Company Information MOG Digitech Holdings Limited is a Cayman Islands-incorporated company listed on the Hong Kong Stock Exchange, with primary operations in China, Malaysia, and Hong Kong - MOG Digitech Holdings Limited is a company incorporated in the Cayman Islands, with its shares listed on The Stock Exchange of Hong Kong Limited under stock code 19421 - The company's principal places of business are located in Nanchang, Jiangxi Province, China, as well as in Malaysia and Hong Kong517 Chairman's Statement Chairman Mr. Tang Chi Wah reviews the 2023 fiscal year, highlighting significant revenue growth driven by new digital RMB-related businesses and recovery of existing operations, achieving a turnaround to profit before non-cash items despite a book loss due to goodwill impairment - In FY2023, the Group achieved significant growth in revenue and gross profit, primarily due to contributions from new digital RMB-related businesses12 - The Group recorded a loss of approximately RMB 74.4 million for the year, mainly attributable to a non-cash goodwill impairment loss of approximately RMB 88.3 million; excluding this, the Group achieved a profit before tax of approximately RMB 18.7 million, successfully turning losses into profits2013 - The Group's future strategy will pursue a dual-track approach: continuing to diversify and expand digital RMB application scenarios while consolidating its position as one of Malaysia's largest optical product retailers10 Management Discussion and Analysis In FY2023, the Group's total revenue significantly increased by 158.1% year-on-year to RMB 1.42 billion, primarily driven by digital payment-related businesses in China; gross profit grew by 33.9% to RMB 206 million, but the gross profit margin decreased from 27.9% to 14.5% due to the increased proportion of new businesses; the Group recorded a net loss of RMB 74.4 million for the year, mainly due to goodwill impairment of RMB 88.3 million for Positive Oasis Group and Chuangtong Group, but achieved a profit before tax of RMB 18.7 million excluding this non-cash impairment; the Group's financial position remains robust with a current ratio of 3.41 times, and it plans to continue seeking acquisition opportunities in digital payment businesses and enhancing information technology system efficiency Business Review The Group's business primarily comprises digital payment, e-commerce, and financing services in China, and optical product retail and franchising in Malaysia, with digital RMB business as a core future growth driver; however, due to China's economic slowdown and rising credit risks in H2 2023, some newly acquired businesses, such as Positive Oasis Group and Chuangtong Group, failed to meet expected revenue targets, leading to goodwill impairment - The Group's businesses primarily include digital payment-related businesses in China and optical product retail businesses in Malaysia2025 - Due to China's economic slowdown, weak commercial credit demand, and rising credit risks, Positive Oasis Group failed to achieve its expected revenue targets, resulting in a goodwill impairment loss of approximately RMB 57 million44 - Due to a significant increase in operating costs during the year, Chuangtong Group scaled down its business and also failed to achieve its revenue targets, leading to a goodwill impairment loss of approximately RMB 31.3 million24 - The Group anticipates continued financial performance growth by focusing on the vast markets of insurtech, consumer tech, and digital supply chain45 Financial Review During the reporting period, the Group's revenue increased by 158.1% year-on-year to RMB 1.42 billion, and gross profit increased by 33.9% year-on-year to RMB 206 million; the gross profit margin decreased to 14.5% due to the expanded proportion of lower-margin digital payment businesses; administrative expenses decreased due to the absence of share-based payment expenses, but selling and distribution costs increased with business expansion; the loss for the year widened to RMB 74.4 million due to significant goodwill impairment charges against two subsidiaries 2023 Fiscal Year Key Financial Indicators | Indicator | For the Year Ended December 31, 2023 (RMB) | For the Nine Months Ended December 31, 2022 (RMB) | Change | | :--- | :--- | :--- | :--- | | Revenue | 1,419,800,000 | 550,000,000 | +158.1% | | Gross Profit | 205,700,000 | 153,600,000 | +33.9% | | Gross Profit Margin | 14.5% | 27.9% | -13.4 percentage points | | Loss for the Year | (74,400,000) | (23,500,000) | Loss widened | | Goodwill Impairment Loss | (88,300,000) | 0 | - | | Profit/(Loss) Before Tax Excluding Goodwill Impairment | 18,700,000 | (14,000,000) | Turnaround to profit | - The decrease in gross profit margin was primarily due to the increased proportion of digital payment-related businesses in China, which have lower gross profit margins, thereby lowering the Group's overall gross profit margin15 - Selling and