36,294    —    —    —    — 
Amounts due to fellow subsidiaries      251,032    —    —    —    — 
Contract liabilities  24   4,609    5,038    5,291    10,162    — 
Income tax payable      2,921    6,256    4,053    4,571    2,638 
       296,207    17,488    13,648    138,513    141,389 
Liabilities associated with assets classified as held for sale  15   —    —    —    1,030    17,912 
Total current liabilities      296,207    17,488    13,648    139,543    159,301 
Non-current liabilities:                            
Contract liabilities  24   3,261    4,017    677    1,031    — 
Deferred tax liability  25   —    885    735    —    — 
Total non-current liabilities      3,261    4,902    1,412    1,031    — 
Total liabilities      299,468    22,390    15,060    140,574    159,301 
Capital and reserves:                            
Share capital  26   5    7    7    8    8 
Treasury shares  26   —    —    —    (52,235)   (52,235)
Reserves      164,400    369,362    392,924    389,411    439,190 
Equity attributable to owners of the Company      164,405    369,369    392,931    337,184    386,963 
Non-controlling interests     —    3,248    2,514    5,850    (8,767)
Total equity      164,405    372,617    395,445    343,034    378,196 
Total equity and liabilities      463,873    395,007    410,505    483,608    537,497 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

F-4

 

 

AMTD DIGITAL INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(All amounts in thousands of US$)

 

   Attributable to owners of the Company         
   Share
capital		   Share
premium		   Treasury
shares		   Share-based
payment
reserve		   Exchange
reserve		    Capital
reserve		   Retained
earnings		   Total   Non-
controlling
interests		   Total
equity		 
   US$   US$   US$   US$   US$    US$   US$   US$   US$   US$ 
                                          
At May 1, 2020   5    128,214    —    —    —     16,656    19,530    164,405    —    164,405 
Profit (loss) for the year   —    —    —    —    —     —    22,937    22,937    (803)   22,134 
Other comprehensive (expense) income for the year:                                                   
Exchange differences arising on translation   —    —    —    —    (516)    —    —    (516)   49    (467)
Total comprehensive (expense) income for the year   —    —    —    —    (516)    —    22,937    22,421    (754)   21,667 
Acquisition of subsidiaries (note 14(b))   —    8,725    —    —    —     —    —    8,725    4,002    12,727 
Issuance of shares (note 26(a) and (e))   2    173,696    —    —    —     —    —    173,698    —    173,698 
Share-based compensation (note 30)   —    —    —    120    —     —    —    120    —    120 
At April 30, 2021   7    310,635    —    120    (516)    16,656    42,467    369,369    3,248    372,617 
Profit (loss) for the year   —    —    —    —    —     —    27,493    27,493    (1,653)   25,840 
Other comprehensive expense for the year:                                                   
Exchange differences arising on translation   —    —    —    —    (4,199)    —    —    (4,199)   (52)   (4,251)
Total comprehensive (expense) income for the year   —    —    —    —    (4,199)    —    27,493    23,294    (1,705)   21,589 
Issuance of shares by a non-wholly owned subsidiary (note 19)   —    —    —    —    —     44    —    44    57    101 
Share-based compensation (note 30)   —    —    —    224    —     —    —    224    914    1,138 
At April 30, 2022   7    310,635    —    344    (4,715)    16,700    69,960    392,931    2,514    395,445 
Profit (loss) for the year   —    —    —    —    —     —    42,059    42,059    (1,246)   40,813 
Other comprehensive (expenses) income for the year:                                                   
Exchange differences arising on translation   —    —    —    —    (532)    —    —    (532)   (458)   (990)
Share of other comprehensive income of joint ventures   —    —    —    —    362     —    —    362    15    377 
Total comprehensive (expense) income for the year   —    —    —    —    (170)    —    42,059    41,889    (1,689)   40,200 
Issuance of shares (note 26(g))   1    229,185    —    —    —     —    —    229,186    —    229,186 
Repurchase of shares of the Company (note 26(h))   —    —    (318,882)   —    —     —    —    (318,882)   —    (318,882)
Acquisition of subsidiaries under common control (note 14(a))   —    —    266,647    —    —     (274,831)   —    (8,184)   5,025    (3,159)
Share-based compensation (note 30)   —    —    —    244    —     —    —    244    —    244 
At April 30, 2023   8    539,820    (52,235)   588    (4,885)    (258,131)   112,019    337,184    5,850    343,034 
Profit (loss) for the period   —    —    —    —    —     —    31,940    31,940    (1,154)   30,786 
Other comprehensive income (expenses) for the period:                                                   
Exchange differences arising on translation   —    —    —    —    502     —    —    502    (290)   212 
Share of other comprehensive income of joint ventures   —    —    —    —    121     —    —    121    5    126 
Total comprehensive income (expense) for the period   —    —    —    —    623     —    31,940    32,563    (1,439)   31,124 
Issuance of shares (note 26(j))   —    5,602    —    —    —     —    —    5,602    —    5,602 
Change in shareholding of subsidiaries without losing control   —    —    —    —    —     11,531    —    11,531    (13,178)   (1,647)
Share-based compensation (note 30)   —    —    —    83    —     —    —    83    —    83 
At October 31, 2023   8    545,422    (52,235)   671    (4,262)    (246,600)   143,959    386,963    (8,767)   378,196 

 

The accompanying notes are an integral part of the consolidated financial statements.

F-5

 

 

AMTD DIGITAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(All amounts in thousands of US$)

 

   Year ended April 30,   Six months ended
October 31,		 
   2021   2022   2023   2023 
   US$   US$   US$   US$ 
CASH FLOWS FROM OPERATING ACTIVITIES                
Profit before tax   25,307    28,870    45,298    32,777 
Adjustments for:                    
Share of losses of joint ventures   —    —    404    1,366 
Interest income   (18)   (743)   (15,945)   (9,012)
Finance costs   —    —    1,195    3,403 
Depreciation   6    9    479    999 
Amortization   625    837    833    442 
Recovery of accounts receivable written off   (9)   (20)   (2)   (1)
Share-based payment   120    1,138    244    83 
Changes in fair value on financial assets at FVTPL   (9,063)   (16,940)   (15,386)   (16,279)
Gain on disposal of subsidiaries   —    —    —    (14,697)
Unrealized exchange gain   —    (403)   —    — 
Operating cash flows before movements in working capital   16,968    12,748    17,120    (919)
Decrease (increase) in fiduciary bank balances   869    369    372    (115)
(Increase) decrease in accounts receivable   (7,522)   3,834    (4,272)   (170)
Decrease in prepayments, deposits and other receivables   1,609    521    1,545    5,808 
(Decrease) increase in client’s monies held on trust   (120)   (316)   (398)   385 
(Decrease) increase in accounts payable   (52)   7    173    37 
(Decrease) increase in other payables and accruals   (2,328)   1,421    523    16,866 
Increase (decrease) in contract liabilities   1,201    (3,011)   4,544    (494)
Cash generated from operations   10,625    15,573    19,607    21,398 
Profits tax refunded (paid)   65    (5,323)   (4,106)   (38)
Net cash from operating activities   10,690    10,250    15,501    21,360 
CASH FLOWS FROM INVESTING ACTIVITIES                    
Additions of financial assets at FVTPL   (6,520)   (3,835)   (5,545)   (825)
Proceeds from disposal of financial assets at FVTPL   10,038    —    58,170    — 
Receipt of return from movie income right investments   —    2,681    —    — 
Acquisition of property, plant and equipment   (22)   (6)   (2)   (17)
Acquisition of intangible assets   —    (227)   —    — 
Acquisition of subsidiaries, net of cash acquired   2,673    —    3,860    — 
Interest received   18    40    3,109    2,858 
Loan to a third party   —    —    (100,123)   — 
Repayment of loan to a third party   —    —    100,123    — 
Advance to AMTD Group   (159,931)   (140,338)   (401,454)   (91,854)
Advance to a non-controlling shareholder   —    —    —    (1,640)
Repayment from AMTD Group   113,927    92,546    222,271    55,488 
Repayment from a non-controlling shareholder   —    —    97    — 
Advance to fellow subsidiaries   (97,759)   —    —    — 
Repayment from fellow subsidiaries   154,104    —    —    — 
Net cash from (used in) investing activities   16,528    (49,139)   (119,494)   (35,990)
CASH FLOW FROM FINANCING ACTIVITIES                    
Proceeds from bank borrowings   —    —    15,018    — 
Proceeds from issue of shares   3,498    —    229,186    — 
Advance from AMTD Group   12,312    —    —    — 
Repayment to AMTD Group   (3,116)   —    —    — 
Advance from fellow subsidiaries   1,996    —    —    — 
Repayment to fellow subsidiaries   (13,672)   —    —    — 
Repayment to a non-controlling shareholder   —    —    —    (594)
Finance costs paid   —    —    (742)   (3,375)
Net cash from (used in) financing activities   1,018    —    243,462    (3,969)
Net increase (decrease) in cash and cash equivalents   28,236    (38,889)   139,469    (18,599)
Cash and cash equivalents at beginning of the year/period   25,317    53,631    14,337    153,661 
Effect of foreign exchange rate changes   78    (405)   (145)   27 
Cash and cash equivalents at end of the year/period   53,631    14,337    153,661    135,089 
Represented by:                    
Cash and cash equivalents   53,631    14,337    152,930    134,843 
Cash and cash equivalents classified as assets held for sale   —    —    731    246 
    53,631    14,337    153,661    135,089 

 

The accompanying notes are an integral part of the consolidated financial statements.

F-6

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

1. GENERAL

 

AMTD Digital Inc. (the “Company”) was incorporated and registered as an exempted company with limited liability in the Cayman Islands under the Companies Act of the Cayman Islands on September 12, 2019. The Company, through its subsidiaries (collectively, the “Group”), is mainly involved in the provision of digital solutions services — financial services, digital solutions services - non financial services, digital media, contents and marketing services and hotel operations, hospitality and very important person (“VIP”) services.

 

The Company’s ultimate holding company, AMTD Group Inc. (“AMTD Group”), a private company incorporated in the British Virgin Islands (“BVI”) and the Company’s immediate holding company is AMTD IDEA Group, a listed company incorporated in the Cayman Islands.

 

2. BASIS OF PREPARATION

 

Basis of preparation

 

The Group’s consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). For the purpose of preparation of the consolidated financial statements, information is considered material if such information is reasonably expected to influence decision made by primary users.

 

In preparing the consolidated financial statements, the Company’s opening consolidated statement of financial position was prepared as at May 1, 2020, the Company’s date of transition from International Financial Reporting Standards (“IFRS”) to U.S. GAAP. There is no adjustment made by the Company in transitioning its IFRS consolidated financial statements to U.S. GAAP.

 

The consolidated financial statements have been prepared on a historical cost basis, except for financial assets at fair value through profit or loss which are measured at fair value.

 

Recent accounting pronouncements

 

The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 was subsequently amended by ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, and ASU 2019-05, Targeted Transition Relief. In November 2019, the FASB issued ASU 2019-10, which extends the effective date for the adoption of ASU 2016-13. In November 2019, the FASB issued ASU 2019-11 to clarify its new credit impairment guidance in ASU 326. Accordingly, for public entities that are not smaller reporting entities, ASU 2016-13 and its amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For all other entities, this guidance and its amendments will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. As an emerging growth company, the Company adopted this guidance on May 1, 2023 and the adoption of this ASU did not have a material impact on its consolidated financial statements.

 

F-7

 

  

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

2. BASIS OF PREPARATION - (CONTINUED)

 

Recent accounting pronouncements - (Continued)

 

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for all entities for fiscal years and interim periods within those fiscal years beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The removed and modified disclosures were adopted on a retrospective basis and the new disclosures were adopted on a prospective basis.

