HKD 20-F/A
AMTD Digital Inc. (HKD)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
FORM
(Mark One)
OR
For the fiscal year ended
OR
For
the transition period from
OR
Date of event requiring this shell company report
Commission
File Number:
(Exact Name of Registrant as Specified in Its Charter)
N/A
(Translation of Registrant’s Name into English)
(Jurisdiction of Incorporation or Organization)
(Address of Principal Executive Offices)
Telephone:
(Name, Telephone, Email and/or Facsimile Number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
| American depositary shares, |
| * | Not for trading, but only in connection with the listing of American depositary shares on the New York Stock Exchange. |
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
Indicate the number of outstanding shares of
each of the issuer’s classes of capital or common stock as of the close of the period covered by the transition report:
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒
If
this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒
Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. ☒
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Non-accelerated filer ☐ | ||||
| Emerging growth company |
If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards†
provided pursuant to Section 13(a) of the Exchange Act.
| † | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
☒ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ | Other ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18
If
this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). ☐ Yes
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes ☐ No
EXPLANATORY NOTE
This Amendment No. 1 on Form 20-F/A (the “Amendment”) is being filed by AMTD Digital Inc. (the “Company,” “we,” “our,” or “us”) to amend the Company’s Transition Report on Form 20-F for the transition period from May 1, 2023 to October 31, 2023, originally filed with the U.S. Securities Exchange Commission (the “SEC”) on July 16, 2024 (the “Original Filing”). This Amendment is being filed to address certain comments from the staff of the SEC in relation to the Original Filing and to supplement the Original Filing with the inclusion of (i) the audited consolidated financial statements of the Company for the three fiscal years ended April 30, 2023, and (ii) unaudited financial information of the Company for the six months ended October 31, 2022.
This Amendment speaks as of the filing date of the Original Filing, or July 16, 2024. Other than as set forth herein, the Company has not modified or updated any other disclosures and has made no changes to the items or sections in the Original Filing. Other than as expressly stated in this Amendment, this Amendment does not, and does not purport to, amend, update or restate the information in any part of the Original Filing or reflect any events that have occurred after the Original Filing was filed on July 16, 2024. The filing of this Amendment should not be understood to mean that any other statements contained in the Original Filing are true and complete as of any date subsequent to July 16, 2024. Accordingly, this Amendment should be read in conjunction with the Original Filing and the documents filed with or furnished to the SEC by the Company subsequent to July 16, 2024, including any amendments to such documents, as information in such documents may update or supersede certain information contained in this Amendment.
TABLE OF CONTENTS
| Page | ||
| Part III | 1 | |
| ITEM 17. FINANCIAL STATEMENTS | 1 | |
| ITEM 18. FINANCIAL STATEMENTS | 1 | |
| ITEM 19. EXHIBITS | 1 | |
| SIGNATURES | 3 |
i
Part III
ITEM 17. FINANCIAL STATEMENTS
We have elected to provide financial statements pursuant to Item 18.
ITEM 18. FINANCIAL STATEMENTS
The consolidated financial statements of AMTD Digital Inc. are included at the end of this transition report.
ITEM 19. EXHIBITS
1
| * | Filed herewith. |
| ** | Furnished herewith. |
| # | Portions of this exhibit have been omitted or redacted. |
2
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this transition report on its behalf.
| AMTD Digital Inc. | |||
| By: | /s/ Lawrence Lee | ||
| Name: | Lawrence Lee | ||
| Title: | Chief Executive Officer | ||
| Date: | February 18, 2025 | ||
3
AMTD DIGITAL INC.
INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of AMTD Digital Inc.:
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of AMTD Digital Inc. and subsidiaries (the “Company”) as of April 30, 2021, 2022 and 2023 and October 31, 2023, the related consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for each of the three years ended April 30, 2021, 2022 and 2023 and six months ended October 31, 2023 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of April 30, 2021, 2022 and 2023 and October 31, 2023, and the results of its operations and its cash flows for each of the three years ended April 30, 2023 and six months ended October 31, 2023 in conformity with generally accepted accounting principles in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
July 26, 2024
PCAOB No:
We have served as the Company’s auditor since 2024.
F-2
AMTD DIGITAL INC.
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
(All amounts in thousands of United States dollars (“US$”), except for share and per share data)
| Year ended April 30, | Six months ended October 31, | |||||||||||||||||
| Notes | 2021 | 2022 | 2023 | 2023 | ||||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||||
| Revenue from contracts with customers | 5 | |||||||||||||||||
| Employee benefits expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Advertising and promotion expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Premises and office expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Legal and professional fee | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Depreciation and amortization | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Finance costs | 7 | ( | ) | ( | ) | |||||||||||||
| Other expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Changes in fair value on financial assets measured at fair value through profit or loss (“FVTPL”) | 8 | |||||||||||||||||
| Other income | 9 | |||||||||||||||||
| Other gains and losses, net | 10 | ( | ) | |||||||||||||||
| Profit before tax | ||||||||||||||||||
| Income tax expense | 11 | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Profit for the year/period | 12 | |||||||||||||||||
| 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 | ( | ) | ( | ) | ( | ) | ||||||||||||
| Items that may be reclassified subsequently to profit or loss: | ||||||||||||||||||
| Exchange differences arising on translation of foreign operations | ( | ) | ( | ) | ( | ) | ||||||||||||
| Share of other comprehensive expense of joint ventures | ||||||||||||||||||
| ( | ) | ( | ) | ( | ) | |||||||||||||
Other comprehensive (expense) income for the year/period | ( | ) | ( | ) | ( | ) | ||||||||||||
| Total comprehensive income for the year/period | ||||||||||||||||||
| Profit (loss) for the year/period attributable to: | ||||||||||||||||||
| - Owners of the Company | ||||||||||||||||||
| - Non-controlling interests | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Total comprehensive income (expense) for the year/period attributable to: | ||||||||||||||||||
| - Owners of the Company | ||||||||||||||||||
| - Non-controlling interests | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
| Earnings per share | 13 | |||||||||||||||||
| - Basic (US$) | ||||||||||||||||||
| - Diluted (US$) | ||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-3
AMTD DIGITAL INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONS
(All amounts in thousands of US$)
| As of May 1, | As of April 30, | As of October 31, | ||||||||||||||||||||
| Notes | 2020 | 2021 | 2022 | 2023 | 2023 | |||||||||||||||||
| US$ | US$ | US$ | US$ | US$ | ||||||||||||||||||
| ASSETS | ||||||||||||||||||||||
| Non-current assets: | ||||||||||||||||||||||
| Goodwill | 17 | |||||||||||||||||||||
| Property, plant and equipment | 18 | |||||||||||||||||||||
| Intangible assets | 19 | |||||||||||||||||||||
| Prepayments, deposits and other receivables | 21 | |||||||||||||||||||||
| Financial assets at FVTPL | 20 | |||||||||||||||||||||
| Interests in joint ventures | 16 | |||||||||||||||||||||
| Total non-current assets | ||||||||||||||||||||||
| Current assets: | ||||||||||||||||||||||
| Accounts receivable | 21 | |||||||||||||||||||||
| Prepayments, deposits and other receivables | 21 | |||||||||||||||||||||
| Amount due from AMTD Group (as defined in note 1) | 29 | |||||||||||||||||||||
| Amounts due from fellow subsidiaries | ||||||||||||||||||||||
| Amount due from a non-controlling shareholder | 29 | |||||||||||||||||||||
| Financial assets at FVTPL | 20 | |||||||||||||||||||||
| Fiduciary bank balances | ||||||||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||||||||
| Assets classified as held for sale | 15 | |||||||||||||||||||||
| Total current assets | ||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||
| EQUITY AND LIABILITIES | ||||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||||
| Clients’ monies held on trust | ||||||||||||||||||||||
| Accounts payable | 22 | |||||||||||||||||||||
| Other payables and accruals | 22 | |||||||||||||||||||||
| Bank borrowings | 23 | |||||||||||||||||||||
| Amount due to a non-controlling shareholder | 29 | |||||||||||||||||||||
| Amount due to immediate holding company | ||||||||||||||||||||||
| Amounts due to fellow subsidiaries | ||||||||||||||||||||||
| Contract liabilities | 24 | |||||||||||||||||||||
| Income tax payable | ||||||||||||||||||||||
| Liabilities associated with assets classified as held for sale | 15 | |||||||||||||||||||||
| Total current liabilities | ||||||||||||||||||||||
| Non-current liabilities: | ||||||||||||||||||||||
| Contract liabilities | 24 | |||||||||||||||||||||
| Deferred tax liability | 25 | |||||||||||||||||||||
| Total non-current liabilities | ||||||||||||||||||||||
| Total liabilities | ||||||||||||||||||||||
| Capital and reserves: | ||||||||||||||||||||||
| Share capital | 26 | |||||||||||||||||||||
| Treasury shares | 26 | ( | ) | ( | ) | |||||||||||||||||
| Reserves | ||||||||||||||||||||||
| Equity attributable to owners of the Company | ||||||||||||||||||||||
| Non-controlling interests | ( | ) | ||||||||||||||||||||
| Total equity | ||||||||||||||||||||||
| Total equity and liabilities | ||||||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-4
AMTD DIGITAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(All amounts in thousands of US$)
| Attributable to owners of the Company | ||||||||||||||||||||||||||||||||||||||||
| Share capital | Share premium | Treasury shares | Share-based payment reserve | Exchange reserve | Capital reserve | Retained earnings | Total | Non- controlling interests | Total equity | |||||||||||||||||||||||||||||||
| US$ | US$ | US$ | US$ | US$ | US$ | US$ | US$ | US$ | US$ | |||||||||||||||||||||||||||||||
| At May 1, 2020 | ||||||||||||||||||||||||||||||||||||||||
| Profit (loss) for the year | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Other comprehensive (expense) income for the year: | ||||||||||||||||||||||||||||||||||||||||
| Exchange differences arising on translation | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Total comprehensive (expense) income for the year | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Acquisition of subsidiaries (note 14(b)) | ||||||||||||||||||||||||||||||||||||||||
| Issuance of shares (note 26(a) and (e)) | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation (note 30) | ||||||||||||||||||||||||||||||||||||||||
| At April 30, 2021 | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Profit (loss) for the year | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Other comprehensive expense for the year: | ||||||||||||||||||||||||||||||||||||||||
| Exchange differences arising on translation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Total comprehensive (expense) income for the year | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of shares by a non-wholly owned subsidiary (note 19) | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation (note 30) | ||||||||||||||||||||||||||||||||||||||||
| At April 30, 2022 | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Profit (loss) for the year | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Other comprehensive (expenses) income for the year: | ||||||||||||||||||||||||||||||||||||||||
| Exchange differences arising on translation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Share of other comprehensive income of joint ventures | ||||||||||||||||||||||||||||||||||||||||
| Total comprehensive (expense) income for the year | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Issuance of shares (note 26(g)) | ||||||||||||||||||||||||||||||||||||||||
| Repurchase of shares of the Company (note 26(h)) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Acquisition of subsidiaries under common control (note 14(a)) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Share-based compensation (note 30) | ||||||||||||||||||||||||||||||||||||||||