distribution costs increased by approximately RMB 44.1 million, mainly due to the expansion of digital payment-related businesses in China; administrative expenses decreased by approximately RMB 30.6 million, primarily due to non-cash share-based payments of approximately RMB 41.9 million in the comparative period48 - Finance costs increased from approximately RMB 0.8 million to approximately RMB 4.4 million, mainly due to increased interest on interest-bearing borrowings81 Goodwill Impairment During the reporting period, the Group recognized total goodwill impairment losses of approximately RMB 88.3 million, primarily from Positive Oasis Group (approximately RMB 57 million) and Chuangtong Group (approximately RMB 31.3 million); the impairment was due to these cash-generating units failing to meet their expected revenue and operating profit targets at the time of acquisition, driven by changes in the macroeconomic environment and adjustments to their own operating strategies - The impairment loss for Positive Oasis Group was approximately RMB 57 million, due to the downturn in the Chinese economy and rising credit risks in H2 2023, which caused its lending business to fall short of expected targets50 - The impairment loss for Chuangtong Group was approximately RMB 31.3 million, due to a significant increase in operating costs leading the Group to scale down its business, causing it to fail to meet expected targets50 - The Board believes that despite the impairment, the consideration determined at the time of acquisition was reasonable and fair, and the impairment was primarily due to unexpected changes in the business environment and prudent business decisions59 Liquidity, Financial Resources, and Capital Structure As of the end of 2023, the Group maintained a robust financial position with bank balances and cash of approximately RMB 79 million; total equity increased to RMB 556 million, and total liabilities were RMB 134 million; the current ratio remained healthy at 3.41 times, and the gearing ratio was low at approximately 0.05 times Financial Position Overview (December 31, 2023) | Indicator | December 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Bank Balances and Cash | Approx. RMB 79 million | Approx. RMB 68 million | | Total Equity | Approx. RMB 556 million | Approx. RMB 486 million | | Total Liabilities | Approx. RMB 134 million | Approx. RMB 111 million | | Current Ratio | Approx. 3.41 times | Approx. 3.32 times | | Gearing Ratio | Approx. 0.05 times | Approx. 0.04 times | - As of the end of 2023, the Group's interest-bearing borrowings were approximately RMB 12 million, compared to approximately RMB 0.7 million at the end of 202284 Key Risks and Uncertainties The Group faces key risks including credit risk associated with digital payment businesses and uncertainties arising from the lack of long-term contracts with suppliers and customers; measures such as background checks and shortened credit periods have been implemented to mitigate credit risk, while the absence of long-term purchase commitments makes it difficult to forecast future orders and allocate resources effectively - Digital payment businesses may involve significant amounts, and client delays or defaults could materially and adversely affect the Group's financial position; the Group has implemented measures such as background checks and shortened credit periods to mitigate credit risk70 - The Group has not entered into long-term written contracts with either suppliers or customers, making it difficult to accurately forecast future order volumes and revenue, thereby impacting the effective allocation and planning of resources9771 Outlook and Future Prospects The Group's 2024 business strategy focuses on expansion and efficiency enhancement, including expanding digital payment-related businesses through acquisitions or investments, offering diversified products and services to customers, increasing customized lens production capacity and retail brand awareness, and upgrading information technology systems to improve operational efficiency; the report also discloses the utilization progress of net proceeds from the listing, with some plans delayed due to the pandemic - The Group plans to expand its digital payment-related businesses through acquisitions and investments, and upgrade its information technology systems to enhance operational efficiency73 - In its optical business, the Group will continue to enhance retail brand awareness, develop its own brands, and increase the production capacity of customized lenses11999 Use of Net Proceeds from Listing and Progress (As of December 31, 2023) | Purpose | Net Proceeds (MYR million) | Unutilized Amount (MYR million) | Expected Utilization Timeline | | :--- | :--- | :--- | :--- | | Establishment of 36 self-operated retail stores | 28.1 | 22.1 | March 31, 2025 | | Upgrading and renovation of 25 self-operated retail stores | 5.1 | 2.6 | March 31, 2025 | | Brand promotion and marketing | 4.7 | 1.2 | March 31, 2025 | | Development of optical laboratory | 5.5 | 5.5 | September 30, 2025 | | Upgrading IT systems | 4.3 | 2.2 | March 31, 2025 | | Total | 50.3 | 33.6 | | Corporate Governance Report The Company is committed to maintaining high standards of corporate governance and has complied with the Corporate Governance Code set out in Appendix 14 of the Listing Rules; during the reporting period, the Board structure met requirements, and three core committees—Audit, Remuneration, and Nomination—were established; the report details the Board's responsibilities, meeting attendance, director training, risk management and internal control systems, shareholder communication policy, and implementation of the Board diversity policy, ensuring transparency and accountability in the company's operations Board and Committees The Board comprises executive and independent non-executive directors, meeting Listing Rules requirements; the roles of Chairman and Chief Executive Officer are combined by Mr. Tang Chi Wah, which the Board believes facilitates smooth business strategy execution; three committees—Audit, Remuneration, and Nomination—are established, each with a majority of independent non-executive directors to ensure independent and objective decision-making; during the reporting period, the Board and its committees held multiple meetings to review financial statements, internal controls, director nominations, and remuneration, among other significant matters - The Board structure complies with Listing Rules requirements, with independent non-executive directors constituting at least one-third of the Board members104 - The Audit Committee, Remuneration Committee, and Nomination Committee have been established, each with clear terms of reference and holding regular meetings118139161163 2023 Board and Committee Meeting Attendance | Committee | Number of Meetings Held | | :--- | :--- | | Board | 18 | | Audit Committee | 2 | | Remuneration Committee | 2 | | Nomination Committee | 2 | Board Diversity and Nomination Policy The Company has adopted a Board Diversity Policy aimed at building a diverse Board across dimensions such as gender, age, cultural background, and professional experience, with the current Board including two female directors; the Nomination Policy clearly defines the selection criteria and nomination procedures for director candidates, emphasizing meritocracy and ensuring all appointments align with the company's strategic development needs - The Company has adopted a Board Diversity Policy, considering factors including gender, age, cultural and educational background, professional experience, skills, and knowledge151167 - The Nomination Policy stipulates selection criteria for director candidates, including integrity, experience, time commitment, and independence, and outlines the Nomination Committee's review procedures153193 Risk Management and Internal Control The Board bears overall responsibility for the Group's risk management and internal control systems, reviewing their effectiveness at least annually; the Company has appointed external consultants to undertake internal audit functions, continuously monitoring significant controls in financial, operational, and compliance areas; the Board confirms that the Group's risk management and internal control systems were effective and adequate during the reporting period - The Board is responsible for establishing and maintaining proper and effective risk management and internal control systems, and reviews their effectiveness at least annually175198 - The Company has appointed external consultants to perform internal audit functions, with review results and recommendations submitted to the Audit Committee; management is responsible for taking follow-up actions176 - The Board confirms that the Group's risk management and internal control systems are effective and adequate200 Shareholder Rights and Communication The Company values effective communication with shareholders and has adopted a Shareholder Communication Policy; the report clarifies procedures for shareholders to convene extraordinary general meetings, propose resolutions at general meetings, and nominate directors; the Company maintains communication with shareholders through various channels, including annual reports, interim reports, announcements, and general meetings, ensuring timely and transparent information disclosure - The Company has adopted a Shareholder Communication Policy aimed at providing timely, balanced, and understandable company information to shareholders and potential investors226184 - Shareholders holding not less than one-tenth of the Company's paid-up capital may request to convene an extraordinary general meeting223 - The report details the procedures for shareholders to nominate individuals for election as directors, including required written notices and candidate information208183 