源想集团(08401) - 2019 Q3 - 季度财报

Company Information The report provides fundamental corporate governance and operational information, including board members, committee structures, principal offices, auditors, legal advisors, and principal bankers - The report provides fundamental corporate governance and operational information, including board members, committee structures, principal offices, auditors, legal advisors, and principal bankers[7][8] Financial Highlights For the nine months ended December 31, 2018, the company's revenue slightly decreased by 4.5% year-on-year, with gross profit also down 4.4%, but successfully turned profitable with a profit of approximately HKD 3.50 million due to the absence of one-off listing expenses from the prior period, and no dividends are recommended - For the nine months ended December 31, 2018, the company's revenue slightly decreased by 4.5% year-on-year, with gross profit also down 4.4%, but successfully turned profitable with a profit of approximately HKD 3.50 million due to the absence of one-off listing expenses from the prior period, and no dividends are recommended[12] Unaudited Financial Highlights for the Nine Months Ended December 31, 2018 | Metric | Current Period (Nine Months 2018) | Prior Period (Nine Months 2017) | YoY Change | | :--- | :--- | :--- | :--- | | Unaudited Revenue | Approx. HKD 20.39 million | Approx. HKD 21.36 million | -4.5% | | Unaudited Gross Profit | Approx. HKD 13.77 million | Approx. HKD 14.41 million | -4.4% | | Unaudited Profit/(Loss) | Profit Approx. HKD 3.50 million | Loss Approx. HKD 3.12 million | Turned Profitable | | Proposed Dividend | Not distributed | N/A | - | Management Discussion and Analysis This section provides an overview of the company's operational performance, financial results, and strategic outlook for the reporting period Business Review During the reporting period, the company's total revenue was approximately HKD 20.39 million, a 4.5% year-on-year decrease, primarily due to revenue declines in core markets of Hong Kong and Taiwan, which were not fully offset by growth in new markets like Malaysia and Singapore, yet the company achieved a profit of approximately HKD 3.50 million by turning from loss to profit due to the absence of significant one-off listing expenses from the prior year - The company's primary business involves providing online advertising services, including viral marketing, interactive engagement, and mass blogging services, with key markets in Hong Kong, Taiwan, Malaysia, and Singapore[13] Revenue Contribution by Geographical Market | Region | Revenue Share (Nine Months 2018) | Revenue Share (Nine Months 2017) | | :--- | :--- | :--- | | Hong Kong | 49.1% | 53.1% | | Taiwan | 40.3% | 44.6% | | Other Markets (Malaysia & Singapore) | 10.6% | 2.3% | Hong Kong Market Due to intensified market competition and an unstable economic environment, Hong Kong market revenue decreased by 11.7% to HKD 10.02 million from HKD 11.35 million in the prior period, prompting the company to adjust its service portfolio - Hong Kong market revenue decreased by approximately 11.7%, from approximately HKD 11.345 million to approximately HKD 10.015 million[15] Taiwan Market The Taiwan market faced multiple challenges, including changes in internet user behavior patterns, increased competition, and economic instability, leading to a revenue decline to HKD 8.22 million - Taiwan market revenue decreased from approximately HKD 9.522 million to approximately HKD 8.223 million[16] Other Markets New markets like Malaysia and Singapore emerged as growth drivers, with total revenue increasing from HKD 0.49 million to HKD 2.15 million, as Malaysia saw rapid member development exceeding 110,000, while Singapore's member recruitment fell short of expectations, impacting local revenue - Revenue from other markets (Malaysia and Singapore) increased from approximately HKD 0.489 million to HKD 2.151 million, becoming a core growth driver[17] - As of December 31, 2018, Malaysia's member count reached 111,681, while Singapore's member count was only 10,049, falling below expectations[17] Outlook The company anticipates intensified competition in the online advertising industry and potential conservative spending by advertisers due to the US-China trade war, yet management remains confident, planning to leverage its large member base, strong client relationships, and proprietary platform to solidify market position, while continuing to strengthen member development, expand client networks, explore new markets, and recruit more talent - The company believes its competitive advantages lie in its substantial member base, history of serving reputable clients, and strong relationships with media agencies[19] - Future strategies include strengthening member development, improving applications and websites, expanding client networks, exploring new markets, launching new services, and recruiting business development talent[19][20] Financial Review During the reporting period, both the company's revenue and gross profit decreased by approximately 4.5% year-on-year, while selling and distribution costs and administrative and other operating expenses significantly increased by 56.8% and 48.6% respectively, primarily due to increased headcount, salaries, and professional fees, and income tax expenses decreased by 33.3%, ultimately resulting in a net profit of HKD 3.50 million compared to a net loss of HKD 3.12 million in the prior period, mainly attributable to the absence of substantial listing expenses incurred last year Key Income Statement Items Changes | Item | Current Period (Nine Months 2018) | Prior Period (Nine Months 2017) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | HKD 20.39 million | HKD 21.36 million | -4.5% | | Cost of Services | HKD 6.62 million | HKD 6.95 million | -4.7% | | Gross Profit | HKD 13.77 million | HKD 14.41 million | -4.4% | | Selling and Distribution Costs | HKD 2.84 million | HKD 1.81 million | +56.8% | | Administrative and Other Operating Expenses | HKD 7.15 million | HKD 4.81 million | +48.6% | | Income Tax | HKD 0.90 million | HKD 1.35 million | -33.3% | | Profit/(Loss) for the Period | HKD 3.50 million | (HKD 3.12 million) | Turned Profitable | Other Financial Information The company's functional and presentation currency is HKD, with some subsidiaries using NTD, MYR, and SGD, but no significant currency risks were faced during the reporting period, and no material events impacting the company's operations and financial performance occurred after the reporting period end - The company did not face any significant currency risks[29] - No significant subsequent events occurred after December 31, 2018[30] Other Information This section details the interests of directors and principal shareholders, corporate governance practices, and other relevant disclosures Directors' and Principal Shareholders' Interests As of December 31, 2018, executive directors Ms. Cheung Li, Mr. Lo Ka Kin, and Mr. Lee Wing Leung collectively held 57.14% of the company's shares through their jointly controlled entity, Source Idea Investment Limited, while non-executive director Mr. Lam Wang Yuen held 17.86% through his controlled entity, Genesis Financial Group Limited, with the report detailing their shareholdings and associated interests Directors' and Principal Shareholders' Shareholdings (as of December 31, 2018) | Shareholder Name | Capacity/Nature of Interest | Number of Shares Held | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Ms. Cheung Li, Mr. Lo Ka Kin, Mr. Lee Wing Leung | Interest in controlled corporation (Source Idea Investment Limited) | 114,280,000 | 57.14% | | Mr. Lam Wang Yuen | Interest in controlled corporation (Genesis Financial Group Limited) | 35,720,000 | 17.86% | Corporate Governance During the reporting period, the company complied with the GEM Listing Rules' Corporate Governance Code, with one deviation: the roles of Chairman and Chief Executive Officer were not separated, but jointly performed by three executive directors (Ms. Cheung Li, Mr. Lo Ka Kin, and Mr. Lee Wing Leung), an arrangement the Board believes ensures effective business planning and decision-making, and the Audit Committee has reviewed the unaudited quarterly financial statements - The company deviated from Corporate Governance Code Provision A.2.1, as the responsibilities of the Chairman and Chief Executive Officer were not segregated but jointly performed by three executive directors[40] - The Audit Committee, comprising three independent non-executive directors, reviewed the financial statements for the period and deemed them compliant with applicable accounting standards and disclosure requirements[46] Other Disclosure Matters During and up to the date of the report, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities, and while a share option scheme has been adopted, no options have been granted yet, and directors confirmed no competing interests with the company's business - During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities[39] - As of December 31, 2018, the company had not granted any share options under its share option scheme[42] Unaudited Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements, including the statement of profit or loss and other comprehensive income, statement of changes in equity, and their accompanying notes Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the nine months ended December 31, 2018, the company reported revenue of HKD 20.39 million, gross profit of HKD 13.77 million, and operating profit of HKD 4.41 million, with profit for the period at HKD 3.50 million after deducting income tax of HKD 0.90 million, and total comprehensive income for the period was HKD 3.08 million after accounting for a foreign currency translation loss of HKD 0.42 million from foreign operations, resulting in basic and diluted earnings per share of 0.02 HK cents Income Statement Summary (for the Nine Months Ended December 31, 2018) | Item | Amount (HKD '000) | | :--- | :--- | | Revenue | 20,389 | | Gross Profit | 13,771 | | Operating Profit | 4,406 | | Profit for the Period | 3,504 | | Total Comprehensive Income for the Period | 3,084 | | Basic Earnings Per Share (HK cents) | 0.02 | Unaudited Condensed Consolidated Statement of Changes in Equity As of December 31, 2018, the company's total equity was HKD 59.65 million, an increase of HKD 3.08 million from HKD 56.57 million as of April 1, 2018, with this increase representing the total comprehensive income for the reporting period - As of December 31, 2018, the company's total equity was HKD 59.65 million[49] Notes to the Unaudited Condensed Consolidated Financial Statements The notes to the financial statements provide supplementary explanations for key accounting data, including revenue and segment information showing Hong Kong and Taiwan as primary income sources, and income tax notes explaining applicable tax rates in different jurisdictions, with no dividends recommended for the reporting period Revenue by Geographical Area (HKD '000) | Region | Nine Months 2018 | Nine Months 2017 | | :--- | :--- | :--- | | Hong Kong | 10,015 | 11,345 | | Taiwan | 8,223 | 9,522 | | Other | 2,151 | 489 | | Total | 20,389 | 21,356 | - The company's applicable tax rates in different regions are: Hong Kong profits tax at 16.5% and Taiwan corporate income tax at 20%[61] - The company does not recommend paying any dividends for the nine months ended December 31, 2018[61]