Financial Performance - Total gross merchandise value for the group reached approximately HKD 4,235,500,000, representing a 4.9% increase compared to the same period last year, outperforming the overall retail market in Hong Kong [7]. - Revenue for the period was HKD 1,897,548, reflecting a 3.8% increase compared to HKD 1,828,567 in the previous year [9]. - The company reported a net loss of HKD 27,478, a decline of 156.4% from a profit of HKD 48,696 in the previous year [9]. - Total gross merchandise value for completed orders gross merchandise value reached HKD 4,199,746, up 5.2% from HKD 3,992,883 year-on-year [9]. - The company reported a net loss of HKD 27,500,000 for the first half of 2024, compared to a profit of HKD 48,700,000 in the same period of 2023 [55]. - Total revenue for the six months ended June 30, 2024, was HKD 1,897,548, an increase of 3.7% from HKD 1,828,567 for the same period in 2023 [74]. - The company reported a loss before tax of HKD 28,899 compared to a profit of HKD 43,400 in the previous year, reflecting a significant decline [74]. - The company reported a total comprehensive loss of HKD 14,093 for the period, compared to a total comprehensive income of HKD 53,188 in the previous year [75]. E-commerce Growth - The group has maintained a steady growth in its e-commerce business, which has been operational for ten years, focusing on continuous improvement and innovation [7]. - The overall strategy includes exploring international markets and diversifying business models to avoid stagnation and potential market exit [7]. - Active users of the HKTVmall app increased to 1,647,000 in June 2024, up from 1,581,000 in June 2023, reflecting a growth trend [16]. - The number of independent customers shopping on HKTVmall rose by 61,000 to 1,218,000 in the first half of 2024, compared to 1,157,000 in the same period of 2023 [17]. - The total merchandise transaction value for products eligible for the eight-hour express delivery service grew approximately 130.0% from December 2023 to June 2024, exceeding the initial target of 120,000 products [38]. - The "Street Market Same-Day Delivery" service saw its total merchandise transaction value grow from HKD 23.3 million in the first half of 2023 to HKD 107.9 million in the first half of 2024, representing a year-on-year growth of 363.1% [43]. - Everuts, launched in January 2023, achieved a total merchandise transaction value of HKD 22.7 million in the first half of 2024, a 136.5% increase compared to the same period in 2023 [43]. Cost Management and Profitability - Adjusted EBITDA decreased by 54.5% to HKD 37,596 from HKD 82,580 year-on-year, with an adjusted EBITDA margin of 0.9% [9]. - The gross profit margin increased to 22.9% in H1 2024 from 22.3% in H1 2023, driven by improved margins in both 1P and 3P businesses [24]. - The 1P business gross margin was intentionally raised to 25.0% in H1 2024, up from 23.5% in H1 2023, through active pricing strategies and cost management [25]. - The company reported a significant non-cash item of investment property valuation loss amounting to HKD 8,550,000 in the first half of 2024 [12]. - Other operating expenses increased by HKD 130,500,000 to HKD 1,044,200,000 in the first half of 2024, up from HKD 913,700,000 in the first half of 2023 [49]. - Delivery costs accounted for 11.8% of the total completed order merchandise transaction value in the first half of 2024, up from 10.9% in the first half of 2023 [53]. Strategic Initiatives - The company is actively promoting two innovative business models: "Street Market Same-Day Delivery" and the global purchasing platform "Everuts," aiming to expand online shopping offerings [7]. - The company plans to invest in advertising and marketing to expand its user base beyond 1.6 million users and attract new customers [8]. - The company aims to increase customer loyalty and shopping frequency on HKTVmall through improved service offerings [35]. - The company is developing a fully automated retail store system, with the first store located in Manchester, UK, expected to enhance efficiency over the next one to two years [45]. - The company plans to allocate approximately HKD 200 million for the expansion of its electronic delivery center in Tseung Kwan O, expected to be completed by the end of 2023 [60]. Market Conditions and Challenges - The retail sales value in Hong Kong for the first half of 2024 decreased by 6.5%, while online retail sales value saw a slight decline of 0.3% compared to the same period last year [7]. - The company anticipates challenges in the retail environment in Hong Kong, maintaining a cautious yet flexible approach to manage its business [63]. - The company recognizes the need for innovation to maintain its unique advantages in the competitive landscape of Hong Kong's retail sector [7]. - The group incurred a loss of HKD 84,500,000 in the new exploration and technology segment for the first half of 2024, compared to a loss of HKD 48,000,000 in the same period of 2023 [56]. Cash Flow and Financial Position - Free cash flow improved significantly to HKD 47,250, compared to a negative HKD 26,560 in the same period last year, marking a 277.9% increase [9]. - Cash position increased by 33.4% to HKD 765,338 from HKD 573,593 at the end of December 2023 [10]. - The group generated a net cash inflow from operating activities of HKD 176,500,000 during the first half of 2024 [58]. - The company reported a significant increase in cash and cash equivalents, with a net increase of HKD 254,167,000 compared to a decrease of HKD 95,632,000 in the prior year [83]. - The total cash position increased primarily due to a net realization of financial assets of HKD 147,900,000 [58]. Shareholder Information - The company has a total of 2,165 full-time employees as of June 30, 2024, down from 2,214 as of December 31, 2023 [73]. - The company did not declare any interim dividend for the six months ended June 30, 2024, consistent with the same period in 2023 [122]. - The board has adopted a dividend policy aimed at providing reasonable returns to investors while retaining sufficient capital for sustainable growth [165]. - The company expects to distribute dividends at 30% to 60% of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) based on current payout ratio guidelines [165].

香港交易及結算所有限公司及香港聯合交易所有限公司對本公告之內容概不 負 責，對 其 準 確 性 或 完 整 性 亦 不 發 表 任 何 聲 明，並 明 確 表 示，概 不 對 因 本 公 告 全部或任何部分內容而產生或因倚賴該等內容而引致之任何損失承擔任何責 任。 香 港 科 技 探 索 有 限 公 司 Hong Kong Technology Venture Company Limited （股份代號：1137） （根據公司條例於香港註冊成立之有限公司） 截至二零二四年六月三 十 日止六個月 之 中 期 業 績 | --- | --- | |-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ...

Financial Performance - Direct merchandise sales for 2023 amounted to HKD 2,393,000,000, a slight decrease from HKD 2,425,600,000 in 2022[12] - The group reported a net profit of HKD 45,321,000 for 2023, a decrease of 78.6% compared to HKD 212,204,000 in 2022[21] - Adjusted EBITDA for the year was HKD 122,717,000, down 61.2% from HKD 316,388,000 in the previous year[27] - Revenue for the year was HKD 3,811,706,000, a slight decrease of 0.4% from HKD 3,828,051,000[27] - The total gross merchandise value (GMV) reached HKD 8,423,983,000, reflecting a 1.8% increase from HKD 8,276,171,000[27] - The net profit margin for the year was 0.6%, down from 2.6% in 2022[27] - The total gross merchandise transaction value for the year 2023 was HKD 8,210,300,000, showing a slight increase from HKD 8,188,100,000 in 2022, reflecting a moderate year-on-year growth rate due to economic constraints and slow retail recovery[76] - The total gross merchandise value of completed orders increased by 1.7% to HKD 8,330,100,000 in 2023, compared to HKD 8,188,100,000 in 2022[150] - The company's revenue decreased by 0.4% year-on-year to HKD 3,811,700,000 in 2023, down from HKD 3,828,100,000 in 2022[150] Operating Expenses - Other operating expenses increased by HKD 110,600,000 to HKD 1,979,300,000 in 2023, compared to HKD 1,868,700,000 in 2022[13] - The operating expenses for the Hong Kong e-commerce segment were HKD 1,740.7 million, which is 21.2% of the total merchandise transaction value in 2023, up from 20.5% in 2022[14] - The new exploration and technology segment's main operating expenses increased to HKD 136.5 million in 2023 from HKD 76.0 million in 2022[14] - The e-commerce operation and support costs as a percentage of total gross merchandise value rose from 4.6% in 2022 to 4.8% in 2023[156] - Operating expenses for O2O store operations increased from 1.8% of total completed order GMV in 2022 to 2.4% in 2023, attributed to a shift back to point-to-point delivery services post-COVID[173] Marketing and Promotions - The company launched a large promotional campaign in November and December 2023, which included distributing cash vouchers of at least HKD 3,000 to HKTVmall users, leading to increased costs[17] - Marketing and promotional expenses represented 2.7% of the total merchandise transaction value in 2023, compared to 2.4% in 2022[14] - A marketing campaign titled "Mom Says It's Good" was launched on November 2, 2023, featuring advertisements in 58 MTR stations and distributing cash vouchers worth at least HKD 3,000 to HKTVmall users[122] - The company has initiated a significant marketing campaign, including creative advertisements covering over 50 MTR stations to promote HKTVmall[63] Customer Engagement and Expansion - The company has established a high-interaction environment through its global interactive shopping live broadcasts, enhancing community engagement with target customers[9] - The company expanded delivery services to cover remote areas, aiming to attract new customer segments[53] - The number of independent customers increased by approximately 104,000 in 2023, reaching a total of about 1,507,000 independent customers[102] - Monthly active app users increased from 1,520,000 in December 2022 to 1,680,000 in December 2023, peaking at 1,780,000 in November 2023[125] - The company aims to enhance user engagement by promoting less frequently purchased product categories and attracting new customers through strategic discounts[122] Strategic Initiatives - The company plans to seize new market opportunities with a new strategic direction[24] - The company is focusing on continuous system design improvements and store operation reviews to enhance future large-scale deployment effectiveness and efficiency[11] - The company is committed to investing in new concepts, technologies, and business developments over the next three to five years, requiring resource allocation and funding[70] - The company is focusing on strengthening its e-commerce foundation by expanding its online merchant base and diversifying product offerings[121] Product and Service Development - The company launched its first automated retail store, "in:Five," in Manchester, UK, allowing customers to pick up products via an app within minutes[149] - The company has launched a second-hand goods trading platform, "EcoMart," to encourage sustainable consumption and strengthen customer connections[65] - The company introduced a new "Display Store" model in December 2023, allowing customers to find independently operated online stores on HKTVmall's search engine[87] - The company expanded its product offerings to approximately 1,600,000 items through