东方企控集团(00018) - 2024 - 年度财报

Management Discussion and Analysis Performance Overview The company's profit attributable to owners decreased by approximately 55% to HK$75.1 million, with revenue down 7% to HK$629 million, primarily due to reduced media business income and the absence of prior-year one-off gains and subsidies FY2024 Performance Summary | Metric | FY2024 (HKD) | FY2023 (HKD) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | Approx. 628,996,000 | Approx. 677,165,000 | -7% | | Profit attributable to owners of the company | Approx. 75,096,000 | Approx. 166,564,000 | -55% | - Overall performance declined due to decreased publishing and advertising revenue in the media business[60] - Absence of government support subsidies during the reporting period (approximately HK$22.28 million in the prior year)[60] - Prior year included a gain from the disposal of Australian property and a reversal of expected credit losses on operating license receivables, totaling approximately HK$19.47 million[60] Financial Resources and Liquidity The Group maintained ample liquidity with net current assets of approximately HK$1.138 billion and a low gearing ratio of 0.4% as of March 31, 2024 Financial Position Indicators (as of March 31) | Metric | 2024 (HKD) | 2023 (HKD) | | :--- | :--- | :--- | | Net Current Assets | Approx. 1,137,831,000 | Approx. 1,029,465,000 | | Time Deposits, Bank Balances and Cash | Approx. 560,937,000 | Approx. 665,196,000 | | Gearing Ratio | 0.4% | 0.4% | Dividend Distribution The Board recommended a total annual dividend of HK$0.06 per share, comprising a final dividend and a special dividend of HK$0.03 each, surpassing the prior year's HK$0.05 Dividend Details (Per Share) | Dividend Type | FY2024 (HKD) | FY2023 (HKD) | | :--- | :--- | :--- | | Interim Dividend | 0 | HK$0.03 | | Special Interim Dividend | 0 | HK$0.02 | | Proposed Final Dividend | HK$0.03 | 0 | | Proposed Special Dividend | HK$0.03 | 0 | | Total for the Year | HK$0.06 | HK$0.05 | Business Review The Group's media business revenue declined by 10% amid economic challenges, while its financing business grew strongly with a 75% increase in loan receivables, and property investment valuations were mixed - Facing economic recession and an uncertain operating environment, the Group's media business encountered significant challenges, with overall revenue decreasing by approximately 10% year-on-year[99] Media Business Revenue Breakdown | Business Segment | FY2024 Revenue (HKD) | Year-on-Year Change | | :--- | :--- | :--- | | Total Media Business | - | -10% | | Oriental Daily News Publishing and Advertising | Approx. 464,813,000 | -9% | | Digital Media Business | Approx. 99,363,000 | -14% | - The financing business continued to develop, with loan receivables totaling approximately HK$524 million at period-end, an increase of approximately 75% year-on-year; total loan interest income was approximately HK$45.45 million, up approximately 47% year-on-year, with a prudent approach primarily focused on first mortgages on properties and no bad debt recorded during the period[101] - In property investment, the valuation of Hong Kong investment properties decreased by approximately 12%, but the valuation of Australian hotel properties increased by approximately 9%, partially offsetting local losses[73] Business Outlook The Group anticipates improved media advertising revenue from economic stimulus and sports events, expects steady expansion in its financing business, and remains cautious on Hong Kong property while seeking to sell its Australian hotel - Government economic stimulus measures and major sporting events (European Championship, Olympic Games) are expected to create a positive consumer atmosphere, helping to boost the Group's advertising revenue[104] - Regarding the financing business, despite uncertain property price trends, the market has become more active, and management expects the business to expand steadily in the coming year, remaining optimistic about its prospects[109] - In property, Hong Kong office rental income is expected to decline, but Australian hotel operating fee income is growing steadily, and the Group continues to actively seek buyers for the hotel[106] Report of the Directors Principal Activities and Performance The Company, an investment holding entity providing corporate management services, reported its performance in the consolidated financial statements, with the Board recommending a total dividend of HK$0.06 per share - The Company's principal activities are investment holding and providing corporate management services[115] - The Board recommended a final dividend of HK$0.03 per share and a special dividend of HK$0.03 per share[117] Environmental, Social and Governance (ESG) The Group is committed to environmental protection and social responsibility through various initiatives, including solar power and compliance with labor laws, reporting a 10.6% employee turnover rate - The Group implemented various environmental measures, including installing solar photovoltaic power systems, using energy-efficient equipment, promoting paperless operations, and recycling resources[128][130][158] - The Group strictly complies with the Personal Data (Privacy) Ordinance and other relevant labor laws, safeguarding the data security and rights of employees and customers[159][162] - During the reporting period, the Group's natural employee turnover rate was 10.6%[166] Major Customers and Suppliers The Group exhibits high customer and supplier concentration, with the top five customers accounting for 59% of turnover and the top five suppliers for 75% of total purchases Customer and Supplier Concentration | Category | Percentage | | :--- | :--- | | Top Five Customers | Approx. 