 

The Company adopted this guidance on date of initial adoption and the adoption of this ASU did not have a material impact on its consolidated financial statements.

 

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, with early adoption permitted. The Company adopted this guidance on May 1, 2020 and the adoption of this ASU did not have a material impact on its consolidated financial statements.

 

3. SIGNIFICANT ACCOUNTING POLICIES

 

(a)Basis of consolidation

 

The consolidated financial statements include the financial statements of the Company and its subsidiaries for the years ended April 30, 2021, 2022 and 2023 and six months ended October 31, 2023. A subsidiary is an entity, directly or indirectly, controlled by the Company. Control is achieved when the Group has power over investee, is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the current ability to direct the relevant activities of the investee).

 

The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described above.

 

The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

 

Profit or loss and each item of other comprehensive income, if any, is attributed to the owners of the parent of the Group (including ordinary shareholders and holders of perpetual securities) and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions among members of the Group are eliminated in full on consolidation.

 

Non-controlling interests in subsidiaries are presented separately from the Group’s equity therein, which represent present ownership interests entitling their holders to a proportionate share of net assets of the relevant subsidiaries upon liquidation.

 

F-8

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

3. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

 

(a)Basis of consolidation - (Continued)

 

Changes in the Group’s interests in existing subsidiaries

 

Changes in the Group’s interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s relevant components of equity and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries, including re-attribution of relevant reserves between the Group and the non-controlling interests according to the Group’s and the non-controlling interests’ proportionate interests.

 

Any difference between the amount by which the non-controlling interests are adjusted, and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company.

 

When the Group loses control of a subsidiary, the assets and liabilities of that subsidiary and non-controlling interests (if any) are derecognized. A gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the carrying amount of the assets (including goodwill), and liabilities of the subsidiary attributable to the owners of the Company. All amounts previously recognized in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

 

(b)Business combinations

 

A business is an integrated set of activities and assets which includes an input and a substantive process that together significantly contribute to the ability to create outputs. The acquired processes are considered substantive if they are critical to the ability to continue producing outputs, including an organized workforce with the necessary skills, knowledge, or experience to perform the related processes or they significantly contribute to the ability to continue producing outputs and are considered unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs.

 

Acquisitions of businesses, other than business combination under common control are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognized in profit or loss as incurred.

 

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value, except that:

 

●deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with relevant guidance;

 

●liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with relevant guidance;

 

F-9

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

3. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

 

  (b) Business combinations - (Continued)

 

●assets (or disposal groups) that are classified as held for sale are measured in accordance with that standard; and

 

●lease liabilities are recognized and measured at the present value of the remaining lease payments as if the acquired leases were new leases at the acquisition date, except for leases for which the lease terms ends within 12 months of the acquisition date. Right-of-use assets are recognized and measured at the same amount as the relevant lease liabilities, adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms.

 

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net amount of the identifiable assets acquired and the liabilities assumed as of acquisition date. If, after re-assessment, the net amount of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognized immediately in profit or loss as a bargain purchase gain.

 

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the relevant subsidiary’s net assets in the event of liquidation are initially measured at fair value.

  

Business combinations under common control

 

The Company accounts for the business combination with entities under common control using historical carrying values and under a prospective basis (referred to herein as predecessor accounting) which involves the Company accounting for the combination prospectively from the date on which it occurred. For predecessor accounting:

 

  ● Assets and liabilities of the acquired entity are stated at carrying amounts in the consolidated financial statements of the controlling party. Fair value measurement is not required.

 

  ● Income statement reflects the results of the combining parties.

 

  ● No new goodwill arises in predecessor accounting.

 

  ● Any difference between the consideration given and the aggregate carrying value of the assets and liabilities of the acquired entity at the date of the transaction is recognized in capital reserve.

 

  (c) Goodwill

 

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see the accounting policy above) less accumulated impairment losses, if any.

 

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or group of cash-generating units) that is expected to benefit from the synergies of the combination, which represent the lowest level at which the goodwill is monitored for internal management purposes and not larger than an operating segment.

 

A cash-generating unit (or group of cash-generating units) to which goodwill has been allocated is tested for impairment annually or more frequently when there is indication that the unit may be impaired. For goodwill arising on an acquisition in a reporting period, the cash-generating unit (or group of cash- generating units) to which goodwill has been allocated is tested for impairment before the end of that reporting period. If the recoverable amount is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill and then to the other assets on a pro-rata basis based on the carrying amount of each asset in the unit (or group of cash-generating units).

 

F-10

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

3. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

 

  (c) Goodwill - (Continued)

 

On disposal of the relevant cash-generating unit or any of the cash-generating unit within the group of cash-generating units, the attributable amount of goodwill is included in the determination of the amount of profit or loss on disposal. When the Group disposes of an operation within the cash-generating unit (or a cash-generating unit within a group of cash-generating units), the amount of goodwill disposed of is measured on the basis of the relative values of the operation (or the cash-generating unit) disposed of and the portion of the cash-generating unit (or the group of cash-generating units) retained.

 

  (d) Fair value measurement

 

The Group measures its movie income right investments and equity investments at fair value at the end of each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

 

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

 

All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

 

Level 1 — based on quoted prices (unadjusted) in active markets for identical assets or liabilities

 

Level 2 — based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly

 

Level 3 — based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

 

For assets and liabilities that are recognized at fair value in the consolidated financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

 

(e)Impairment of non-financial assets

 

At the end of the reporting period, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets with finite useful lives to determine whether there is any indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the relevant asset is estimated, which is the sum of undiscounted cash flows that are expected to result from the use and eventual disposition of asset or asset group. The recoverable amount of property, plant and equipment and intangible assets with definite life are estimated recoverable amount of an asset group (i.e. the lowest level of identifiable cash flows that are largely independent of the net cash flows of other groups of assets). An impairment loss is recognized for a depreciable or amortizable asset (asset group) only if the carrying amount of the asset (asset group) exceeds its recoverable amount. If the asset is not recoverable, then an asset’s (asset group’s) impairment is calculated with reference to the fair value of that asset (asset group) in comparison to its carrying amount.

  

F-11

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

3. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

 

(e)Impairment of non-financial assets - (Continued)

 

The Group performs an initial qualitative assessment before proceeding with the quantitative test on goodwill and indefinite life intangible asset. If the Group concludes, based on qualitative assessment, that it is not more likely than not that a reporting unit that goodwill allocated to or indefinite life intangible assets is impaired, then the Group is not required to perform a quantitative test for that reporting unit or indefinite life intangible assets.

 

Intangible assets with indefinite life are estimated individually. An impairment loss for an indefinite life intangible asset is recognized if the fair value of the asset is less than the asset’s carrying amount. Goodwill is allocated to those reporting units which are operating segments or one level below the operating segment level (component level), if it constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that segment. Goodwill is impaired if the carrying amount of the reporting unit to which it is allocated exceeds the fair value of the reporting unit. An impairment is the excess of the reporting unit’s carrying amount over its fair value.

 

Corporate assets are not allocated to asset groups in testing long-lived assets for impairment. An additional high-level of asset group is identified (which may be at the entity level), which is tested for impairment after the related lower-level assets groups have been tested.

 

An impairment loss is not reversed if the fair value of the impaired asset or asset group increase subsequently.

 

  (f) Revenue from contracts with customers

 

Revenue from contracts with customers is recognized when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.

 

When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which the Group will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved.

 

Revenue is derived from the commissions and fees from the digital solutions services - financial services and membership fee from the digital solutions services - non financial services, income from digital media, content, and marketing services, and income from hotel operations, hospitality and VIP services.

 

Digital solutions services — financial services

 

The Group earns commission income by facilitating the arrangement between insurance company partners and individuals/businesses. The service promised to the customer is placement of an effective insurance or reinsurance policy. Commission revenue is usually a percentage of the premium paid by the insured and generally depends upon the type of insurance or reinsurance policy and the insurance company partner. Revenue is recognized at a point in time upon execution and effectiveness of insurance contracts. The Group allows a credit period up to 15 days to its customers.

 

Digital solutions services - non financial services

 

The Group provides its corporate clients exclusive access to the membership program for a fixed membership fee negotiated on case by case basis and agreed upon entering the contract with each customer. The digital solutions services - non financial services segment provides its members networking opportunities with prestigious corporate members, prominent business executives and partners. Contract terms of contracts entered during the years ended April 30, 2021, 2022 and 2023 generally ranged from 1 to 3 years. Revenue from such service is recognized over time as the customers simultaneously receive and consume the service provided by the Group. The Group may require customers to provide partial upfront payments of total service fees. Upfront payment is due immediately at the point the customer entered into the service contracts. The remaining payments will be settled according to the payment schedules stated in the service contracts. The Group may allow a credit period ranging from 0 to 90 days to its customers for the demand note issued in accordance with the payment schedules. When the Group receives an upfront payment, this will give rise to contract liabilities at the time of the initial sales transaction for which revenue is recognized over the membership service period.

 

F-12

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

3. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

 

  (f) Revenue from contracts with customers - (Continued)

 

Digital media, content, and marketing services

 

The Group provides digital media, content, and marketing services to its customers on its multimedia channels. The Group recognizes revenues of the digital media, content, and marketing services over the contract term during which the content is displayed. 

 

Hotel operations, hospitality and VIP services

 

The Group provides accommodations and other ancillary services to hotel guests. Revenue of hotel operations, hospitality and VIP services are recognized over time by reference to the progress towards complete satisfaction of the relevant performance obligation, as the hotel guest simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs.

 

A contract liability represents the Group’s obligation to transfer services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer.

 

(g)Contract liabilities

 

A contract liability is recognized when the payment is made and received or the payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognized as revenue when the Group performs under the contract (i.e., transfers control of the related goods or services to the customer).

 

For certain customers, the Group requires upfront payment and recorded such upfront fee as contract liabilities in other payables and accruals. Upfront fee is recognized as revenue based on the time elapsed for the service period.

 

(h)Foreign currencies

 

In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recognized at the rates of exchanges prevailing on the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. 

 

Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

 

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are recognized in profit or loss in the period in which they arise.

 

For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group’s operations are translated into the presentation currency of the Group using exchange rates prevailing at the end of each reporting period. Income and expenses items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity under the heading of exchange reserve (attributed to non-controlling interests as appropriate).

 

On the disposal of a foreign operation (that is, a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss.

 

  (i) Employee benefits

 

Retirement benefit costs

 

Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.

 

F-13

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

3. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

 

(i)Employee benefits - (Continued)

 

Short-term employee benefits

 

Short-term employee benefits are recognized at the undiscounted amount of the benefits expected to be paid as and when employees rendered the services. All short-term employee benefits are recognized as an expense.

 

A liability is recognized for benefits accruing to employees (such as wages and salaries and annual leave) after deducting any amount already paid.

 

(j)Government grants

 

Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attaching to them and the grants will be received.

 

Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate.

 

Government grants related to income that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they become receivable. Such grants are presented under other income.

 

  (k) Share-based payments

 

Equity-settled share-based payments transactions

 

Restricted ordinary shares granted to employees

 

Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date.

 

The fair value of the equity-settled share-based payments determined at the grant date without taking into consideration all non-market  vesting conditions is expensed on a straight-line basis over the vesting period.

 

When the restricted ordinary shares are vested, the amount previously recognized in share-based payment reserve will be transferred to share premium.

 

  (l) Property, plant and equipment

 

Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.

 

Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to profit or loss in the year in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalized in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognizes such parts as individual assets with specific useful lives and depreciates them accordingly.

 

Depreciation is calculated on a straight-line basis to write off the cost of each item of property, plant and equipment to its residual value over its estimated useful life.

 

Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end.