over 6,400 merchants and suppliers by December 2023[104] Logistics and Delivery - The company expects to enhance the efficiency of its "last mile" delivery resources through a merchant delivery program launched in the second half of 2022[16] - The "Street Market Same-Day Delivery" service now covers over 90% of HKTVmall's existing customer base, exceeding the 75% target set for 2022[87] - The third-party logistics service enabled a reduction in order-to-delivery time to 8 hours, with significant transaction growth: 198% for a small equipment merchant, 84% for a personal care merchant, and 62% for a pet merchant compared to the same period in 2022[128] - HKTVmall expanded its "last mile" delivery service to the UK, offering nearly 700,000 product choices[86] Market Challenges - The company is facing competitive pressure from domestic physical stores and online shopping platforms, necessitating the introduction of more merchants from outside Hong Kong and potentially engaging in price wars to gain market share[68] - The company is considering adjustments to its future strategies in response to changing consumer behaviors and increased competition from domestic and cross-border retail[90] Financial Health - As of December 31, 2023, cash position is HKD 573,593, a decrease of 18.7% from HKD 705,807 in the previous year[42] - Total equity attributable to shareholders is HKD 2,145,348, down 2.9% from HKD 2,208,793[42] - The number of issued shares decreased by 3.7% to 888,546 thousand shares from 923,090 thousand shares[42] - The net asset value per share increased by 0.8% to HKD 2.41 from HKD 2.39[42] Employee and Corporate Governance - The company reported a gender distribution of 38.9% male and 34.4% female among its workforce[196] - The age group distribution shows 37.1% under 30 years, 37.2% between 30-50 years, and 37.8% over 50 years[196] - 49.8% of the workforce is located outside of Hong Kong, indicating a significant geographical spread[196] - The company provides up to two days of onboarding and safety training for frontline staff[198] - The company has implemented various cybersecurity measures, including a 24-hour managed security operations center and regular security assessments by certified third parties[190]

Annual Results for the Year Ended December 31, 2023 [Group Financial Summary](index=1&type=section&id=Group%20Financial%20Summary) The Group's 2023 performance showed limited growth and reduced profitability due to economic challenges and new investments, with net cash decreasing primarily from share repurchases Group Financial Summary | Metric | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Gross Merchandise Value (GMV) | 8,424,000 | 8,276,200 | | Net Profit | 45,300 | 212,200 | | Adjusted EBITDA | 122,700 | 316,400 | | Net Cash and Liquid Funds | 935,400 | 1,050,300 | - Net cash and liquid funds decreased primarily due to **HKD 110.6 million** used for share repurchases during the year[58](index=58&type=chunk) [Chairman's Statement](index=3&type=section&id=Chairman%27s%20Statement) The Chairman's Statement highlights a complex global environment, structural changes in Hong Kong's economy, and intense competition for HKTVmall, leading the Group to focus on 'Marketplace Same-Day Delivery' and international ventures while prioritizing long-term growth and shareholder returns through share repurchases - Hong Kong's retail sector faces structural changes, weakened economic confidence, and domestic competition, requiring HKTVmall to intensify marketing efforts[60](index=60&type=chunk)[61](index=61&type=chunk) - The Group will accelerate deployment and investment in 'Marketplace Same-Day Delivery' service, viewing it as a unique HKTVmall advantage despite potential short-term losses[56](index=56&type=chunk) - The UK fully automated retail store business remains in an investment phase, requiring one to two years for system and operational refinement, with overseas expansion deemed essential for long-term benefits despite challenges[62](index=62&type=chunk) - Management prioritizes long-term growth and will continue share repurchases to benefit shareholders confident in the Group's long-term investment potential[87](index=87&type=chunk)[88](index=88&type=chunk) [Business Review](index=5&type=section&id=Business%20Review) This section reviews the 2023 performance of Hong Kong's e-commerce and new initiatives businesses, noting a segment reorganization, stable HKTVmall GMV despite slow retail recovery, and progress in new ventures like 'Marketplace Same-Day Delivery' and automated retail stores, all while these new projects remain in an investment loss phase - Hong Kong E-commerce Business segment reorganized to include third-party logistics and ThePlace, while Marketplace Same-Day Delivery was reallocated to New Initiatives and Technology Business[65](index=65&type=chunk)[90](index=90&type=chunk) Completed Order GMV Comparison (2023 vs 2022) | Metric | 2023 (HKD) | 2022 (HKD) | | :--- | :--- | :--- | | HKTVmall Gross Merchandise Value (GMV) | 8,292,900,000 | 8,276,200,000 | | Completed Order GMV | 8,210,300,000 | 8,188,100,000 | - New initiatives (Marketplace Same-Day Delivery, Everuts, fully automated retail stores, and life science projects) generated an adjusted EBITDA loss of approximately **HKD 126.2 million** in 2023, a significant increase from **HKD 57 million** loss in 2022, primarily due to full-year operational startup costs and uncapitalized technology and support costs[58](index=58&type=chunk)[156](index=156&type=chunk) [Hong Kong E-commerce Business](index=5&type=section&id=Hong%20Kong%20E-commerce%20Business) Hong Kong's e-commerce business maintained stable GMV in 2023 despite a slow retail recovery, driven by marketing campaigns that boosted cross-category sales and expanded the user base, though gross margin and blended commission rates declined due to strategic adjustments, while multimedia advertising revenue grew - Quarterly average purchase frequency per customer decreased from **5.1 times** in Q4 2022 to **4.6 times** in Q4 2023[66](index=66&type=chunk) - 'A Ma Dou Wah Zheng' marketing campaign aims to encourage users to purchase less frequently bought product categories and expand the customer base[69](index=69&type=chunk) Product Category GMV Comparison (2023 vs 2022) | Product Category | 2023 (HKD billions) | 2022 (HKD billions) | YoY Growth/Decline (HKD) | YoY Growth/Decline (%) | | :--- | :--- | :--- | :--- | :--- | | Groceries | 3.51 | 4.01 | -0.50 | -12.5% | | Beauty and Health Products | 2.02 | 1.73 | +0.29 | +16.8% | | Electronics and Electrical Appliances | 0.98 | 0.99 | -0.01 | -1.0% | | Pet Supplies | 0.61 | 0.40 | +0.21 | +52.5% | | Home Goods and Furniture | 0.40 | 0.45 | -0.05 | -11.1% | | Others | 0.69 | 0.61 | +0.08 | +13.1% | - Monthly active app users increased from **1,520,000** in December 2022 to **1,680,000** in December 2023, with total unique customers reaching approximately **1,507,000**[73](index=73&type=chunk)[98](index=98&type=chunk) - Third-party logistics services provide 8-hour delivery for HKTVmall merchants, significantly boosting partner merchants' GMV (up to **198%**)[126](index=126&type=chunk) Gross Margin and Blended Commission Rate Comparison (2023 vs 2022) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | 1P Business Gross Margin | 23.6% | 26.2% | | 3P Business Blended Commission Rate | 21.8% | 22.1% | | Total Gross Margin and Blended Commission Rate | 22.3% | 23.4% | - Multimedia advertising revenue grew **14.4%** to **HKD 150.5 million**, indicating increasing adaptation by suppliers, merchants, and partners to leverage the HKTVmall platform for business growth[109](index=109&type=chunk)[132](index=132&type=chunk) [New Initiatives and Technology Business](index=13&type=section&id=New%20Initiatives%20and%20Technology%20Business) New Initiatives and Technology Business made significant strides in 2023, with 'Marketplace Same-Day Delivery' covering over 91.5% of HKTVmall customers and Everuts expanding globally, while the first self-developed fully automated retail store, in:Five, launched in the UK, though all projects remain in an investment phase requiring further system refinement and scaling - 'Marketplace Same-Day Delivery' service covers over **91.5%** of HKTVmall's customer base, offering 3-hour delivery and connecting over **400** market vendors[119](index=119&type=chunk) Marketplace Same-Day Delivery 2023 Performance | Metric | 2023 | | :--- | :--- | | Gross Merchandise Value (GMV) | Approximately HKD 100.6 million | | Growth in Unique Customers | 10 times (within 12 months) | | Monthly GMV Growth | Nearly 10 times (Jan to Dec 2023) | - Everuts' personal shopper network expanded to over **6,000** shoppers across **30** countries and regions, with 2023 GMV of approximately **HKD 30.4 million**[171](index=171&type=chunk) - The first self-developed fully automated retail store, in:Five, launched its pilot in Manchester, UK, in August 2023, featuring one-click app pickup and robot order fulfillment[122](index=122&type=chunk) [Financial Review](index=16&type=section&id=Financial%20Review) This section reviews the Group's 2023 financial performance, noting a slight revenue decrease despite increased completed order GMV, declining direct merchandise sales gross margin, stable concessionaire sales and multimedia advertising revenue, increased operating expenses due to marketing and new initiatives, and significant drops in net profit and adjusted EBITDA, while liquidity remains robust despite reduced total cash and prudent capital expenditure Group Revenue and Completed Order GMV Comparison (2023 vs 2022) | Metric | 2023 (HKD) | 2022 (HKD) | | :--- | :--- | :--- | | Completed Order GMV | 8,330,100,000 | 8,188,100,000 | | Revenue | 3,811,700,000 | 3,828,100,000 | Major Revenue Sources Comparison (2023 vs 2022) | Source | 2023 (HKD) | 2022 (HKD) | | :--- | :--- | :--- | | Direct Merchandise Sales | 2,393,000,000 | 2,425,600,000 | | Concessionaire Sales and Other Service Income | 1,268,200,000 | 1,265,400,000 | | Multimedia Advertising Revenue and Program Copyrights | 150,500,000 | 131,600,000 | | Technology Business Revenue | – | 5,400,000 | - Hong Kong E-commerce Business segment's major operating expenses as a percentage of completed order GMV increased from **20.5%** in 2022 to **21.2%** in 2023, primarily due to increased marketing activities and full-year costs of third-party logistics service trials[8](index=8&type=chunk)[124](index=124&type=chunk)[146](index=146&type=chunk)[181](index=181&type=chunk) Major Operating Expenses Comparison (as % of Completed Order GMV) (2023 vs 2022) | Expense Category | 2023 (%) | 2022 (%) | | :--- | :--- | :--- | | Delivery Costs | 11.3% | 11.7% | | Marketing, Promotion, and O2O Store Marketing Expenses | 2.7% | 2.4% | | O2O Store Operating Expenses | 2.4% | 1.8% | | E-commerce Operations and Support Costs | 4.8% | 4.6% | Group Net Profit and Adjusted EBITDA Comparison (2023 vs 2022) | Metric | 2023 (HKD) | 2022 (HKD) | | :--- | :--- | :--- | | Profit for the Year | 45,300,000 | 212,200,000 | | Adjusted EBITDA | 122,700,000 | 316,400,000 | - Total cash position decreased from **HKD 705.8 million** as of December 31, 2022, to **HKD 573.6 million** as of December 31, 2023, primarily due to investments in financial assets, lease