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
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
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 |
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.
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.
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.
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.
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.
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)
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.
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.
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.
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.
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; |
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. |
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).
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.
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.
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.
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.
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.
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.
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.
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.
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.
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) |
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.
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.
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.
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.
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:
| ● | 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.
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(All amounts in thousands
of U.S. dollars (“US$”), except for share and per share data)
3. |
SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) |
Initial recognition and measurement
Financial liabilities are classified, at initial
recognition, as financial liabilities at amortized cost or at fair value through profit or loss (warrants and derivative financial instruments),
as appropriate.
All financial liabilities are recognized initially
at fair value and, in the case of financial liabilities at amortized cost, net of directly attributable transaction costs. Transaction
costs directly attributable to the acquisition of financial liabilities at fair value through profit or loss are recognized immediately
in profit or loss.
The Group’s financial liabilities include
accounts payable, bank borrowings, financial liabilities included in other payables and accruals, derivative financial liability and convertible
bond.
Subsequent measurement
The subsequent measurement of financial liabilities
depends on their classification as follows:
Financial liabilities at amortized
cost
After initial recognition, interest-bearing loans
and borrowings are subsequently measured at amortized cost, using the effective interest rate method unless the effect of discounting
would be immaterial, in which case they are stated at cost. Gains and losses are recognized in profit or loss when the liabilities are
derecognized as well as through the effective interest rate amortization process.
Amortized cost is calculated by taking into account
any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest
rate amortization is included in finance costs in profit or loss.
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(All amounts in thousands
of U.S. dollars (“US$”), 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.
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.
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.
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.
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.
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.
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)
|
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 | |
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(All amounts in thousands
of U.S. dollars (“US$”), except for share and per share data)
|
Disaggregation of revenue
from contracts with customers - (Continued) |
Year ended April 30, 2023
Segments | |
Digital solutions services —
non financial services | | |
Digital solutions services —
financial services | | |
Hotel operations, hospitality and VIP services | | |
Digital media, content, and marketing services and others | | |
Total | |
| |
US$ | | |
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 | |
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(All amounts in thousands
of U.S. dollars (“US$”), except for share and per share data)
The Group
operates its businesses in four operating segments: digital solutions services — non financial services segment,
digital solutions services — financial services segment, hotel operations, hospitality and VIP services segment and digital
media, content, and marketing services and others segment. The following summary describes the operations in each of the
Group’s reportable segment.
|
(a) |
The
digital solutions services — non financial services segment: The Group provides its institutional and corporate clients with
exclusive access to the membership program; |
|
(b) |
The
digital solutions services — financial services segment: The Group provides primarily corporate clients with insurance
brokerage services; |
| (c) | Hotel
operations, hospitality and VIP services segment: The Group engages in hotel investments, hotel operations, hospitality and VIP services
since the acquisition of AMTD Assets in February 2023; and |
| (d) | The digital media, content, and marketing services and others
segment: The Group engages in digital media, content, and marketing business in which the Group creates and promotes digital solutions
content by investing in and developing multimedia channels to provide users and audiences access to content medium through a comprehensive
library of traditional and digital movies, podcasts, webinars and live videos offered by content providers and online media platforms
and invests in innovative technology companies which operate digital non financial license businesses through strategic investments. |
Segment revenues and
results
The following is an
analysis of the Group’s revenues and results by operating and reportable segments:
For the year ended
April 30, 2021
| |
Digital solutions services —
non financial services | | |
Digital solutions services —
financial services | | |
Digital media, content, and marketing services and others | | |
Consolidated | |
| |
US$ | | |
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 | |
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 | |
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$16,775 reside in Hong Kong and Singapore, respectively, at October 31, 2023.
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(All amounts in thousands
of U.S. dollars (“US$”), except for share and per share data)
| |
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.
| |
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.
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(All amounts in thousands
of U.S. dollars (“US$”), except for share and per share data)
| |
Year ended April 30, | | |
Six months ended October 31, | |
| |
2021 | | |
2022 | | |
2023 | | |
2023 | |
| |
US$ | | |
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$66,507 at April 30, 2021, 2022 and 2023 and October 31, 2023,
available for offset against future profits, respectively. No deferred tax asset has been recognized in respect of these tax losses
due to the unpredictability of future profit streams. The tax losses may be carried forward indefinitely.
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(All amounts in thousands
of U.S. dollars (“US$”), 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. |
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$520 per share of the Company for the Group’s expansion to hotel operations, hospitality
and VIP services business.
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(All amounts in thousands
of U.S. dollars (“US$”), 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 | |
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 | |
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$21,761. The pro forma information is for illustrative purposes only and is not necessarily an
indication of revenue and results of operations of the Group that actually would have been achieved had the acquisition been
completed on May 1, 2020, nor is it intended to be a projection of future results.
In determining the pro-forma
revenue and profit of the Group had PolicyPal been acquired at the beginning of the current year, the directors of the Company have
calculated depreciation of plant and equipment and amortization of intangible asset acquired on the basis of the fair values arising
in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition
financial statements.
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(All amounts in thousands
of U.S. dollars (“US$”), 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 clas |