Biographies of Directors and Senior Management This section provides detailed background information on the Company's executive directors, independent non-executive directors, and senior management members, including their age, position, responsibilities, professional experience, academic qualifications, and positions held in other listed companies; the core management team possesses extensive experience in corporate management, finance, law, and the optical retail industry - Mr. Tang Chi Wah, 46, serves as Chairman of the Board and Co-Chief Executive Officer, responsible for the Group's overall strategic planning and operational management in China, with extensive experience in telecommunications operations622 - Datin Low Lay Choo serves as Co-Chief Executive Officer, primarily responsible for the overall management and operations of the Malaysian business, with extensive experience in the optical retail industry631 - The independent non-executive director team possesses professional backgrounds in finance, accounting, and law, providing independent opinions and judgments to the Board625655657 Environmental, Social and Governance Report (ESG) This year's ESG report expands its scope to include digital payment-related businesses in China; the report outlines the Group's ESG management system and identifies key issues through materiality assessment; environmentally, the Group discloses greenhouse gas emissions, resource consumption data, and sets emission reduction targets; socially, the report covers employment and labor practices, health and safety, development and training, supply chain management, product responsibility, anti-corruption, and community investment, demonstrating the Group's efforts and performance in sustainable development ESG Management and Strategy The Group has established an ESG governance structure with the Board fully responsible for formulating ESG strategies and assessing risks and opportunities; through continuous communication with key stakeholders including shareholders, employees, customers, and suppliers, the Group conducted a materiality assessment to identify the most significant ESG issues for its business and stakeholders, such as emissions, resource use, employment, product responsibility, and anti-corruption - The Board bears overall responsibility for the Company's ESG strategy and reporting, and is responsible for assessing and identifying ESG-related risks and opportunities640 - Through materiality assessment, the Group identified the most relevant sustainability issues, including environmental aspects like emissions and resource use, and social aspects like employment, product responsibility, and anti-corruption678677 Environmental Protection The Group is committed to reducing the environmental impact of its operations; during the reporting period, total greenhouse gas emissions were 552.17 tonnes of CO2 equivalent, primarily from purchased electricity; the Group has set a target to reduce greenhouse gas emission intensity by 2% by 2030; in terms of resource use, total electricity consumption was approximately 1 million kWh, and total water consumption was approximately 6,766 cubic meters; the Group has also identified climate change-related physical and transition risks and developed response strategies 2023 Key Environmental Performance Indicators | Indicator | Unit | 2023 Data | | :--- | :--- | :--- | | Total Greenhouse Gas Emissions | tonnes of CO2 equivalent | 552.17 | | Greenhouse Gas Emission Intensity | tonnes of CO2 equivalent/employee | 1.37 | | Non-hazardous Waste Generated | tonnes | 6.34 | | Total Energy Consumption | kWh | 1,003,935.10 | | Total Water Consumption | cubic meters | 6,766.00 | - The Group has set environmental targets: to reduce greenhouse gas emission intensity by 2% by 2030, using 2023 as the baseline, and to keep the growth in energy and water consumption intensity below 5%709729716 - The Group has identified physical risks (e.g., extreme weather) and transition risks (e.g., stricter regulations) posed by climate change, integrating them into its enterprise risk management framework719738720 Social Responsibility On the social front, the Group focuses on employee well-being, supply chain management, product quality, and community contributions; as of the end of 2023, the Group employed 404 full-time staff, with an employee turnover rate of 16.1%; the Group provides comprehensive employee training, with an average of 101 training hours per employee; the Company strictly adheres to labor standards, opposing child and forced labor; in its operations, the Group implements stringent supplier screening and product quality control, and has anti-corruption and whistleblowing policies; during the reporting period, the Group actively participated in community investment, sponsoring various university activities - As of December 31, 2023, the Group had 404 full-time employees, with an annual turnover rate of approximately 