rentals, purchases of property, plant and equipment, share repurchases, and additions to intangible assets[157](index=157&type=chunk) - The Group invested **HKD 258.8 million** in capital expenditure in 2023, maintaining a robust financial position to support continuous business expansion[20](index=20&type=chunk) [Outlook](index=24&type=section&id=Outlook) The outlook section highlights severe challenges for Hong Kong's retail sector and uncertainty regarding the Group's 2026 GMV target due to shifting consumer habits, while outlining specific 2024 business goals for HKTVmall and new initiatives, strategic enhancements, and an updated capital expenditure plan for expanding automated delivery facilities - Hong Kong's retail sector faces challenges, with government forecasting **2.5% to 3.5%** real growth, and shifting consumer shopping habits creating uncertainty for the **HKD 12 billion** GMV target by 2026[39](index=39&type=chunk) HKTVmall Business Targets vs Actual Performance (2024 vs 2023) | Business Target | 2024 Target | 2023 Actual Performance | | :--- | :--- | :--- | | Full-year Gross Merchandise Value (GMV) | HKD 8.7 billion to HKD 9.1 billion | HKD 8.29 billion | | Blended Gross Margin and Commission Rate | 22.0% to 22.5% | 22.2% | | Multimedia Advertising Revenue | HKD 143 million | HKD 150.5 million | | Delivery Costs as % of GMV | 10.7%–10.8% | 10.8% | | Marketing, Promotion, and O2O Store Marketing Expenses as % of GMV | 2.8%–3.0% | 2.7% | | O2O Store Operating Costs as % of GMV | 2.2%–2.4% | 2.4% | | E-commerce Operations and Support Costs as % of GMV | 4.8%–5.0% | 4.4% | | Adjusted EBITDA as % of GMV | 2.6% to 3.0% | 3.1% | New Initiatives Business Targets vs Actual Performance (2024 vs 2023) | Project | Metric | 2024 Target | 2023 Actual Performance | | :--- | :--- | :--- | :--- | | Everuts | Full-year Gross Merchandise Value (GMV) | HKD 144 million | HKD 30.4 million | | | Adjusted EBITDA Loss | HKD 35 million | HKD 21.1 million | | Marketplace Same-Day Delivery | Full-year Gross Merchandise Value (GMV) | HKD 200 million to HKD 260 million | HKD 100.6 million | | | Adjusted EBITDA Loss | HKD 43 million to HKD 49 million | HKD 50 million | | Fully Automated Retail Store and System | Full-year Gross Merchandise Value (GMV) | HKD 5.3 million | – | | | Adjusted EBITDA Loss | HKD 57 million | HKD 44.5 million | | Life Science Project | Adjusted EBITDA Loss | HKD 10 million | HKD 2.5 million | - The Group will launch 'Display Stores' to expand its online ecosystem and support merchant growth through 'ThePlace' omnichannel online store solution[168](index=168&type=chunk)[196](index=196&type=chunk) - The goal is to cover **120,000** products with 8-hour express delivery service by the end of 2024[197](index=197&type=chunk) - The core capital expenditure plan is updated to **HKD 250 million to HKD 300 million**, primarily for expanding delivery capacity and 3P business parcel sorting capabilities[47](index=47&type=chunk)[199](index=199&type=chunk) [Results](index=30&type=section&id=Results) This section presents the audited consolidated financial statements for the year ended December 31, 2023, including the consolidated statement of profit or loss, consolidated statement of comprehensive income, and consolidated statement of financial position, showing a significant decrease in profit for the year and total equity Consolidated Statement of Profit or Loss Summary (Year Ended December 31) | Metric | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Revenue | 3,811,706 | 3,828,051 | | Direct Merchandise Sales | 2,392,982 | 2,425,620 | | Cost of Inventories | (1,865,094) | (1,819,490) | | Concessionaire Sales and Other Service Income | 1,268,187 | 1,265,444 | | Multimedia Advertising Revenue and Program Copyrights | 150,537 | 131,630 | | Technology Business Revenue | – | 5,357 | | Other Operating Expenses | (1,979,343) | (1,868,744) | | Other Income, Net | 90,560 | 15,506 | | Finance Costs | (18,465) | (13,613) | | Profit Before Tax | 38,764 | 142,360 | | Income Tax Credit | 6,557 | 69,844 | | Profit for the Year | 45,321 | 212,204 | | Basic Earnings Per Share | HKD 0.05 | HKD 0.23 | | Diluted Earnings Per Share | HKD 0.05 | HKD 0.22 | Consolidated Statement of Comprehensive Income Summary (Year Ended December 31) | Metric | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Profit for the Year | 45,321 | 212,204 | | Other Comprehensive Income for the Year | (280) | (14,803) | | Total Comprehensive Income for the Year | 45,041 | 197,401 | Consolidated Statement of Financial Position Summary (As of December 31) | Metric | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Non-current Assets | 2,458,543 | 2,595,997 | | Current Assets | 1,003,238 | 1,023,515 | | Current Liabilities | 986,797 | 968,758 | | Net Current Assets | 16,441 | 54,757 | | Total Assets Less Current Liabilities | 2,474,984 | 2,650,754 | | Non-current Liabilities | 329,636 | 441,961 | | Total Equity | 2,145,348 | 2,208,793 | [Notes to the Financial Statements](index=34&type=section&id=Notes) This section provides detailed notes to the consolidated financial statements, covering the basis of preparation, changes in accounting policies, revenue and segment information, other income/expenses, profit before tax, other comprehensive income, income tax credit, dividends, earnings per share, other financial assets, and trade and other payables, explaining calculation methods, accounting principles, and changes for each item [Basis of Preparation](index=34&type=section&id=Basis%20of%20Preparation) The financial statements are prepared in accordance with Hong Kong Financial Reporting Standards and the Hong Kong Companies Ordinance, using a historical cost basis and involving management judgments, estimates, and assumptions, with an unqualified auditor's report - Financial statements are prepared in accordance with all applicable Hong Kong Financial Reporting Standards and the Hong Kong Companies Ordinance, complying with Listing Rules disclosure provisions[257](index=257&type=chunk) - Except for investment properties and other financial assets measured at fair value, the financial statements are prepared using the historical cost convention[242](index=242&type=chunk) [Changes in Accounting Policies](index=35&type=section&id=Changes%20in%20Accounting%20Policies) The Group adopted several HKFRS amendments, including those on accounting estimates, deferred tax, insurance contracts, and international tax reform, and retrospectively adopted guidance on MPF-LSP offset mechanism abolition, none of which had a material impact on current or prior period results or financial position - Amendments to HKAS 8, HKAS 12, and new standards or interpretations like HKFRS 17 have been adopted[244](index=244&type=chunk)[259](index=259&type=chunk) - Guidance on the accounting impact of abolishing the MPF-Long Service Payment offset mechanism in Hong Kong has been retrospectively adopted, with no material impact on opening equity balances, cash flows, or EPS for 2022 and 2023[245](index=245&type=chunk)[260](index=260&type=chunk) [Revenue and Segment Information](index=36&type=section&id=Revenue%20and%20Segment%20Information) The Group's primary businesses are e-commerce and new initiatives, with segment composition revised to reflect this, and revenue disaggregated by nature and timing, mostly recognized at a point in time, while segment results, assets, and liabilities are monitored for resource allocation and performance, with no geographical segment information presented as most operations are in Hong Kong - The Group primarily engages in e-commerce (including HKTVmall, delivery and logistics, multimedia production) and new initiatives and technology businesses (including technology R&D and global technology operations)[261](index=261&type=chunk)[265](index=265&type=chunk)[248](index=248&type=chunk) Customer Contract Revenue Disaggregation (2023 vs 2022) | Nature of Revenue | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Direct Merchandise Sales | 2,392,982 | 2,425,620 | | Concessionaire Sales and Other Service Income | 1,268,187 | 1,265,444 | | Multimedia Advertising Revenue and Program Copyrights | 150,537 | 131,630 | | Technology Business Revenue | – | 5,357 | | **Total** | **3,811,706** | **3,828,051** | | Timing of Revenue Recognition | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Recognized at a point in time | 3,584,571 | 3,619,126 | | Recognized over time | 227,135 | 208,925 | | **Total** | **3,811,706** | **3,828,051** | Reportable Segment Profit/Loss (Adjusted EBITDA) (2023 vs 2022) | Segment | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Hong Kong E-commerce Business | 223,566 | 335,346 | | New Initiatives and Technology Business | (93,394) | (14,794) | | **Total** | **130,172** | **320,552** | - Most of the Group's operating activities and assets are located in Hong Kong, thus no geographical segment information is presented[275](index=275&type=chunk) [Other Income / (Expenses) Net](index=40&type=section&id=Other%20Income%20%2F%20%28Expenses%29%20Net) Other income, net, significantly increased to HKD 90,560 thousand in 2023 from HKD 15,506 thousand in 2022, primarily due to higher bank interest income, increased investment returns from other financial assets, and a base effect from expected credit loss provisions on Russian financial institution bonds in 2022 Other Income / (Expenses) Net Details (2023 vs 2022) | Item | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Bank interest income | 19,846 | 2,140 | | Dividend and investment income from other financial assets | 6,280 | 6,076 | | Interest income from other financial assets | 16,648 | 13,955 | | Unrealized fair value loss on investment fund units measured at FVTPL | (772) | (13,263) | | Reversal/(provision) for expected credit losses on debt securities measured at FVOCI | 214 | (42,247) | | Rental income from investment properties | 23,774 | 23,774 | | Net exchange gain/(loss) | 4,364 | (6,018) | | Government grants | 21 | 18,728 | | Discount unwinding gain on lease deposits | 3,471 | – | | Others | 16,714 | 12,361 | | **Total** | **90,560** | **15,506** | - The increase in income is primarily attributable to the base effect from expected credit loss provisions on Russian financial institution bonds in 2022 and a **HKD 17.7 million** increase in bank interest income[184](index=184&type=chunk) [Profit Before Tax](index=41&type=section&id=Profit%20Before%20Tax) Profit before tax is net of various operating and finance costs, with total other operating expenses increasing to HKD 1,979,343 thousand in 2023, mainly due to higher advertising, marketing, talent, and outsourced delivery expenses, while finance costs primarily comprise interest on lease liabilities and bank charges Other Operating Expenses Details (2023 vs 2022) | Item | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Depreciation (owned property, plant and equipment) | 87,653 | 91,577 | | Depreciation (right-of-use assets) | 197,462 | 179,728 | | Advertising and marketing expenses | 163,845 | 108,068 | | Auditor's remuneration | 3,451 | 3,050 | | Write-down and write-off of inventories | 30,293 | 20,957 | | Staff costs | 872,017 | 842,688 | | Amortisation of intangible assets | 15,135 | 12,043 | | Outsourced delivery expenses | 