 

An item of property, plant and equipment including any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognized in profit or loss in the year the asset is derecognized is the difference between the net sales proceeds and the carrying amount of the relevant asset.

 

F-14

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

3. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

 

  (m) Intangible assets

 

Intangible assets acquired separately

 

Intangible assets with finite useful lives that are acquired separately are carried at costs less accumulated amortization and any accumulated impairment losses. Amortization for intangible assets with finite useful lives is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

 

Intangible asset acquired in a business combination

 

Intangible asset acquired in a business combination are recognized separately from goodwill and are initially recognized at their fair value at the acquisition date (which is regarded as their cost).

 

Subsequent to initial recognition, intangible assets acquired in a business combination with finite useful lives are reported at costs less accumulated amortization and any accumulated impairment losses being their fair value at the date of the revaluation less subsequent accumulated amortization and any accumulated impairment losses, on the same basis as intangible assets that are acquired separately. Intangible assets acquired in a business combination with indefinite useful lives are carried at cost less any subsequent accumulated impairment losses.

 

An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains and losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is derecognized.

 

  (n) Taxation

 

Income tax comprises current and deferred tax. Income tax relating to items recognized outside profit or loss is recognized outside profit or loss, either in other comprehensive income or directly in equity.

 

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the countries in which the Group operates.

 

Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

  

F-15

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

3. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

 

  (o) Financial instruments  - Investments and other financial assets

 

The Group’s financial assets are classified into financial assets at fair value through profit or loss and loans and receivables. The classification depends on nature and purpose of financial assets and is determined at the time of initial recognition.

 

Financial assets at fair value through profit or loss

 

Equity investments are generally measured at fair value with changes in fair value recognized through profit or loss.

 

Loans and receivables

 

Loans and receivables are classified as either held-for-sale or held-for-investment. When the Group holds an originated or purchased loans or receivables for which it has the intent and ability to hold for the foreseeable future or to maturity or payoff, the loans or receivables should be classified as held-for-investment. Loans and receivables held-for-investment are measured at their amortized cost. If the Group intends to sell loans or receivables, the loans or receivables should be classified as held for sale. Loans and receivables classified as loans held for sale are measured at the lower of cost or fair value, or carried at fair value if the fair value option is elected.

 

All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.

 

Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

 

Subsequent measurement

 

The subsequent measurement of financial assets depends on their classification as follows:

 

Financial assets at amortized cost

 

Financial assets at amortized cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognized in the consolidated statements of profit or loss when the asset is derecognized, modified or impaired.

 

The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income and interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts and payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

 

Financial assets at fair value through profit or loss

 

Financial assets at fair value through profit or loss are carried in the consolidated statements of financial position at fair value with net changes in fair value recognized in profit or loss.

 

This category includes derivative instruments and equity investments which the Group had not irrevocably elected to classify at fair value through other comprehensive income. Dividends income which is derived from Group’s ordinary course of business is recognized as revenue in the consolidated statements of profit or loss when the right of payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.

 

F-16

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

3. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

 

(p)Derecognition of financial assets

 

Financial assets are derecognized when the Group surrenders control over those assets. The Group has surrendered control over transferred assets only if all the following conditions are met.

 

●Legal control: The transferred assets is isolated from the Group, i.e. put legally beyond the reach of the Group.

 

●Actual control: (i) the transferee has the right to pledge or exchange the assets (or beneficial interests) that it received; and (ii) no condition both (a) constrains the transferee from taking advantage of its right to pledge or exchange and (b) provides more than a trivial benefit to the Group.

 

●Effective control: The Group does not maintain effective control over the transferred financial assets or third party beneficial interests related to those transferred assets.

 

In derecognizing a transferred financial assets, a gain or loss is recognized based on the difference between the carrying amount of the financial assets of the carrying amount and the sum of the proceeds received for the asset or the participating interest derecognized.

 

(q)Impairment of financial assets

 

The Group utilizes the expected credit losses (“ECL”) model to determine an allowance that reflects its best estimate of the expected credit losses on accounts receivable, prepayments, deposits and other receivables which is recorded as a liability to offset the receivables. The ECL model is prepared after considering historical experience, current conditions, and reasonable and supportable economic forecasts to estimate expected credit losses. Accounts receivable, prepayments, deposits and other receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded as a reduction of bad debt expense.

 

The Group uses simplified flow rate matrix approach to estimate expected credit losses for the accounts receivable. The allowance for credit loss is estimated for accounts receivable that share similar risk characteristics based on a collective assessment using a combination of measurement models and management judgment. The approach considers factors including historical aging schedule and forward-looking macroeconomic conditions.

 

The allowance for expected credit loss is disclosed accordingly in the relevant notes.

 

General approach

 

The ECL model is based on a single measurement approach of full lifetime ECL throughout the life of an instrument.

 

Interest income is calculated based on the gross carrying amount of the financial asset unless the financial asset is credit-impaired, in which case interest income is calculated based on amortized cost of the financial asset.

 

F-17

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

3. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

 

(q)Impairment of financial assets - (Continued)

 

Credit-impaired financial assets

 

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

 

a)significant financial difficulty of the issuer or the borrower;

 

b)a breach of contract, such as a default or past due event;

 

c)the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;

 

d)it is becoming probable that the borrower will enter bankruptcy or other financial reorganization; or

 

e)the disappearance of an active market for that financial asset because of financial difficulties.

 

Write-off policy

 

The Group writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, for example, when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings.

 

Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice where appropriate. A write-off constitutes a derecognition event. Any subsequent recoveries are recognized in profit or loss.

 

Measurement and recognition of ECL

 

The measurement of ECL is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data and forward-looking information. Estimation of ECL reflects an unbiased and probability-weighted amount that is determined with the respective risks of default occurring as the weights.

 

Generally, the ECL is the difference between all contractual cash flows that are due to the Group in accordance with the contract and the cash flows that the Group expects to receive, discounted at the effective interest rate determined at initial recognition.

 

ECL for trade receivables from contract with customers are considered on a collective basis taking into consideration past due information and relevant credit information such as forward looking macroeconomic information.

 

For collective assessment, the Group takes into consideration the following characteristics when formulating the grouping:

 

●Past-due status;

 

●Nature, size and industry of debtors; and

 

●External credit ratings where available.

 

The grouping is regularly reviewed by management to ensure the constituents of each group continue to share similar credit risk characteristics.

 

Interest income is calculated based on the gross carrying amount of the financial asset unless the financial asset is credit-impaired, in which case interest income is calculated based on amortized cost of the financial asset.

 

The Group recognizes an impairment gain or loss in profit or loss for all financial instruments by adjusting their carrying amount, with the exception of trade receivables from contracts with customers where the corresponding adjustment is recognized through a loss allowance account.

 

F-18

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

3. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

 

(r)Financial liabilities

 

Initial recognition and measurement

 

Financial liabilities are classified, at initial recognition, as financial liabilities at amortized cost or at fair value through profit or loss (warrants and derivative financial instruments), as appropriate.

 

All financial liabilities are recognized initially at fair value and, in the case of financial liabilities at amortized cost, net of directly attributable transaction costs. Transaction costs directly attributable to the acquisition of financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.

 

The Group’s financial liabilities include accounts payable, bank borrowings, financial liabilities included in other payables and accruals, derivative financial liability and convertible bond.

 

Subsequent measurement

 

The subsequent measurement of financial liabilities depends on their classification as follows:

 

Financial liabilities at amortized cost

 

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate amortization process.

 

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortization is included in finance costs in profit or loss.

 

F-19

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

3. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

 

(s)Derecognition of financial liabilities

 

A financial liability is derecognized when the obligation under the liability is discharged or canceled, or expires.

 

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognized in profit or loss.

 

(t)Classification as debt or equity

 

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

 

(u)Equity instruments

 

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.

 

Repurchase of the Company’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancelation of the Company’s own equity instruments.

 

  (v) Cash and cash equivalents

 

Cash and cash equivalents presented on the consolidated statement of financial position include:

 

  (a) cash, which comprises of cash on hand and demand deposits, excluding bank balances that are subject to regulatory restrictions that result in such balances no longer meeting the definition of cash; and

 

  (b) cash equivalents, which comprises of short-term (generally with original maturity of three months or less), highly liquid investments that are readily convertible to a known amount of cash and which are subject to an insignificant risk of changes in value. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

 

For the purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above.

 

F-20

 

 

AMTD DIGITAL INC. 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

3. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

 

  (w) Fiduciary bank balances

 

The fiduciary bank balances are in relation to the money deposited by clients in the course of the conduct of the regulated activities under insurance brokerage business. These clients’ monies are maintained in segregated bank accounts. The Group acts as an agent in placing the insurable risks of their clients with insurers and, as such, generally is not entitled to the premiums or liable for claims arising from such transactions. Other than the commissions earned on the transaction which is recognized as revenue of the Group, the Group does not recognize other amounts received from clients in its profit or loss. The clients’ money is recognized in fiduciary bank balances and a corresponding deposit liability is established in favor of the insurer or the policyholder and recognized on the consolidated statements of financial position as clients’ monies held on trust. However, the Group does not have a currently enforceable right to offset those payables with the deposits placed and the Group is entitled to retain the interest income on any cash balances arising from these transactions.

 

  (x) Investments in joint ventures

 

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

 

The Group’s investment in joint ventures are stated in the consolidated statement of financial position at cost and the Group’s share of net assets under the equity method of accounting, less any impairment losses. The financial statements of joint ventures used for equity accounting purposes are prepared using uniform accounting policies as those of the Group for similar transactions and events in similar circumstances. Appropriate adjustments have been made to conform the joint venture’s accounting policies to those of the Group. The Group’s share of the post-acquisition results and other comprehensive income of joint ventures is included in the consolidated statement of profit or loss and consolidated statement of comprehensive income, respectively. Changes in net assets of joint venture other than profit or loss and other comprehensive income are not accounted for unless such changes resulted in changes in ownership interest held by the Group. When the Group’s share of losses of a joint venture exceeds the Group’s interest in that joint venture exceeds the Group’s interest in that joint venture, the Group discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture.

 

On acquisition of the investment in a joint venture, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognized immediately in profit or loss in the period in which the investment is acquired.

 

F-21

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

3. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

 

  (x) Investments in joint ventures - (Continued)

 

Impairments of investments in joint ventures are recognized only if the impairment are other than temporary. Evidence of a loss in value might include, but would not necessarily be limited to, absence of an ability to recover the carrying amount of the investment or inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment. A fair value of investments in joint ventures that is less than its carrying amount may indicate a loss in investments in joint ventures. An impairment loss of investments in joint ventures that is other than a temporary decline is recognized to profit or loss and such impairment loss cannot be reversed subsequently.

 

When a group entity transacts with a joint venture of the Group, profits and losses resulting from the transactions with the joint venture are recognized in the Group’s consolidated financial statements only to the extent of interests in the joint venture that are not related to the Group.

 

  (y) Non-current assets held for sale

 

Non-current assets (and disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

 

When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in the relevant subsidiary after the sale.

 

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell, except for financial assets within the scope of IFRS 9, which continue to be measured in accordance with the accounting policies as set out in respective sections.

 

  (z) Borrowing costs

 

Borrowing costs not directly attributable to the acquisition, construction or production of qualifying assets are recognized as expenses in profit or loss in the period in which they are incurred.

 

F-22

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

4. KEY SOURCES OF ESTIMATION UNCERTAINTY

 

In the application of the Group’s accounting policies, which are described in note 3, the Company is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

 

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

 

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of each reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

 

Fair value of unlisted equity investments and movie income right investments

 

The Group’s unlisted equity instruments and movie income right investments are measured at fair value with fair value being determined based on significant unobservable inputs using valuation techniques. Judgment and estimation are required in establishing the relevant valuation techniques and the relevant inputs thereof. Changes in assumptions relating to these factors could result in material adjustments to the fair value of these instruments.

