[Form 6-K Report](index=1&type=section&id=Form%206-K%20Report) [Share Repurchase Program Announcement](index=2&type=section&id=Share%20Repurchase%20Program%20Announcement) AMTD Digital Inc. announced a share repurchase program via a Form 6-K filing, with details provided in an attached press release - AMTD Digital Inc. has announced a share repurchase program, disclosed via a press release filed as Exhibit 99.1[2](index=2&type=chunk) Share Repurchase Program Details | Program Detail | Value | | :------------------ | :-------------- | | Authorized Amount | US$30 million | - The report was signed by Director Dr. Feridun Hamdullahpur and filed on August 23, 2023[3](index=3&type=chunk)

PART I [Key Information](index=10&type=section&id=ITEM%203.%20KEY%20INFORMATION) The company faces significant risks from its China/Hong Kong operations, business model, controlling shareholder, and ADS volatility [Risk Factors](index=10&type=section&id=D.%20Risk%20Factors) Key risks stem from China/HK regulations, a nascent business model, reliance on the AMTD ecosystem, and extreme ADS price volatility - The company identifies significant risks related to **PRC government intervention and potential U.S. delisting** under the HFCAA due to PCAOB inspection issues[16](index=16&type=chunk)[17](index=17&type=chunk)[27](index=27&type=chunk) - Business operations are concentrated in the emerging digital financial services industry with a **limited operating history**, particularly in its main revenue source, the SpiderNet ecosystem[29](index=29&type=chunk)[59](index=59&type=chunk) - As a **"controlled company"**, potential conflicts of interest arise from its parent, AMTD Group, and a dual-class share structure limits public ADS holder voting power[176](index=176&type=chunk)[177](index=177&type=chunk)[191](index=191&type=chunk) - The ADS trading price has shown **extreme volatility**, ranging from US$12.05 to US$2,555.30 since its July 2022 IPO[182](index=182&type=chunk) [Information on the Company](index=51&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) The company operates a digital solutions platform in Asia across four business lines, acting as the core of the AMTD SpiderNet ecosystem [History and Development of the Company](index=51&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) Incorporated in 2019, the company consolidated businesses from AMTD Group, became majority-owned by AMTD IDEA, and listed on the NYSE in July 2022 - The company was formed via a 2019 restructuring, carving out businesses from its **Controlling Shareholder, AMTD Group**[233](index=233&type=chunk) - **AMTD IDEA Group acquired a majority stake** in February 2022, now owning 87.6% of issued shares and 99.3% of total voting power[235](index=235&type=chunk) - The company's ADSs began trading on the NYSE on **July 15, 2022**, under the ticker symbol "HKD"[236](index=236&type=chunk) [Business Overview](index=52&type=section&id=B.%20Business%20Overview) The business comprises four core segments, with the SpiderNet ecosystem being a key revenue driver and strategy under extensive regulation - The business is built on four pillars: **Digital Financial Services, SpiderNet Ecosystem Solutions, Digital Media, Content, and Marketing, and Digital Investments**[238](index=238&type=chunk) - The company is connected to **Airstar Bank**, a Hong Kong virtual bank, and plans a digital wholesale bank in Singapore[242](index=242&type=chunk)[245](index=245&type=chunk) - A **controlling interest in PolicyPal**, a Singapore digital insurance platform, was acquired in August 2020[253](index=253&type=chunk)[255](index=255&type=chunk) - The **SpiderNet Ecosystem Solutions business is a primary revenue driver**, providing exclusive network access for a membership fee[261](index=261&type=chunk)[262](index=262&type=chunk) - The company operates under **stringent regulatory frameworks in Singapore (MAS) and Hong Kong (HKIA)** for its various activities[288](index=288&type=chunk)[376](index=376&type=chunk) [Corporate Structure](index=83&type=section&id=C.%20Corporate%20Structure) The company is a holding company controlled by AMTD IDEA Group through a layered structure governed by several inter-company agreements - AMTD Digital is controlled by AMTD IDEA Group, which is **50.6% owned by AMTD Group Company Limited**, creating a layered control structure[396](index=396&type=chunk)[397](index=397&type=chunk) - A **Master Transaction Agreement** governs liability allocation and investment referrals with the Controlling Shareholder[399](index=399&type=chunk)[404](index=404&type=chunk) - A **Transitional Services Agreement** ensures the provision of corporate support services from the Controlling Shareholder post-IPO[407](index=407&type=chunk)[411](index=411&type=chunk) - A **Non-Competition Agreement** prevents business competition between the company and its Controlling Shareholder[412](index=412&type=chunk)[413](index=413&type=chunk) [Property, Plants and Equipment](index=88&type=section&id=D.%20Property%2C%20Plants%20and%20Equipment) The company's principal executive offices in Hong Kong are leased and shared by its Controlling Shareholder - The company's main offices are **leased by its Controlling Shareholder**, not directly by the company itself[417](index=417&type=chunk) [Operating and Financial Review and Prospects](index=88&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) FY2022 saw flat revenue but higher profit due to fair value gains, with liquidity sourced from operations and its controlling shareholder [Operating Results](index=88&type=section&id=A.