AMTD Digital Inc.’s First Half 2023 Financials Achieved over 130% Increase in Net Profit

Rhea-AI Summary

AMTD Digital Inc. (NYSE: HKD) announced a significant financial turnaround for the six months ending October 31, 2022. Profit surged by 131.8% to HK$83.7 million (US$10.7 million), while total comprehensive income rose by 134.8% to HK$83.3 million (US$10.6 million). Revenue also increased to HK$109.3 million (US$13.9 million), driven by growth in digital financial services and solutions. The company boasts a strong cash position of US$138.7 million and successfully integrated AMTD Assets Group, enhancing its portfolio with properties valued at approximately US$500 million. Despite global challenges, the management remains optimistic about future growth in the digital media and entertainment sectors.

Positive

• Profit increased by 131.8% to HK$83.7 million (US$10.7 million).
• Total comprehensive income rose by 134.8% to HK$83.3 million (US$10.6 million).
• Revenue grew to HK$109.3 million (US$13.9 million).
• Cash and cash equivalents totaled US$138.7 million.
• Successfully integrated AMTD Assets Group with a fair market value of US$500 million.

Negative

• None.

NEW YORK & SINGAPORE & HONG KONG--(BUSINESS WIRE)-- AMTD Digital Inc. (“AMTD Digital” or the “Company”) (NYSE: HKD), a NYSE-listed company and a subsidiary of AMTD IDEA Group (“AMTD IDEA”) (NYSE: AMTD; SGX: HKB), today announced its unaudited financial results for the six months ended October 31, 2022. AMTD IDEA is a subsidiary of AMTD Group Inc. (“AMTD Group”) and AMTD Group is a Hong Kong-headquartered conglomerate focusing on the “IDEA” strategy to develop the four pillars of core businesses, namely international connectors and business services, digital solutions, education and training, and premium assets and hospitality.

Highlights of Interim Financial Results and Key Changes for the Six Months Ended October 31, 2022

• Profit and total comprehensive income for the six months ended October 31, 2022, increased by 131.8% and 134.8%, respectively, as compared to the same period in prior year to HK$83.7 million (US$10.7 million equivalent) and HK$83.3 million (US$10.6 million equivalent), respectively.

• The Company successfully expanded its digital media, content and marketing business. To date, AMTD Digital Media and Entertainment Group, being AMTD Digital’s media, cultural and entertainment arm, and including therein AMTD Digital Media Limited, has become one of the major operating subsidiaries under AMTD Digital, and boasts enormous credentials and experience to produce, promote and distribute quality, entertaining and cultural movies, contents, images and outputs to the public.

• Developments subsequent to October 31, 2022:

1. Previously announced transaction of injecting AMTD Assets Group (“AMTD Assets”) into AMTD Digital has been closed successfully in February 2023. AMTD Assets represents the letter “A” of AMTD Group’s “IDEA” strategy, and holds a global portfolio of premium whole building properties, with a fair market value of approximately US$500 million. Following the completion of the transaction, AMTD Digital owns 100% of the equity interest in AMTD Assets.
2. AMTD Digital is strong in its cash and cash equivalent position. As of October 31, 2022, the Company had a cash and cash equivalent balance of US$138.7 million. In addition, the Company was granted a clean facility line amounting to US$15 million from an international financial institution in February 2023.

Statement from the Board Members and Senior Management:

Dr. Timothy Tong, chairman of the board of directors and independent director of AMTD Digital, commented, “The six-month period that ended on October 31, 2022 was filled with challenges arising from the COVID pandemic and geopolitical tensions around the world. Despite having to face such strong head-wind that was not conducive to business growth, AMTD Digital achieved a nearly 132% net profit growth as compared to the same period a year earlier and was successfully listed on the New York Stock Exchange on July 15, 2022. Further, the management of AMTD Digital has positioned the company for further business growth through strategic investments into the digital entertainment and life style sectors, combining multi-media channels, intellectual properties and digital tools to provide VIP services to customers. I thank the management for working so diligently and am cautiously optimistic about the future prospect for strong performance by the company.”

Dr. Feridun Hamdullahpur, chairman of AMTD IDEA Group (NYSE: AMTD; SGX: HKB) and an independent director of AMTD Digital, commented, “I am pleased to see very strong performance by AMTD Digital delivering solid results for the six months ended October 31, 2022. AMTD Digital has shown resilience, perseverance, and a great deal of creativity moving the company solidly and confidently forward through global turbulent waters. I congratulate the leadership team for their dedication, commitment and hard work.”