 

Credit risk management and ECL estimation

 

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure of its counterparties is continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the management periodically.

 

The carrying amount of financial assets recorded in the consolidated financial statements, grossed up for any allowances for losses, represents the Group’s maximum exposure to credit risk.

 

Other than accounts receivable mentioned in note 21, the credit risk on liquid funds is limited because the counterparties are mainly banks with sound credit. The directors of the Company consider the credit risk on other receivables are not significant after considering counterparties’ financial background and creditability. As of April 30, 2021, 2022 and 2023 and October 31, 2023, the ECL of other receivables is considered as insignificant.

 

The directors of the Company continuously monitor the credit quality and financial position of the immediate holding company and the level of exposure to ensure that the follow-up action is taken to recover the debt. The directors of the Company make individual assessment based on historical settlement records, past experience, and also quantitative and qualitative information that are reasonable and supportive forward-looking information (i.e. the forecasted default rate expected by the international credit-rating agencies). As of April 30, 2021, 2022 and 2023 and October 31, 2023, the ECL of amount due from immediate holding company is considered as insignificant.

 

F-23

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

5. REVENUE

 

  Disaggregation of revenue from contracts with customers

 

Year ended April 30, 2021

 

Segments  Digital solutions
services —
non financial
services		   Digital solutions
services —
financial
services		   Digital media,
content, and
marketing
services
and others		   Total 
   US$   US$   US$   US$ 
Types of services                
Digital solutions services — non financial services   23,740    —    —    23,740 
Digital solutions services — financial services   —    1,511    —    1,511 
Total   23,740    1,511    —    25,251 
Timing of revenue recognition                    
A point in time   —    1,511    —    1,511 
Over time   23,740    —    —    23,740 
Total   23,740    1,511    —    25,251 

 

Year ended April 30, 2022

 

Segments  Digital solutions
services —
non financial
services		   Digital solutions
services —
financial
services		   Digital media,
content, and
marketing
services
and others		   Total 
   US$   US$   US$   US$ 
Types of services                
Digital solutions services — non financial services   23,689    —    —    23,689 
Digital solutions services — financial services   —    1,514    —    1,514 
Digital media, content, and marketing services   —    —    68    68 
Total   23,689    1,514    68    25,271 
Timing of revenue recognition                    
A point in time   —    1,514    —    1,514 
Over time   23,689    —    68    23,757 
Total   23,689    1,514    68    25,271 

 

F-24

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

5. REVENUE - (CONTINUED)

 

  Disaggregation of revenue from contracts with customers - (Continued)

 

Year ended April 30, 2023

 

Segments  Digital solutions
services —
non financial
services		   Digital solutions
services —
financial
services		   Hotel
operations,
hospitality
and VIP
services		   Digital media,
content, and
marketing
services
and others		   Total 
   US$   US$   US$   US$   US$ 
Types of services                    
Digital solutions services — non financial services   28,037    —    —    —    28,037 
Digital solutions services — financial services   —    1,540    —    —    1,540 
Digital media, content, and marketing services   —    —    —    1,294    1,294 
Hotel operations, hospitality and VIP services   —    —    2,195    —    2,195 
Total   28,037    1,540    2,195    1,294    33,066 
Timing of revenue recognition                         
A point in time   —    1,540    —    —    1,540 
Over time   28,037    —    2,195    1,294    31,526 
Total   28,037    1,540    2,195    1,294    33,066 

 

Six months ended October 31, 2023

 

Segments  Digital solutions
services —
non financial
services		   Digital solutions
services —
financial
services		   Hotel
operations,
hospitality
and VIP
services		   Digital media,
content, and
marketing
services
and others		   Total 
   US$   US$   US$   US$   US$ 
Types of services                    
Digital solutions services — non financial services   1,278    —    —    —    1,278 
Digital solutions services — financial services   —    486    —    —    486 
Digital media, content, and marketing services   —    —    —    27    27 
Hotel operations, hospitality and VIP services   —    —    6,882    —    6,882 
Total   1,278    486    6,882    27    8,673 
Timing of revenue recognition                         
A point in time   —    486    —    —    486 
Over time   1,278    —    6,882    27    8,187 
Total   1,278    486    6,882    27    8,673 

  

F-25

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

6. OPERATING SEGMENTS

 

The Group operates its businesses in four operating segments: digital solutions services — non financial services segment, digital solutions services — financial services segment, hotel operations, hospitality and VIP services segment and digital media, content, and marketing services and others segment. The following summary describes the operations in each of the Group’s reportable segment.

 

  (a) The digital solutions services — non financial services segment: The Group provides its institutional and corporate clients with exclusive access to the membership program;

 

  (b) The digital solutions services — financial services segment: The Group provides primarily corporate clients with insurance brokerage services;

 

(c)Hotel operations, hospitality and VIP services segment: The Group engages in hotel investments, hotel operations, hospitality and VIP services since the acquisition of AMTD Assets in February 2023; and

 

(d)The digital media, content, and marketing services and others segment: The Group engages in digital media, content, and marketing business in which the Group creates and promotes digital solutions content by investing in and developing multimedia channels to provide users and audiences access to content medium through a comprehensive library of traditional and digital movies, podcasts, webinars and live videos offered by content providers and online media platforms and invests in innovative technology companies which operate digital non financial  license businesses through strategic investments.

 

Segment revenues and results

 

The following is an analysis of the Group’s revenues and results by operating and reportable segments:

 

For the year ended April 30, 2021

 

   Digital
solutions
services —
non financial
services		   Digital
solutions
services —
financial
services		   Digital media,
content, and
marketing
services
and others		   Consolidated 
   US$   US$   US$   US$ 
Segment revenues                
Revenue from external customers   22,777    1,438    —    24,215 
Revenue from related parties   963    73    —    1,036 
    23,740    1,511    —    25,251 
Changes in fair value on financial assets measured at FVTPL   —    —    9,063    9,063 
Segment profits   18,605    140    9,130    27,875 
Unallocated:                    
Other gains and losses                  (39)
Corporate expenses                  (2,529)
Profit before tax                  25,307 

 

F-26

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

6. OPERATING SEGMENTS - (CONTINUED)

 

Segment revenues and results - (Continued)

 

For the year ended April 30, 2022

 

   Digital solutions
services —
non financial
services		  Digital solutions
services —
financial
services		   Digital media,
content, and
marketing
services
and others		   Consolidated 
   US$   US$   US$   US$ 
Segment revenues                
Revenue from external customers   22,047    1,430    68    23,545 
Revenue from related parties   1,642    84    —    1,726 
    23,689    1,514    68    25,271 
Changes in fair value on financial assets measured at FVTPL   —    —    16,940    16,940 
Segment profits   17,527    122    17,491    35,140 
Unallocated:                    
Other income                  4 
Other gains and losses                  609 
Corporate expenses                  (6,883)
Profit before tax                  28,870 

 

For the year ended April 30, 2023

 

   Digital solutions
services —
non financial
services		   Digital solutions
services —
financial
services		   Hotel
operations,
hospitality
and VIP
services		   Digital media,
content, and
marketing
services
and others		   Consolidated 
   US$   US$   US$   US$   US$ 
Segment revenues                    
Revenue from external customers   25,869    1,480    2,195    1,294    30,838 
Revenue from related parties   2,168    60    —    —    2,228 
    28,037    1,540    2,195    1,294    33,066 
Changes in fair value on financial assets measured at FVTPL   —    —    —    15,386    15,386 
Segment profits/(losses)   21,470    87    (1,185)   19,287    39,659 
Unallocated:                         
Other income                       13,330 
Other gains and losses                       153 
Corporate expenses                       (7,844)
Profit before tax                       45,298 

 

F-27

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

6. OPERATING SEGMENTS - (CONTINUED)

 

Segment revenues and results - (Continued)

 

For the six months ended October 31, 2023

 

   Digital solutions
services —
non financial
services		  Digital solutions
services —
financial
services		  Hotel
operations,
hospitality
and VIP
services		  Digital media,
content, and
marketing
services
and others		  Consolidated
   US$  US$  US$  US$  US$
Segment revenues               
Revenue from external customers   —    453    6,882    27    7,362 
Revenue from related parties   1,278    33    —    —    1,311 
    1,278    486    6,882    27    8,673 
Changes in fair value on financial assets measured at FVTPL   —    —    —    16,279    16,279 
Segment profits/(losses)   486    (707)   (2,189)   16,114    13,704 
Unallocated:                         
Other income                       8,988 
Other gains and losses                       14,342 
Corporate expenses                       (4,257)
Profit before tax                       32,777 

 

The accounting policies of the operating segments are the same as the Group’s accounting policies described in note 3. Segment profits (losses) represents the profit earned by/loss from each segment without allocation of certain other income, other gains and losses, corporate expenses, including central administration costs and directors’ emoluments. This is the measure reported to the CODM for the purposes of resources allocation and performance assessment.

 

The CODM makes decisions according to operating results of each segment. No analysis of segment asset and segment liability is presented as the CODM does not regularly review such information for the purposes of resources allocation and performance assessment. Therefore, only segment revenue and segment results are presented.

 

Geographical information

 

During the year ended April 30, 2021, the Group’s revenue from external customers, based on the location of services, are US$24,950 and US$301 which are derived from Hong Kong and Singapore, respectively. The Group’s non-current assets, excluding non-current financial instruments, based on the location of assets, of US$ 6 and US$14,250 reside in Hong Kong and Singapore, respectively, at April 30, 2021.

 

During the year ended April 30, 2022, the Group’s revenue from customers, based on the location of services, are US$25,158 and US$113 which are derived from Hong Kong and Singapore, respectively. The Group’s non-current assets, excluding non-current financial instruments, based on the location of assets, of US$4 and US$12,129 reside in Hong Kong and Singapore, respectively, at April 30, 2022.

 

During the year ended April 30, 2023, the Group’s revenue from customers, based on the location of services, are US$31,736, US$1,107 and US$223 which are derived from Hong Kong, Canada and Singapore, respectively. The Group’s non-current assets, excluding non-current financial instruments, based on the location of assets/operations, of US$70,236, US$64,102 and US$24,597 reside in Hong Kong, Canada and Singapore, respectively, at April 30, 2023.

 

During the six months ended October 31, 2023, the Group’s revenue from customers, based on the location of services, are US$4,536, US$4,067 and US$70 which are derived from Hong Kong, Canada and Singapore, respectively. The Group’s non-current assets, excluding non-current financial instruments, based on the location of assets/operations, of US$69,871 and US$16,775 reside in Hong Kong and Singapore, respectively, at October 31, 2023.

 

F-28

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

7. FINANCE COSTS

 

   Year ended April 30,   Six months
ended
October 31,		 
   2021   2022   2023   2023 
   US$   US$   US$   US$ 
Interest on bank borrowings   —    —    769    617 
Interest on amount due to a non-controlling shareholder   —    —    426    2,786 
    —    —    1,195    3,403 

 

8. CHANGES IN FAIR VALUE ON FINANCIAL ASSETS MEASURED AT FVTPL

 

Details of the disposal of financial assets at FVTPL are disclosed in note 20. 

 

9. OTHER INCOME

 

   Year ended April 30,   Six months
ended
October 31,		 
   2021   2022   2023   2023 
   US$   US$   US$   US$ 
Bank and other interest income   18    743    15,945    8,988 
Government grant    152    117    56    — 
Others   1    7    51    — 
    171    867    16,052    8,988 

 

10. OTHER GAINS AND LOSSES, NET

 

   Year ended April 30,   Six months
ended
October 31,		 
   2021   2022   2023   2023 
   US$   US$   US$   US$ 
Net exchange (loss) gain   (48)   589    151    (356)
Recovery of accounts and other receivables written off   9    20    2    1 
Gain on disposal of subsidiaries   —    —    —    14,697 
    (39)   609    153    14,342 

 

During the six months ended October 31, 2023, the Company were disposed of certain subsidiaries which principally engaged in digital solution services – non financial services.