%20Operating%20Results) FY2022 profit rose to HK$201.4 million on flat revenue, driven by fair value gains, while expenses increased due to growth and IPO costs Consolidated Results of Operations (Fiscal Years 2020-2022) | | 2020 (HK$ in thousands) | 2021 (HK$ in thousands) | 2022 (HK$ in thousands) | 2022 (US$ in thousands) | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **167,547** | **195,816** | **196,958** | **25,101** | | Changes in fair value on financial assets at FVTPL | 43,592 | 70,291 | 132,032 | 16,827 | | Employee benefits expense | (15,168) | (48,026) | (72,426) | (9,230) | | Legal and professional fee | (1,952) | (6,850) | (23,456) | (2,989) | | **Profit before tax** | **182,047** | **196,252** | **225,010** | **28,676** | | Income tax expense | (23,715) | (24,611) | (23,614) | (3,009) | | **Profit for the year** | **158,332** | **171,641** | **201,396** | **25,667** | Revenue by Business Segment (Fiscal Years 2020-2022) | Segment | 2020 (HK$ in thousands) | 2021 (HK$ in thousands) | 2022 (HK$ in thousands) | % of Total 2022 Revenue | | :--- | :--- | :--- | :--- | :--- | | Digital financial services | 9,869 | 11,721 | 11,798 | 6.0% | | SpiderNet ecosystem solutions | 157,678 | 184,095 | 184,627 | 93.7% | | Corporate | — | — | 533 | 0.3% | | **Total** | **167,547** | **195,816** | **196,958** | **100.0%** | - The increase in profit for FY2022 was largely driven by a **realized gain of HK$130.6 million** from the disposal of 'Investment I'[452](index=452&type=chunk)[456](index=456&type=chunk) - A significant portion of income is derived from a limited number of clients, with the **top five clients accounting for 43.6% of total revenue** in FY2022[89](index=89&type=chunk) [Liquidity and Capital Resources](index=101&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company maintains liquidity through operations and its parent, with no debt and sufficient cash despite large intra-group transfers Summary of Cash Flows (Fiscal Years 2021-2022) | | 2021 (HK$ in thousands) | 2022 (HK$ in thousands) | 2022 (US$ in thousands) | | :--- | :--- | :--- | :--- | | Net cash generated from operating activities | 82,901 | 79,891 | 10,182 | | Net cash (used in)/from investing activities | 128,167 | (382,986) | (48,810) | | Net cash from financing activities | 7,894 | — | — | | **Cash and cash equivalents at end of the year** | **416,420** | **112,516** | **14,340** | - As of April 30, 2022, the company held **HK$112.5 million (US$14.3 million) in cash** and had no total indebtedness[490](index=490&type=chunk) - A significant use of cash was a **net outflow of HK$372.5 million to AMTD Group**, reflecting a centralized treasury function[499](index=499&type=chunk)[569](index=569&type=chunk) [Critical Accounting Estimates](index=104&type=section&id=E.%20Critical%20Accounting%20Estimates) Critical accounting estimates involve significant judgment in the fair value measurement of Level 3 assets and impairment of goodwill - **Fair value measurement of unquoted equity instruments and movie income rights** are key estimation uncertainties as Level 3 assets[515](index=515&type=chunk)[818](index=818&type=chunk) - Determining potential **impairment of goodwill (HK$58.7 million) and intangible assets (HK$36.4 million)** requires significant estimation[817](index=817&type=chunk) [Directors, Senior Management and Employees](index=105&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) The company's leadership includes a six-member board, key executives, and 50 employees, with established governance committees - The board comprises six directors, with several holding **concurrent positions within the broader AMTD Group**[519](index=519&type=chunk)[526](index=526&type=chunk)[527](index=527&type=chunk) - For FY2022, aggregate cash compensation for directors and executive officers was **HK$7.2 million (US$0.9 million)**[530](index=530&type=chunk) - Governance committees have been established, but the **audit, compensation, and nominating committees each consist of only a single member**[541](index=541&type=chunk)[543](index=543&type=chunk)[544](index=544&type=chunk) - As of April 30, 2022, the company had **50 employees**, with 70% being frontline staff[553](index=553&type=chunk)[554](index=554&type=chunk) [Major Shareholders and Related Party Transactions](index=112&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) AMTD IDEA Group controls the company through super-voting shares, leading to significant related-party transactions and fund transfers - **AMTD IDEA Group is the principal shareholder**, holding 87.6% of beneficial ownership and 99.3% of the aggregate voting power[559](index=559&type=chunk)[560](index=560&type=chunk) - The company has a **dual-class share structure** where Class B shares, held by AMTD IDEA Group, have 20 votes per share[559](index=559&type=chunk) - In FY2022, the company had **significant related-party transactions**, including receiving HK$7.1 million in cost recharges and earning HK$12.8 million from services