PICO FAR EAST(00752) - 2024 - 中期财报

Financial Highlights Overall Performance For the six months ended April 30, 2024, the Group achieved strong financial performance with total revenue growing 18% to HKD 2.942 billion, core operating profit increasing 53% to HKD 267 million, and profit attributable to company shareholders rising 90% to HKD 192 million, with basic earnings per share at 15.47 HK cents Key Financial Indicators for H1 2024 | Indicator | Six Months Ended April 30, 2024 | Six Months Ended April 30, 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 2.942 billion | HKD 2.493 billion | +18% | | Core Operating Profit | HKD 267 million | HKD 174 million | +53% | | Profit Attributable to Company Shareholders | HKD 192 million | HKD 101 million | +90% | | Basic Earnings Per Share | 15.47 HK cents | 8.17 HK cents | +89.3% | - The Board recommended an interim dividend of 5.5 HK cents per ordinary share, a 175% increase from 2.0 HK cents in the prior year period[136] Consolidated Financial Statements Condensed Consolidated Income Statement During the period, the Group's revenue increased 18.0% to HKD 2.942 billion, gross profit rose 24.1% to HKD 872 million, operating profit surged 61.5% to HKD 254 million, and profit for the period reached HKD 199 million, up 94.2% Condensed Consolidated Income Statement | Item | Six Months Ended April 30, 2024 (thousand HKD) | Six Months Ended April 30, 2023 (thousand HKD) | | :--- | :--- | :--- | | Revenue | 2,942,002 | 2,493,180 | | Gross Profit | 871,855 | 702,755 | | Core Operating Profit | 267,290 | 173,808 | | Operating Profit | 254,156 | 157,332 | | Profit Before Tax | 239,658 | 136,188 | | Profit for the Period | 198,809 | 102,385 | | Profit Attributable to Company Shareholders | 191,701 | 101,111 | | Basic Earnings Per Share | 15.47 cents | 8.17 cents | Condensed Consolidated Statement of Comprehensive Income The Group reported a profit for the period of HKD 199 million, with other comprehensive income significantly reduced to HKD 20.68 million due to foreign exchange differences, resulting in a total comprehensive income of HKD 219 million, largely consistent with HKD 221 million in the prior year Condensed Consolidated Statement of Comprehensive Income | Item | Six Months Ended April 30, 2024 (thousand HKD) | Six Months Ended April 30, 2023 (thousand HKD) | | :--- | :--- | :--- | | Profit for the Period | 198,809 | 102,385 | | Other Comprehensive Income for the Period, Net of Tax | 20,683 | 119,081 | | Total Comprehensive Income for the Period | 219,492 | 221,466 | | Total Comprehensive Income Attributable to Company Shareholders | 212,316 | 219,785 | Condensed Consolidated Balance Sheet As of April 30, 2024, the Group's total assets were HKD 5.17 billion, total liabilities HKD 2.72 billion, and net assets (total equity) HKD 2.449 billion, a 5.1% increase from the beginning of the period, with net current assets stable at HKD 1.132 billion and cash balances at HKD 1.476 billion Summary of Financial Position | Item | April 30, 2024 (thousand HKD) | October 31, 2023 (thousand HKD) | | :--- | :--- | :--- | | Non-current Assets | 1,585,576 | 1,594,742 | | Current Assets | 3,584,799 | 3,465,765 | | Current Liabilities | 2,452,744 | 2,336,406 | | Non-current Liabilities | 269,105 | 394,163 | | Net Assets | 2,448,526 | 2,329,938 | | Equity Attributable to Company Shareholders | 2,387,228 | 2,261,271 | Condensed Consolidated Statement of Changes in Equity As of April 30, 2024, equity attributable to company shareholders increased from HKD 2.261 billion to HKD 2.387 billion, primarily driven by HKD 192 million profit for the period, partially offset by HKD 86.78 million in final dividends paid - Beginning equity attributable to shareholders was HKD 2,261,271 thousand, with profit for the period contributing HKD 191,701 thousand, and the 2023 final dividend payout consuming HKD 86,781 thousand, resulting in an ending equity attributable to shareholders of HKD 2,387,228 thousand[22] Condensed Consolidated Cash Flow Statement During the period, net cash from operating activities increased 17.8% to HKD 286 million, net cash used in investing activities significantly decreased to HKD 66.36 million, and net cash used in financing activities decreased to HKD 156 million, leading to a net increase in cash and cash equivalents of HKD 64.10 million, reversing the prior year's decrease, with an ending balance of HKD 1.246 billion Summary of Cash Flow Statement | Item | Six Months Ended April 30, 2024 (thousand HKD) | Six Months Ended April 30, 2023 (thousand HKD) | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 286,062 | 242,729 | | Net Cash Used in Investing Activities | (66,360) | (125,544) | | Net Cash Used in Financing Activities | (155,607) | (200,136) | | Net Increase (Decrease) in Cash and Cash Equivalents | 64,095 | (82,951) | | Cash and Cash Equivalents at End of Period | 1,246,180 | 1,351,778 | Notes to the Consolidated Financial Statements 1. Basis of Preparation and Key Accounting