294,769 | 270,597 | | Payment processing fees | 92,562 | 92,593 | | Motor vehicle running expenses | 45,676 | 44,762 | | Software license and registration fees | 23,538 | 26,833 | | Utilities, consumables and office expenses | 59,606 | 53,430 | | Others | 91,523 | 104,530 | | **Total** | **1,979,343** | **1,868,744** | Finance Costs Details (2023 vs 2022) | Item | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Interest on lease liabilities | 17,771 | 13,122 | | Bank charges | 694 | 491 | | **Total** | **18,465** | **13,613** | - Total staff costs (including directors) amounted to **HKD 872,017 thousand**, an increase from last year, partially offset by staff costs capitalized as intangible assets and other contract costs[278](index=278&type=chunk)[300](index=300&type=chunk) [Other Comprehensive Income](index=42&type=section&id=Other%20Comprehensive%20Income) This section details the components and tax effects of other comprehensive income, which improved to (HKD 280) thousand in 2023 from (HKD 14,803) thousand in 2022, primarily due to changes in fair value reserves for equity instruments and debt securities designated at fair value through other comprehensive income Other Comprehensive Income Details (2023 vs 2022) | Item | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Net change in fair value reserve for equity instruments designated at FVOCI (non-recyclable) | 2,837 | (6,851) | | Remeasurement of defined benefit plan liability | (917) | – | | Exchange differences arising from translation of financial statements of overseas subsidiaries | (1,135) | 587 | | Net change in fair value reserve for debt securities measured at FVOCI (recyclable) | (1,065) | (8,539) | | **Total Other Comprehensive Income** | **(280)** | **(14,803)** | [Income Tax Credit](index=43&type=section&id=Income%20Tax%20Credit) The income tax credit significantly decreased to HKD 6,557 thousand in 2023 from HKD 69,844 thousand in 2022, with Hong Kong profits tax calculated at 16.5% (or 8.25% for the first HKD 2 million of assessable profits for qualifying subsidiaries), and deferred tax primarily arising from temporary differences Income Tax Credit Details (2023 vs 2022) | Item | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Current tax - Hong Kong profits tax | 12 | 222 | | Current tax - Overseas | 1,041 | 1,059 | | Deferred tax - Origination and reversal of temporary differences | (7,610) | (71,125) | | **Total** | **(6,557)** | **(69,844)** | - Hong Kong profits tax is calculated at **16.5%**, with qualifying subsidiaries taxed at **8.25%** on the first **HKD 2 million** of assessable profits[305](index=305&type=chunk) [Dividends](index=43&type=section&id=Dividends) The Board decided not to recommend a final dividend for the year ended December 31, 2023, and no interim dividend was declared or paid, to conserve liquidity for future capital expenditure, new investment initiatives, and share repurchase programs - The Board does not recommend a final dividend for the year ended December 31, 2023 (2022: nil)[233](index=233&type=chunk)[307](index=307&type=chunk) - No interim dividend was declared or paid in 2023 (2022: **HKD 0.08** per share)[280](index=280&type=chunk) [Earnings Per Share](index=44&type=section&id=Earnings%20Per%20Share) Basic and diluted earnings per share for 2023 both decreased significantly to HKD 0.05, calculated based on profit for the year and the weighted average number of ordinary shares outstanding, with diluted EPS adjusted for the impact of potential dilutive ordinary shares under the share option scheme Earnings Per Share Comparison (2023 vs 2022) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Basic Earnings Per Share | HKD 0.05 | HKD 0.23 | | Diluted Earnings Per Share | HKD 0.05 | HKD 0.22 | Weighted Average Number of Ordinary Shares (2023 vs 2022) | Item | 2023 (Thousand Shares) | 2022 (Thousand Shares) | | :--- | :--- | :--- | | Ordinary shares in issue at January 1 | 923,090 | 917,007 | | Effect of exercise of options | 657 | 4,234 | | Effect of share repurchases and cancellations | (5,864) | – | | Weighted average number of ordinary shares at December 31 | 917,883 | 921,241 | | Weighted average number of ordinary shares (diluted) at December 31 | 935,322 | 947,786 | [Other Financial Assets](index=45&type=section&id=Other%20Financial%20Assets) As of December 31, 2023, total investments in other financial assets increased to HKD 361,772 thousand, comprising equity instruments and debt securities designated at fair value through other comprehensive income, and investment fund units measured at fair value through profit or loss, all fair valued Other Financial Assets Details (2023 vs 2022) | Item | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Equity instruments designated at FVOCI (non-recyclable) | 87,422 | 81,100 | | Debt securities measured at FVOCI (recyclable) | 226,068 | 214,532 | | Investment fund units measured at FVTPL | 48,282 | 48,901 | | **Total** | **361,772** | **344,533** | | - Non-current portion | 201,060 | 292,791 | | - Current portion | 160,712 | 51,742 | [Trade and Other Payables and Accrued Expenses](index=45&type=section&id=Trade%20and%20Other%20Payables%20and%20Accrued%20Expenses) As of December 31, 2023, total trade payables were HKD 382,760 thousand, mostly not overdue, while other payables and accrued expenses totaled HKD 446,926 thousand, mainly comprising accrued staff salaries, payables for property, plant and equipment purchases, outsourced human resources service expenses, and advertising and promotion expenses Trade Payables Ageing Analysis (2023 vs 2022) | Ageing | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Not overdue – 30 days | 369,977 | 340,717 | | 31–60 days | 2,926 | 6,045 | | 61–90 days | 1,147 | 2,170 | | Over 90 days | 8,710 | 5,695 | | **Total** | **382,760** | **354,627** | Other Payables and Accrued Expenses (2023 vs 2022) | Item | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Contract liabilities | 259,392 | 245,797 | | Other payables and accrued expenses | 187,534 | 197,868 | | Non-current other payables and accrued expenses | 6,479 | – | | **Total** | **453,405** | **443,665** | [Capital and Reserves](index=33&type=section&id=Capital%20and%20Reserves) This section presents the statement of changes in equity for the year ended December 31, 2023, showing a decrease in total equity from HKD 2,208,793 thousand in 2022 to HKD 2,145,348 thousand in 2023, primarily influenced by profit for the year, other comprehensive income, and share repurchases and cancellations Total Equity (2023 vs 2022) | Metric | 2023 (HKD '000) | 2022 (HKD '000) | | :--- | :--- | :--- | | Total Equity | 2,145,348 | 2,208,793 | - Total equity decreased primarily due to profit for the year, other comprehensive income, and share repurchases and cancellations[313](index=313&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=48&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) For the year ended December 31, 2023, the Company repurchased 35,449,000 shares on the Stock Exchange for approximately HKD 110.2 million (excluding expenses), which were subsequently cancelled, demonstrating the Board's confidence in the Company's growth potential and long-term prospects 2023 Share Repurchase Details | Month of Purchase | Number of Shares Purchased | Highest Price Paid (HKD) | Lowest Price Paid (HKD) | Total Consideration Paid (Excluding Expenses) (HKD) | | :--- | :--- | :--- | :--- | :--- | | July | 1,266,000 | 4.49 | 4.45 | 5,677,870 | | August | 2,658,000 | 3.48 | 3.43 | 9,212,510 | | September | 22,866,000 | 3.28 | 2.91 | 72,682,560 | | October | 2,928,000 | 2.95 | 2.73 | 8,333,580 | | November | 1,116,000 | 2.58 | 2.47 | 2,820,490 | | December | 4,615,000 | 2.56 | 2.39 | 11,475,160 | | **Total** | **35,449,000** | | | **110,202,170** | - Repurchased shares were subsequently cancelled, with the Board believing the buyback is in the best interests of the Company and shareholders, reflecting confidence in business growth potential and long-term prospects[291](index=291&type=chunk) [Corporate Governance Code](index=49&type=section&id=Corporate%20Governance%20Code) The Company complied with the Corporate Governance Code for the year ended December 31, 2023, except for independent non-executive directors serving over nine years, for which the Board maintains their independence and is actively seeking suitable candidates, while all directors confirmed full compliance with the standard code for securities transactions, and the Audit Committee reviewed the audited financial results - The Company did not comply with Corporate Governance Code provision B.2.4(b) in 2023 as all independent non-executive directors served over nine years, but a new independent non-executive director was appointed effective January 1, 2024[225](index=225&type=chunk)[236](index=236&type=chunk) - The Company believes existing independent non-executive directors maintain independence, the Board's composition ensures balanced and effective governance, and qualified candidates are being sought and evaluated[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk)[230](index=230&type=chunk) - All directors confirmed full compliance with the standard code for securities transactions during 2023[231](index=231&type=chunk) - The Audit Committee reviewed and discussed the audited financial results for the year ended December 31, 2023, with management[232](index=232&type=chunk) [Annual General Meeting](index=51&type=section&id=Annual%20General%20Meeting) The Annual General Meeting will be held on Tuesday, June 18, 2024, with share transfer registration suspended from June 13 to June 18, 2024, to determine shareholders' eligibility to attend and vote, and this announcement also lists the Board of Directors - The Annual General Meeting will be held on **Tuesday, June 18, 2024**[222](index=222&type=chunk) - Share transfer registration will be suspended from **Thursday, June 13, 2024**, to **Tuesday, June 18, 2024**[223](index=223&type=chunk) Board of Directors | Position | Name | | :--- | :--- | | Chairman | Mr. Cheung Chi Kin | | Deputy Chairman and Group Chief Executive Officer | Mr. Wong Wai Kay, Ricky | | Group Chief Financial Officer and Company Secretary | Ms. Wong Nga Lai, Alice | | Chief Executive Officer (International Business) | Mr. Lau Chi Kong | | Chief Executive Officer (Hong Kong) | Ms. Chow Wai Ching, Vivian | | Independent Non-executive Director | Mr. Li Hon Ying, Bernard | | Independent Non-executive Director | Mr. Pak Dun Li | | Independent Non-executive Director | Mr. Mak Wing Sum, Alvin | | Independent Non-executive Director | Mr. On Yu Chiu, Andrew |