| At April 30, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Profit (loss) for the period | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (expenses) for the period: | ||||||||||||||||||||||||||||||||||||||||
| Exchange differences arising on translation | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Share of other comprehensive income of joint ventures | ||||||||||||||||||||||||||||||||||||||||
| Total comprehensive income (expense) for the period | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Issuance of shares (note 26(j)) | ||||||||||||||||||||||||||||||||||||||||
| Change in shareholding of subsidiaries without losing control | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Share-based compensation (note 30) | ||||||||||||||||||||||||||||||||||||||||
| At October 31, 2023 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-5
AMTD DIGITAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands of US$)
| Year ended April 30, | Six months ended October 31, | |||||||||||||||
| 2021 | 2022 | 2023 | 2023 | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||||||
| Profit before tax | ||||||||||||||||
| Adjustments for: | ||||||||||||||||
| Share of losses of joint ventures | ||||||||||||||||
| Interest income | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Finance costs | ||||||||||||||||
| Depreciation | ||||||||||||||||
| Amortization | ||||||||||||||||
| Recovery of accounts receivable written off | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Share-based payment | ||||||||||||||||
| Changes in fair value on financial assets at FVTPL | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gain on disposal of subsidiaries | ( | ) | ||||||||||||||
| Unrealized exchange gain | ( | ) | ||||||||||||||
| Operating cash flows before movements in working capital | ( | ) | ||||||||||||||
| Decrease (increase) in fiduciary bank balances | ( | ) | ||||||||||||||
| (Increase) decrease in accounts receivable | ( | ) | ( | ) | ( | ) | ||||||||||
| Decrease in prepayments, deposits and other receivables | ||||||||||||||||
| (Decrease) increase in client’s monies held on trust | ( | ) | ( | ) | ( | ) | ||||||||||
| (Decrease) increase in accounts payable | ( | ) | ||||||||||||||
| (Decrease) increase in other payables and accruals | ( | ) | ||||||||||||||
| Increase (decrease) in contract liabilities | ( | ) | ( | ) | ||||||||||||
| Cash generated from operations | ||||||||||||||||
| Profits tax refunded (paid) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net cash from operating activities | ||||||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||||||
| Additions of financial assets at FVTPL | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Proceeds from disposal of financial assets at FVTPL | ||||||||||||||||
| Receipt of return from movie income right investments | ||||||||||||||||
| Acquisition of property, plant and equipment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Acquisition of intangible assets | ( | ) | ||||||||||||||
| Acquisition of subsidiaries, net of cash acquired | ||||||||||||||||
| Interest received | ||||||||||||||||
| Loan to a third party | ( | ) | ||||||||||||||
| Repayment of loan to a third party | ||||||||||||||||
| Advance to AMTD Group | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Advance to a non-controlling shareholder | ( | ) | ||||||||||||||
| Repayment from AMTD Group | ||||||||||||||||
| Repayment from a non-controlling shareholder | ||||||||||||||||
| Advance to fellow subsidiaries | ( | ) | ||||||||||||||
| Repayment from fellow subsidiaries | ||||||||||||||||
| Net cash from (used in) investing activities | ( | ) | ( | ) | ( | ) | ||||||||||
| CASH FLOW FROM FINANCING ACTIVITIES | ||||||||||||||||
| Proceeds from bank borrowings | ||||||||||||||||
| Proceeds from issue of shares | ||||||||||||||||
| Advance from AMTD Group | ||||||||||||||||
| Repayment to AMTD Group | ( | ) | ||||||||||||||
| Advance from fellow subsidiaries | ||||||||||||||||
| Repayment to fellow subsidiaries | ( | ) | ||||||||||||||
| Repayment to a non-controlling shareholder | ( | ) | ||||||||||||||
| Finance costs paid | ( | ) | ( | ) | ||||||||||||
| Net cash from (used in) financing activities | ( | ) | ||||||||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ( | ) | ||||||||||||
| Cash and cash equivalents at beginning of the year/period | ||||||||||||||||
| Effect of foreign exchange rate changes | ( | ) | ( | ) | ||||||||||||
| Cash and cash equivalents at end of the year/period | ||||||||||||||||
| Represented by: | ||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||
| Cash and cash equivalents classified as assets held for sale | ||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F-6
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 1. | GENERAL |
AMTD Digital Inc. (the “Company”) was incorporated and registered as an exempted company with limited liability in the Cayman Islands under the Companies Act of the Cayman Islands on September 12, 2019. The Company, through its subsidiaries (collectively, the “Group”), is mainly involved in the provision of digital solutions services — financial services, digital solutions services - non financial services, digital media, contents and marketing services and hotel operations, hospitality and very important person (“VIP”) services.
The Company’s ultimate holding company, AMTD Group Inc. (“AMTD Group”), a private company incorporated in the British Virgin Islands (“BVI”) and the Company’s immediate holding company is AMTD IDEA Group, a listed company incorporated in the Cayman Islands.
| 2. | BASIS OF PREPARATION |
Basis of preparation
The Group’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). For the purpose of preparation of the consolidated financial statements, information is considered material if such information is reasonably expected to influence decision made by primary users.
In preparing the consolidated financial statements, the Company’s opening consolidated statement of financial position was prepared as at May 1, 2020, the Company’s date of transition from International Financial Reporting Standards (“IFRS”) to U.S. GAAP. There is no adjustment made by the Company in transitioning its IFRS consolidated financial statements to U.S. GAAP.
The consolidated financial statements have been prepared on a historical cost basis, except for financial assets at fair value through profit or loss which are measured at fair value.
Recent accounting pronouncements
The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 was subsequently amended by ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, ASU 2019-04 Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, and ASU 2019-05, Targeted Transition Relief. In November 2019, the FASB issued ASU 2019-10, which extends the effective date for the adoption of ASU 2016-13. In November 2019, the FASB issued ASU 2019-11 to clarify its new credit impairment guidance in ASU 326. Accordingly, for public entities that are not smaller reporting entities, ASU 2016-13 and its amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For all other entities, this guidance and its amendments will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. As an emerging growth company, the Company adopted this guidance on May 1, 2023 and the adoption of this ASU did not have a material impact on its consolidated financial statements.
F-7
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 2. | BASIS OF PREPARATION - (CONTINUED) |
Recent accounting pronouncements - (Continued)
In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for all entities for fiscal years and interim periods within those fiscal years beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The removed and modified disclosures were adopted on a retrospective basis and the new disclosures were adopted on a prospective basis.
The Company adopted this guidance on date of initial adoption and the adoption of this ASU did not have a material impact on its consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740)—Simplifying the Accounting for Income Taxes. ASU 2019-12 is intended to simplify accounting for income taxes. It removes certain exceptions to the general principles in Topic 740 and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years, with early adoption permitted. The Company adopted this guidance on May 1, 2020 and the adoption of this ASU did not have a material impact on its consolidated financial statements.
| 3. | SIGNIFICANT ACCOUNTING POLICIES |
| (a) | Basis of consolidation |
The consolidated financial statements include the financial statements of the Company and its subsidiaries for the years ended April 30, 2021, 2022 and 2023 and six months ended October 31, 2023. A subsidiary is an entity, directly or indirectly, controlled by the Company. Control is achieved when the Group has power over investee, is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that give the Group the current ability to direct the relevant activities of the investee).
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control described above.
The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.
Profit or loss and each item of other comprehensive income, if any, is attributed to the owners of the parent of the Group (including ordinary shareholders and holders of perpetual securities) and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions among members of the Group are eliminated in full on consolidation.
Non-controlling interests in subsidiaries are presented separately from the Group’s equity therein, which represent present ownership interests entitling their holders to a proportionate share of net assets of the relevant subsidiaries upon liquidation.
F-8
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 3. | SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) |
| (a) | Basis of consolidation - (Continued) |
Changes in the Group’s interests in existing subsidiaries
Changes in the Group’s interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s relevant components of equity and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries, including re-attribution of relevant reserves between the Group and the non-controlling interests according to the Group’s and the non-controlling interests’ proportionate interests.
Any difference between the amount by which the non-controlling interests are adjusted, and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, the assets and liabilities of that subsidiary and non-controlling interests (if any) are derecognized. A gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the carrying amount of the assets (including goodwill), and liabilities of the subsidiary attributable to the owners of the Company. All amounts previously recognized in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary. The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.
| (b) | Business combinations |
A business is an integrated set of activities and assets which includes an input and a substantive process that together significantly contribute to the ability to create outputs. The acquired processes are considered substantive if they are critical to the ability to continue producing outputs, including an organized workforce with the necessary skills, knowledge, or experience to perform the related processes or they significantly contribute to the ability to continue producing outputs and are considered unique or scarce or cannot be replaced without significant cost, effort, or delay in the ability to continue producing outputs.
Acquisitions of businesses, other than business combination under common control are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally recognized in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value, except that:
| ● | deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements are recognized and measured in accordance with relevant guidance; |
| ● | liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with relevant guidance; |
F-9
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 3. | SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) |
| (b) | Business combinations - (Continued) |
| ● | assets (or disposal groups) that are classified as held for sale are measured in accordance with that standard; and |
| ● | lease liabilities are recognized and measured at the present
value of the remaining lease payments as if the acquired leases were new leases at the acquisition date, except for leases for which
the lease terms ends within |
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net amount of the identifiable assets acquired and the liabilities assumed as of acquisition date. If, after re-assessment, the net amount of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognized immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the relevant subsidiary’s net assets in the event of liquidation are initially measured at fair value.