16.1%723766 - The Group prioritizes employee development, with an average of 101 training hours per employee during the reporting period751 - The Group strictly complies with laws and regulations against child and forced labor, and has established equal opportunity and anti-discrimination policies753754 - The Group has established a supplier screening mechanism, incorporating environmental and social performance into evaluation criteria; concurrently, it implements strict product quality control procedures to protect consumer rights and data privacy756535969 - The Company maintains a zero-tolerance stance on corruption, has established a whistleblowing policy, and provides anti-corruption training for directors and employees; during the reporting period, the Group actively engaged in community investment, sponsoring various education-related activities783811537 Directors' Report The Directors' Report outlines the Group's principal businesses, performance, and financial position for the FY2023; the Board does not recommend a final dividend for the reporting period; the report also discloses changes in share capital, directors' and major shareholders' interests in shares, details of the share option scheme, and continuing connected transactions; furthermore, the report confirms the Company's compliance with the public float requirements of the Listing Rules and the re-appointment of Kaiyuan Xin De Certified Public Accountants Limited as auditor - The Board does not recommend the payment of any final dividend for the reporting period93797 - During the reporting period, the Group adopted a share option scheme; as of December 31, 2023, 2,160,000 share options were available for grant under the scheme837838 - In February 2023, 47,840,000 share options granted under the share option scheme were fully exercised253 - The report discloses property lease agreements entered into with connected persons as continuing connected transactions265266267 - Based on public information, the Company maintained the public float required by the Listing Rules as of the date of this annual report271 Independent Auditor's Report The independent auditor, Kaiyuan Xin De Certified Public Accountants Limited, issued an unmodified opinion on the Group's consolidated financial statements for the year ended December 31, 2023, affirming that the statements present a true and fair view of the Group's financial position, financial performance, and cash flows, and are properly prepared in accordance with International Financial Reporting Standards; the report highlights goodwill impairment assessment and expected credit loss assessment for trade and other receivables as key audit matters - The auditor believes that the consolidated financial statements present a true and fair view of the Group's financial position and performance in accordance with International Financial Reporting Standards, and issued an unmodified opinion305274 - Key audit matters include: - Goodwill Impairment Assessment: The auditor focused on this due to the significant judgment required from management in determining key assumptions and the material balance of goodwill - Expected Credit Loss Assessment for Trade and Other Receivables: This was also identified as a key audit matter due to the material carrying amount of receivables and the high uncertainty involved in assessing expected credit losses277909 Consolidated Financial Statements This section provides the Group's detailed audited consolidated financial statements, including the Consolidated Statement of Profit or Loss and Other Comprehensive Income, Consolidated Statement of Financial Position, Consolidated Statement of Changes in Equity, and Consolidated Statement of Cash Flows, along with detailed notes to these statements; the financial statements comprehensively reflect the Group's operating results, financial position, and cash flows during the reporting period Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended December 31, 2023, the Group recorded revenue of RMB 1.42 billion and gross profit of RMB 206 million; due to a goodwill impairment of RMB 88.27 million, the loss before tax was RMB 69.62 million, and the loss for the year was RMB 74.38 million; basic and diluted loss per share was RMB 0.12 Consolidated Statement of Profit or Loss Summary (For the Year Ended December 31) | Item (RMB in thousands) | 2023 | 2022 (Nine Months) | | :--- | :--- | :--- | | Revenue | 1,419,769 | 550,032 | | Gross Profit | 205,745 | 153,612 | | Goodwill Impairment | (88,270) | – | | Loss Before Tax | (69,619) | (14,035) | | Loss for the Year/Period | (74,380) | (23,479) | | Loss Attributable to Owners of the Company | (75,564) | (27,856) | | Basic Loss Per Share | RMB (0.12) | RMB (0.05) | Consolidated Statement of Financial Position As of December 31, 2023, the Group's total assets were RMB 691 million, total liabilities were RMB 134 million, and net assets were RMB 556 