Company Information Hong Kong Technology Venture Company Limited (stock code: 1137) is listed on The Stock Exchange of Hong Kong Limited - Hong Kong Technology Venture Company Limited (stock code: 1137) is listed on The Stock Exchange of Hong Kong Limited[8](index=8&type=chunk)[11](index=11&type=chunk) - The company's American Depositary Shares were delisted from the US Securities and Exchange Commission (SEC) in December 2015 and deregistered in December 2016, now eligible for over-the-counter trading in the US[11](index=11&type=chunk) - Key executive directors include Mr. Cheung Chi Kin (Chairman), Mr. Ricky Wong (Vice Chairman and Group Chief Executive Officer), Ms. Alice Wong (Group Chief Financial Officer), Mr. Frank Liu (Chief Executive Officer (International Business)), and Ms. Vivian Chow (Chief Executive Officer (Hong Kong))[12](index=12&type=chunk) - KPMG is the company's auditor[12](index=12&type=chunk)[13](index=13&type=chunk) Chairman's Statement The Chairman's Statement highlights challenges in Hong Kong's retail sector, the Group's stable H1 2023 performance despite reduced profitability, and strategic expansions in logistics and international markets - Hong Kong's retail sector faces multiple challenges, including a decline in mid-to-high-end consumers, a shift towards overseas or online shopping, reduced evening outings, and recruitment difficulties[16](index=16&type=chunk) - Despite economic pressures and intense competition, the Group maintained stable development in H1 2023, though profitability decreased due to lower gross margins[18](index=18&type=chunk) - The shift from offline to online consumption is a major trend, with the Group's customers maintaining online shopping habits post-pandemic[19](index=19&type=chunk) - The Group is expanding its logistics infrastructure, including a **144,000 sq ft** third-party logistics distribution center in Tsing Yi and an additional **200,000 sq ft** automated logistics center at Tseung Kwan O headquarters within three years[19](index=19&type=chunk) - The Group has established technology R&D centers in Taiwan, the UK, Australia, and Israel, focusing on international market expansion for broader and more stable revenue streams[19](index=19&type=chunk)[25](index=25&type=chunk) - The first self-developed fully automated retail store and system, 'in:Five,' has commenced trial operations in Manchester, UK, marking a significant milestone in retail automation[25](index=25&type=chunk) - Everuts personal shopper service has built a global network of **2,000 'Exploruts,'** extending beyond Hong Kong to offer consumers international shopping options[22](index=22&type=chunk) Management Discussion and Analysis [Operating Summary](index=7&type=section&id=Operating%20Summary) This chapter provides an overview of key operating metrics for H1 2023, showing a slight decrease in GMV and average order value, but an increase in unique customers H1 2023 Operating Summary | Metric | Six Months Ended June 30, 2023 (HK$ Thousand) | Six Months Ended June 30, 2022 (HK$ Thousand) | Percentage Change | | :--- | :--- | :--- | :--- | | Gross Merchandise Value (GMV) | 4,028,000 | 4,186,000 | (3.8%) | | Average Daily Order Volume | 48,400 | 49,100 | (1.4%) | | Average Order Value (HK$) | 460 | 471 | (2.3%) | | Consolidated Unique Customers | 1,229,000 | 1,107,000 | 11.0% | | **For the Month Ended June 30, 2023** | | | | | Gross Merchandise Value (GMV) | 686,383 | 615,617 | 11.5% | | Average Daily Order Volume | 49,300 | 46,400 | 6.3% | | Average Order Value (HK$) | 464 | 442 | 5.0% | [Financial Summary](index=8&type=section&id=Financial%20Summary) This chapter outlines the company's H1 2023 financial performance, indicating decreased revenue and profit, but stable total equity and cash position H1 2023 Financial Summary | Metric | Six Months Ended June 30, 2023 (HK$ Thousand) | Six Months Ended June 30, 2022 (HK$ Thousand) | Percentage Change | | :--- | :--- | :--- | :--- | | Completed Order Gross Merchandise Value (GMV) | 3,986,636 | 4,135,323 | (3.6%) | | Revenue | 1,828,567 | 1,922,144 | (4.9%) | | Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) | 87,844 | 141,328 | (37.8%) | | Adjusted EBITDA | 82,580 | 195,590 | (57.8%) | | Profit for the Period | 48,696 | 127,849 | (61.9%) | | Capital Expenditure - Property, Plant and Equipment | 140,926 | 214,114 | (34.2%) | | **As of June 30, 2023** | | | | | Cash Position | 660,610 | 705,807 (December 31, 2022) | (6.4%) | | Total Equity | 2,263,621 | 2,208,793 (December 31, 2022) | 2.5% | [Business Review](index=10&type=section&id=Business%20Review) This chapter reviews the performance of the company's e-commerce (HKTVmall) and new initiatives, highlighting HKTVmall's efforts in customer expansion and new feature development amidst a challenging market, and the internationalization of technology businesses [E-commerce Business — HKTVmall](index=10&type=section&id=E-commerce%20Business%20%E2%80%94%20HKTVmall) HKTVmall faced challenges in H1 2023 from slow economic recovery and increased overseas travel, leading to a slight GMV decrease; however, the company successfully expanded its online customer base and enhanced engagement through new features like "Add-on Order," "Elderly Club," and "Fresh Market Same-Day Delivery" - HKTVmall's Gross Merchandise Value (GMV) slightly decreased by **3.8%** to **HK$4.028 billion** in H1 2023, primarily due to a weak Hong Kong supermarket sector and the absence of pandemic-driven demand surges from H1 2022[36](index=36&type=chunk)[40](index=40&type=chunk) - Unique customers grew by **11.0%** to **1.229 million** in H1 2023, with monthly active app users climbing to **1.65 million** in July 2023, indicating sustained online shopping habits[28](index=28&type=chunk)[38](index=38&type=chunk)[42](index=42&type=chunk) - The proportion of 1P (direct merchandise sales) and 3P (merchant concessionaire sales) businesses remained stable at **29.7%** and **70.3%** of completed order GMV, respectively[51](index=51&type=chunk) - Overall gross margin and blended commission rate decreased to **22.2%** (H1 2022: 23.5%), mainly due to a strategic reduction in 1P business gross margin to **23.5%** to maintain competitiveness and drive online sales[53](index=53&type=chunk)[55](index=55&type=chunk) - Delivery costs as a percentage of completed order GMV remained at **10.8%** (Q1 2023) and **10.4%** (Q2 2023), benefiting from reduced pandemic-related operating expenses and efficient merchant delivery solutions[72](index=72&type=chunk) - The 'Add-on Order' feature performed strongly, with the average GMV per online add-on order increasing from **HK$86.0** in Q2 2020 to **HK$155.0** in Q2 2023, and the conversion rate improving from **8.8%** to **21.5%**[79](index=79&type=chunk)[80](index=80&type=chunk) - The 'HKTVmall Elderly Club' has over **110,000 registered members**, with an average retention rate **64.0% higher** than general customers, and Q2 2023 GMV grew by **97.0%** year-on-year[84](index=84&type=chunk) - 'Fresh Market Same-Day Delivery' service has expanded to cover approximately **91.5%** of existing HKTVmall customers, exceeding the 2023 target of **75.0%**, and enhances customer engagement through social media groups[86](index=86&type=chunk)[87](index=87&type=chunk) - HKTVLive launched an upgraded 24/7 interactive live shopping channel in May 2023, significantly increasing live broadcast sessions (**159** in June 2023 vs **17** in June 2022)[88](index=88&type=chunk) [Technology Business and New Initiatives](index=20&type=section&id=Technology%20Business%20and%20New%20Initiatives) The company actively advances its technology business and new initiatives, including the social shopping platform ShareHub, international expansion of cross-border personal shopper service Everuts, and trial operations of a third-party logistics (3PL) distribution center - Since its August 2022 launch, the ShareHub social platform has rapidly acquired over **680,000 unique users** and introduced the 'More! Duo Na!' follow-buy repurchase program to enhance stickiness[92](index=92&type=chunk)[95](index=95&type=chunk) - Everuts cross-border personal shopper service officially launched in January 2023, connecting Hong Kong consumers with over **2,000 'Exploruts'** in more than **30 countries and regions** globally, expanding the shopping experience through HKTVLive and interactive chat groups[93](index=93&type=chunk)[96](index=96&type=chunk) - The **144,000 sq ft** distribution center designed for 3PL services began trial operations in May 2023, with full launch expected in Q4 2023, capable of processing over **20,000 orders** and approximately **100,000 merchant products** daily[97](index=97&type=chunk) [Financial Review](index=21&type=section&id=Financial%20Review) This chapter details the H1 2023 financial performance, showing significant declines in revenue and profit, primarily due to strategic gross margin reductions, increased marketing, and investment losses in new technology businesses - H1 2023 revenue decreased by **4.9%** to **HK$1.8286 billion** (H1 2022: HK$1.9221 billion), with direct merchandise sales declining by **3.9%**[100](index=100&type=chunk)[101](index=101&type=chunk) - Direct merchandise sales gross margin decreased to **23.5%** (H1 2022: 26.8%), aimed at maintaining competitiveness for online grocery products and expanding the customer base[101](index=101&type=chunk) - Total other operating expenses slightly decreased to **HK$913.7 million**, but as a percentage of completed order GMV, it marginally increased from **19.9%** to **20.3%**[101](index=101&type=chunk) - Delivery costs as a percentage of completed order GMV decreased from **11.4%** to **10.6%**, primarily due to reduced pandemic-related operating expenses and improved efficiency of merchant delivery solutions[104](index=104&type=chunk)[107](index=107&type=chunk) - Marketing, advertising, and O2O store promotion expenses increased to **2.2%** (H1 2022: 1.9%) due to more promotional activities launched post-pandemic[104](index=104&type=chunk)[108](index=108&type=chunk) - The Technology and Other Businesses segment incurred an adjusted EBITDA loss of **HK$62.0 million** (H1 2022: HK$28.2 million loss), mainly due to new initiative developments[116](index=116&type=chunk) - Net other income was **HK$41.9 million** (H1 2022: HK$14.4 million expense), driven by increased investment returns, investment property rental income, and foreign exchange gains[120](index=120&type=chunk)[221](index=221&type=chunk) - Profit for H1 2023 was **HK$48.7 million** (H1 2022: HK$127.8 million), with adjusted EBITDA at **HK$82.6 million** (H1 2022: HK$195.6 million)[115](index=115&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) This chapter details the company's liquidity and capital resources, showing a slight decrease in cash position but an increase in other financial asset investments, with sufficient unused bank facilities to support business development - As of June 30, 2023, total cash position (cash and cash equivalents and time deposits) was **HK$660.6 million**, a **6.4% decrease** from HK$705.8 million as of December 31, 2022[30](index=30&type=chunk)[125](index=125&type=chunk) - Investments in other financial assets increased by **8.9%** to **HK$375.2 million** (December 31, 2022: HK$344.5 million)[30](index=30&type=chunk)[126](index=126&type=chunk) - Capital expenditure for H1 2023 was **HK$55.7 million** (H1 2022: HK$197.3 million), primarily for expanding the Tseung Kwan O headquarters e-commerce fulfillment center and new initiatives[128](index=128&type=chunk) - As of June 30, 2023, the Group had **HK$1.0077 billion** in unutilized bank facilities[127](index=127&type=chunk) [Fundraising Activities](index=25&type=section&id=Fundraising%20Activities) This chapter reviews the company's 2020 fundraising activities, including details of the placing and subscription, use of proceeds, and pledging of group assets - The company completed a placing and