Policies These interim financial statements are prepared under HKAS 34, with the Group adopting new and revised HKFRSs, including amendments to HKAS 12 on deferred tax and the Pillar Two Model Rules, and retrospectively applying accounting guidance on the abolition of the MPF offsetting mechanism, none of which had a material impact on the financial statements - The Group adopted amendments to HKAS 12, 'Deferred Tax related to Assets and Liabilities arising from a Single Transaction,' narrowing the scope of initial recognition exemption, but with no material impact on the statement of financial position[27][96] - The Group first adopted amendments related to 'International Tax Reform—Pillar Two Model Rules' and applied the relevant temporary exception provisions[48][49] - In response to the abolition of the MPF offsetting mechanism in Hong Kong, the Group retrospectively applied relevant accounting guidance to provide more reliable information[50][86] 2. Fair Value Measurement The report details fair value measurement hierarchies for financial assets and liabilities, with most financial assets measured at Level 2 (observable inputs like fund investments) and Level 3 (unobservable inputs like unlisted equity securities), for which management uses discounted cash flow, recent transaction prices, and option pricing models for valuation Financial Assets Measured at Fair Value (April 30, 2024) | Asset Class | Level 1 (thousand HKD) | Level 2 (thousand HKD) | Level 3 (thousand HKD) | Total (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | Financial Assets at FVTOCI | – | – | 19,061 | 19,061 | | Financial Assets at FVTPL | – | 20,948 | 1,908 | 22,856 | | Total | – | 20,948 | 20,969 | 41,917 | - Level 3 fair value financial instruments primarily include unlisted equity securities, investments in simple agreements for future equity, and contingent consideration, valued using discounted cash flow, recent transaction prices, and income approaches[60][41][69] 3. Revenue and Segment Information The Group's revenue is primarily derived from four business segments, with 'Exhibitions, Events and Brand Activation' being the largest contributor at approximately 86% of total revenue, while the Greater China region accounts for the largest share at approximately 46%, with all segments and key regional markets achieving year-on-year revenue growth Revenue by Business Segment (External Customers) | Business Segment | H1 2024 Revenue (thousand HKD) | H1 2023 Revenue (thousand HKD) | | :--- | :--- | :--- | | Exhibitions, Events and Brand Activation | 2,540,122 | 2,149,148 | | Visual Brand Activation | 160,073 | 159,912 | | Museums and Themed Entertainment | 182,712 | 152,597 | | Conference and Show Management | 59,095 | 31,523 | | Total | 2,942,002 | 2,493,180 | Revenue by Geographical Region | Region | H1 2024 Revenue (thousand HKD) | H1 2023 Revenue (thousand HKD) | | :--- | :--- | :--- | | Greater China | 1,346,371 | 1,268,773 | | Southeast Asia | 682,955 | 440,039 | | Middle East | 392,699 | 317,433 | | UK and US | 408,103 | 359,753 | | Others | 111,874 | 107,182 | | Consolidated Total | 2,942,002 | 2,493,180 | 4. & 5. Finance Costs and Income Tax Expense During the period, the Group's finance costs decreased to HKD 16.18 million from HKD 20.58 million due to lower borrowing interest, while income tax expense increased to HKD 40.85 million from HKD 33.80 million, consistent with the growth in profit before tax Finance Costs and Income Tax Expense | Item | Six Months Ended April 30, 2024 (thousand HKD) | Six Months Ended April 30, 2023 (thousand HKD) | | :--- | :--- | :--- | | Finance Costs | 16,176 | 20,580 | | Income Tax Expense | 40,849 | 33,803 | 7. & 8. Dividends and Earnings Per Share (EPS) The Group paid a 2023 final dividend of 7.0 HK cents per share, totaling HKD 86.78 million, and the Board resolved to declare a 2024 interim dividend of 5.5 HK cents per share, significantly higher than 2.0 HK cents in the prior period, with basic EPS at 15.47 HK cents and diluted EPS at 15.45 HK cents, both substantially up year-on-year - The 2023 final dividend paid was 7.0 HK cents per share, totaling HKD 86,781 thousand[105] - The Board resolved to declare a 2024 interim dividend of 5.5 HK cents per share (2023: 2.0 HK cents)[106] Earnings Per Share Calculation | Item | Six Months Ended April 30, 2024 | Six Months Ended April 30, 2023 | | :--- | :--- | :--- | | Profit (thousand HKD) | 191,701 | 101,111 | | Weighted Average Number of Ordinary Shares (Basic) | 1,239,471,873 | 1,238,350,038 | | Weighted Average Number of Ordinary Shares (Diluted) | 1,241,132,205 | 1,238,971,680 | Key Balance Sheet Items At period-end, the Group's property, plant, and equipment had a carrying value of HKD 510 million, intangible assets HKD 453 million, trade receivables HKD 716 million (mostly within 91 days), and trade payables HKD 321 million, with 610,000 new shares issued during the period due to share option exercises - Trade receivables at period-end were approximately