 

F-29

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

11. INCOME TAX EXPENSE

 

   Year ended April 30,   Six months
ended
October 31,		 
   2021   2022   2023   2023 
   US$   US$   US$   US$ 
Hong Kong Profits Tax                
- Current tax   3,282    3,207    4,630    1,393 
- (Over) underprovision in prior years   (3)   (36)   (5)   704 
Deferred tax (note 25)   (106)   (141)   (140)   (106)
    3,173    3,030    4,485    1,991 

 

Under the two-tiered profits tax rates regime in Hong Kong, the first HK$2 million of profits of the qualifying group entity is taxed at 8.25%, and profits above HK$2 million is taxed at 16.5%. The profits of group entities not qualifying for the two-tiered profits tax rates regime continue to be taxed at a flat rate of 16.5%.

 

Singapore CIT is calculated at 17.0% on the estimated assessable profit. No provision for taxation in Singapore has been made as the relevant group entities have no assessable profits during the years ended April 30, 2021, 2022 and 2023 and six months ended October 31, 2023.

 

The Company’s subsidiaries established in Canada is subject to Federal and Ontario provincial income taxes at an aggregate rate of 33%. Since the acquisition of AMTD Assets in February 2023, no provision for taxation in Canada has been made as the relevant group entities have no assessable profits.

 

The income tax expense for the year/period can be reconciled to the profit before tax per the consolidated statements of profit or loss and other comprehensive income as follows:

 

   Year ended April 30,   Six months
ended
October 31,		 
   2021   2022   2023   2023 
   US$   US$   US$   US$ 
Profit before tax   25,307    28,870    45,298    32,777 
Tax at the domestic income tax rate of 16.5%   4,176    4,764    7,474    5,408 
Tax effect of income not taxable for tax purpose   (2,156)   (3,168)   (3,070)   (5,325)
Tax effect of expenses not deductible for tax purpose   968    1,010    51    58 
Tax effect of share of losses of joint ventures   —    —    66    220 
Tax effect of tax losses not recognized   202    457    289    931 
Utilization of tax losses previously not recognized   —    —    (298)   — 
(Over) underprovision in prior years   (3)   (36)   (5)   704 
Effect of different tax rates of subsidiaries operating in other jurisdictions   (9)   3    (20)   (5)
Others   (5)   —    (2)   — 
Income tax expense for the year/period   3,173    3,030    4,485    1,991 

 

The Group has unused tax losses of US$1,860, US$1,806, US$60,865 and US$66,507 at April 30, 2021, 2022 and 2023 and October 31, 2023, available for offset against future profits, respectively. No deferred tax asset has been recognized in respect of these tax losses due to the unpredictability of future profit streams. The tax losses may be carried forward indefinitely.

 

F-30

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

12. PROFIT FOR THE YEAR/PERIOD

 

Profit for the year/period has been arrived at after charging:

 

   Year ended April 30,   Six months
ended
October 31,		 
   2021   2022   2023   2023 
   US$   US$   US$   US$ 
Staff costs                    
Salaries, allowances and other benefits   6,026    9,125    9,735    2,997 
Retirement benefit scheme contributions (note)   167    168    133    77 
Share of losses of joint ventures (including in other expenses)   —    —    404    1,366 
Depreciation and amortization   631    846    1,312    1,441 

 

Note:The Group operates a Mandatory Provident Fund Scheme and Central Provident Fund Scheme for all qualifying employees in Hong Kong and Singapore, respectively. The assets of the schemes are held separately from those of the Group, in funds under the control of trustees.

 

13. EARNINGS PER SHARE

 

The calculation of the basic and diluted earnings per share attributable to owners of the Company is based on the following data:

 

   Year ended April 30,   Six months
ended
October 31,		 
Earnings figures are calculated as follows:  2021   2022   2023   2023 
   US$   US$   US$   US$ 
Earnings for the purpose of basic and diluted earnings per share   22,937    27,493    42,059    31,940 

 

   Year ended April 30,   Six months
ended
October 31,		 
Number of shares  2021   2022   2023   2023 
Weighted average number of ordinary shares for the purpose of basic earnings per share   52,919,515    67,579,432    74,159,933    76,602,929 
Effect of dilutive potential ordinary shares - restricted ordinary shares and restricted shares unit   7,185    28,492    47,236    51,941 
Weighted average number of ordinary shares for the purpose of diluted earnings per share   52,926,700    67,607,924    74,207,169    76,654,870 

 

14. ACQUISITIONS OF SUBSIDIARIES

 

(a)Acquisition of AMTD Assets in 2023

 

In August 2022, AMTD IDEA Group and the Company had entered into certain agreements pursuant to which the Company acquired 96.1% of the equity interest in AMTD Assets, which holds a global portfolio of premium whole building properties, from AMTD Group at a consideration, to be settled by 515,385 Class B ordinary shares of the Company (“Consideration Shares”) at agreed share price of US$520 per share of the Company for the Group’s expansion to hotel operations, hospitality and VIP services business.

 

F-31

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

14. ACQUISITIONS OF SUBSIDIARIES - (CONTINUED)

 

(a)Acquisition of AMTD Assets in 2023 - (Continued)

 

The transaction was completed and AMTD Assets was consolidated by Company since February 6, 2023 based on business combination under common control using predecessor accounting prospectively. The difference between the consideration and the net asset value of AMTD Assets, amounting to approximately US$274,831, was recorded in capital reserve within the consolidated statement of changes in equity. The Consideration Shares were settled by treasury shares of the Company with repurchase price of US$266,647.

 

No acquisition-related cost has been recognized as an expense for the year ended April 30, 2023.

 

Assets acquired and liabilities recognized at the date of acquisition:

 

   US$ 
Interests in joint ventures   24,726 
Property, plant and equipment   135,592 
Cash and cash equivalents   3,860 
Accounts receivable   527 
Prepayments, deposits and other receivables   20,365 
Amount due from a non-controlling shareholder   637 
Accounts payable   (311)
Other payables and accruals   (1,582)
Contract liabilities   (688)
Bank borrowings   (50,849)
Amount due to a non-controlling shareholder   (53,464)
Amount due to AMTD Group   (81,972)
    (3,159)

 

Reserves arising on acquisition:    
     
Consideration transferred   266,647 
Plus: non-controlling interests of AMTD Assets   (336)
Plus: non-controlling interests of AMTD Assets’ subsidiaries   5,361 
Less: recognized amounts of net assets acquired   3,159
    274,831 

 

Net cash inflow on acquisition of AMTD Assets:

 

Cash consideration paid   — 
Add: cash and cash equivalent balances acquired   3,860 
    3,860 

 

F-32

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

14. ACQUISITIONS OF SUBSIDIARIES - (CONTINUED)

 

  (b) Acquisition of PolicyPal Pte Ltd. (“PolicyPal”) in 2020

 

On August 3, 2020, the Group acquired 51% of the issued share capital of PolicyPal for a consideration of US$3,000 in cash and 702,765 of Class A ordinary shares of the Company. This acquisition has been accounted for using the acquisition method. The amount of goodwill arising as a result of the acquisition was US$7,566. PolicyPal operates a digital insurance brokerage business under direct insurance and exempt financial adviser license issued by the Monetary Authority of Singapore (“MAS”) in relation to advising on investment products that are life policies and arranging of life policies in Singapore, other than for reinsurance. The acquisition of PolicyPal, which is included in the digital solutions services — financial services segment, was in line with the Group’s digital solutions services strategy.

 

Consideration transferred:

 

   US$ 
Cash   3,000 
Ordinary shares of the Company   8,725 
Total   11,725 

 

As part of the consideration for the acquisition of PolicyPal, 702,765 of Class A ordinary shares of the Company were issued. The fair value of the ordinary shares of the Company is determined with assistance from an independent valuation firm. Details of the movement of share capital are set out in note 26(c).

 

Acquisition-related costs amounting to US$7 have been excluded from the consideration transferred and have been recognized as an expense, within the other expenses line item in the consolidated statement of profit or loss and other comprehensive income for the year ended April 30, 2021.

 

Assets acquired and liabilities recognized at the date of acquisition:

 

   US$ 
Property, plant and equipment   4 
Intangible asset   5,836 

Accounts receivable, deposits and other receivables

   38 
Cash and cash equivalents   5,673 
Accounts and other payables   (2,398)
Deferred tax liability   (992)
    8,161 

 

F-33

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

14. ACQUISITIONS OF SUBSIDIARIES - (CONTINUED)

 

(b)Acquisition of PolicyPal in 2020 - (Continued)

 

Assets acquired and liabilities recognized at the date of acquisition - (Continued):

 

The gross contractual amounts of those trade and other receivables acquired amounted to US$38. In 2021, all of the acquired trade and other receivables have been collected.

 

The intangible asset represents the developed technology. Such intangible asset is amortized on a straight-line basis over 7 years.

 

Goodwill arising on acquisition:

 

   US$ 
Consideration transferred   11,725 
Plus: non-controlling  interests (49% in PolicyPal)   4,002 
Less: net assets acquired   (8,161)
Goodwill arising on acquisition   7,566 

 

The  non-controlling  interests (49%) in PolicyPal recognized at the acquisition date was measured at their proportionate share of net assets acquired.

 

Goodwill arose in the acquisition of PolicyPal because the cost of the combination included a control premium. In addition, the consideration paid for the acquisition effectively included amounts in relation to the benefit of expected synergies, revenue growth, future market development and the assembled workforce of PolicyPal. These benefits are not recognized separately from goodwill because they do not meet the recognition criteria for identifiable intangible asset.

 

None of the goodwill arising on these acquisitions is expected to be deductible for tax purposes.

 

Net cash inflow on acquisition of PolicyPal:

 

   US$ 
Cash consideration paid   (3,000)
Add: cash and cash equivalents balances acquired   5,673 
    2,673 

 

Impact of the acquisition on the results of the Group:

 

The profit of the Group for the year ended April 30, 2021 includes loss of US$1,119 attributable from PolicyPal. Revenue of the Group for the year ended April 30, 2021 includes US$301 attributable from PolicyPal.

 

Had the acquisition been completed on May 1, 2020, revenue for the year ended April 30, 2021 of the Group would have been US$25,351, and profit for the year ended April 30, 2021 of the Group would have been US$21,761. The pro forma information is for illustrative purposes only and is not necessarily an indication of revenue and results of operations of the Group that actually would have been achieved had the acquisition been completed on May 1, 2020, nor is it intended to be a projection of future results.

 

In determining the  pro-forma revenue and profit of the Group had PolicyPal been acquired at the beginning of the current year, the directors of the Company have calculated depreciation of plant and equipment and amortization of intangible asset acquired on the basis of the fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the  pre-acquisition financial statements.

 

F-34

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

15. ASSETS CLASSIFIED AS HELD FOR SALE/ LIABILITIES ASSOCIATED WITH ASSETS CLASSIFIED AS HELD FOR SALE

 

In April 2023, the Company entered into an agreement to dispose of part of its digital solutions services — financial services. In October 2023, the Company intended to dispose of part of its hotel operations, hospitality and VIP services. The assets and liabilities attributable to these businesses, which are expected to be sold within twelve months, have been classified as disposal groups held for sale and are presented separately in the consolidated statement of financial position (see below). The disposal group is part of the Group’s digital solutions services — financial services segment as of April 30, 2023 and October 31, 2023 and part of hotel operations, hospitality and VIP services as of October 31, 2023. The net proceeds of disposal are expected to exceed the net carrying amount of the relevant assets and liabilities and accordingly, no impairment loss has been recognized. Both disposal groups are disposed subsequently to October 31, 2023.