Mr. Mark Lo, CEO and director of AMTD Digital, commented, “For most part of 2022 our markets continued to be affected by the ongoing COVID pandemic and travel restrictions, geopolitical tensions and rising U.S. interest rates environment. However, we are delighted to report that our business growth remained solid, with interim results demonstrating an over 130% net profit growth against a challenging macro backdrop. Our company also achieved a significant milestone in July 2022 which was the successful listing on the New York Stock Exchange amid an overall challenging environment in the capital markets. Post IPO we continued to demonstrate our ambition and commitment to expansion, with recent developments to strengthen our presence into the digital media and entertainment segment, including various film productions. Lastly, I would like to thank the board for its support and guidance and also the strong commitment from the management team. I would also like to take this opportunity to express my gratitude to our shareholders, business partners and clients for their support and business opportunities.”

Interim Financial Results for the Six Months Ended October 31, 2022

Revenue

Our revenue from contracts with customers increased from HK$101.4 million for the six months ended October 31, 2021 to HK$109.3 million (US$13.9 million) for the six months ended October 31, 2022, primarily due to the expansion of the following businesses.

• Digital financial services. Our commission income from the digital financial services segment increased from HK$3.7 million for the six months ended October 31, 2021 to HK$4.6 million (US$0.6 million) for the six months ended October 31, 2022.

• Digital solutions. Our fee income from the digital solutions segment increased from HK$97.5 million for the six months ended October 31, 2021 to HK$100.7 million (US$12.8 million) for the six months ended October 31, 2022.

• Corporate. Our digital media, content, and marketing services income from corporate segment increased from HK$0.2 million for the six months ended October 31, 2021 to HK$4.0 million (US$0.5 million) for the six months ended October 31, 2022.

Employee benefits expense

Our employee benefits expense decreased by 13.5% from HK$34.1 million for the six months ended October 31, 2021 to HK$29.5 million (US$3.7 million) for the six months ended October 31, 2022, primarily due to the decrease in share-based payment expense.

Advertising and promotion expense

Our advertising and promotion expense decreased by 19.4% from HK$3.1 million for the six months ended October 31, 2021 to HK$2.5 million (US$0.3 million) for the six months ended October 31, 2022 mainly due to a decrease in third-party media sponsorship during the six months ended October 31, 2022 as we successfully developed and evolved into a global media company.

Premises and office expenses

Our premises and office expenses increased by 8.6% from HK$3.5 million for the six months ended October 31, 2021 to HK3.8 million (US$0.5 million) for the six months ended October 31, 2022 mainly due to our business expansion in the six months ended October 31, 2022.

Legal and professional fee

Our legal and professional fee decreased by 5.1% from HK$9.9 million for the six months ended October 31, 2021 to HK$9.4 million (US$1.2 million) for the six months ended October 31, 2022 mainly due to decrease in legal and professional fee as our listing was completed in July 2022.

Depreciation and amortization

Our depreciation and amortization expenses remained steadily at HK$3.3 million (US$0.4 million) for the six months ended October 31, 2022.

Changes in fair value on financial assets measured at fair value through profit or loss (“FVTPL”)

Our changes in fair value on financial assets measured at FVTPL was HK$0.3 million in the six months ended October 31, 2021, compared to HK$2.7 million (US$0.3 million) in the six months ended October 31, 2022, primarily due to the unrealized gain from certain investments in the six months ended October 31, 2022.

Interest income from notes receivable

Our interest income from notes receivable of HK$24.2 million (US$3.1 million) was recorded for the six months ended October 31, 2022 due to the new notes issued by counter-parties in arm’s length transactions after October 31, 2021.

Income tax expense

We incurred income tax expense of HK$11.4 million and HK$13.6 million (US$1.7 million) for the six months ended October 31, 2021 and 2022, respectively. The increase in our income tax expense was attributable to an increase in assessable profits in the six months ended October 31, 2022.

Profit for the period

As a result of the foregoing, our profit increased from HK$36.1 million for the six months ended October 31, 2021 to HK$83.7 million (US$10.7 million) for the six months ended October 31, 2022.

Exchange rate

The Company’s business is mainly conducted in Hong Kong and most of its revenues generated are denominated in Hong Kong dollars. This announcement contains translations of Hong Kong dollars into U.S. dollars solely for the convenience of the reader. Unless otherwise noted, all translations from Hong Kong dollars to U.S. dollars are made at a rate of HK$7.8498 to US$1.00, the exchange rate in effect as of October 31, 2022 as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. No representation is made that the Hong Kong dollar amounts could have been, or could be, converted, realized, or settled into U.S. dollars at that rate on October 31, 2022, or at any other rate.

About AMTD Digital Inc.

AMTD Digital Inc. (NYSE: HKD) is a comprehensive digital solutions platform in Asia. Its one-stop digital solutions platform operates four main business lines including digital financial services, digital solutions, digital media, content and marketing, as well as digital investments. It is the fusion reactor at the core of the AMTD SpiderNet ecosystem and empowers and integrates the various digital businesses within its ecosystem. For AMTD Digital Inc.’s announcements, please visit https://ir.amtdigital.net/investor-news.