subscription in February 2020, raising approximately **HK$453.2 million** net proceeds by issuing **90 million new shares** at **HK$5.15 per share**[130](index=130&type=chunk) - Proceeds were primarily used for expanding e-commerce and related businesses (**HK$400 million**) and as general working capital (**HK$53.2 million to HK$73.2 million**)[131](index=131&type=chunk) Use of Proceeds from 2020 Fundraising (HK$ Million) | Intended Use | Intended Amount to be Used | Amount Used as of December 31, 2022 | Amount Used as of June 30, 2023 | Expected Timeline for Use | | :--- | :--- | :--- | :--- | :--- | | Expansion of Tseung Kwan O Headquarters E-commerce Fulfillment Center | 200 | 150.5 | 200.0 | By end of 2023 or earlier | | Addition of a Sixth Fulfillment Center | 40 | 40.0 | 40.0 | By end of 2022 or earlier | | Addition of approximately 200 to 250 Delivery Vehicles | 90 to 110 | 35.7 | 36.0 | By end of 2023 or earlier | | Upgrade of Computer Hardware and Software | 50 | 50.0 | 50.0 | By end of 2021 or earlier | | General Working Capital of the Group | 53.2 to 73.2 | 73.2 | 73.2 | By end of 2021 or earlier | | **Total** | **453.2** | **349.4** | **399.2** | | - As of June 30, 2023, the Group's **HK$1.0341 billion** bank facilities were secured by **HK$313.6 million** in other financial assets and **HK$185.2 million** in bank balances[132](index=132&type=chunk) [Outlook](index=26&type=section&id=Outlook) This chapter outlines the company's future development, including updated HKTVmall business targets to address economic challenges, expansion of HKTVLive features, international market expansion, and continued investment in logistics infrastructure - Given the weaker-than-expected Hong Kong economic recovery and high-interest rate environment, HKTVmall anticipates moderate full-year GMV growth in 2023 and will make additional investments in marketing and promotional activities[137](index=137&type=chunk) Updated 2023 HKTVmall Business Targets (vs. Original Targets) | Business Target | 2023 Revised Target | 2023 Original Target | | :--- | :--- | :--- | | Full-year Gross Merchandise Value (GMV) | HK$8.4 billion to HK$8.8 billion | HK$8.8 billion to HK$9.2 billion | | Blended Gross Margin and Commission (before multimedia advertising revenue) | 22.2% | 24.0%-24.5% | | Multimedia Advertising Revenue | HK$140 million to HK$150 million | HK$156 million | | Adjusted EBITDA as a percentage of Completed Order GMV | 3.2%-3.4% (approx. HK$270 million to HK$300 million) | 5.0%–5.5% (approx. HK$440 million to HK$506 million) | - HKTVLive plans to launch a 'Video-on-Demand' feature in Q3 2023, offering diverse content to extend user viewing time and increase cross-selling opportunities[137](index=137&type=chunk) - International expansion plans include extending direct delivery services to Australia and Canada in Q3-Q4 2023, following the launch of 'Direct Delivery to Macau' in December 2022 and 'Direct Delivery to UK' in May 2023[138](index=138&type=chunk) - Everuts will further strengthen its international reach through the 'Travel Personal Shopper Program' and expansion into the Thailand market in July 2023[140](index=140&type=chunk) - Core capital expenditure plans include: Phase 1 completion of an additional **33,000 sq ft** floor on top of the existing distribution center in Q3 2023; Phase 2 planned completion of a **30,000 sq ft** facility renovation in Q1 2025; and Phase 3 planned construction of a new approximately **200,000 sq ft** distribution center by 2027[4](index=4&type=chunk)[141](index=141&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk) - As of June 30, 2023, the number of full-time employees slightly decreased to **2,153** (December 31, 2022: 2,186)[148](index=148&type=chunk) Financial Information [Unaudited Consolidated Income Statement](index=28&type=section&id=Unaudited%20Consolidated%20Income%20Statement) This chapter presents the unaudited consolidated income statement for H1 2023, showing a decrease in revenue and profit attributable to equity holders compared to the same period last year Summary of Unaudited Consolidated Income Statement | Metric | Six Months Ended June 30, 2023 (HK$ Thousand) | Six Months Ended June 30, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | 1,828,567 | 1,922,144 | | Direct Merchandise Sales | 1,162,383 | 1,210,255 | | Concessionaire Sales Income and Other Service Income | 606,010 | 641,745 | | Multimedia Advertising Income and Program Copyright | 59,940 | 64,787 | | Technology and Other Business Income | 234 | 5,357 | | Profit for the Period | 48,696 | 127,849 | | Basic Earnings Per Share (HK$) | 0.05 | 0.14 | | Diluted Earnings Per Share (HK$) | 0.05 | 0.13 | [Unaudited Consolidated Statement of Comprehensive Income](index=29&type=section&id=Unaudited%20Consolidated%20Statement%20of%20Comprehensive%20Income) This chapter presents the unaudited consolidated statement of comprehensive income for H1 2023, showing a significant decrease in total comprehensive income for the period, mainly due to changes in fair value reserves and exchange differences Summary of Unaudited Consolidated Statement of Comprehensive Income | Metric | Six Months Ended June 30, 2023 (HK$ Thousand) | Six Months Ended June 30, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Profit for the Period | 48,696 | 127,849 | | Other Comprehensive Income | 4,492 | (8,334) | | - Equity instruments designated at fair value through other comprehensive income - Net change in fair value reserve | 2,279 | 484 | | - Exchange differences arising from translation of financial statements of overseas subsidiaries | (683) | 554 | | - Debt securities at fair value through other comprehensive income - Net change in fair value reserve | 2,896 | (9,372) | | Total Comprehensive Income for the Period | 53,188 | 119,515 | [Unaudited Consolidated Statement of Financial Position](index=30&type=section&id=Unaudited%20Consolidated%20Statement%20of%20Financial%20Position) This chapter provides the unaudited consolidated statement of financial position as of June 30, 2023, illustrating the composition of the company's assets, liabilities, and equity, showing a slight increase in total equity and a stable asset base Summary of Unaudited Consolidated Statement of Financial Position | Metric | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Property, Plant and Equipment | 1,994,915 | 1,971,551 | | Intangible Assets | 121,067 | 103,209 | | Other Financial Assets (Non-current) | 262,054 | 292,791 | | Deferred Tax Assets | 87,643 | 81,252 | | **Total Non-current Assets** | **2,537,331** | **2,595,997** | | Other Receivables, Deposits and Prepayments (Current) | 181,000 | 121,175 | | Inventories and Other Contract Costs | 133,278 | 144,791 | | Other Current Financial Assets | 113,115 | 51,742 | | Time Deposits | 50,457 | - | | Cash and Cash Equivalents | 610,153 | 705,807 | | **Total Current Assets** | **1,088,003** | **1,023,515** | | Trade Payables | 376,003 | 354,627 | | Other Payables and Accruals | 435,406 | 443,665 | | Lease Liabilities (Current) | 152,017 | 164,098 | | **Total Current Liabilities** | **969,774** | **968,758** | | Lease Liabilities (Non-current) | 390,230 | 440,395 | | **Total Non-current Liabilities** | **391,939** | **441,961** | | Total Equity | 2,263,621 | 2,208,793 | [Unaudited Consolidated Statement of Changes in Equity](index=31&type=section&id=Unaudited%20Consolidated%20Statement%20of%20Changes%20in%20Equity) This chapter presents the unaudited consolidated statement of changes in equity for H1 2023, reflecting the impact of profit for the period, other comprehensive income, and share issuance under the share option scheme on equity Summary of Unaudited Consolidated Statement of Changes in Equity | Metric | Balance as of January 1, 2023 (HK$ Thousand) | Profit for the Period (HK$ Thousand) | Other Comprehensive Income (HK$ Thousand) | Shares Issued under Share Option Scheme (HK$ Thousand) | Share-based Payment Transactions (HK$ Thousand) | Balance as of June 30, 2023 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Share Capital | 1,800,972 | - | - | 3,389 | - | 1,804,361 | | Retained Profits | 203,377 | 48,696 | - | - | - | 252,245 | | Fair Value Reserve (Non-recyclable) | (10,884) | - | 2,279 | - | - | (8,605) | | Fair Value Reserve (Recyclable) | (10,751) | - | 2,896 | - | - | (7,855) | | Exchange Reserve | (2,341) | - | (683) | - | - | (3,024) | | Capital Reserve | 44,493 | - | - | (632) | (1,117) | 42,744 | | **Total Equity** | **2,208,793** | **48,696** | **4,492** | **2,757** | **(1,117)** | **2,263,621** | [Unaudited Condensed Consolidated Cash Flow Statement](index=32&type=section&id=Unaudited%20Condensed%20Consolidated%20Cash%20Flow%20Statement) This chapter summarizes the unaudited condensed consolidated cash flow statement for H1 2023, showing decreased net cash inflow from operating activities, with investing and financing activities leading to a net decrease in cash and cash equivalents Summary of Unaudited Condensed Consolidated Cash Flow Statement | Metric | Six Months Ended June 30, 2023 (HK$ Thousand) | Six Months Ended June 30, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 130,538 | 215,493 | | Net Cash Used in Investing Activities | (136,775) | (204,985) | | Net Cash Used in Financing Activities | (89,395) | (58,868) | | Net Decrease in Cash and Cash Equivalents | (95,632) | (48,360) | | Cash and Cash Equivalents as of January 1 | 705,807 | 624,247 | | Cash and Cash Equivalents as of June 30 | 610,153 | 575,839 | [Notes to the Unaudited Interim Financial Report](index=33&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Financial%20Report) This chapter provides detailed notes to the interim financial report, explaining the basis of preparation, changes in accounting policies, segment information, operating expenses, fair value measurement of financial instruments, and capital commitments - The interim financial report is prepared in accordance with Hong Kong Accounting Standard 34 and has been reviewed by KPMG, with an unmodified review opinion[170](index=170&type=chunk)[173](index=173&type=chunk)[314](index=314&type=chunk) - The Group is assessing the impact of new HKICPA guidance on the abolition of the MPF offsetting mechanism, with related accounting policy changes expected to be applied in the annual financial statements for the year ending December 31, 2023[177](index=177&type=chunk)[178](index=178&type=chunk) - The Group's operations are divided into two reportable segments: E-commerce Business (Hong Kong) and Technology and Other Businesses (Local and International)[190](index=190&type=chunk)[191](index=191&type=chunk)[210](index=210&type=chunk) - Net other income for H1 2023 significantly increased to **HK$41.9 million** (H1 2022: HK$14.4 million expense), primarily due to increased bank interest income, investment returns, and foreign exchange gains[120](index=120&type=chunk)[221](index=221&type=chunk) - No interim dividend was declared for H1 2023 (H1 2022: HK$0.08 per share) to conserve liquidity for distribution center construction, machinery and related capital expenditure plans, new initiative investments, and share repurchase programs[227](index=227&type=chunk)[357](index=357&type=chunk) - As of June 30, 2023, capital commitments for the purchase of property, plant and