Business combinations under common control
The Company accounts for the business combination with entities under common control using historical carrying values and under a prospective basis (referred to herein as predecessor accounting) which involves the Company accounting for the combination prospectively from the date on which it occurred. For predecessor accounting:
| ● | Assets and liabilities of the acquired entity are stated at carrying amounts in the consolidated financial statements of the controlling party. Fair value measurement is not required. |
| ● | Income statement reflects the results of the combining parties. |
| ● | No new goodwill arises in predecessor accounting. |
| ● | Any difference between the consideration given and the aggregate carrying value of the assets and liabilities of the acquired entity at the date of the transaction is recognized in capital reserve. |
| (c) | Goodwill |
Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business (see the accounting policy above) less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (or group of cash-generating units) that is expected to benefit from the synergies of the combination, which represent the lowest level at which the goodwill is monitored for internal management purposes and not larger than an operating segment.
A cash-generating unit (or group of cash-generating units) to which goodwill has been allocated is tested for impairment annually or more frequently when there is indication that the unit may be impaired. For goodwill arising on an acquisition in a reporting period, the cash-generating unit (or group of cash- generating units) to which goodwill has been allocated is tested for impairment before the end of that reporting period. If the recoverable amount is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill and then to the other assets on a pro-rata basis based on the carrying amount of each asset in the unit (or group of cash-generating units).
F-10
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 3. | SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) |
| (c) | Goodwill - (Continued) |
On disposal of the relevant cash-generating unit or any of the cash-generating unit within the group of cash-generating units, the attributable amount of goodwill is included in the determination of the amount of profit or loss on disposal. When the Group disposes of an operation within the cash-generating unit (or a cash-generating unit within a group of cash-generating units), the amount of goodwill disposed of is measured on the basis of the relative values of the operation (or the cash-generating unit) disposed of and the portion of the cash-generating unit (or the group of cash-generating units) retained.
| (d) | Fair value measurement |
The Group measures its movie income right investments and equity investments at fair value at the end of each reporting period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the consolidated financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
Level 1 — based on quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 — based on valuation techniques for which the lowest level input that is significant to the fair value measurement is observable, either directly or indirectly
Level 3 — based on valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognized at fair value in the consolidated financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
| (e) | Impairment of non-financial assets |
At the end of the reporting period, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets with finite useful lives to determine whether there is any indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the relevant asset is estimated, which is the sum of undiscounted cash flows that are expected to result from the use and eventual disposition of asset or asset group. The recoverable amount of property, plant and equipment and intangible assets with definite life are estimated recoverable amount of an asset group (i.e. the lowest level of identifiable cash flows that are largely independent of the net cash flows of other groups of assets). An impairment loss is recognized for a depreciable or amortizable asset (asset group) only if the carrying amount of the asset (asset group) exceeds its recoverable amount. If the asset is not recoverable, then an asset’s (asset group’s) impairment is calculated with reference to the fair value of that asset (asset group) in comparison to its carrying amount.
F-11
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 3. | SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) |
| (e) | Impairment of non-financial assets - (Continued) |
The Group performs an initial qualitative assessment before proceeding with the quantitative test on goodwill and indefinite life intangible asset. If the Group concludes, based on qualitative assessment, that it is not more likely than not that a reporting unit that goodwill allocated to or indefinite life intangible assets is impaired, then the Group is not required to perform a quantitative test for that reporting unit or indefinite life intangible assets.
Intangible assets with indefinite life are estimated individually. An impairment loss for an indefinite life intangible asset is recognized if the fair value of the asset is less than the asset’s carrying amount. Goodwill is allocated to those reporting units which are operating segments or one level below the operating segment level (component level), if it constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that segment. Goodwill is impaired if the carrying amount of the reporting unit to which it is allocated exceeds the fair value of the reporting unit. An impairment is the excess of the reporting unit’s carrying amount over its fair value.
Corporate assets are not allocated to asset groups in testing long-lived assets for impairment. An additional high-level of asset group is identified (which may be at the entity level), which is tested for impairment after the related lower-level assets groups have been tested.
An impairment loss is not reversed if the fair value of the impaired asset or asset group increase subsequently.
| (f) | Revenue from contracts with customers |
Revenue from contracts with customers is recognized when control of goods or services is transferred to the customers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.
When the consideration in a contract includes a variable amount, the amount of consideration is estimated to which the Group will be entitled in exchange for transferring the goods or services to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
Revenue is derived from the commissions and fees from the digital solutions services - financial services and membership fee from the digital solutions services - non financial services, income from digital media, content, and marketing services, and income from hotel operations, hospitality and VIP services.
Digital solutions services — financial services
The
Group earns commission income by facilitating the arrangement between insurance company partners and individuals/businesses. The service
promised to the customer is placement of an effective insurance or reinsurance policy. Commission revenue is usually a percentage of
the premium paid by the insured and generally depends upon the type of insurance or reinsurance policy and the insurance company partner.
Revenue is recognized at a point in time upon execution and effectiveness of insurance contracts. The Group allows a credit period up
to
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
F-12
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 3. | SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) |
| (f) | Revenue from contracts with customers - (Continued) |
Digital media, content, and marketing services
The Group provides digital media, content, and marketing services to its customers on its multimedia channels. The Group recognizes revenues of the digital media, content, and marketing services over the contract term during which the content is displayed.
Hotel operations, hospitality and VIP services
The Group provides accommodations and other ancillary services to hotel guests. Revenue of hotel operations, hospitality and VIP services are recognized over time by reference to the progress towards complete satisfaction of the relevant performance obligation, as the hotel guest simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs.
A contract liability represents the Group’s obligation to transfer services to a customer for which the Group has received consideration (or an amount of consideration is due) from the customer.
| (g) | Contract liabilities |
A contract liability is recognized when the payment is made and received or the payment is due (whichever is earlier) from a customer before the Group transfers the related goods or services. Contract liabilities are recognized as revenue when the Group performs under the contract (i.e., transfers control of the related goods or services to the customer).
For certain customers, the Group requires upfront payment and recorded such upfront fee as contract liabilities in other payables and accruals. Upfront fee is recognized as revenue based on the time elapsed for the service period.
| (h) | Foreign currencies |
In preparing the financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recognized at the rates of exchanges prevailing on the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are recognized in profit or loss in the period in which they arise.
For the purposes of presenting the consolidated financial statements, the assets and liabilities of the Group’s operations are translated into the presentation currency of the Group using exchange rates prevailing at the end of each reporting period. Income and expenses items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange differences arising, if any, are recognized in other comprehensive income and accumulated in equity under the heading of exchange reserve (attributed to non-controlling interests as appropriate).
On the disposal of a foreign operation (that is, a disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that includes a foreign operation), all of the exchange differences accumulated in equity in respect of that operation attributable to the owners of the Company are reclassified to profit or loss.
| (i) | Employee benefits |
Retirement benefit costs
Payments to defined contribution retirement benefit plans are recognized as an expense when employees have rendered service entitling them to the contributions.
F-13
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 3. | SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) |
| (i) | Employee benefits - (Continued) |
Short-term employee benefits
Short-term employee benefits are recognized at the undiscounted amount of the benefits expected to be paid as and when employees rendered the services. All short-term employee benefits are recognized as an expense.
A liability is recognized for benefits accruing to employees (such as wages and salaries and annual leave) after deducting any amount already paid.
| (j) | Government grants |
Government grants are not recognized until there is reasonable assurance that the Group will comply with the conditions attaching to them and the grants will be received.
Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate.
Government grants related to income that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the period in which they become receivable. Such grants are presented under other income.
| (k) | Share-based payments |
Equity-settled share-based payments transactions
Restricted ordinary shares granted to employees
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date.
The fair value of the equity-settled share-based payments determined at the grant date without taking into consideration all non-market vesting conditions is expensed on a straight-line basis over the vesting period.
When the restricted ordinary shares are vested, the amount previously recognized in share-based payment reserve will be transferred to share premium.
| (l) | Property, plant and equipment |
Property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use.
Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to profit or loss in the year in which it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a major inspection is capitalized in the carrying amount of the asset as a replacement. Where significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognizes such parts as individual assets with specific useful lives and depreciates them accordingly.
Depreciation is calculated on a straight-line basis to write off the cost of each item of property, plant and equipment to its residual value over its estimated useful life.
Where parts of an item of property, plant and equipment have different useful lives, the cost of that item is allocated on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the depreciation method are reviewed, and adjusted if appropriate, at least at each financial year end.
An item of property, plant and equipment including any significant part initially recognized is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or retirement recognized in profit or loss in the year the asset is derecognized is the difference between the net sales proceeds and the carrying amount of the relevant asset.
F-14
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 3. | SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) |
| (m) | Intangible assets |
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at costs less accumulated amortization and any accumulated impairment losses. Amortization for intangible assets with finite useful lives is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
Intangible asset acquired in a business combination
Intangible asset acquired in a business combination are recognized separately from goodwill and are initially recognized at their fair value at the acquisition date (which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business combination with finite useful lives are reported at costs less accumulated amortization and any accumulated impairment losses being their fair value at the date of the revaluation less subsequent accumulated amortization and any accumulated impairment losses, on the same basis as intangible assets that are acquired separately. Intangible assets acquired in a business combination with indefinite useful lives are carried at cost less any subsequent accumulated impairment losses.
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or disposal. Gains and losses arising from derecognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is derecognized.
| (n) | Taxation |
Income tax comprises current and deferred tax. Income tax relating to items recognized outside profit or loss is recognized outside profit or loss, either in other comprehensive income or directly in equity.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period, taking into consideration interpretations and practices prevailing in the countries in which the Group operates.
Deferred tax is provided, using the liability method, on all temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
F-15
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 3. | SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) |
| (o) | Financial instruments - Investments and other financial assets |
The Group’s financial assets are classified into financial assets at fair value through profit or loss and loans and receivables. The classification depends on nature and purpose of financial assets and is determined at the time of initial recognition.
Financial assets at fair value through profit or loss
Equity investments are generally measured at fair value with changes in fair value recognized through profit or loss.
Loans and receivables
Loans and receivables are classified as either held-for-sale or held-for-investment. When the Group holds an originated or purchased loans or receivables for which it has the intent and ability to hold for the foreseeable future or to maturity or payoff, the loans or receivables should be classified as held-for-investment. Loans and receivables held-for-investment are measured at their amortized cost. If the Group intends to sell loans or receivables, the loans or receivables should be classified as held for sale. Loans and receivables classified as loans held for sale are measured at the lower of cost or fair value, or carried at fair value if the fair value option is elected.
All regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
Financial assets at amortized cost
Financial assets at amortized cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognized in the consolidated statements of profit or loss when the asset is derecognized, modified or impaired.
The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income and interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts and payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are carried in the consolidated statements of financial position at fair value with net changes in fair value recognized in profit or loss.
This category includes derivative instruments and equity investments which the Group had not irrevocably elected to classify at fair value through other comprehensive income. Dividends income which is derived from Group’s ordinary course of business is recognized as revenue in the consolidated statements of profit or loss when the right of payment has been established, it is probable that the economic benefits associated with the dividend will flow to the Group and the amount of the dividend can be measured reliably.
F-16
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 3. | SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) |
| (p) | Derecognition of financial assets |
Financial assets are derecognized when the Group surrenders control over those assets. The Group has surrendered control over transferred assets only if all the following conditions are met.
| ● | Legal control: The transferred assets is isolated from the Group, i.e. put legally beyond the reach of the Group. |
| ● | Actual control: (i) the transferee has the right to pledge or exchange the assets (or beneficial interests) that it received; and (ii) no condition both (a) constrains the transferee from taking advantage of its right to pledge or exchange and (b) provides more than a trivial benefit to the Group. |
| ● | Effective control: The Group does not maintain effective control over the transferred financial assets or third party beneficial interests related to those transferred assets. |
In derecognizing a transferred financial assets, a gain or loss is recognized based on the difference between the carrying amount of the financial assets of the carrying amount and the sum of the proceeds received for the asset or the participating interest derecognized.
| (q) | Impairment of financial assets |
The Group utilizes the expected credit losses (“ECL”) model to determine an allowance that reflects its best estimate of the expected credit losses on accounts receivable, prepayments, deposits and other receivables which is recorded as a liability to offset the receivables. The ECL model is prepared after considering historical experience, current conditions, and reasonable and supportable economic forecasts to estimate expected credit losses. Accounts receivable, prepayments, deposits and other receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded as a reduction of bad debt expense.
The Group uses simplified flow rate matrix approach to estimate expected credit losses for the accounts receivable. The allowance for credit loss is estimated for accounts receivable that share similar risk characteristics based on a collective assessment using a combination of measurement models and management judgment. The approach considers factors including historical aging schedule and forward-looking macroeconomic conditions.
The allowance for expected credit loss is disclosed accordingly in the relevant notes.
General approach
The ECL model is based on a single measurement approach of full lifetime ECL throughout the life of an instrument.
Interest income is calculated based on the gross carrying amount of the financial asset unless the financial asset is credit-impaired, in which case interest income is calculated based on amortized cost of the financial asset.
F-17
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 3. | SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) |
| (q) | Impairment of financial assets - (Continued) |
Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:
| a) | significant financial difficulty of the issuer or the borrower; |
| b) | a breach of contract, such as a default or past due event; |
| c) | the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider; |
| d) | it is becoming probable that the borrower will enter bankruptcy or other financial reorganization; or |
| e) | the disappearance of an active market for that financial asset because of financial difficulties. |
Write-off policy
The Group writes off a financial asset when there is information indicating that the counterparty is in severe financial difficulty and there is no realistic prospect of recovery, for example, when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings.
Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice where appropriate. A write-off constitutes a derecognition event. Any subsequent recoveries are recognized in profit or loss.
Measurement and recognition of ECL
The measurement of ECL is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data and forward-looking information. Estimation of ECL reflects an unbiased and probability-weighted amount that is determined with the respective risks of default occurring as the weights.
Generally, the ECL is the difference between all contractual cash flows that are due to the Group in accordance with the contract and the cash flows that the Group expects to receive, discounted at the effective interest rate determined at initial recognition.
ECL for trade receivables from contract with customers are considered on a collective basis taking into consideration past due information and relevant credit information such as forward looking macroeconomic information.
For collective assessment, the Group takes into consideration the following characteristics when formulating the grouping:
| ● | Past-due status; |
| ● | Nature, size and industry of debtors; and |
| ● | External credit ratings where available. |
The grouping is regularly reviewed by management to ensure the constituents of each group continue to share similar credit risk characteristics.
Interest income is calculated based on the gross carrying amount of the financial asset unless the financial asset is credit-impaired, in which case interest income is calculated based on amortized cost of the financial asset.
The Group recognizes an impairment gain or loss in profit or loss for all financial instruments by adjusting their carrying amount, with the exception of trade receivables from contracts with customers where the corresponding adjustment is recognized through a loss allowance account.
F-18
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 3. | SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) |
| (r) | Financial liabilities |
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at amortized cost or at fair value through profit or loss (warrants and derivative financial instruments), as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of financial liabilities at amortized cost, net of directly attributable transaction costs. Transaction costs directly attributable to the acquisition of financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
The Group’s financial liabilities include accounts payable, bank borrowings, financial liabilities included in other payables and accruals, derivative financial liability and convertible bond.
Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification as follows:
Financial liabilities at amortized cost
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost, using the effective interest rate method unless the effect of discounting would be immaterial, in which case they are stated at cost. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the effective interest rate amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortization is included in finance costs in profit or loss.
F-19
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 3. | SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) |
| (s) | Derecognition of financial liabilities |
A financial liability is derecognized when the obligation under the liability is discharged or canceled, or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition of a new liability, and the difference between the respective carrying amounts is recognized in profit or loss.
| (t) | Classification as debt or equity |
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
| (u) | Equity instruments |
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs.
Repurchase of the Company’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancelation of the Company’s own equity instruments.
| (v) | Cash and cash equivalents |
Cash and cash equivalents presented on the consolidated statement of financial position include:
| (a) | cash, which comprises of cash on hand and demand deposits, excluding bank balances that are subject to regulatory restrictions that result in such balances no longer meeting the definition of cash; and |
| (b) | cash equivalents, which comprises of short-term (generally with original maturity of three months or less), highly liquid investments that are readily convertible to a known amount of cash and which are subject to an insignificant risk of changes in value. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. |
For the purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above.
F-20
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 3. | SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) |
| (w) | Fiduciary bank balances |
The fiduciary bank balances are in relation to the money deposited by clients in the course of the conduct of the regulated activities under insurance brokerage business. These clients’ monies are maintained in segregated bank accounts. The Group acts as an agent in placing the insurable risks of their clients with insurers and, as such, generally is not entitled to the premiums or liable for claims arising from such transactions. Other than the commissions earned on the transaction which is recognized as revenue of the Group, the Group does not recognize other amounts received from clients in its profit or loss. The clients’ money is recognized in fiduciary bank balances and a corresponding deposit liability is established in favor of the insurer or the policyholder and recognized on the consolidated statements of financial position as clients’ monies held on trust. However, the Group does not have a currently enforceable right to offset those payables with the deposits placed and the Group is entitled to retain the interest income on any cash balances arising from these transactions.
| (x) | Investments in joint ventures |
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
The Group’s investment in joint ventures are stated in the consolidated statement of financial position at cost and the Group’s share of net assets under the equity method of accounting, less any impairment losses. The financial statements of joint ventures used for equity accounting purposes are prepared using uniform accounting policies as those of the Group for similar transactions and events in similar circumstances. Appropriate adjustments have been made to conform the joint venture’s accounting policies to those of the Group. The Group’s share of the post-acquisition results and other comprehensive income of joint ventures is included in the consolidated statement of profit or loss and consolidated statement of comprehensive income, respectively. Changes in net assets of joint venture other than profit or loss and other comprehensive income are not accounted for unless such changes resulted in changes in ownership interest held by the Group. When the Group’s share of losses of a joint venture exceeds the Group’s interest in that joint venture exceeds the Group’s interest in that joint venture, the Group discontinues recognizing its share of further losses. Additional losses are recognized only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the joint venture.
On acquisition of the investment in a joint venture, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognized as goodwill, which is included within the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognized immediately in profit or loss in the period in which the investment is acquired.
F-21
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 3. | SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) |
| (x) | Investments in joint ventures - (Continued) |
Impairments of investments in joint ventures are recognized only if the impairment are other than temporary. Evidence of a loss in value might include, but would not necessarily be limited to, absence of an ability to recover the carrying amount of the investment or inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment. A fair value of investments in joint ventures that is less than its carrying amount may indicate a loss in investments in joint ventures. An impairment loss of investments in joint ventures that is other than a temporary decline is recognized to profit or loss and such impairment loss cannot be reversed subsequently.
When a group entity transacts with a joint venture of the Group, profits and losses resulting from the transactions with the joint venture are recognized in the Group’s consolidated financial statements only to the extent of interests in the joint venture that are not related to the Group.
| (y) | Non-current assets held for sale |
Non-current assets (and disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in the relevant subsidiary after the sale.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell, except for financial assets within the scope of IFRS 9, which continue to be measured in accordance with the accounting policies as set out in respective sections.
| (z) | Borrowing costs |
Borrowing costs not directly attributable to the acquisition, construction or production of qualifying assets are recognized as expenses in profit or loss in the period in which they are incurred.
F-22
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 4. | KEY SOURCES OF ESTIMATION UNCERTAINTY |
In the application of the Group’s accounting policies, which are described in note 3, the Company is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of each reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Fair value of unlisted equity investments and movie income right investments
The Group’s unlisted equity instruments and movie income right investments are measured at fair value with fair value being determined based on significant unobservable inputs using valuation techniques. Judgment and estimation are required in establishing the relevant valuation techniques and the relevant inputs thereof. Changes in assumptions relating to these factors could result in material adjustments to the fair value of these instruments.
Credit risk management and ECL estimation
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties, as a means of mitigating the risk of financial loss from defaults. The Group’s exposure of its counterparties is continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that are reviewed and approved by the management periodically.
The carrying amount of financial assets recorded in the consolidated financial statements, grossed up for any allowances for losses, represents the Group’s maximum exposure to credit risk.
Other than accounts receivable mentioned in note 21, the credit risk on liquid funds is limited because the counterparties are mainly banks with sound credit. The directors of the Company consider the credit risk on other receivables are not significant after considering counterparties’ financial background and creditability. As of April 30, 2021, 2022 and 2023 and October 31, 2023, the ECL of other receivables is considered as insignificant.