Safe Harbor Statement

This press release contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to,” and similar statements. Statements that are not historical facts, including statements about the beliefs, plans, and expectations of AMTD Digital, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Further information regarding these and other risks is included in the filings of AMTD Digital with the SEC. All information provided in this press release is as of the date of this press release, and AMTD Digital does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED OCTOBER 31, 2021 AND 2022

		For the Six Months Ended October 31,
		2021			2022
		HK$			HK$			US$
		(in thousands, except for percentages and per share data)
Revenue from contracts with customers		101,357			109,254			13,918
Employee benefits expense		(34,078	)		(29,525	)		(3,761	)
Advertising and promotion expense		(3,118	)		(2,494	)		(318	)
Premises and office expenses		(3,518	)		(3,783	)		(482	)
Legal and professional fee		(9,911	)		(9,412	)		(1,199	)
Depreciation and amortization		(3,293	)		(3,304	)		(421	)
Other expenses		(888	)		(3,910	)		(498	)
Changes in fair value on financial assets measured at FVTPL		301			2,756			351
Interest income from notes receivable		—			24,245			3,089
Other income		511			13,840			1,763
Other gains and losses, net		196			(332	)		(42	)
Profit before tax		47,559			97,335			12,400
Income tax expense		(11,427	)		(13,588	)		(1,731	)
Profit for the period		36,132			83,747			10,669
Item that may be reclassified subsequently to profit or loss:
Exchange differences arising on translation of foreign operations		(643	)		(425	)		(54	)
Other comprehensive expense for the period		(643	)		(425	)		(54	)
Total comprehensive income for the period		35,489			83,322			10,615
Profit (loss) for the period attributable to:
- Owners of the Company		40,890			87,019			11,086
- Non-controlling interests		(4,758	)		(3,272	)		(417	)
		36,132			83,747			10,669
Total comprehensive income (expense) for the period attributable to:
- Owners of the Company		40,562			86,867			11,067
- Non-controlling interests		(5,073	)		(3,545	)		(452	)
		35,489			83,322			10,615
Earnings per share
- Basic (HK$)		0.61			1.21			0.15
- Diluted (HK$)		0.60			1.21			0.15

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT APRIL 30, 2022 AND OCTOBER 31, 2022

		As of April 30,		As of October 31,
		2022		2022
		HK$		HK$		US$
		(in thousands)
ASSETS
Non-current assets
Goodwill		58,675		58,675		7,475
Property, plant and equipment		126		102		12
Intangible assets		36,418		33,123		4,220
Financial assets at FVTPL		150,134		190,367		24,251
Total non-current assets		245,353		282,267		35,958
Current assets
Accounts receivable		39,545		75,692		9,643
Prepayments and other receivables		289,910		12,172		1,551
Amount due from AMTD Group		2,522,653		2,812,620		358,305
Fiduciary bank balances		11,669		12,088		1,540
Cash and cash equivalents		112,516		1,089,132		138,746
Total current assets		2,976,293		4,001,704		509,785
Total assets		3,221,646		4,283,971		545,743
EQUITY AND LIABILITIES
Current liabilities
Clients’ monies held on trust		6,650		6,870		875
Accounts payable		80		90		11
Other payables and accruals		27,043		38,421		4,895
Contract liabilities		41,523		19,682		2,507
Income tax payable		31,810		13,757		1,753
Total current liabilities		107,106		78,820		10,041
Non-current liabilities
Contract liabilities		5,317		1,111		142
Deferred tax liability		5,771		5,221		665
Total non-current liabilities		11,088		6,332		807
Total liabilities		118,194		85,152		10,848
Capital and reserves
Share capital		52		59		8
Reserves		3,083,933		4,182,838		532,859
Non-controlling interests		19,467		15,922		2,028
Total equity		3,103,452		4,198,819		534,895
Total equity and liabilities		3,221,646		4,283,971		545,743

 

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IR Office

AMTD Digital Inc.

TEL: +852 3163-3298

EMAIL: ir@amtdigital.com

Source: AMTD Digital Inc.

FAQ

What were AMTD Digital's financial results for the six months ended October 31, 2022?

AMTD Digital reported a profit increase of 131.8% to HK$83.7 million (US$10.7 million) and total comprehensive income growth of 134.8% to HK$83.3 million (US$10.6 million). Revenue rose to HK$109.3 million (US$13.9 million).

How much cash does AMTD Digital have as of October 31, 2022?

As of October 31, 2022, AMTD Digital had cash and cash equivalents of US$138.7 million.

What are the key business segments driving AMTD Digital's revenue growth?

The key business segments driving AMTD Digital's revenue growth include digital financial services and digital solutions.

What impacts did AMTD Digital's integration of AMTD Assets Group have?

The integration of AMTD Assets Group enhanced AMTD Digital's portfolio with properties valued at approximately US$500 million.

What is the outlook for AMTD Digital after its recent financial results?

Management expressed optimism for future growth, particularly in the digital media and entertainment sectors.