HKD 716 million, with about 78% (HKD 557 million) aged within 91 days[113] - Trade payables at period-end were approximately HKD 321 million, with about 75% (HKD 240 million) aged within 91 days[115] - During the period, 610,000 ordinary shares were issued due to the exercise of share options[117][122] 18. & 19. Commitments and Contingencies As of April 30, 2024, the Group had contracted but unprovided capital commitments of HKD 4.64 million and provided guarantees totaling approximately HKD 79.75 million for performance bonds and other matters, for which directors believe the likelihood of claims is remote Capital Commitments and Guarantees | Item | April 30, 2024 (thousand HKD) | October 31, 2023 (thousand HKD) | | :--- | :--- | :--- | | Capital Commitments (Contracted but not provided for) | 4,635 | 3,543 | | Performance Guarantees | 66,437 | 106,376 | | Other Guarantees | 13,317 | 1,423 | 21. Subsequent Events On May 31, 2024, the Group exercised a put option to acquire the remaining 40% equity interest in indirect non-wholly owned subsidiary Infinity Marketing Team, LLC (IMT) for approximately USD 30.07 million, making IMT an indirect wholly-owned subsidiary - Subsequent to the reporting period, the Group acquired the remaining 40% equity interest in Infinity Marketing Team, LLC (IMT) for a cash consideration of approximately HKD 235 million (USD 30,070,118.39), making it a wholly-owned subsidiary[133] Management Discussion and Analysis Operations Review Despite global economic challenges, the Group achieved strong growth in H1, leveraging its integrated brand experience framework and 'content, community, creativity, and data' strategy, with sustained growth in Greater China, strong momentum in Southeast Asia, effective investments in the Middle East, steady recovery in the US and Europe, and all business segments recording revenue growth, most notably 'Conference and Show Management' - The Group achieved good progress across key markets (Mainland China, Southeast Asia, Middle East, US, Europe) by integrating data and digital elements into comprehensive cross-platform solutions[137][138] - The Group strategically divested 45% equity in InfocommAsia Pte Ltd. to reallocate resources and focus on core businesses[138] Exhibitions, Events and Brand Activation As the Group's largest segment, revenue grew 18.2% to HKD 2.54 billion, demonstrating strong momentum, with the Group providing services for major global exhibitions like Mobile World Congress and Dubai Airshow, and creating innovative digital-integrated brand activation projects for clients such as State Farm and Xiaomi Segment Revenue Performance | Business Segment | H1 2024 Revenue | H1 2023 Revenue | YoY Growth | | :--- | :--- | :--- | :--- | | Exhibitions, Events and Brand Activation | HKD 2.54 billion | HKD 2.149 billion | +18.2% | - The Group provides services for numerous renowned global exhibitions and continuously integrates digital interactive elements such as AI, Web3, and VR/AR into cross-platform project solutions[148][149][150] Visual Brand Activation Despite intensified competition in China's EV market, this segment's revenue remained stable at HKD 160 million, consistent with the prior year, as the Group strengthened its market position and secured key contracts by focusing on leading automotive brands like Kia and GAC Aion and leveraging innovative digital tools Segment Revenue Performance | Business Segment | H1 2024 Revenue | H1 2023 Revenue | YoY Growth | | :--- | :--- | :--- | :--- | | Visual Brand Activation | HKD 160 million | HKD 160 million | 0% | - The Group was appointed as the exclusive service provider for Kia China's new EV showrooms and provides visual brand services for 150 retail stores of GAC Aion's premium brand, Hyper[154] Museums and Themed Entertainment Revenue for this segment grew 20.4% to HKD 183 million, driven by the smooth progress of ongoing projects and completion of several significant ones, including the well-progressing 11 SKIES themed attraction project in Hong Kong with K11 Group, poised to be a future landmark retail and entertainment destination Segment Revenue Performance | Business Segment | H1 2024 Revenue | H1 2023 Revenue | YoY Growth | | :--- | :--- | :--- | :--- | | Museums and Themed Entertainment | HKD 183 million | HKD 152 million | +20.4% | - The Group's 11 SKIES themed attraction project in Hong Kong, in collaboration with K11 Group and adjacent to Hong Kong International Airport, is progressing well and is set to become a future retail and entertainment landmark[158] Conference and Show Management This segment performed exceptionally well, with revenue surging 84.4% to HKD 59 million as demand for conferences and conventions recovered, leveraging the Group's 'content, community, creativity, and data' strategy, along with smart technology and AI-driven data analytics, to provide deeper insights and effective content for clients Segment Revenue Performance | Business Segment | H1 2024 Revenue | H1 2023 Revenue | YoY Growth | | :--- | :--- | :--- | :--- | | Conference and Show Management | HKD 59 million | HKD 32 million | +84.4% | - The Group capitalized on the recovery in demand for conferences and conventions in key markets like Southeast Asia, achieving rapid business growth[160] Liquidity and Financial Resources The Group's financial position is robust, with net cash balance (bank and cash balances less borrowings) significantly increasing to HKD 1.146 billion from HKD 904 million at period-end, total borrowings decreasing to HKD 344 million, and the gearing ratio falling from 6.20% to 3.64%, indicating reduced financial risk and ample liquidity Cash and Borrowing Position (million HKD) | Item | April 30, 2024 | October 31, 2023 | | :--- | :--- | :--- | | Bank and Cash Balances | 1,490 | 1,294 | | Less: Borrowings | (344) | (390) | | Net Cash Balance | 1,146 | 904 | Key Financial Ratios | Ratio | April 30, 2024 | October 31, 2023 | | :--- | :--- | :--- | | Current Ratio | 1.46 times | 1.48 times | | Gearing Ratio | 3.64% | 6.20% | Human Resources As of April 30, 2024, the Group employed approximately 2,600 full-time staff globally, with staff costs increasing to HKD 656 million from HKD 454 million in the prior period, and its remuneration policy is linked to employee performance and regional trends, offering discretionary bonuses and share options as incentives - As of period-end, the Group had approximately 2,600 full-time employees, with staff costs for the period totaling HKD 656 million[169] Outlook The Group is optimistic about its future, poised to capture a larger market share in the recovering economy, supported by a robust pipeline of diverse projects, unique digital experience expertise, and the full acquisition of Infinity Marketing Team, LLC (IMT), while continuing to focus on innovation, integrating AI, data, and Web3 technologies to expand into new markets and sustain profit growth for long-term shareholder value - The Group possesses a strong project pipeline for the second half of the fiscal year and beyond, covering various sectors including exhibitions, automotive projects, and art festivals[172][174] - The full acquisition of IMT will help the Group expand its service expertise and business network in the US, driving new business development[174][133] - The Visual Brand Activation segment will continue to benefit from growth in the EV sector and has been appointed by BYD as one of its qualified suppliers for future global large-scale center projects[175][176] - The Museums and Themed Entertainment segment has secured major project contracts, including the Hong Kong Museum of History, Wetland Park, and a Hollywood movie theme park in Japan, with expected completion between 2025 and 2026[178][183] Corporate Governance and Other Information Directors' and Shareholders' Interests The report discloses directors' and major shareholders' interests in the company's shares, with Pine Asset Management Limited being the largest shareholder at 37.28% as of April 30, 2024, and institutional investors like FMR LLC and Brandes Investment Partners, L.P. also holding significant positions Major Shareholder Holdings (April 30, 2024) | Shareholder Name | Capacity | Number of Shares Held | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Pine Asset Management Limited | Beneficial Owner | 462,167,186 | 37.28% | | FMR LLC | Interest of Controlled Corporation | 123,789,010 | 9.99% | | Brandes Investment Partners, L.P. | Investment Manager | 99,023,157 | 7.99% | | FIL Limited | Interest of Controlled Corporation | 89,813,000 | 7.24% | Share Option Schemes The company operates a share option scheme adopted in 2022, with 17,416,000 outstanding share options under the 2012 and 2022 schemes as of period-end, during which 610,000 options were exercised, and HKD 433,000 in share option expenses were recognized - As of April 30, 2024, there were 17,416,000 outstanding share options under the 2012 and 2022 schemes[197][198] - During the period, 610,000 share options were exercised at exercise prices of HKD 1.154 and HKD 1.300 respectively[198] - The Group recognized total expenses of HKD 433,000 for share options granted during the period[208] Corporate Governance During the reporting period, the company complied with the Corporate Governance Code, with one deviation: the roles of Chairman and Chief Executive Officer are not separate, but the Board believes the existing arrangement maintains a strong management position with sufficient power balance, and the Audit Committee has reviewed these interim financial statements - The company complies with the Corporate Governance Code, with one deviation: the roles of Chairman and Chief Executive Officer are held by the same individual, an arrangement the Board believes maintains a strong management position with sufficient power balance[216] - The Audit Committee, together with management, has reviewed the Group's accounting principles, internal controls, and unaudited interim financial statements[218]