 

The major classes of assets and liabilities of the disposal groups classified as held for sale are as follows:

 

   As of
April 30,
2023		   As of
October 31,
2023		 
   US$   US$ 

Goodwill

   7,484    7,500 
Property, plant and equipment   3    62,953 
Intangible assets   3,505    3,099 
Accounts receivable   27    530 
Prepayments, deposits and other receivables   1    214 
Due from a minority shareholder of subsidiaries   —    2,182 
Fiduciary bank balances   330    321 
Cash and cash equivalents   731    246 
Total assets classified as held for sale   12,081    77,045 
           
Client’s monies held on trust   (23)   — 
Accounts payable    —    (484)
Due to AMTD Group   —    (15,233)
Other payables and accruals   (408)   (1,668)
Deferred tax liability   (599)   (527)
Total liabilities associated with assets classified as held for sale   (1,030)   (17,912)

 

16. INTERESTS IN JOINT VENTURES

 

   As of April 30,   As of
October 31,		 
   2021   2022   2023   2023 
   US$   US$   US$   US$ 
Cost of investments in joint ventures net of accumulated share of loss and other comprehensive expense   —    —    (5,749)   (6,999)
Due from joint ventures   —    —    30,346    23,774 
    —    —    24,597    16,775 

 

Amounts due from joint ventures are unsecured, interest-free and repayable on demand.

 

Details of material joint ventures as at April 30, 2023 and October 31, 2023 are as follows:

 

Name  Place of
incorporation		   Percentage of
ownership
interest held
by the
Company		   Principal activity
DHI Holdings (S) Pte Ltd.   Singapore    51%  Hotel operations, hospitality
and VIP services in
Singapore

 

F-35

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

16. INTERESTS IN JOINT VENTURES - (CONTINUED)

 

The following table illustrates the summarized financial information in respect of the joint ventures adjusted for any differences in accounting policies and reconciled to the carrying amount in the consolidated financial statements:

 

   As of
April 30,
2023		   As of
October 31,
2023		 
   US$   US$ 
Total assets   215,425    196,343 
Total liabilities   (226,698)   (210,067)
Net liabilities   (11,273)   (13,724)
Proportion of the Group’s ownership   51%   51%
Group’s share of net assets of joint ventures   (5,749)   (6,999)
Due from joint ventures   30,346    23,774 
Interests in joint ventures   24,597    16,775 
Additional information of the joint ventures          
Cash and cash equivalents   16,009    4,117 
Amounts due to shareholders   (57,914)   (46,415)
Bank borrowings   (162,257)   (157,818)

 

   February 6,
2023 to
April 30,
2023		  May 1,
2023 to
October 31,
2023
   US$  US$
Revenue   6,100    20,162 
Loss for the period   (792)   (2,678)
Other comprehensive expense for the period   739    227 
Total comprehensive income for the period   (53)   (2,451)

 

17. GOODWILL

 

   US$ 
COST    
As of May 1, 2020   — 
Acquisition of subsidiaries (note 14(b))   7,566 
Exchange realignment   (9)
As of April 30, 2021   7,557 
Exchange realignment   (80)
As of April 30, 2022   7,477 
Reclassified as held for sale (note 15)   (7,484)
Exchange realignment   7 
As of April 30, 2023 and October 31, 2023   — 

 

F-36

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

17. GOODWILL - (CONTINUED)

 

For the purpose of impairment testing as of April 30, 2021 and 2022, goodwill has been allocated to a cash-generating unit providing digital solutions services — financial services. The recoverable amount of this cash-generating unit has been determined based on value in use calculation which uses cash flow projections based on financial budgets approved by management covering a 5-year period, and pre-tax discount rate of 28.03% for the years ended April 30, 2021 and 2022, respectively. Cash flows beyond the 5-year period are extrapolated using a steady 1.5% growth rate for the years ended April 30, 2021 and 2022, respectively. Other key assumptions for the value in use calculation relate to the estimation of cash inflows/outflows which include budgeted sales and gross margin and such estimation is based on this cash-generating unit’s past performance and management’s expectations for the market development. Based on the result of the assessment, management of the Group determined that the recoverable amount of the cash-generating unit is higher than the carrying amount. As of April 30, 2021 and 2022, the Company determined that there is no impairment of goodwill.

 

Management believes that any reasonably possible changes in any of these assumptions would not cause the carrying amount of this cash-generating unit to exceed its recoverable amount.

 

18. PROPERTY, PLANT AND EQUIPMENT

 

   Hotel
properties		   Computer
equipment		   Total 
   US$   US$   US$ 
COST            
As of May 1, 2020   —    —    — 
Acquisition of subsidiaries (note 14(b))   —    4    4 
Additions   —    22    22 
As of April 30, 2021   —    26    26 
Additions   —    6    6 
Exchange realignment   —    (1)   (1)
As of April 30, 2022   —    31    31 
Additions   —    2    2 
Acquired on acquisition of subsidiaries (note 14(a))   135,592    —    135,592 
Reclassified as held for sale (note 15)   —    (9)   (9)
Exchange realignment   (1,102)   —    (1,102)
As of April 30, 2023   134,490    24    134,514 
Additions   17    —    17 
Disposal of subsidiaries   —    (2)   (2)
Reclassified as held for sale (note 15)   (63,575)   —    (63,575)
Exchange realignment   (502)   —    (502)
As of October 31, 2023   70,430    22    70,452 
ACCUMULATED DEPRECIATION               
As of May 1, 2020   —    —    — 
Provided for the year   —    6    6 
As of April 30, 2021   —    6    6 
Provided for the year   —    9    9 
As of April 30, 2022   —    15    15 
Provided for the year   469    10    479 
Reclassified as held for sale (note 15)   —    (6)   (6)
Exchange realignment   —    (1)   (1)
As of April 30, 2023   469    18    487 
Provided for the period   995    3    998 
Disposal of subsidiaries   —    (1)   (1)
Reclassified as held for sale   (625)   —    (625)
Exchange realignment   —    1    1 
As of October 31, 2023   839    21    860 
CARRYING VALUES               
As of April 30, 2021   —    20    20 
As of April 30, 2022   —    16    16 
As of April 30, 2023   134,021    6    134,027 
As of October 31, 2023   69,591    1    69,592 

 

F-37

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

18. PROPERTY, PLANT AND EQUIPMENT - (CONTINUED)

 

The property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:

 

Computer equipment  5 years
Hotel properties  Over the shorter of the useful life ranged 40-75 years and the remaining lease terms

 

A hotel property of US$69,920 and US$69,591 was pledged for a bank borrowing (note 23) as at April 30, 2023 and October 31, 2023, respectively.

 

19. INTANGIBLE ASSETS

 

   Developed
technology		   Brand
name		   Total 
   US$   US$   US$ 
COST            
As of May 1, 2020   —    —    — 
Acquisition of subsidiaries (note (14(b))   5,836    —    5,836 
Exchange realignment   (6)   —    (6)
As of April 30, 2021   5,830    —    5,830 
Additions   151    177    328 
Exchange realignment   (68)   (2)   (70)
As of April 30, 2022   5,913    175    6,088 
Reclassified as held for sale (note 15)   (5,773)   —    (5,773)
Exchange realignment   14    —    14 
As of April 30, 2023 and October 31, 2023   154    175    329 
AMORTIZATION               
As of May 1, 2020   —    —    — 
Charge for the year   625    —    625 
As of April 30, 2021   625    —    625 
Charge for the year   829    8    837 
Exchange realignment   (14)   —    (14)
As of April 30, 2022   1,440    8    1,448 
Charge for the year   824    9    833 
Reclassified as held for sale (note 15)   (2,268)   —    (2,268)
Exchange realignment   4    —    4 
As of April 30, 2023   —    17    17 
Charge for the period   29    4    33 
As of October 31, 2023   29    21    50 
CARRYING VALUES               
As of April 30, 2021   5,205    —    5,205 
As of April 30, 2022   4,473    167    4,640 
As of April 30, 2023   153    158    311 
As of October 31, 2023   125    154    279 

 

During the year ended April 30, 2022, the Group acquired a brand name for its digital media, content, and marketing business with a cash consideration of US$177. In addition, PolicyPal, a subsidiary of the Company, acquired a wealth tech platform, which is a developed technology, with a consideration of US$151 of which US$101 was settled by issuing 619 ordinary shares of PolicyPal and US$50 was settled by cash during the year ended April 30, 2022.

 

The intangible assets are amortized on a straight-line basis as follows:

 

Developed technology  7 years
Brand name  20 years

 

For the purpose of impairment testing, the recoverable amount of this reporting unit has been determined using undiscounted cash flow projections in the financial budgets approved by management covering a 5-year period. Cash flows beyond the 5-year period are extrapolated using a steady growth rate. This growth rate is based on the relevant industry growth forecasts and does not exceed the average long-term growth rate for the relevant industry. Based on the result of the assessment, management of the Group determined that the recoverable amount of the related brand name is higher than the carrying amount and there is no impairment.

 

F-38

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

20. FINANCIAL ASSETS AT FVTPL

 

   As of April 30,   As of
October 31,		 
   2021   2022   2023   2023 
   US$   US$   US$   US$ 
Unlisted equity securities (note (i))   27,413    11,091    489    488 
Movie income right investments (note (ii))   10,445    8,039    13,924    5,523 
    37,858    19,130    14,413    6,011 
Presented as:                    
Current   —    —    9,243    5,723 
Non-current   37,858    19,130    5,170    288 
    37,858    19,130    14,413    6,011 

 

Notes:

 

(i) The Company classified certain equity securities as non-current when Company considered that these equity securities are held for long-term purposes and would realize their performance potential in the long run.

 

  During the year ended April 30, 2022, the Group disposed a financial asset measured at FVTPL to an independent third party with a gain of US$16,752 at consideration of US$32,520 which is recorded as consideration receivable on disposal of financial assets at FVTPL included in account and other receivables as of April 30, 2022 (note 21). The consideration receivable, in the form of a loan note from an independent third party, is unsecured, carries a fixed interest rate of 1.2% per month and repayable within one year. The related interest receivable of US$677 at April 30, 2022 was included in other receivables (note 21). The consideration receivable and related interest receivable were fully settled in October 2022.

 

During the year ended April 30, 2023, the Group disposed financial assets measured at FVTPL to independent third parties at the consideration of US$25,650 and resulting in a gain on disposal of US$15,036.

 

During the six months ended October 31, 2023, the Group disposed financial assets measured at FVTPL to an independent third party at a consideration of US$25,550 and resulting in a gain on disposal of US$16,281.

 

(ii) The Group entered into movie income right agreements with certain production houses. In accordance to the relevant agreements, the Group is entitled to certain percentage of the profit to be derived from the release of the films upon entering into the agreement. The Group may be required to further contribute to the film program due to the budget overruns. Any agreed further contribution to the film program due to the budget overruns of the film program by the Group will be added to the carrying amounts of financial assets.

 

F-39

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

21. ACCOUNTS RECEIVABLE, PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

 

   As of April 30,  As of
October 31,		 
   2021  2022  2023  2023 
   US$  US$  US$  US$ 
Commission receivable from digital solutions services — financial services   356   201   274   400 
Accounts receivable arising from the digital solutions services — non financial services   8,585   4,838   8,541   3 
Accounts receivable from hotel operations, hospitality and VIP services   —   —   988   531 
Total accounts receivable   8,941   5,039   9,803   934 
Consideration receivable on disposal   —   32,520   —   34,133 
Prepayments   1,051   349   501   1,053 
Deposits   —   —   141   251 
Note receivables (note (i))   536   677   150   150 
Other receivables (note (ii))   391   1,488   6,886   240 
Deferred issue costs   1,026   1,907   —   — 
Prepayment for subscription of bond instruction (note (iii))   1,475   —   —   — 
Prepayments, deposits and other receivables   4,479   36,941   7,678   35,827 

 

Presented as:             
Current   2,468   36,941   7,678   35,827 
Non-current   2,011   —   —   — 
    4,479   36,941   7,678   35,827 

 

Notes:

 

(i)The amount represented note receivables from independent third parties. The balances are unsecured, carried at fixed interest rates ranged from 5% to 8% and have original maturity of 2 years.