equipment amounted to **HK$67.105 million**, and for the expansion of e-commerce and distribution centers to **HK$91.613 million**[290](index=290&type=chunk) - Key management personnel remuneration for H1 2023 was **HK$11.946 million** (H1 2022: HK$11.801 million)[291](index=291&type=chunk) Independent Review Report The Independent Review Report confirms KPMG's review of the interim financial report, concluding no material non-compliance with HKAS 34 - KPMG conducted an independent review of the interim financial report in accordance with Hong Kong Standard on Review Engagements 2410[293](index=293&type=chunk)[313](index=313&type=chunk) - The review concluded that nothing came to the reviewer's attention that caused them to believe the interim financial report is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting'[314](index=314&type=chunk) Other Information This section covers share transactions, directors' and major shareholders' interests, share option schemes, corporate governance compliance, and the company's dividend policy - For the six months ended June 30, 2023, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[316](index=316&type=chunk) Directors' Interests in Shares and Share Options (as of June 30, 2023) | Director's Name | Personal Interests (Shares) | Corporate Interests (Shares) | Total Share Interests | Relevant Share Interests under Share Options | Total Interests | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Cheung Chi Kin | 26,453,424 | 24,924,339 | 51,377,763 | 9,000,000 | 60,377,763 | 6.54% | | Mr. Ricky Wong | - | 355,051,177 | 355,051,177 | 10,000,000 | 365,051,177 | 39.52% | | Ms. Alice Wong | 50,000 | - | 50,000 | 4,000,000 | 4,050,000 | 0.44% | | Mr. Frank Liu | - | - | - | 4,000,000 | 4,000,000 | 0.43% | | Ms. Vivian Chow | - | - | - | 3,500,000 | 3,500,000 | 0.38% | - Top Group International Limited is a substantial shareholder, holding **355,051,177 shares**, representing **38.43%** of the issued share capital[327](index=327&type=chunk) - The 2012 Share Option Scheme expired on December 31, 2022, with no further options granted under this scheme thereafter, but all options granted before expiry remain valid[300](index=300&type=chunk)[338](index=338&type=chunk) - The 2020 Share Option Scheme and 2021 Share Award Scheme have been approved, but no options or award shares have been granted under these schemes as of the report date[325](index=325&type=chunk)[326](index=326&type=chunk)[343](index=343&type=chunk)[344](index=344&type=chunk) - The company has not fully complied with Corporate Governance Code provision B.2.4(b) (regarding the appointment of new independent non-executive directors after nine years of service), but emphasizes the independence, skills, and experience of current INEDs and is seeking suitable candidates[351](index=351&type=chunk)[352](index=352&type=chunk) - The Board has adopted a dividend policy, expecting to distribute dividends between **30% and 60%** of adjusted EBITDA, but no interim dividend is recommended for H1 2023 to conserve liquidity for capital investment plans[357](index=357&type=chunk)[364](index=364&type=chunk)

Financial Performance - For the first half of 2023, HKTVmall recorded a total merchandise transaction value of approximately HKD 4,028,000,000, a decrease of 3.8% compared to approximately HKD 4,186,000,000 for the same period in 2022[7]. - The total merchandise transaction value based on completed orders for the first half of 2023 was HKD 3,986,600,000, compared to HKD 4,135,300,000 in the first half of 2022[10]. - The total merchandise transaction value for the first half of 2023 was HKD 3,986,600,000, representing a decline of 3.6% compared to HKD 4,135,300,000 in the first half of 2022[48]. - The group recorded a net profit of HKD 48.7 million in H1 2023, down from HKD 127.8 million in H1 2022, with adjusted EBITDA of HKD 82.6 million compared to HKD 195.6 million in the previous year[57]. - The company reported a profit of HKD 48,696,000 for the six months ending June 30, 2023, compared to HKD 127,849,000 for the same period in 2022[114]. - The net profit for the period was HKD 48,696, a significant decline of 61.9% from HKD 127,849 in the same period last year[132]. - Basic earnings per share decreased to HKD 0.05 from HKD 0.14, reflecting a 64.3% drop[132]. - Revenue for the six months ended June 30, 2023, was HKD 1,828,567, a decrease from HKD 1,922,144 in the same period of 2022, representing a decline of approximately 4.9%[151]. - Revenue from direct merchandise sales was HKD 1,162,383, down from HKD 1,210,255, indicating a decrease of about 4.0%[162]. - Revenue from licensed sales and other service income was HKD 606,010, compared to HKD 641,745, reflecting a decline of approximately 5.6%[162]. Customer Engagement and Behavior - The average purchase frequency per customer in Q2 2023 was 4.80 times, down from 5.09 times in Q4 2022[9]. - The number of independent customers reached 1,229,000 in the first half of 2023, an increase from 1,107,000 in the same period of 2022[12]. - The number of independent customers who shopped on HKTVmall increased from 1,107,000 in the first half of 2022 to 1,229,000 in the first half of 2023, indicating a structural change in consumer shopping behavior[28]. - The average retention rate of senior members in the "HKTVmall Senior Club" is 64.0% higher than that of general customers, with a 97.0% increase in total merchandise transaction value in Q2 2023 compared to Q2 2022[41]. - The company emphasized maintaining existing customer online shopping habits while expanding the customer base[7]. Operational Efficiency and Costs - The mixed commission rate slightly decreased to 21.7% in the first half of 2023, compared to 22.1% in the same period of 2022[14]. - Delivery costs as a percentage of total merchandise transaction value decreased from 11.4% in the first half of 2022 to 10.6% in the first half of 2023[53]. - Other operating expenses decreased by HKD 3,600,000 to HKD 913,700,000 in the first half of 2023, with delivery costs and marketing expenses being the main operational cost items[50]. - E-commerce operating and support costs increased from 4.6% of total completed order merchandise trading volume in H1 2022 to 5.1% in H1 2023, primarily due to increased talent resources and related expenses from diversified business expansion[54]. - Operating expenses for O2O store operations increased from 2.0% of total merchandise transaction value in the first half of 2022 to 2.4% in the first half of 2023[74]. Strategic Initiatives and Expansion - HKTVmall expanded its product offerings to over 1,300,000 items as of June 2023, up from over 1,000,000 items in June 2022[12]. - The company aims to adjust the gross margin of its 1P business to 23.5%, down from 26.8% in the first half of 2022, to promote sales of less frequently purchased products online[33]. - The company is adapting its business model to align with changes in the market environment, acknowledging that it cannot change the broader social situation[22]. - The company plans to expand consumer coverage by enhancing rapid logistics services for wet market products, attracting both existing and new customers[64]. - The company plans to expand its delivery capacity by renovating an existing 30,000 square feet facility, expected to be completed in Q1 2025[130]. - A new distribution center of approximately 200,000 square feet is planned, with about 170,000 square feet dedicated to smart delivery, expected to double the capacity of the current center by 2027[130]. - The company plans to extend its service range to Australia and Canada, targeting a launch in Q3 to Q4 of 2023[90]. - The company is actively seeking new exploration projects to ensure continuous progress and push the company to new heights[45]. Market Challenges and Competition - The management noted that due to intense competition, the gross profit margin has declined, despite effective control of operational expenses, leading to a decrease in profitability[21]. - The first half of 2023 did not experience the same surge in demand for grocery and personal care products as seen in early 2022 due to the pandemic[27]. - The total merchandise transaction value for grocery and miscellaneous goods decreased by HKD 340 million due to the absence of demand spikes seen in February and March 2022, but it remains the largest contributing product category for HKTVmall[30]. - The group anticipates a moderate growth in total merchandise turnover for HKTVmall in 2023, influenced by economic challenges and increased interest rates[107]. Financial Position and Investments - The group invested HKD 375.2 million in other financial assets as of June 30, 2023, up from HKD 344.5 million as of December 31, 2022[58]. - The total cash position of the group as of June 30, 2023, was HKD 660.6 million, a decrease from HKD 705.8 million as of December 31, 2022[100]. - As of June 30, 2023, the group's bank financing amounted to HKD 1,034.1 million, with other financial assets of HKD 313.6 million and cash of HKD 185.2 million held in various banks[84]. - The company is focusing on cash management activities based on overall treasury objectives and policies, concentrating investments in liquid investment instruments and fixed income products[79]. - The company raised approximately HKD 463.5 million from the subscription of 90,000,000 new ordinary shares at HKD 5.15 per share, resulting in a net amount of approximately HKD 453.2 million[82]. Governance and Compliance - The company has maintained compliance with the listing rules of the Hong Kong Stock Exchange during the reporting period[193]. - The company did not comply with certain corporate governance code provisions due to specific reasons outlined in the report[194]. - The company has a balanced and effective board governance structure as of the reporting date[195].

Share Incentive Plan - The total number of shares available for issuance under the share incentive plan is 91,598,574, accounting for approximately 9.92% of the company's issued shares as of the reporting date[14]. - The maximum allocation for each participant under the share incentive plan is capped at 10% of the total number of shares issued as of the adoption date, which is 91,598,574 shares[22]. - The share incentive plan is valid for 10 years from the adoption date, which is from March 31, 2021, to March 30, 2031[27]. - If the allocation exceeds 1% of the total issued shares, the company must publish a circular and obtain shareholder approval at a general meeting[15]. - The plan aims to align the interests of selected participants with those of the company's shareholders to drive future development and expansion[20]. - No share rewards have been granted under the share incentive plan since its adoption date[9]. - The board may determine the vesting conditions and periods for the rewards at any time during the plan's effectiveness[24]. - The total number of options granted to participants under the plan and any other share option plans cannot exceed 1% of the total issued shares during any 12-month period[23]. - The plan does not have a purchase price for the rewards[26]. Company Developments - The company has not disclosed any new products, technologies, market expansions, or acquisitions in this announcement[25].