59% of turnover | | Largest Customer | Approx. 26% of turnover | | Top Five Suppliers | Approx. 75% of total purchases | | Largest Supplier | Approx. 26% of total purchases | Corporate Governance Report Board of Directors The Board, composed of executive, non-executive, and independent non-executive directors, provides balanced leadership, held four meetings during the period, and ensured all directors met professional development requirements - The Board comprises 3 executive directors, 1 non-executive director, and 3 independent non-executive directors, with independent non-executive directors constituting more than one-third, meeting listing rule requirements[201] - During the reporting period, the Board held 4 meetings, and all directors attended all meetings they were required to attend[257][267] Board Committees The Board has established six committees—Executive, Audit, Remuneration, Nomination, Investment, and Corporate Social Responsibility—each with clear duties to ensure high corporate governance standards - The Board has established six committees, including the Executive Committee, Audit Committee, Remuneration Committee, Nomination Committee, Investment Committee, and Corporate Social Responsibility Committee[273] - The Audit Committee comprises two independent non-executive directors and one non-executive director, responsible for overseeing financial reporting, risk management, and internal control systems[274] - Both the Remuneration Committee and Nomination Committee are majority-led by independent non-executive directors who also serve as chairpersons, responsible for remuneration policies and director nominations, respectively[277][278] Risk Management and Internal Control The Board ensures the effectiveness of the Group's risk management and internal control systems through annual reviews and independent internal audits, deeming them effective and adequate during the reporting period - The Board is responsible for maintaining the Group's risk management and internal control systems and reviews their effectiveness at least once annually[296] - The Group has engaged an independent professional consulting firm, 'Wise Management Professionals Limited,' to conduct internal audit work and submit reports to the Audit Committee and the Board[303] - Following review, the Board concluded that the Group's risk management and internal control systems were effective and adequate during the reporting period, with no significant deficiencies identified[302] Independent Auditor's Report The auditor issued an unmodified opinion on the Group's consolidated financial statements, with key audit matters including impairment assessments of receivables, property, plant and equipment, and investment property valuations Opinion The auditor believes the consolidated financial statements present a true and fair view of the Group's financial position, performance, and cash flows as of March 31, 2024, in accordance with Hong Kong Financial Reporting Standards - The auditor issued an unmodified opinion on the Group's consolidated financial statements[333] Key Audit Matters Key audit matters include impairment assessments of receivables, property, plant and equipment, and the valuation of investment properties, all involving significant management judgment and estimates - Key Audit Matter One: Impairment assessment of trade and other receivables, due to their material balance and the high degree of management judgment required to assess expected credit losses (ECL)[338][339] - Key Audit Matter Two: Impairment assessment of property, plant and equipment, due to their material balance and the significant judgment and estimation involved in management's assessment of impairment, including key assumptions like discount rates and future cash flows[342][343] - Key Audit Matter Three: Valuation of investment properties, due to their material balance and the significant judgment and estimation involved in fair value measurement, relying on independent professional valuers' assessments[346][350] Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income The Group's FY2024 revenue was HK$629 million, down 7%, with annual profit significantly decreasing by 55% to HK$76.54 million due to lower income and fair value losses, resulting in basic earnings per share of HK$0.0313 Key Items from Consolidated Statement of Profit or Loss (For the year ended March 31) | Item (HK$ thousand) | 2024 | 2023 | | :--- | :--- | :--- | | Revenue | 628,996 | 677,165 | | Profit before tax | 93,422 | 212,778 | | Profit for the year | 76,538 | 170,923 | | Profit attributable to owners of the Company | 75,096 | 166,564 | | Basic earnings per share | HK$0.0313 | HK$0.0695 | Consolidated Statement of Financial Position As of March 31, 2024, the Group's total assets increased to HK$1.957 billion, total liabilities remained stable at HK$162 million, and total equity rose to HK$1.794 billion, indicating robust liquidity Key Items from Consolidated Statement of Financial Position (as of March 31) | Item (HK$ thousand) | 2024 | 2023 | | :--- | :--- | :--- | | Non-current