The directors of the Company continuously monitor the credit quality and financial position of the immediate holding company and the level of exposure to ensure that the follow-up action is taken to recover the debt. The directors of the Company make individual assessment based on historical settlement records, past experience, and also quantitative and qualitative information that are reasonable and supportive forward-looking information (i.e. the forecasted default rate expected by the international credit-rating agencies). As of April 30, 2021, 2022 and 2023 and October 31, 2023, the ECL of amount due from immediate holding company is considered as insignificant.
F-23
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 5. | REVENUE |
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 | ||||||||||||||||
| Digital solutions services — financial services | ||||||||||||||||
| Total | ||||||||||||||||
| Timing of revenue recognition | ||||||||||||||||
| A point in time | ||||||||||||||||
| Over time | ||||||||||||||||
| Total | ||||||||||||||||
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 | ||||||||||||||||
| Digital solutions services — financial services | ||||||||||||||||
| Digital media, content, and marketing services | ||||||||||||||||
| Total | ||||||||||||||||
| Timing of revenue recognition | ||||||||||||||||
| A point in time | ||||||||||||||||
| Over time | ||||||||||||||||
| Total | ||||||||||||||||
F-24
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 5. | REVENUE - (CONTINUED) |
| Disaggregation of revenue from contracts with customers - (Continued) |
Year ended April 30, 2023
| Segments | Digital solutions services — non financial services | Digital solutions services — financial services | Hotel operations, hospitality and VIP services | Digital media, content, and marketing services and others | Total | |||||||||||||||
| US$ | US$ | US$ | US$ | US$ | ||||||||||||||||
| Types of services | ||||||||||||||||||||
| Digital solutions services — non financial services | ||||||||||||||||||||
| Digital solutions services — financial services | ||||||||||||||||||||
| Digital media, content, and marketing services | ||||||||||||||||||||
| Hotel operations, hospitality and VIP services | ||||||||||||||||||||
| Total | ||||||||||||||||||||
| Timing of revenue recognition | ||||||||||||||||||||
| A point in time | ||||||||||||||||||||
| Over time | ||||||||||||||||||||
| Total | ||||||||||||||||||||
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 | ||||||||||||||||||||
| Digital solutions services — financial services | ||||||||||||||||||||
| Digital media, content, and marketing services | ||||||||||||||||||||
| Hotel operations, hospitality and VIP services | ||||||||||||||||||||
| Total | ||||||||||||||||||||
| Timing of revenue recognition | ||||||||||||||||||||
| A point in time | ||||||||||||||||||||
| Over time | ||||||||||||||||||||
| Total | ||||||||||||||||||||
F-25
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 6. | OPERATING SEGMENTS |
The Group
operates its businesses in
| (a) | The digital solutions services — non financial services segment: The Group provides its institutional and corporate clients with exclusive access to the membership program; |
| (b) | The digital solutions services — financial services segment: The Group provides primarily corporate clients with insurance brokerage services; |
| (c) | Hotel operations, hospitality and VIP services segment: The Group engages in hotel investments, hotel operations, hospitality and VIP services since the acquisition of AMTD Assets in February 2023; and |
| (d) | The digital media, content, and marketing services and others segment: The Group engages in digital media, content, and marketing business in which the Group creates and promotes digital solutions content by investing in and developing multimedia channels to provide users and audiences access to content medium through a comprehensive library of traditional and digital movies, podcasts, webinars and live videos offered by content providers and online media platforms and invests in innovative technology companies which operate digital non financial license businesses through strategic investments. |
Segment revenues and results
The following is an analysis of the Group’s revenues and results by operating and reportable segments:
For the year ended April 30, 2021
| Digital solutions services — non financial services | Digital solutions services — financial services | Digital media, content, and marketing services and others | Consolidated | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| Segment revenues | ||||||||||||||||
| Revenue from external customers | ||||||||||||||||
| Revenue from related parties | ||||||||||||||||
| Changes in fair value on financial assets measured at FVTPL | ||||||||||||||||
| Segment profits | ||||||||||||||||
| Unallocated: | ||||||||||||||||
| Other gains and losses | ( | ) | ||||||||||||||
| Corporate expenses | ( | ) | ||||||||||||||
| Profit before tax | ||||||||||||||||
F-26
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 6. | OPERATING SEGMENTS - (CONTINUED) |
Segment revenues and results - (Continued)
For the year ended April 30, 2022
| Digital solutions services — non financial services | Digital solutions services — financial services | Digital media, content, and marketing services and others | Consolidated | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| Segment revenues | ||||||||||||||||
| Revenue from external customers | ||||||||||||||||
| Revenue from related parties | ||||||||||||||||
| Changes in fair value on financial assets measured at FVTPL | ||||||||||||||||
| Segment profits | ||||||||||||||||
| Unallocated: | ||||||||||||||||
| Other income | ||||||||||||||||
| Other gains and losses | ||||||||||||||||
| Corporate expenses | ( | ) | ||||||||||||||
| Profit before tax | ||||||||||||||||
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 | ||||||||||||||||||||
| Revenue from related parties | ||||||||||||||||||||
| Changes in fair value on financial assets measured at FVTPL | ||||||||||||||||||||
| Segment profits/(losses) | ( | ) | ||||||||||||||||||
| Unallocated: | ||||||||||||||||||||
| Other income | ||||||||||||||||||||
| Other gains and losses | ||||||||||||||||||||
| Corporate expenses | ( | ) | ||||||||||||||||||
| Profit before tax | ||||||||||||||||||||
F-27
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 6. | OPERATING SEGMENTS - (CONTINUED) |
Segment revenues and results - (Continued)
For the six months ended October 31, 2023
| Digital solutions services — non financial services | Digital solutions services — financial services | Hotel operations, hospitality and VIP services | Digital media, content, and marketing services and others | Consolidated | ||||||||||||||||
| US$ | US$ | US$ | US$ | US$ | ||||||||||||||||
| Segment revenues | ||||||||||||||||||||
| Revenue from external customers | ||||||||||||||||||||
| Revenue from related parties | ||||||||||||||||||||
| Changes in fair value on financial assets measured at FVTPL | ||||||||||||||||||||
| Segment profits/(losses) | ( | ) | ( | ) | ||||||||||||||||
| Unallocated: | ||||||||||||||||||||
| Other income | ||||||||||||||||||||
| Other gains and losses | ||||||||||||||||||||
| Corporate expenses | ( | ) | ||||||||||||||||||
| Profit before tax | ||||||||||||||||||||
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$
During the year ended April 30, 2022, the Group’s revenue from customers, based on the location
of services, are US$
During the year ended April 30, 2023, the Group’s revenue from customers, based on the location
of services, are US$
During the six months ended October 31, 2023, the Group’s revenue
from customers, based on the location of services, are US$
F-28
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 7. | FINANCE COSTS |
| Year ended April 30, | Six months ended October 31, | |||||||||||||||
| 2021 | 2022 | 2023 | 2023 | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| Interest on bank borrowings | ||||||||||||||||
| Interest on amount due to a non-controlling shareholder | ||||||||||||||||
| 8. | CHANGES IN FAIR VALUE ON FINANCIAL ASSETS MEASURED AT FVTPL |
Details of the disposal of financial assets at FVTPL are disclosed in note 20.
| 9. | OTHER INCOME |
| Year ended April 30, | Six months ended October 31, | |||||||||||||||
| 2021 | 2022 | 2023 | 2023 | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| Bank and other interest income | ||||||||||||||||
| Government grant | ||||||||||||||||
| Others | ||||||||||||||||
| 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 | ( | ) | ( | ) | ||||||||||||
| Recovery of accounts and other receivables written off | ||||||||||||||||
| Gain on disposal of subsidiaries | ||||||||||||||||
| ( | ) | |||||||||||||||
During the six months ended October 31, 2023, the Company disposed of certain subsidiaries which principally engaged in digital solution services – non financial services.