 

(ii)The amount as of April 30, 2023 mainly represents interest receivables of US$6,218 which is fully settled subsequently in May 2023.

 

(iii)As of April 30, 2021, AMTD Group, the ultimate holding company, made a prepayment of US$1,475 on behalf of the Group to an independent third party to subscribe for its bond instrument. Such prepayment was transferred to AMTD Group to settle amount due to AMTD Group amounting to US$1,475 during year ended April 30, 2022.

 

The Group allows a credit period of up to 15 days to its commission receivable arising from digital solutions services — financial services and a credit period of ranging from 0 to 90 days to its accounts receivable arising from digital solutions services — non financial services for the demand note issued according to the payment schedules. The normal settlement terms of accounts receivable from hotel operations, hospitality and VIP services are specific terms mutually agreed between the contracting parties. As at April 30, 2021, 2022 and 2023 and October 31, 2023, included in the Group’s accounts receivable balance were debtors with aggregate carrying amounts of US$356, US$185, US$635 and US$380, respectively, which were past due as at the reporting date. At April 30, 2021, 2022 and 2023 and October 31, 2023, out of the past due balances, US$361, US$185, US$361 and US$188, respectively, had been past due 90 days or more. The management assessed that there has been no significant increase in credit risk nor default because of the background of the debtors and historical payment arrangement with these debtors. The Group does not hold any collateral over these balances.

 

F-40

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

22. ACCOUNTS PAYABLE, OTHER PAYABLES AND ACCRUALS

 

   As of April 30,   As of
October 31,		 
   2021   2022   2023   2023 
   US$   US$   US$   US$ 
Accounts payable arising from digital solutions services — financial services   14    10    14    — 
Accounts payable arising from hotel operations, hospitality and VIP services   —    —    479    69 
Total accounts payable   14    10    493    69 
                     
Consideration payable on movie income right investments   3,850    —    —    — 
Payable to former subsidiaries   —    —    —    15,346 
Other payables and accruals   131    1,540    3,253    3,568 
Accrued issue cost   1,026    1,907    —    — 
Total other payables and accruals   5,007    3,447    3,253    18,914 

 

23. BANK BORROWINGS

 

   As of April 30,   As of
October 31,		 
   2021   2022   2023   2023 
   US$   US$   US$   US$ 
United States dollars - unsecured   —    —    15,000    15,000 
Hong Kong dollars - secured   —    —    50,803    50,565 
    —    —    65,803    65,565 

 

As of April 30, 2023 and October 31, 2023, bank borrowings of US$15,889 and US$15,893 were repayable in one year or on demand, and US$49,914 and US$49,672 were repayable more than one year but within 5 years, respectively.

 

These bank borrowings carry a weighted average contractual interest rate of 7.60% p.a. and 6.96% p.a., respectively as of April 30, 2023 and October 31, 2023.

 

As of April 30, 2023 and October 31, 2023, the Group had a bank borrowing of US$50,803 and US$50,565, respectively, denominated in Hong Kong dollars. This borrowing is secured by the Group’s hotel property, which had a carrying amount of US$69,920 and US$69,501, respectively, as of April 30, 2023 and October 31, 2023. The borrowing carries an interest rate of 1.65% above the Hong Kong Interbank Offered Rate (“HIBOR”). The repayment dates for this borrowing range from October 2023 to April 2025.

 

As of April 30, 2023 and October 31, 2023, the Group had a bank borrowing of US$15,000 is denominated in US$, which is unsecured, carries interest rate at 0.25% below daily Wall Street Journal Prime Rate and repayable within one year.

 

24. CONTRACT LIABILITIES

 

   As of April 30,   As of
October 31,		 
   2021   2022   2023   2023 
   US$   US$   US$   US$ 
Digital solutions services — non financial services income   9,055    5,968    9,700    — 
Digital media, content, and marketing services income   —    —    1,000    — 
Hotel operations, hospitality and VIP services income   —    —    493    — 
    9,055    5,968    11,193    — 
Presented as:                    
Current   5,038    5,291    10,162    — 
Non-current   4,017    677    1,031    — 
    9,055    5,968    11,193    — 

 

Contract liabilities are classified as current and non-current  based on the Group’s earliest obligation to transfer services to the customers.

 

F-41

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

25. DEFERRED TAX LIABILITY

 

The following is the deferred tax liability recognized and movements thereon:

 

   Intangible
assets		 
   US$ 
As of May 1, 2020  — 
Acquisition of a subsidiary (note 14(b))  992 
Credit to profit or loss (note 11)  (106)
Exchange realignment   (1)
As of April 30, 2021   885 
Credit to profit or loss (note 11)   (141)
Exchange realignment   (9)
As of April 30, 2022   735 
Credit to profit or loss (note 11)   (140)
Reclassified as liabilities associated with assets classified as held for sale (note 15)   (599)
Exchange realignment   4 
As of April 30, 2023 and October 31, 2023   — 

 

F-42

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

26. SHARE CAPITAL AND TREASURY SHARES

 

   Class A ordinary shares   Class B ordinary shares   Total   Treasury shares—
Class B ordinary
shares		 
   Number of
shares		   Share
capital		   Number of
shares		   Share
capital		   Number of
shares		   Share
capital		   Number of
shares		   Share
capital		 
       US$       US$       US$       US$ 
Ordinary shares of US$0.0001 each                                
Authorized                                
As of April 30, 2021, 2022 and 2023 and October 31, 2023   8,000,000,000    800    2,000,000,000    200    10,000,000,000    1,000    N/A    N/A 
Issued and fully paid                                        
As of May 1, 2020   10,726,667    1    38,800,000    4    49,526,667    5    —    — 
Issuance of shares (notes (a) and (e))   17,350,000    2    —    —    17,350,000    2    —    — 
Share-based compensation (note (b))   38,710    —    —    —    38,710    —    —    — 
Acquisitions of subsidiaries (note (c))   702,765    —    —    —    702,765    —    —    — 
Transfer of shares (note (d))   14,598,000    1    (14,598,000)   (1)   —    —    —    — 
As of April 30, 2021   43,416,142    4    24,202,000    3    67,618,142    7    —    — 
Transfer of shares (note (f))   (41,448,000)   (4)   41,448,000    4    —    —    —    — 
As of April 30, 2022   1,968,142    —    65,650,000    7    67,618,142    7    —    — 
Issuance of shares (note (g))   8,960,000    1    —    —    8,960,000    1    —    — 
Shares repurchases (note (h))   —    —    (616,346)   —    (616,346)   —    616,346    318,882 
Acquisition of subsidiaries (note (i))   —    —    515,385    —    515,385    —    (515,385)   (266,647)
As of April 30, 2023    10,928,142    1    65,549,039    7    76,477,181    8    100,961    52,235 
Issuance of shares (note (j))   380,065    —    —    —    380,065    —    —    — 
As of October 31, 2023 (note (k))   11,308,207    1    65,549,039    7    76,857,246    8    100,961    52,235 

 

Notes:

 

(a)Between May 13, 2020 and August 3, 2020, the Company issued 350,000 shares of Class A ordinary shares to third party investors for an aggregate consideration of US$3,500.

 

(b) On August 3, 2020, the Company granted 38,710 shares of Class A ordinary shares with an aggregated grant date fair value of US$481, which has a vesting period of 3 years, to a personnel of the Company.

 

(c)The Company issued 702,765 Class A ordinary shares to certain shareholders of PolicyPal, together with a cash consideration, in exchange for 51% of the equity interest of PolicyPal on August 3, 2020. Details of the acquisition of subsidiary are set out in note 14(b).

 

(d) On June 26, 2020, the then immediate holding company of the Company, AMTD Group, converted its 14,598,000 Class B ordinary shares to Class A ordinary shares. AMTD Group then transferred its 2,441,000 Class A ordinary shares to AMTD Assets Alpha Group, a fellow subsidiary of the Company, 2,441,000 Class A ordinary shares to AMTD Education Group, a fellow subsidiary of the Company, and 9,716,000 Class A ordinary shares to AMTD IDEA Group, respectively.

 

(e)On March 8, 2021, the Company issued 8,500,000 Class A ordinary shares to AMTD Assets Alpha Group, a fellow subsidiary of the Company, and 8,500,000 Class A ordinary shares to AMTD Education Group, a fellow subsidiary of the Company, for cash considerations of US$85,000 and US$85,000, respectively.

 

F-43

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

26.SHARE CAPITAL AND TREASURY SHARES - (CONTINUED)

 

(f)On February 23, 2022, 41,448,000 Class A ordinary shares of the Company held by AMTD IDEA Group were returned and canceled with 41,448,000 Class B ordinary shares issued to AMTD IDEA Group.

 

(g) During year ended April 30, 2023, the Company issued (i) 1,600,000 Class A ordinary shares to a third party investor, for a cash consideration of US$100,000, and (ii) 7,360,000 Class A ordinary shares as part of its initial public offering in July 2022 with net proceeds of US$129,186. The proceeds from shares issued during the year ended April 30, 2023 amounted to US$229,186, net of total issuance cost incurred.

 

(h)During the year ended April 30, 2023, the Company repurchased 616,346 Class B ordinary shares from the immediate holding company, amounting to US$318,882.

 

(i)The Company acquired 96.1% of the equity interest in AMTD Assets on February 6, 2023 for which the consideration is settled by 515,385 treasury shares — Class B ordinary shares. See note 14(a) for details.

 

(j) During the six months ended October 31, 2023, the Company issued 380,065 Class A ordinary shares at the fair value of US$5,602 for the purpose of an acquisition of a company by immediate holding company.

 

(k)The number of Class A ordinary shares of the Company at October 31, 2023 included 38,710 unvested Class A ordinary shares as detailed in note 30. The outstanding and vested Class A ordinary shares of the Company at October 31, 2023 is 11,269,497 shares.

 

27.CREDIT RISK AND IMPAIRMENT ASSESSMENT

 

Credit risk refers to the risk that the Group’s counterparties default on their contractual obligations resulting in financial losses to the Group. The Group’s credit risk exposures are primarily attributable to accounts receivable, other receivables and deposits, bank balances, fiduciary bank balances and amounts due from AMTD Group, joint ventures and a non-controlling shareholder. The Group does not hold any collateral or other credit enhancements to cover its credit risks associated with its financial assets.

 

The Group performed impairment assessment for financial assets under ECL model. Information about the Group’s credit risk management, maximum credit risk exposures and the related impairment assessment, if applicable, are summarized as below:

 

Commission receivable arising from the digital solutions services — financial services, accounts receivable arising from the digital solutions services — non financial services and accounts receivable from hotel operations, hospitality and VIP services

 

The Group has concentration of credit risk as 26% and 46% of the commission receivable arising from the digital solutions services — financial services due from the Group’s five largest customers as at April 30, 2022 and 2023, respectively. The Group has concentration of credit risk as 66% and 16% of the accounts receivable arising from the digital solutions services — non financial services due from the Group’s five largest customers as at April 30, 2022 and 2023, respectively. In order to minimize the credit risk, the management of the Group has delegated a team responsible for determination of credit limits and credit approvals.