assets | 739,925 | 776,549 | | Current assets | 1,216,846 | 1,115,628 | | Total assets | 1,956,771 | 1,892,177 | | Current liabilities | 79,015 | 86,163 | | Non-current liabilities | 83,316 | 76,159 | | Total liabilities | 162,331 | 162,322 | | Total equity | 1,794,440 | 1,729,855 | Consolidated Statement of Cash Flows Net cash outflow from operating activities was HK$113 million, primarily due to increased loan receivables, while investing activities generated HK$17.68 million, and cash and cash equivalents decreased to HK$561 million at period-end Summary of Consolidated Statement of Cash Flows (For the year ended March 31) | Item (HK$ thousand) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash from/(used in) operating activities | (113,193) | 92,281 | | Net cash from investing activities | 17,680 | 191,653 | | Net cash used in financing activities | (1,300) | (263,772) | | Net (decrease)/increase in cash and cash equivalents | (96,813) | 20,162 | | Cash and cash equivalents at end of period | 560,937 | 665,196 | Notes to the Consolidated Financial Statements The notes detail the Group's significant accounting policies, key estimates, and judgments, providing supplementary information on material items, including segment information, revenue, asset/liability details, and financial risk management Note 4: Significant Accounting Policies This note outlines the Group's significant accounting policies, including financial instrument classification and impairment, revenue recognition, leases, investment properties, and foreign currency translation, all prepared under Hong Kong Financial Reporting Standards - Financial assets are classified into three categories based on business model and cash flow characteristics: measured at amortized cost, at fair value through other comprehensive income (FVOCI), and at fair value through profit or loss (FVTPL)[430] - The Group applies the expected credit loss (ECL) model to recognize loss allowances for financial assets measured at amortized cost, categorized into 12-month ECL and lifetime ECL[8] - Revenue recognition follows HKFRS 15, recognized when control of goods or services is transferred to the customer; specific policies include newspaper revenue recognized upon delivery, advertising revenue upon publication, and subscription revenue upon authorization[36][39] - Investment properties are subsequently measured using the fair value model, with changes in fair value recognized in profit or loss for the period[420] Note 7: Segment Information The Group's three reportable segments are newspaper publishing, loan business, and other operations; newspaper publishing revenue declined in FY2024, while the loan business grew significantly, with most revenue and non-current assets in Hong Kong Segment Revenue and Results (HK$ thousand) | Segment | 2024 Revenue | 2023 Revenue | 2024 Results | 2023 Results | | :--- | :--- | :--- | :--- | :--- | | Newspaper Publishing | 564,176 | 625,062 | 66,311 | 106,864 | | Loan Business | 45,453 | 30,975 | 34,510 | 22,999 | | Other Operating Segments | 19,367 | 21,128 | (5,556) | 71,118 | | Total | 628,996 | 677,165 | 95,265 | 200,981 | Revenue and Non-current Assets by Geographical Area (HK$ thousand) | Region | 2024 Revenue | 2023 Revenue | 2024 Non-current Assets | 2023 Non-current Assets | | :--- | :--- | :--- | :--- | :--- | | Hong Kong | 617,461 | 664,796 | 504,711 | 548,438 | | Australia | 11,535 | 12,369 | 213,869 | 203,397 | Note 23: Loan and Interest Receivables Total loan and interest receivables significantly increased to HK$527 million at period-end, all secured by Hong Kong properties with an effective annual interest rate of 10.36%, and management considers credit risk controllable Loan and Interest Receivables (HK$ thousand) | Category | 2024 | 2023 | | :--- | :--- | :--- | | Current | 523,219 | 292,832 | | Non-current | 3,620 | 8,385 | | Total | 526,839 | 301,217 | - All loan receivables are secured by properties located in Hong Kong, with a total market value of collateral approximately HK$705 million, exceeding the total loan amount[604][581] - Given no significant change in credit risk and sufficient collateral value, the Directors believe no loss allowance for expected credit losses is required for these balances[665] Note 37: Financial Risk Management and Fair Value Measurement The Group manages key financial risks, including foreign currency, credit, interest rate, and liquidity, through continuous monitoring, maintaining ample liquidity and a robust capital structure - The primary foreign currency risk arises from the Australian Dollar (AUD); a 10% appreciation of AUD against HKD would increase profit before tax by approximately HK$0.1 million[654][655][657] - Credit risk is concentrated: the largest and top five receivables in the newspaper publishing segment account for 20% and 34% of that segment's total receivables, respectively; for the loan business segment, the largest and top five receivables account for 29% and 92% of the total loans, respectively[688][691] - Interest rate risk primarily stems from short-term bank deposits; a 0.5% increase/decrease in interest rates would increase/decrease profit before tax by approximately HK$2.57 million[695][696] - The Group manages liquidity risk by utilizing bank and other borrowings to maintain a balanced funding position; financial liabilities at period-end are primarily due within one year[697][671]