F-29
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 11. | INCOME TAX EXPENSE |
| Year ended April 30, | Six months ended October 31, | |||||||||||||||
| 2021 | 2022 | 2023 | 2023 | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| Hong Kong Profits Tax | ||||||||||||||||
| - Current tax | ||||||||||||||||
| - (Over) underprovision in prior years | ( | ) | ( | ) | ( | ) | ||||||||||
| Deferred tax (note 25) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Under the two-tiered profits
tax rates regime in Hong Kong, the first HK$
Singapore CIT is calculated at
The Company’s subsidiaries established
in Canada is subject to Federal and Ontario provincial income taxes at an aggregate rate of
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 | ||||||||||||||||
| Tax at the domestic income tax rate of 16.5% | ||||||||||||||||
| Tax effect of income not taxable for tax purpose | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Tax effect of expenses not deductible for tax purpose | ||||||||||||||||
| Tax effect of share of losses of joint ventures | ||||||||||||||||
| Tax effect of tax losses not recognized | ||||||||||||||||
| Utilization of tax losses previously not recognized | ( | ) | ||||||||||||||
| (Over) underprovision in prior years | ( | ) | ( | ) | ( | ) | ||||||||||
| Effect of different tax rates of subsidiaries operating in other jurisdictions | ( | ) | ( | ) | ( | ) | ||||||||||
| Others | ( | ) | ( | ) | ||||||||||||
| Income tax expense for the year/period | ||||||||||||||||
The Group has unused tax
losses of US$
F-30
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 12. | PROFIT FOR THE YEAR/PERIOD |
Profit for the year/period has been arrived at after charging:
| Year ended April 30, | Six months ended October 31, | |||||||||||||||
| 2021 | 2022 | 2023 | 2023 | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| Staff costs | ||||||||||||||||
| Salaries, allowances and other benefits | ||||||||||||||||
| Retirement benefit scheme contributions (note) | ||||||||||||||||
| Share of losses of joint ventures (including in other expenses) | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Note: | The Group operates a Mandatory Provident Fund Scheme and Central Provident Fund Scheme for all qualifying employees in Hong Kong and Singapore, respectively. The assets of the schemes are held separately from those of the Group, in funds under the control of trustees. |
| 13. | EARNINGS PER SHARE |
The calculation of the basic and diluted earnings per share attributable to owners of the Company is based on the following data:
| Year ended April 30, | Six months ended October 31, | |||||||||||||||
| Earnings figures are calculated as follows: | 2021 | 2022 | 2023 | 2023 | ||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| 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 | ||||||||||||||||
| Effect of dilutive potential ordinary shares - restricted ordinary shares and restricted shares unit | ||||||||||||||||
| Weighted average number of ordinary shares for the purpose of diluted earnings per share | ||||||||||||||||
| 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
F-31
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 14. | ACQUISITIONS OF SUBSIDIARIES - (CONTINUED) |
| (a) | Acquisition of AMTD Assets in 2023 - (Continued) |
The transaction was completed and
AMTD Assets was consolidated by Company since February 6, 2023 based on business combination under common control using predecessor
accounting prospectively. The difference between the consideration and the net asset value of AMTD Assets, amounting to approximately
US$
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 | ||||
| Property, plant and equipment | ||||
| Cash and cash equivalents | ||||
| Accounts receivable | ||||
| Prepayments, deposits and other receivables | ||||
| Amount due from a non-controlling shareholder | ||||
| Accounts payable | ( | ) | ||
| Other payables and accruals | ( | ) | ||
| Contract liabilities | ( | ) | ||
| Bank borrowings | ( | ) | ||
| Amount due to a non-controlling shareholder | ( | ) | ||
| Amount due to AMTD Group | ( | ) | ||
| ( | ) | |||
| Reserves arising on acquisition: | ||||
| Consideration transferred | ||||
| Plus: non-controlling interests of AMTD Assets | ( | ) | ||
| Plus: non-controlling interests of AMTD Assets’ subsidiaries | ||||
| Less: recognized amounts of net assets acquired | ||||
Net cash inflow on acquisition of AMTD Assets:
| Cash consideration paid | ||||
| Add: cash and cash equivalent balances acquired | ||||
F-32
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 14. | ACQUISITIONS OF SUBSIDIARIES - (CONTINUED) |
| (b) | Acquisition of PolicyPal Pte Ltd. (“PolicyPal”) in 2020 |
On August 3, 2020, the Group acquired
Consideration transferred:
| US$ | ||||
| Cash | ||||
| Ordinary shares of the Company | ||||
| Total | ||||
As part of the consideration for the
acquisition of PolicyPal,
Acquisition-related costs amounting to US$
Assets acquired and liabilities recognized at the date of acquisition:
| US$ | ||||
| Property, plant and equipment | ||||
| Intangible asset | ||||
Accounts receivable, deposits and other receivables | ||||
| Cash and cash equivalents | ||||
| Accounts and other payables | ( | ) | ||
| Deferred tax liability | ( | ) | ||
F-33
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 14. | ACQUISITIONS OF SUBSIDIARIES - (CONTINUED) |
| (b) | Acquisition of PolicyPal in 2020 - (Continued) |
Assets acquired and liabilities recognized at the date of acquisition - (Continued):
The gross contractual amounts of those trade
and other receivables acquired amounted to US$
The intangible asset represents the developed
technology. Such intangible asset is amortized on a straight-line basis over
Goodwill arising on acquisition:
| US$ | ||||
| Consideration transferred | ||||
| Plus: non-controlling interests ( | ||||
| Less: net assets acquired | ( | ) | ||
| Goodwill arising on acquisition | ||||
The non-controlling
interests (
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 | ( | ) | ||
| Add: cash and cash equivalents balances acquired | ||||
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$
Had the acquisition been completed on May 1, 2020,
revenue for the year ended April 30, 2021 of the Group would have been US$
In determining the pro-forma revenue and profit of the Group had PolicyPal been acquired at the beginning of the current year, the directors of the Company have calculated depreciation of plant and equipment and amortization of intangible asset acquired on the basis of the fair values arising in the initial accounting for the business combination rather than the carrying amounts recognized in the pre-acquisition financial statements.
F-34
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 15. | ASSETS CLASSIFIED AS HELD FOR SALE/ LIABILITIES ASSOCIATED WITH ASSETS CLASSIFIED AS HELD FOR SALE |
In April 2023, the Company entered into an agreement to dispose of part of its digital solutions services — financial services. In October 2023, the Company intended to dispose of part of its hotel operations, hospitality and VIP services. The assets and liabilities attributable to these businesses, which are expected to be sold within twelve months, have been classified as disposal groups held for sale and are presented separately in the consolidated statement of financial position (see below). The disposal group is part of the Group’s digital solutions services — financial services segment as of April 30, 2023 and October 31, 2023 and part of hotel operations, hospitality and VIP services as of October 31, 2023. The net proceeds of disposal are expected to exceed the net carrying amount of the relevant assets and liabilities and accordingly, no impairment loss has been recognized. Both disposal groups are disposed subsequently to October 31, 2023.
The major classes of assets and liabilities of the disposal groups classified as held for sale are as follows:
| As of April 30, 2023 | As of October 31, 2023 | |||||||
| US$ | US$ | |||||||
Goodwill | ||||||||
| Property, plant and equipment | ||||||||
| Intangible assets | ||||||||
| Accounts receivable | ||||||||
| Prepayments, deposits and other receivables | ||||||||
| Due from a minority shareholder of subsidiaries | ||||||||
| Fiduciary bank balances | ||||||||
| Cash and cash equivalents | ||||||||
| Total assets classified as held for sale | ||||||||
| Client’s monies held on trust | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Due to AMTD Group | ( | ) | ||||||
| Other payables and accruals | ( | ) | ( | ) | ||||
| Deferred tax liability | ( | ) | ( | ) | ||||
| Total liabilities associated with assets classified as held for sale | ( | ) | ( | ) | ||||
| 16. | INTERESTS IN JOINT VENTURES |
| As of April 30, | As of October 31, | |||||||||||||||
| 2021 | 2022 | 2023 | 2023 | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| Cost of investments in joint ventures net of accumulated share of loss and other comprehensive expense | ( | ) | ( | ) | ||||||||||||
| Due from joint ventures | ||||||||||||||||
Amounts due from joint ventures are unsecured, interest-free and repayable on demand.
Details of material joint ventures as at April 30, 2023 and October 31, 2023 are as follows:
| Name | Place of incorporation | Percentage of ownership interest held by the Company | Principal activity | |||||||
| DHI Holdings (S) Pte Ltd. | % | and VIP services in Singapore | ||||||||
F-35
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 16. | INTERESTS IN JOINT VENTURES - (CONTINUED) |
The following table illustrates the summarized financial information in respect of the joint ventures adjusted for any differences in accounting policies and reconciled to the carrying amount in the consolidated financial statements:
| As of April 30, 2023 | As of October 31, 2023 | |||||||
| US$ | US$ | |||||||
| Total assets | ||||||||
| Total liabilities | ( | ) | ( | ) | ||||
| Net liabilities | ( | ) | ( | ) | ||||
| Proportion of the Group’s ownership | % | % | ||||||
| Group’s share of net assets of joint ventures | ( | ) | ( | ) | ||||
| Due from joint ventures | ||||||||
| Interests in joint ventures | ||||||||
| Additional information of the joint ventures | ||||||||
| Cash and cash equivalents | ||||||||
| Amounts due to shareholders | ( | ) | ( | ) | ||||
| Bank borrowings | ( | ) | ( | ) | ||||
| February 6, 2023 to April 30, 2023 | May 1, 2023 to October 31, 2023 | |||||||
| US$ | US$ | |||||||
| Revenue | ||||||||
| Loss for the period | ( | ) | ( | ) | ||||
| Other comprehensive expense for the period | ||||||||
| Total comprehensive income for the period | ( | ) | ( | ) | ||||
| 17. | GOODWILL |
| US$ | ||||
| COST | ||||
| As of May 1, 2020 | ||||
| Acquisition of subsidiaries (note 14(b)) | ||||
| Exchange realignment | ( | ) | ||
| As of April 30, 2021 | ||||
| Exchange realignment | ( | ) | ||
| As of April 30, 2022 | ||||
| Reclassified as held for sale (note 15) | ( | ) | ||
| Exchange realignment | ||||
| As of April 30, 2023 and October 31, 2023 | ||||
F-36
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 17. | GOODWILL - (CONTINUED) |
For the purpose of impairment testing as of April 30, 2021 and 2022,
goodwill has been allocated to a cash-generating unit providing digital solutions services — financial services. The recoverable
amount of this cash-generating unit has been determined based on value in use calculation which uses cash flow projections based on financial
budgets approved by management covering a 5-year period, and pre-tax discount rate of
Management believes that any reasonably possible changes in any of these assumptions would not cause the carrying amount of this cash-generating unit to exceed its recoverable amount.