二零二二年年報 17 主席 主席 報告書 管理層討論 及分析 超越整體零售市場表現 (c) 香港無店面零售價值約66.0%（二零二一年︰53.4%）。 此外，每名客戶的季度平均購買頻率在二零二二年第四季增長至5.09次，二零二一年第四季則為4.61次；而每位客戶購買的主要產品類別的季 度平均數量在二零二二年第四季為2.97個，二零二一年第四季則為2.91個。 管理層討論 及分析 二零二二年總毛利率及混合佣金率為23.4%（二零二一年︰23.7%），符合我們二零二二財政年度23.4%的指標。 除指明為比率外，以千港元列示 香港科技探索有限公司 22 管理層討論 及分析 二零二二年年報 23 季度已完成訂單的總商品交易額（百萬港元） 季度佔已完成訂單的總商品交易額之比例 季度毛利率及混合佣金率 在配送及物流方面，由於第五波新型冠狀病毒疫情帶來高流量的總商品交易額（即使當中有部分被期內增加配送人手而產生的額外成本而抵銷）， 我們於二零二二年第一季錄得較低的配送成本百分比至11.2%。配送成本百分比於二零二二年第二季及第三季回復至11.6%的水平。 季度配送成本佔已完成訂單總商品交易額百分比(A) 季度混合毛利率╱佣 ...

Financial Performance - The net profit for the year 2022 was HKD 212,200,000, a significant increase from HKD 14,300,000 in 2021[23]. - Revenue for 2022 increased by 22.3% to HKD 3,828,100,000, compared to HKD 3,130,200,000 in 2021, driven by a 45.2% growth in multimedia advertising revenue[23]. - The adjusted EBITDA for 2022 was HKD 316,400,000, up from HKD 112,700,000 in 2021[23]. - The total merchandise transaction value for 2022 reached HKD 8,276,200,000, reflecting a growth of 25.9% from HKD 6,573,100,000 in 2021[24]. - The group generated a net profit of HKD 212,200,000 in 2022, compared to HKD 14,300,000 in 2021, with adjusted EBITDA of HKD 316,400,000, up from HKD 112,700,000 in the previous year[103]. - Total revenue for the year ended December 31, 2022, was HKD 3,828,051,000, an increase from HKD 3,130,164,000 for the year ended December 31, 2021, representing a growth of approximately 22.3%[188]. - Direct merchandise sales and franchise sales revenue amounted to HKD 2,425,620,000 for the year ended December 31, 2022, compared to HKD 2,047,194,000 in the previous year, reflecting a growth of about 18.4%[188]. Market Growth and Trends - The estimated online retail sales value in Hong Kong for 2022 was HKD 34.6 billion, representing a 20.8% increase from 2021, indicating continued growth in online shopping[6]. - The online retail market in Hong Kong shows significant growth potential, with a penetration rate of approximately 25.0% in the Asia-Pacific region[44]. - The value of Hong Kong's retail industry increased by approximately 2.4% in 2022, compared to 1.9% in 2021[71]. - The value of Hong Kong's non-store retailing surged to approximately 66.0% in 2022, up from 53.4% in 2021[71]. - The company maintains a positive outlook on the growth of e-commerce in Hong Kong, particularly in online customer numbers and their purchasing frequency on HKTVmall[162]. Customer Engagement and Services - The average daily order volume increased to 49,300 orders in December 2022, up from 41,400 orders in December 2021[23]. - The number of independent customers on HKTVmall increased by 9.7% to 1,412,000 in 2022, compared to 1,287,000 in 2021[23]. - The average purchase frequency per customer increased to 5.09 times in Q4 2022, up from 4.61 times in Q4 2021[73]. - The company aims to expand its customer base and increase purchase frequency by continuously developing new product categories[58]. - The company is focused on enhancing product selection within HKTVmall to further increase customer engagement[58]. Strategic Initiatives and Innovations - The "Independent Online Store" solution was introduced in March 2023, aiming to attract new merchants and will be trialed in early April[13]. - The "Video Sales" feature allows merchants to conduct sales 24/7, utilizing existing store resources to reduce additional setup costs[16]. - The new cross-border purchasing service, Everuts, was launched to connect consumers with international buyers, ensuring payment security for both parties[18]. - Management believes that the Everuts platform represents a revolutionary innovation in global retail, despite the anticipated technical and operational challenges[20]. - The company is investing in B2C logistics infrastructure, including the construction of automated distribution centers and smart logistics fleets, to strengthen its competitive edge[32]. Future Projections and Goals - The target for total merchandise transaction value in 2023 is set between HKD 8,800,000,000 and HKD 9,200,000, representing a year-on-year growth of 6.3% to 11.1%[23]. - The company aims to achieve a total merchandise transaction amount of HKD 12,000,000,000 to HKD 15,000,000,000 by 2026, which would account for approximately 3.4% to 4.3% of Hong Kong's total retail sales value in 2022[112]. - The company plans to enhance its 3PL services by adding 144,000 square feet of distribution center space and implementing automated delivery systems[151]. - The company plans to launch its self-developed automated retail store system in Manchester, UK, by mid-2023, currently undergoing internal renovations[42]. - The company aims to improve last-mile delivery times to 8 hours under its 3PL service, with plans for faster logistics arrangements in the second half of 2023[168]. Operational Efficiency - The delivery cost percentage decreased to 11.2% in Q1 2022, then returned to 11.6% in Q2 and Q3 2022[56]. - Average daily order volume increased from 39,000 in 2021 to 49,500 in 2022, improving operational cost efficiency, while total delivery costs as a percentage of completed order total decreased from 11.8% to 11.4%[96]. - The delivery cost accounted for 20.4% of the total merchandise transaction amount in 2022, down from 22.8% in 2021[121]. - The company has established its own rapid delivery team and expanded services to nine wet markets, with plans to further expand to thirteen wet markets by 2023, covering approximately 75% of the existing customer base[117]. Challenges and Risks - In 2022, Hong Kong recorded a significant increase in online shopping fraud cases, with 8,735 incidents reported, highlighting the risks associated with online purchasing[40]. - The group anticipates 2023 to be another challenging year for retail due to various uncertainties, including interest rate environment and market volatility[144]. - The company is cautious in setting its 2023 business targets due to local economic challenges and shifts in consumer purchasing power[162].

Financial Performance - Total gross merchandise value for the six months ended June 30, 2022, reached HKD 4,186 million, a 37.7% increase from HKD 3,040 million in the same period last year[10]. - Revenue for the period was HKD 1,922 million, a 26.6% increase from HKD 1,518 million year-on-year[12]. - The net profit for the period was HKD 127.8 million, a 33.4% increase from HKD 95.8 million last year[12]. - Adjusted EBITDA for the period was HKD 195.6 million, up 35.4% from HKD 144.4 million in the previous year[12]. - Total gross merchandise transaction value for HKTVmall in the first half of 2022 reached HKD 4.14 billion, a 36.8% increase from HKD 3.03 billion in the same period of 2021[22]. - The group achieved a net profit of HKD 127.8 million in the first half of 2022, compared to HKD 95.8 million in the same period of 2021, representing a year-on-year increase of approximately 33.4%[47]. - Revenue for the six months ended June 30, 2022, reached HKD 1,922,144,000, an increase of 26.6% compared to HKD 1,518,127,000 for the same period in 2021[81]. - The company reported a pre-tax profit of 127,849,000 HKD for the six months ended June 30, 2022, compared to 95,826,000 HKD for the same period in 2021, representing a growth of approximately 33.5%[107]. Customer Engagement - The average daily order volume increased to 49,100, up 36.0% from 36,100 in the previous year[10]. - The number of merged independent customers rose to 1,107,000, reflecting a growth of 23.5% compared to 896,000 last year[10]. - The average purchase frequency per customer in Q2 2022 was 5.05 times, compared to 4.61 times in Q4 2021, indicating increased customer engagement[18]. - The average number of main product categories purchased per customer in Q2 2022 was 2.97, up from 2.91 in Q4 2021, showing a diversification in purchasing behavior[18]. - The contribution of grocery products to total completed order transaction value in the first half of 2022 was 49.8%, continuing to drive customer traffic and repeat purchases[21]. - HKTVmall's monthly user traffic remained at approximately 1.5 million independent users, indicating stable user engagement[21]. Market Position and Strategy - HKTVmall aims to achieve a total merchandise transaction value target of HKD 8 billion for the year[4]. - The retail market in Hong Kong was valued at over HKD 350 billion in 2021, with HKTVmall's transaction value accounting for less than 2% of the market[6]. - HKTVmall plans to increase its market share to 4-5% of the Hong Kong retail market in the coming years[6]. - The company aims to assist merchants in establishing independent online stores, leveraging its customer base to enhance their e-commerce success[8]. - The company plans to continue investing in technology and logistics to strengthen its market position in Hong Kong's e-commerce sector[35]. Logistics and Infrastructure - The company is investing billions in logistics infrastructure to enhance delivery capabilities and reduce operational costs[7]. - Two third-party logistics centers are being expanded to provide warehousing and order fulfillment services, aiming to cover 85% of the best-selling products on HKTVmall[7]. - The logistics services will operate 364 days a year, with a goal of achieving same-day delivery for customers[7]. - HKTV has expanded its rapid delivery service to the less competitive wet market segment, offering over 500 products at the same prices as physical markets, with services launched in five markets[34]. - The delivery cost ratio for completed orders was recorded at 11.2% in Q1 2022, slightly increasing to 11.6% in Q2 2022, with expectations of a minor rise due to a new long-term lease for an automated delivery center starting in Q4 2022[29]. Advertising and Revenue Streams - Multimedia advertising revenue increased by HKD 16.8 million to HKD 64.8 million, representing a growth of 35.0% year-on-year, with a target of HKD 120 million for the full year of 2022[24]. - The company plans to increase advertising prices by up to 40% for popular formats in 2023, reflecting strong demand for its digital advertising services[67]. - The increase in multimedia advertising revenue was 35% year-over-year, rising to HKD 64,787,000 from HKD 48,061,000[81]. Capital Expenditures and Investments - Capital expenditures surged by 329.4% to HKD 214.1 million from HKD 49.9 million in the previous year[12]. - The company plans to invest approximately HKD 100 million in capital expenditures for a new automated logistics center, expected to be operational by the end of the first half of 2023[66]. - The company made payments of HKD 197,335,000 for the purchase of property, plant, and equipment during the reporting period, compared to HKD 79,993,000 in the same period last year, indicating a significant increase in capital expenditures[75]. Shareholder Information and Corporate Governance - The company declared an interim dividend of 8 HKD cents per share, totaling 73,729,000 HKD, slightly up from 73,306,000 HKD in the previous year[105]. - The company has complied with the corporate governance code as per the listing rules for the six months ending June 30, 2022[148]. - The audit committee, consisting of three independent non-executive directors, reviewed and discussed the unaudited interim results for the six months ending June 30, 2022[151].