million; non-current assets primarily consisted of goodwill, investments in associates, and intangible assets; current assets were mainly composed of trade and other receivables, and bank balances and cash Consolidated Statement of Financial Position Summary (As of December 31) | Item (RMB in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Total Assets | 690,521 | 596,719 | | Non-current Assets | 331,822 | 333,475 | | Current Assets | 358,699 | 263,244 | | Total Liabilities | 134,160 | 110,986 | | Current Liabilities | 105,328 | 79,188 | | Non-current Liabilities | 28,832 | 31,798 | | Net Assets | 556,361 | 485,733 | | Total Equity | 556,361 | 485,733 | Consolidated Statement of Cash Flows For the year ended December 31, 2023, net cash used in operating activities was RMB 44.9 million, primarily affected by changes in working capital; net cash used in investing activities was RMB 124 million, mainly for the acquisition of investments in associates; net cash from financing activities was RMB 173 million, primarily from proceeds from the issuance of shares upon exercise of share options; net increase in cash and cash equivalents for the year was RMB 3.64 million Consolidated Statement of Cash Flows Summary (For the Year Ended December 31) | Item (RMB in thousands) | 2023 | 2022 (Nine Months) | | :--- | :--- | :--- | | Net Cash (Used in)/From Operating Activities | (44,894) | 30,273 | | Net Cash Used in Investing Activities | (124,463) | (37,851) | | Net Cash From/(Used in) Financing Activities | 172,993 | (17,788) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 3,636 | (25,366) | | Cash and Cash Equivalents at End of Year/Period | 78,968 | 68,021 | Notes to the Consolidated Financial Statements The notes to the financial statements provide detailed explanations of key accounting policies, accounting estimates, segment information, and various asset, liability, and profit/loss items; segment information indicates that digital payment-related businesses have become the largest source of revenue; the goodwill note details the impairment of RMB 88.27 million; related party transactions and financial instrument risk management are also fully disclosed Segment Information The Group's business is divided into five reportable segments: digital payment solution-related business, optical product retail, franchising and license management, e-commerce, and financing services; in 2023, digital payment solution-related business contributed the vast majority of revenue, reaching RMB 1.17 billion, accounting for approximately 82% of total revenue; optical product retail business revenue was RMB 181 million; geographically, revenue from the China market increased from 66% to 87% of total revenue 2023 Revenue by Segment (RMB in thousands) | Segment | 2023 Revenue | 2022 Revenue (Nine Months) | | :--- | :--- | :--- | | Digital Payment Solution-Related Business | 1,170,197 | 344,494 | | Optical Product Retail | 181,259 | 182,734 | | Franchising and License Management | 2,832 | 3,842 | | E-commerce | 28,989 | 5,244 | | Financing Services | 36,492 | 13,718 | | Total | 1,419,769 | 550,032 | - By geographical region, revenue from China was approximately RMB 1.236 billion, accounting for 87% of total revenue; revenue from Malaysia was approximately RMB 184 million, accounting for 13%367 Goodwill As of the end of 2023, the Group's goodwill carrying amount decreased from RMB 172 million at the beginning of the year to RMB 83.85 million; the decrease was primarily due to impairment losses of RMB 31.28 million and RMB 56.99 million recognized against the e-commerce trading business (Chuangtong Group) and credit financing services (Oasis Group) cash-generating units, respectively, totaling RMB 88.27 million Goodwill Movement (RMB in thousands) | Item | E-commerce Trading Business | Credit Financing Services | Total | | :--- | :--- | :--- | :--- | | Balance at Beginning of Period (2023/1/1) | 87,164 | 84,953 | 172,117 | | Impairment during the year | (31,277) | (56,993) | (88,270) | | Balance at End of Period (2023/12/31) | 55,887 | 27,960 | 83,847 | Financial Summary This section provides a summary of the Group's performance, assets, and liabilities for the past five fiscal years/periods; the data indicates a significant expansion in the Group's business scale (measured by revenue and total assets) since 2022, but profitability has fluctuated, with losses recorded in both 2022 (nine months) and 2023 Five-Year Financial Summary (RMB in thousands) | Item | 2021 (Ended 3/31) | 2022 (Ended 3/31) | 2022 (Nine Months) | 2023 (Ended 12/31) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 99,223 | 349,803 | 550,032 | 1,419,769 | | Profit/(Loss) for the Year/Period | 12,254 | 18,900 | (23,479) | (74,380) | | Total Assets | 261,091 | 479,100 | 596,719 | 690,521 | | Total Liabilities | (61,163) | (281,770) | (110,986) | (134,160) | | Total Equity | 199,928 | 197,330 | 485,733 | 556,361 |
马可数字科技(01942) - 2024 - 年度财报