| 18. | PROPERTY, PLANT AND EQUIPMENT |
| Hotel properties | Computer equipment | Total | ||||||||||
| US$ | US$ | US$ | ||||||||||
| COST | ||||||||||||
| As of May 1, 2020 | ||||||||||||
| Acquisition of subsidiaries (note 14(b)) | — | |||||||||||
| Additions | — | |||||||||||
| As of April 30, 2021 | ||||||||||||
| Additions | — | |||||||||||
| Exchange realignment | — | ( | ) | ( | ) | |||||||
| As of April 30, 2022 | ||||||||||||
| Additions | — | |||||||||||
| Acquired on acquisition of subsidiaries (note 14(a)) | ||||||||||||
| Reclassified as held for sale (note 15) | ( | ) | ( | ) | ||||||||
| Exchange realignment | ( | ) | ( | ) | ||||||||
| As of April 30, 2023 | ||||||||||||
| Additions | ||||||||||||
| Disposal of subsidiaries | ( | ) | ( | ) | ||||||||
| Reclassified as held for sale (note 15) | ( | ) | ( | ) | ||||||||
| Exchange realignment | ( | ) | ( | ) | ||||||||
| As of October 31, 2023 | ||||||||||||
| ACCUMULATED DEPRECIATION | ||||||||||||
| As of May 1, 2020 | ||||||||||||
| Provided for the year | ||||||||||||
| As of April 30, 2021 | ||||||||||||
| Provided for the year | ||||||||||||
| As of April 30, 2022 | ||||||||||||
| Provided for the year | ||||||||||||
| Reclassified as held for sale (note 15) | ( | ) | ( | ) | ||||||||
| Exchange realignment | ( | ) | ( | ) | ||||||||
| As of April 30, 2023 | ||||||||||||
| Provided for the period | ||||||||||||
| Disposal of subsidiaries | ( | ) | ( | ) | ||||||||
| Reclassified as held for sale | ( | ) | ( | ) | ||||||||
| Exchange realignment | ||||||||||||
| As of October 31, 2023 | ||||||||||||
| CARRYING VALUES | ||||||||||||
| As of April 30, 2021 | ||||||||||||
| As of April 30, 2022 | ||||||||||||
| As of April 30, 2023 | ||||||||||||
| As of October 31, 2023 | ||||||||||||
F-37
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 18. | PROPERTY, PLANT AND EQUIPMENT - (CONTINUED) |
The property, plant and equipment are depreciated on a straight-line basis over their estimated useful lives as follows:
| Computer equipment | ||
| Hotel properties | Over the shorter of the useful life ranged |
A hotel property of
US$
| 19. | INTANGIBLE ASSETS |
| Developed technology | Brand name | Total | ||||||||||
| US$ | US$ | US$ | ||||||||||
| COST | ||||||||||||
| As of May 1, 2020 | ||||||||||||
| Acquisition of subsidiaries (note (14(b)) | ||||||||||||
| Exchange realignment | ( | ) | ( | ) | ||||||||
| As of April 30, 2021 | ||||||||||||
| Additions | ||||||||||||
| Exchange realignment | ( | ) | ( | ) | ( | ) | ||||||
| As of April 30, 2022 | ||||||||||||
| Reclassified as held for sale (note 15) | ( | ) | ( | ) | ||||||||
| Exchange realignment | ||||||||||||
| As of April 30, 2023 and October 31, 2023 | ||||||||||||
| AMORTIZATION | ||||||||||||
| As of May 1, 2020 | ||||||||||||
| Charge for the year | ||||||||||||
| As of April 30, 2021 | ||||||||||||
| Charge for the year | ||||||||||||
| Exchange realignment | ( | ) | ( | ) | ||||||||
| As of April 30, 2022 | ||||||||||||
| Charge for the year | ||||||||||||
| Reclassified as held for sale (note 15) | ( | ) | ( | ) | ||||||||
| Exchange realignment | ||||||||||||
| As of April 30, 2023 | ||||||||||||
| Charge for the period | ||||||||||||
| As of October 31, 2023 | ||||||||||||
| CARRYING VALUES | ||||||||||||
| As of April 30, 2021 | ||||||||||||
| As of April 30, 2022 | ||||||||||||
| As of April 30, 2023 | ||||||||||||
| As of October 31, 2023 | ||||||||||||
During
the year ended April 30, 2022, the Group acquired a brand name for its digital media, content, and marketing business with a cash
consideration of US$
The intangible assets are amortized on a straight-line basis as follows:
| Developed technology | ||
| Brand name |
F-38
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 20. | FINANCIAL ASSETS AT FVTPL |
| As of April 30, | As of October 31, | |||||||||||||||
| 2021 | 2022 | 2023 | 2023 | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| Unlisted equity securities (note (i)) | ||||||||||||||||
| Movie income right investments (note (ii)) | ||||||||||||||||
| Presented as: | ||||||||||||||||
| Current | ||||||||||||||||
| Non-current | ||||||||||||||||
Notes:
| (i) |
| During the year ended April 30, 2022, the Group disposed a financial asset measured at FVTPL to an independent third party with a gain of US$ |
During the year ended April 30, 2023, the Group disposed financial assets measured at FVTPL to independent third parties at the consideration of US$
During the six months ended October 31,
2023, the Group disposed financial assets measured at FVTPL to an independent third party at a consideration of US$
| (ii) |
F-39
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 21. | ACCOUNTS RECEIVABLE, PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES |
| As of April 30, | As of October 31, | ||||||||||||
| 2021 | 2022 | 2023 | 2023 | ||||||||||
| US$ | US$ | US$ | US$ | ||||||||||
| Commission receivable from digital solutions services — financial services | |||||||||||||
| Accounts receivable arising from the digital solutions services — non financial services | |||||||||||||
| Accounts receivable from hotel operations, hospitality and VIP services | |||||||||||||
| Total accounts receivable | |||||||||||||
| Consideration receivable on disposal | |||||||||||||
| Prepayments | |||||||||||||
| Deposits | |||||||||||||
| Note receivables (note (i)) | |||||||||||||
| Other receivables (note (ii)) | |||||||||||||
| Deferred issue costs | |||||||||||||
| Prepayment for subscription of bond instruction (note (iii)) | |||||||||||||
| Prepayments, deposits and other receivables | |||||||||||||
| Presented as: | |||||||||||||
| Current | |||||||||||||
| Non-current | |||||||||||||
Notes:
| (i) |
| (ii) |
| (iii) |
The
Group allows a credit period of up to 15 days to its commission receivable arising from digital solutions services —
financial services and a credit period of ranging from 0 to
F-40
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 22. | ACCOUNTS PAYABLE, OTHER PAYABLES AND ACCRUALS |
| As of April 30, | As of October 31, | |||||||||||||||
| 2021 | 2022 | 2023 | 2023 | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| Accounts payable arising from digital solutions services — financial services | ||||||||||||||||
| Accounts payable arising from hotel operations, hospitality and VIP services | ||||||||||||||||
| Total accounts payable | ||||||||||||||||
| Consideration payable on movie income right investments | ||||||||||||||||
| Payable to former subsidiaries | ||||||||||||||||
| Other payables and accruals | ||||||||||||||||
| Accrued issue cost | ||||||||||||||||
| Total other payables and accruals | ||||||||||||||||
| 23. | BANK BORROWINGS |
| As of April 30, | As of October 31, | |||||||||||||||
| 2021 | 2022 | 2023 | 2023 | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| United States dollars - unsecured | ||||||||||||||||
| Hong Kong dollars - secured | ||||||||||||||||
As of April 30, 2023 and
October 31, 2023, bank borrowings of US$
These bank
borrowings carry a weighted average contractual interest rate of
As of April 30, 2023 and October 31, 2023, the Group has a bank borrowing
of US$
As of April 30, 2023 and October 31, 2023, the Group has a bank borrowing
of US$
| 24. | CONTRACT LIABILITIES |
| As of April 30, | As of October 31, | |||||||||||||||
| 2021 | 2022 | 2023 | 2023 | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| Digital solutions services — non financial services income | ||||||||||||||||
| Digital media, content, and marketing services income | ||||||||||||||||
| Hotel operations, hospitality and VIP services income | ||||||||||||||||
| Presented as: | ||||||||||||||||
| Current | ||||||||||||||||
| Non-current | ||||||||||||||||
Contract liabilities are classified as current and non-current based on the Group’s earliest obligation to transfer services to the customers.
F-41
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 25. | DEFERRED TAX LIABILITY |
The following is the deferred tax liability recognized and movements thereon:
| Intangible assets | ||||
| US$ | ||||
| As of May 1, 2020 | ||||
| Acquisition of a subsidiary (note 14(b)) | ||||
| Credit to profit or loss (note 11) | ( | ) | ||
| Exchange realignment | ( | ) | ||
| As of April 30, 2021 | ||||
| Credit to profit or loss (note 11) | ( | ) | ||
| Exchange realignment | ( | ) | ||
| As of April 30, 2022 | ||||
| Credit to profit or loss (note 11) | ( | ) | ||
| Reclassified as liabilities associated with assets classified as held for sale (note 15) | ( | ) | ||
| Exchange realignment | ||||
| As of April 30, 2023 and October 31, 2023 | ||||
F-42
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 26. | SHARE CAPITAL AND TREASURY SHARES |
| Class A ordinary shares | Class B ordinary shares | Total | Treasury shares— Class B ordinary shares | |||||||||||||||||||||||||||||
| Number of shares | Share capital | Number of shares | Share capital | Number of shares | Share capital | Number of shares | Share capital | |||||||||||||||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||||||||||||||||||
| Ordinary shares of US$0.0001 each | ||||||||||||||||||||||||||||||||
| Authorized | ||||||||||||||||||||||||||||||||
| Issued and fully paid | ||||||||||||||||||||||||||||||||
| As of May 1, 2020 | ||||||||||||||||||||||||||||||||
| Issuance of shares (notes (a) and (e)) | ||||||||||||||||||||||||||||||||
| Share-based compensation (note (b)) | ||||||||||||||||||||||||||||||||
| Acquisitions of subsidiaries (note (c)) | ||||||||||||||||||||||||||||||||
| Transfer of shares (note (d)) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| As of April 30, 2021 | ||||||||||||||||||||||||||||||||
| Transfer of shares (note (f)) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| As of April 30, 2022 | ||||||||||||||||||||||||||||||||
| Issuance of shares (note (g)) | ||||||||||||||||||||||||||||||||
| Shares repurchases (note (h)) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Acquisition of subsidiaries (note (i)) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| As of April 30, 2023 | ||||||||||||||||||||||||||||||||
| Issuance of shares (note (j)) | ||||||||||||||||||||||||||||||||
| As of October 31, 2023 (note (k)) | ||||||||||||||||||||||||||||||||
Notes:
| (a) |
| (b) |
| (c) |
| (d) |
| (e) |
F-43
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 26. | SHARE CAPITAL AND TREASURY SHARES - (CONTINUED) |
| (f) |
| (g) |
| (h) |
| (i) |
| (j) |
| (k) |
| 27. | CREDIT RISK AND IMPAIRMENT ASSESSMENT |
Credit risk refers to the risk that the Group’s counterparties default on their contractual obligations resulting in financial losses to the Group. The Group’s credit risk exposures are primarily attributable to accounts receivable, other receivables and deposits, bank balances, fiduciary bank balances and amounts due from AMTD Group, joint ventures and a non-controlling shareholder. The Group does not hold any collateral or other credit enhancements to cover its credit risks associated with its financial assets.
The Group performed impairment assessment for financial assets under ECL model. Information about the Group’s credit risk management, maximum credit risk exposures and the related impairment assessment, if applicable, are summarized as below:
Commission receivable arising from the digital solutions services — financial services, accounts receivable arising from the digital solutions services — non financial services and accounts receivable from hotel operations, hospitality and VIP services
The Group has concentration of credit risk as
F-44
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 27. | CREDIT RISK AND IMPAIRMENT ASSESSMENT - (CONTINUED) |
Commission receivable arising from the digital solutions services — financial services, accounts receivable arising from the digital solutions services — non financial services and accounts receivable from hotel operations, hospitality and VIP services - (Continued)
In addition, the Group performs impairment assessment under ECL model on commission receivable from digital solutions services — financial services with significant balances or credit-impaired and accounts receivable arising from digital solutions services — non financial services individually. The remaining commission receivable and receivable from hotel operations, hospitality and VIP services are assessed collectively and grouped based on shared credit risk characteristics by reference to the Group’s past due status of outstanding balances, nature, size and industry of debtors and external credit ratings. The Company assesses the ECL of commission receivable arising from the digital solutions services — financial services and accounts receivable from hotel operation services based on historical observed default rates over the expected life of the debtors and forward-looking information that is available without undue cost or effort. The forward looking information is considered through the use of publicly available economic data and forecasts, including macroeconomic data such as GDP growth and unemployment rate. For the years ended April 30, 2021, 2022 and 2023 and six months ended October 31, 2023, the Group assessed the ECL for commission receivable arising from the digital solutions services — financial services, accounts receivable arising from digital solutions services — non financial services and accounts receivable from hotel operations, hospitality and VIP services to be insignificant and thus no loss allowance is recognized.