 

F-44

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

27.CREDIT RISK AND IMPAIRMENT ASSESSMENT - (CONTINUED)

 

Commission receivable arising from the digital solutions services — financial services, accounts receivable arising from the digital solutions services — non financial services and accounts receivable from hotel operations, hospitality and VIP services - (Continued)

 

In addition, the Group performs impairment assessment under ECL model on commission receivable from digital solutions services — financial services with significant balances or credit-impaired and accounts receivable arising from digital solutions services — non financial services individually. The remaining commission receivable and receivable from hotel operations, hospitality and VIP services are assessed collectively and grouped based on shared credit risk characteristics by reference to the Group’s past due status of outstanding balances, nature, size and industry of debtors and external credit ratings. The Company assesses the ECL of commission receivable arising from the digital solutions services — financial services and accounts receivable from hotel operation services based on historical observed default rates over the expected life of the debtors and forward-looking information that is available without undue cost or effort. The forward looking information is considered through the use of publicly available economic data and forecasts, including macroeconomic data such as GDP growth and unemployment rate. For the years ended April 30, 2021, 2022 and 2023 and six months ended October 31, 2023, the Group assessed the ECL for commission receivable arising from the digital solutions services — financial services, accounts receivable arising from digital solutions services — non financial services and accounts receivable from hotel operations, hospitality and VIP services to be insignificant and thus no loss allowance is recognized.

 

Fiduciary bank balances and bank balances

 

Credit risk on fiduciary bank balances and bank balances is limited because the counterparties are reputable banks with high credit ratings assigned by international credit agencies. The Group assessed ECL for fiduciary bank balances and bank balances by reference to information relating to probability of default and loss given default of the respective credit rating grades published by external credit rating agencies. Based on the average loss rates, the ECL on fiduciary bank balances and bank balances is considered to be insignificant and therefore no loss allowance was recognized.

 

Amounts due from AMTD Group, joint ventures and a non-controlling shareholder

 

The Group regularly evaluates the business performance of AMTD Group, joint ventures and non-controlling shareholders. The Group’s credit risks in these balances are considered low due to the strong financial positions of these entities. The management believes that there are no significant increases in credit risk of these amounts since initial recognition and the Group provided impairment based on ECL. For the years ended April 30, 2021, 2022 and 2023 and six months ended October 31, 2023, the Group assessed the ECL for amounts due from AMTD Group, joint ventures and a non-controlling shareholder to be insignificant and thus no loss allowance is recognized.

 

Consideration receivables, other receivables and deposits

 

For consideration receivables, other receivables and deposits, the Group regularly reviews the recoverable amount of each individual debtor to ensure that adequate impairment losses are recognized for irrecoverable debts. The Group performs impairment assessment under ECL model on such consideration receivables, other receivables and deposits individually. The Group believes that there is no significant increase in credit risk of these amounts since initial recognition and the Group provided impairment based on ECL. For the years ended April 30, 2021, 2022 and 2023 and six months ended October 31, 2023, the Group assessed the ECL for consideration receivables, other receivables and deposits are insignificant and thus no loss allowance is recognized.

 

F-45

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

28.FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS

 

Some of the Group’s financial instruments are measured at fair value for financial reporting purposes. The management of the Company are responsible for determining the appropriate valuation techniques and inputs for fair value measurements.

 

In estimating the fair value, the Group uses observable market data to the extent it is available. Where Level 1 inputs are not available, the Group makes reference to the prices of recent transactions or engages third-party qualified valuers to perform the valuation.

 

The management of the Company works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model. The management reports the findings to the board of directors of the Company to explain the cause of fluctuations in the fair value.

 

(i)Fair value of the Group’s financial assets that are measured at fair value on a recurring basis

 

The Group’s investments in private equity are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets are determined (in particular, the valuation technique(s) and inputs used).

 

      Fair value as at        
    April 30,     October 31,     Fair value   Valuation technique(s)  
Financial assets     2021     2022     2023     2023     hierarchy   and key inputs  
      US$     US$     US$     US$            
Financial assets at FVTPL - unlisted equity securities     1,287     488       489     488     Level 2   The fair values of unlisted equity investments are determined with reference to the recent transaction price of the investments.  
      26,126     10,603       —     —     Level 3   Market approach - the option pricing model (“OPM”) backsolve approach was used to calculate the implied equity value of the investee. Once an overall equity value was determined, amounts were allocated to the various classes of equity based on the security class preferences. The inputs to the OPM backsolve approach are the recent transaction price for capital structure, probability of IPO, redemption and liquidation, the risk-free interest rate and expected volatility.  
Movie income right investments     —     —     —     1,605     Level 2   The fair values of unlisted equity investments are determined with reference to the recent transaction price of the investments.  
      10,445     8,039       13,924     3,918     Level 3   Income approach - in this approach, the discounted cash flow method was used to capture the present value of the expected future economic benefits to be derived from the investments in these movie income right investments, based on an appropriate discount rate.  

 

F-46

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

28.FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS - (CONTINUED)

 

(i)Fair value of the Group’s financial assets that are measured at fair value on a recurring basis - (Continued)

 

Reconciliation of Level 3 fair value measurements

 

   Unlisted
investments
classified as
equity instruments
at FVTPL		   Movie
income
right
investments		   Total 
   US$   US$   US$ 
At May 1, 2020   16,933    —    16,933 
Total gains in profit or loss   9,071    83    9,154 
Transfer   (139)   —    (139)
Additions   304    10,375    10,679 
Exchange realignment   (43)   (13)   (56)
At April 30, 2021   26,126    10,445    36,571 
Total gains in profit or loss   16,564    371    16,935 
Transfer from Level 2 to Level 3   796    —    796 
Receipt of investment return   —    (2,681)   (2,681)
Disposals   (32,712)   —    (32,712)
Exchange realignment   (171)   (96)   (267)
At April 30, 2022   10,603    8,039    18,642 
Total gains in profit or loss   15,036    350    15,386 
New investment   —    5,545    5,545 
Disposals   (25,650)   —    (25,650)
Exchange realignment   11    (10)   1 
At April 30, 2023   —    13,924    13,924 
Total gains in profit or loss   —    16,281    16,281 
Disposals   —    (25,550)   (25,550)
Exchange realignment   —    (737)   (737)
At October 31, 2023   —    3,918    3,918 

  

(ii)Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis

 

The Company considers that the carrying amount of the Group’s financial assets and financial liabilities recorded at amortized cost in the consolidated financial statements approximate their fair values due to the short-term nature of these instruments. Such fair values have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis.

 

F-47

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

29.RELATED PARTY DISCLOSURES

 

In addition to the transactions and balances disclosed elsewhere in the consolidated financial statements, the Group had the following significant related party transactions during the reporting period:

 

      Year ended April 30,   Six months
ended October 31, 		 
Relationship  Nature of transactions  2021   2022   2023   2023 
      US$   US$   US$   US$ 
Ultimate holding company  Digital solutions services — financial services rendered   62    11    7    32 
Ultimate holding company  Digital solutions services — non financial services rendered   963    1,642    2,168    1,278 
Ultimate holding company  Corporate expenses allocated   803    910    1,212    1,533 
Fellow subsidiaries  Digital solutions services — financial services rendered   11    74    52    1 
A related company  Digital solutions services — non financial services rendered   645    —    —    — 
Immediate holding company  Repurchase of shares of the Company   —    —    318,882    — 
Immediate holding company  Consideration for acquisition of AMTD Assets (note 14(a))   —    —    266,647    — 
Ultimate holding company  Interest income(note 9)   —    —    6,612    6,154 

 

Compensation of key management personnel

 

The directors of the Company were considered to be the key management personnel of the Company. The remuneration of key management personnel is determined with regard to the performance of individuals and market trends.

 

Centralized cash management and major non-cash transactions

 

Treasury functions of the Group are conducted centrally under AMTD Group and inter-company fund transfers were carried out among the entities within AMTD Group. The treasury function manages available funds at AMTD Group level and allocates the funds to various entities within AMTD Group for their operations. In May and August 2019 and April 2021, certain entities within AMTD Group had entered into intercompany financing and offsetting agreements pursuant to which certain intercompany receivables and payables are to be netted-off for settlement purpose. These constituted material non-cash transactions.

 

During the year ended April 30, 2021, amount due from AMTD Group, amount due to AMTD Group, amounts due from fellow subsidiaries and amounts due to fellow subsidiaries, which amounted to US$73,616, US$45,469, US$212,394 and US$239,206, respectively, were transferred or netted-off under these agreements.

 

During the year ended April 30, 2023, the Group repurchased 616,346 Class B ordinary shares from its immediate holding company amounting to US$318,882. The consideration was settled through the current accounts with AMTD Group.

 

As of April 30, 2022, the amount due from AMTD Group was unsecured, interest free and repayable on demand. As of April 30, 2023 and October 31, 2023, the amount due from AMTD Group was unsecured, bearing interest of 2% per annum and repayable on demand.

 

As of April 30, 2023, the amount due from a non-controlling shareholder is unsecured, interest-free and repayable on demand.

 

F-48

 

 

AMTD DIGITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)

 

29.RELATED PARTY DISCLOSURES - (CONTINUED)

 

Centralized cash management and major non-cash transactions - (Continued)

 

As at April 30, 2023 and October 31, 2023, the amount due to a non-controlling shareholder comprised of (i) interest bearing balance of US$7,643 and US$7,669 at a variable rate of 2 times of HIBOR plus 1.15% per annum, (ii) interest bearing balance of US$25,479 and US$25,564 at a variable rate of HIBOR plus 1.15% per annum and (iii) non-interest bearing balance of US$20,681 and US$20,156. The amount due to a non-controlling shareholder was unsecured.

 

30.SHARE-BASED COMPENSATION

 

On August 3, 2020, the Company granted 38,710 shares of Class A ordinary shares. The grant date fair value of the Class A ordinary shares is determined based on recent transaction price of the Company’s equity share.

 

On July 31, 2021, the Company granted 17,540 restricted shares units of Class A ordinary shares (“RSUs”) to an employee of the Company. The RSUs granted have a vesting period of three years of employment services with the first one-third vesting on the first anniversary from grant date, and the remaining two third vesting on an annual basis over a two-year period ending on the third anniversary of the grant date. The grant date fair value of the RSUs is determined based on recent transaction price of the Company’s equity share.

 

On September 3, 2021, PolicyPal, a subsidiary of the Company, granted 5,827 ordinary shares of PolicyPal to its employees. The shares granted were vested immediately. The grant date fair value of the ordinary shares of PolicyPal are determined based on recent transaction price of PolicyPal’s equity shares.

 

The non-vested shares and RSUs are not transferable and may not be sold or pledged and the holder has no voting or dividend right. In the event a non-vested shareholder’s employment for the Group is terminated for any reason prior to the third anniversary of the grant date, the holder’s right to the non-vested shares and RSUs will terminate effectively. The outstanding non-vested shares and RSUs shall be forfeited and automatically transferred to and reacquired by the Group without any consideration.

 

The aggregate fair value of the restricted shares and RSUs at grant dates was US$481 and US$737 for the years ended April 30, 2021 and 2022, respectively.

 

The share-based payment expense amounted to US$120, US$1,138, US$244 and US$83 was recognized in the consolidated financial statements during the years ended April 30, 2021, 2022 and 2023 and six months ended October 31, 2023, respectively.

 

As of October 31, 2023 there was US$64 unrecognized compensation cost related to non-vested shares and RSUs which is expected to be recognized over a weighted average vesting period of one year.

 

31. PENDING CLAIMS AND LITIGATION

 

The Group is subject to periodic legal or administrative proceedings in the ordinary course of business. Such proceedings are reviewed with the Group’s legal advisors. The Group does not believe that any pending legal proceeding to which the Group is a party will have a material effect on its business, results of operations or cash flows.

 

F-49

 

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