to an affiliate[566](index=566&type=chunk)[567](index=567&type=chunk) - **Significant intra-group fund transfers** occur, with HK$2,522.7 million (US$321.5 million) due from group companies as of April 30, 2022[569](index=569&type=chunk) [Financial Information](index=115&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) The company reports no material legal proceedings or significant post-balance sheet events and has no fixed dividend policy - The company is not a party to any **material litigation, arbitration, or administrative proceedings**[573](index=573&type=chunk) - **No dividends have been paid**, and future distributions are at the board's discretion without a fixed policy[575](index=575&type=chunk) [Additional Information](index=116&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) This section covers the dual-class share structure, anti-takeover provisions, tax implications, and potential PFIC status - The company's **dual-class share structure** gives Class B shares 20 votes per share versus one for Class A shares[586](index=586&type=chunk)[587](index=587&type=chunk) - The articles of association contain **anti-takeover provisions**, such as the board's authority to issue preferred shares[606](index=606&type=chunk) - The company does not expect to be classified as a **Passive Foreign Investment Company (PFIC)** but notes the risk depends on annual factual determination[226](index=226&type=chunk)[637](index=637&type=chunk) - There are **no foreign exchange control restrictions in Hong Kong** affecting the company's ability to remit profits or pay dividends[612](index=612&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=129&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Primary market risks include equity price risk from unquoted securities and credit risk from related-party receivables - The company is exposed to **equity price risk** from its unquoted securities; a 3% price change would impact pre-tax profit by HK$2.6 million[657](index=657&type=chunk)[919](index=919&type=chunk) - **Foreign exchange risk is considered limited** due to the HKD-USD peg[654](index=654&type=chunk) - **Credit risk is concentrated** in receivables and amounts due from AMTD Group, which are monitored closely[659](index=659&type=chunk)[920](index=920&type=chunk) PART II [Material Modifications to the Rights of Security Holders and Use of Proceeds](index=131&type=section&id=ITEM%2014.%20MATERIAL%20MODIFICATIONS%20TO%20THE%20RIGHTS%20OF%20SECURITY%20HOLDERS%20AND%20USE%20OF%20PROCEEDS) The company reports no modifications to security holder rights and details the intended use of its US$130.4 million in IPO proceeds - The company raised **US$130.4 million in net proceeds** from its July 2022 IPO[668](index=668&type=chunk) - As of the report date, **none of the IPO proceeds have been used**, with funds earmarked for licenses, acquisitions, and IT[669](index=669&type=chunk) [Controls and Procedures](index=132&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) A material weakness in internal control over financial reporting was identified due to the lack of an internal audit function - A **material weakness in internal control** was identified as of April 30, 2022, due to the lack of an internal audit function[155](index=155&type=chunk)[674](index=674&type=chunk) - Remediation steps include **establishing an internal audit department** and hiring experienced personnel[674](index=674&type=chunk) - As an emerging growth company, it is **exempt from the auditor attestation requirement** on internal control over financial reporting[675](index=675&type=chunk) [Principal Accountant Fees and Services](index=134&type=section&id=ITEM%2016C.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) For FY2022, the company paid its principal accountant, Deloitte, HK$6.75 million in audit fees and HK$28,000 in tax fees Accountant Fees (Fiscal Years 2021-2022) | Fee Type | 2021 (HK$ in thousands) | 2022 (HK$ in thousands) | 2022 (US$ in thousands) | | :--- | :--- | :--- | :--- | | Audit Fees | 5,285 | 6,748 | 860 | | Tax Fees | 28 | 28 | 4 | PART III [Financial Statements](index=135&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) This section presents the audited IFRS consolidated financial statements for fiscal years 2020-2022 Consolidated Statement of Financial Position Highlights (as of April 30) | | 2021 (HK$ in thousands) | 2022 (HK$ in thousands) | | :--- | :--- | :--- | | **Total Assets** | **3,067,071** | **3,221,646** | | Non-current assets | 408,811 | 245,353 | | Current assets | 2,658,260 | 2,976,293 | | **Total Liabilities** | **173,849** | **118,194** | | Current liabilities | 135,787 | 107,106 | | Non-current liabilities | 38,062 | 11,088 | | **Total Equity** | **2,893,222** | **3,103,452** | Consolidated Statement of Profit or Loss Highlights (for the year ended April 30) | | 2020 (HK$ in thousands) | 2021 (HK$ in thousands) | 2022 (HK$ in thousands) | | :--- | :--- | :--- | :--- | | Revenue | 167,547 | 195,816 | 196,958 | | Profit before tax | 182,047 | 196,252 | 225,010 | | **Profit for the year** | **158,332** | **171,641** | **201,396** | - The financial statements were audited by **Deloitte Touche Tohmatsu**, which confirmed they conform with IFRS[697](index=697&type=chunk)[700](index=700&type=chunk)