Fiduciary bank balances and bank balances
Credit risk on fiduciary bank balances and bank balances is limited because the counterparties are reputable banks with high credit ratings assigned by international credit agencies. The Group assessed ECL for fiduciary bank balances and bank balances by reference to information relating to probability of default and loss given default of the respective credit rating grades published by external credit rating agencies. Based on the average loss rates, the ECL on fiduciary bank balances and bank balances is considered to be insignificant and therefore no loss allowance was recognized.
Amounts due from AMTD Group, joint ventures and a non-controlling shareholder
The Group regularly evaluates the business performance of AMTD Group, joint ventures and non-controlling shareholders. The Group’s credit risks in these balances are considered low due to the strong financial positions of these entities. The management believes that there are no significant increases in credit risk of these amounts since initial recognition and the Group provided impairment based on ECL. For the years ended April 30, 2021, 2022 and 2023 and six months ended October 31, 2023, the Group assessed the ECL for amounts due from AMTD Group, joint ventures and a non-controlling shareholder to be insignificant and thus no loss allowance is recognized.
Consideration receivables, other receivables and deposits
For consideration receivables, other receivables and deposits, the Group regularly reviews the recoverable amount of each individual debtor to ensure that adequate impairment losses are recognized for irrecoverable debts. The Group performs impairment assessment under ECL model on such consideration receivables, other receivables and deposits individually. The Group believes that there is no significant increase in credit risk of these amounts since initial recognition and the Group provided impairment based on ECL. For the years ended April 30, 2021, 2022 and 2023 and six months ended October 31, 2023, the Group assessed the ECL for consideration receivables, other receivables and deposits are insignificant and thus no loss allowance is recognized.
F-45
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 28. | FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS |
Some of the Group’s financial instruments are measured at fair value for financial reporting purposes. The management of the Company are responsible for determining the appropriate valuation techniques and inputs for fair value measurements.
In estimating the fair value, the Group uses observable market data to the extent it is available. Where Level 1 inputs are not available, the Group makes reference to the prices of recent transactions or engages third-party qualified valuers to perform the valuation.
The management of the Company works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model. The management reports the findings to the board of directors of the Company to explain the cause of fluctuations in the fair value.
| (i) | Fair value of the Group’s financial assets that are measured at fair value on a recurring basis |
The Group’s investments in private equity
are measured at fair value at the end of each reporting period.
| Fair value as at | |||||||||||||||||||
| April 30, | October 31, | Fair value | Valuation technique(s) | ||||||||||||||||
| Financial assets | 2021 | 2022 | 2023 | 2023 | hierarchy | and key inputs | |||||||||||||
| US$ | US$ | US$ | US$ | ||||||||||||||||
| Financial assets at FVTPL - unlisted equity securities | Level 2 | ||||||||||||||||||
| Level 3 | |||||||||||||||||||
| Movie income right investments | Level 2 | ||||||||||||||||||
| Level 3 | |||||||||||||||||||
F-46
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 28. | FAIR VALUE MEASUREMENT OF FINANCIAL INSTRUMENTS - (CONTINUED) |
| (i) | Fair value of the Group’s financial assets that are measured at fair value on a recurring basis - (Continued) |
Reconciliation of Level 3 fair value measurements
| Unlisted investments classified as equity instruments at FVTPL | Movie income right investments | Total | ||||||||||
| US$ | US$ | US$ | ||||||||||
| At May 1, 2020 | ||||||||||||
| Total gains in profit or loss | ||||||||||||
| Transfer | ( | ) | ( | ) | ||||||||
| Additions | ||||||||||||
| Exchange realignment | ( | ) | ( | ) | ( | ) | ||||||
| At April 30, 2021 | ||||||||||||
| Total gains in profit or loss | ||||||||||||
| Transfer from Level 2 to Level 3 | ||||||||||||
| Receipt of investment return | ( | ) | ( | ) | ||||||||
| Disposals | ( | ) | ( | ) | ||||||||
| Exchange realignment | ( | ) | ( | ) | ( | ) | ||||||
| At April 30, 2022 | ||||||||||||
| Total gains in profit or loss | ||||||||||||
| New investment | ||||||||||||
| Disposals | ( | ) | ( | ) | ||||||||
| Exchange realignment | ( | ) | ||||||||||
| At April 30, 2023 | ||||||||||||
| Total gains in profit or loss | ||||||||||||
| Disposals | ( | ) | ( | ) | ||||||||
| Exchange realignment | ( | ) | ( | ) | ||||||||
| At October 31, 2023 | ||||||||||||
| (ii) | Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring basis |
The Company considers that the carrying amount of the Group’s financial assets and financial liabilities recorded at amortized cost in the consolidated financial statements approximate their fair values due to the short-term nature of these instruments. Such fair values have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis.
F-47
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 29. | RELATED PARTY DISCLOSURES |
In addition to the transactions and balances disclosed elsewhere in the consolidated financial statements, the Group had the following significant related party transactions during the reporting period:
| Year ended April 30, | Six months ended October 31, | |||||||||||||||||
| Relationship | Nature of transactions | 2021 | 2022 | 2023 | 2023 | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||||
| Ultimate holding company | ||||||||||||||||||
| Ultimate holding company | ||||||||||||||||||
| Ultimate holding company | ||||||||||||||||||
| Fellow subsidiaries | ||||||||||||||||||
| A related company | ||||||||||||||||||
| Immediate holding company | ||||||||||||||||||
| Immediate holding company | ||||||||||||||||||
| Ultimate holding company | ||||||||||||||||||
Compensation of key management personnel
The directors of the Company were considered to be the key management personnel of the Company. The remuneration of key management personnel is determined with regard to the performance of individuals and market trends.
Centralized cash management and major non-cash transactions
Treasury functions of the Group are conducted centrally under AMTD Group and inter-company fund transfers were carried out among the entities within AMTD Group. The treasury function manages available funds at AMTD Group level and allocates the funds to various entities within AMTD Group for their operations. In May and August 2019 and April 2021, certain entities within AMTD Group had entered into intercompany financing and offsetting agreements pursuant to which certain intercompany receivables and payables are to be netted-off for settlement purpose. These constituted material non-cash transactions.
During the year ended April 30, 2021, amount
due from AMTD Group, amount due to AMTD Group, amounts due from fellow subsidiaries and amounts due to fellow subsidiaries, which amounted
to US$
During the year ended April 30, 2023, the
Group repurchased
As of
April 30, 2022, the amount due from AMTD Group was unsecured, interest free and repayable on demand. As of April 30, 2023 and
October 31, 2023, the amount due from AMTD Group was unsecured, bearing interest of
As of April 30, 2023, the amount due from a non-controlling shareholder is unsecured, interest-free and repayable on demand.
F-48
AMTD DIGITAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands of U.S. dollars (“US$”), except for share and per share data)
| 29. | RELATED PARTY DISCLOSURES - (CONTINUED) |
Centralized cash management and major non-cash transactions - (Continued)
As at April 30, 2023 and
October 31, 2023, the amount due to a non-controlling shareholder comprised of (i) interest bearing balance of US$
| 30. | SHARE-BASED COMPENSATION |
On August 3, 2020, the Company granted
On July 31, 2021, the Company
granted
On September 3, 2021, PolicyPal, a subsidiary
of the Company, granted
The non-vested shares and RSUs are not transferable and may not be sold or pledged and the holder has no voting or dividend right. In the event a non-vested shareholder’s employment for the Group is terminated for any reason prior to the third anniversary of the grant date, the holder’s right to the non-vested shares and RSUs will terminate effectively. The outstanding non-vested shares and RSUs shall be forfeited and automatically transferred to and reacquired by the Group without any consideration.
The aggregate fair value of the restricted
shares and RSUs at grant dates was US$
The share-based payment
expense amounted to US$
As of October
31, 2023 there was US$
F-49
| 31. | TRANSITION PERIOD COMPARATIVE DATA |
| Six months ended | ||||||||
| October 31, | ||||||||
| 2022 | 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | ||||||||
| Revenue from contracts with customers | ||||||||
| Employee benefits expense | ( | ) | ( | ) | ||||
| Advertising and promotion expense | ( | ) | ( | ) | ||||
| Premises and office expenses | ( | ) | ( | ) | ||||
| Legal and professional fee | ( | ) | ( | ) | ||||
| Depreciation and amortization | ( | ) | ( | ) | ||||
| Finance costs | ( | ) | ||||||
| Other expenses | ( | ) | ( | ) | ||||
| Changes in fair value on financial assets measured at FVTPL | ||||||||
| Other income | ||||||||
| Other gains and losses, net | ( | ) | ||||||
| Profit before tax | ||||||||
| Income tax expense | ( | ) | ( | ) | ||||
| Profit for the year/period | ||||||||
| 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 | ||||||||
| Items that may be reclassified subsequently to profit or loss: | ||||||||
| Exchange differences arising on translation of foreign operations | ( | ) | ( | ) | ||||
| Share of other comprehensive expense of joint ventures | ||||||||
| ( | ) | ( | ) | |||||
| Other comprehensive (expense) income for the year/period | ( | ) | ||||||
| Total comprehensive income for the year/period | ||||||||
| Profit (loss) for the year/period attributable to: | ||||||||
| - Owners of the Company | ||||||||
| - Non-controlling interests | ( | ) | ( | ) | ||||
| Total comprehensive income (expense) for the year/period attributable to: | ||||||||
| - Owners of the Company | ||||||||
| - Non-controlling interests | ( | ) | ( | ) | ||||
| Earnings per share | ||||||||
| - Basic (US$) | ||||||||
| - Diluted (US$) | ||||||||
| 32. | PENDING CLAIMS AND LITIGATION |
The Group is subject to periodic legal or administrative proceedings in the ordinary course of business. Such proceedings are reviewed with the Group’s legal advisors. The Group does not believe that any pending legal proceeding to which the Group is a party will have a material effect on its business, results of operations or cash flows.
F-50