源想集团(08401) - 2022 - 中期财报

Company Information This report provides information on Source Think Group Limited and its subsidiaries, including executive directors and headquarters location - This report provides information about Source Think Group Limited ("the Company") and its subsidiaries ("the Group"). Executive Directors include Ms. Zhang Li, Mr. Luo Jiajian, Mr. Li Yongliang, etc. The company's headquarters are located in Kwun Tong, Hong Kong[6] - The company's auditor is KPMG, and its principal bankers include The Hongkong and Shanghai Banking Corporation, Bank of Communications, and E.SUN Commercial Bank[7][8] Financial Highlights The company experienced an overall performance decline for the six months ended September 30, 2021, with expanded losses due to reduced revenue and no interim dividend recommended - For the six months ended September 30, 2021 ("the Relevant Period"), the company's performance declined across the board, with losses expanding due to reduced revenue, and the Board not recommending an interim dividend[11] Financial Highlights for the Six Months Ended September 30, 2021 | Indicator | Amount (HKD) | YoY Change | | :--- | :--- | :--- | | Unaudited Revenue | 8,418,000 | -24.9% | | Unaudited Gross Profit | 2,852,000 | -49.5% | | Unaudited Loss | 5,324,000 | Loss increased by 47.7% | Management Discussion and Analysis This section reviews the Group's business performance, outlook, use of proceeds, dividends, financial position, significant investments, and employee policies Business Review The Group's core business of online advertising services saw significant declines in revenue and gross profit, leading to expanded losses due to the ongoing COVID-19 pandemic - The Group's main business is providing online advertising services, including viral marketing, interactive engagement, and mass blogger services, with operations across Hong Kong, Taiwan, and various Southeast Asian markets[12] - Due to the COVID-19 pandemic causing a slowdown in the advertising industry, the Group's revenue decreased by 24.9% year-on-year to approximately HKD 8.42 million, gross profit decreased by 49.5% year-on-year to approximately HKD 2.85 million, and losses expanded to approximately HKD 5.32 million[12] Geographical Market Analysis Hong Kong remains the Group's primary revenue source, increasing its contribution to 77.7%, while all regional markets experienced revenue declines Revenue Contribution by Geographical Market | Region | Revenue Contribution in Relevant Period | Revenue Contribution in Previous Period | | :--- | :--- | :--- | | Hong Kong | 77.7% | 62.6% | | Taiwan | 13.1% | 26.8% | | Southeast Asia | 9.2% | 10.6% | - Hong Kong market revenue decreased by 6.8% year-on-year to approximately HKD 6.54 million, primarily due to increased competition and economic instability[14] - Taiwan market revenue significantly decreased by 63.3% year-on-year to approximately HKD 1.10 million, mainly due to changes in user behavior, competition, and pandemic lockdowns[15] - Total revenue from Southeast Asian markets (Malaysia, Indonesia, Philippines) was approximately HKD 0.77 million, a year-on-year decrease of approximately 35.4%, primarily affected by pandemic lockdown measures[16] Business Outlook The Group is confident in future sales recovery post-pandemic, focusing on revitalizing sales, developing new businesses, and strengthening its talent and member base - The Group is confident about future sales recovery, relying on its experienced sales team, diversified advertising services, consolidated member base, and strong client relationships[17] - Future strategies include recruiting more business development talent, strengthening member base categorization (e.g., age, interests), and leveraging first-mover advantage to consolidate industry leadership[17] Use of Proceeds All net proceeds of approximately HKD 26.7 million from the 2018 listing have been fully utilized, with a reallocation of funds towards IT system upgrades - Net proceeds from listing were approximately HKD 26.7 million, originally planned for brand building, IT upgrades, talent enhancement, selective acquisitions, and working capital[19] - In October 2020, the company resolved to reallocate a total of HKD 2.5 million originally designated for acquisitions and brand building to IT system upgrades[21] Use of Net Proceeds (As of September 30, 2021) | Purpose | Reallocated (HKD '000) | Total Actual Utilized (HKD '000) | Balance (HKD '000) | | :--- | :--- | :--- | :--- | | Brand building, client base & member network development | 4,819 | 4,819 | – | | IT system upgrades | 7,276 | 7,276 | – | | Talent pool & workforce enhancement & work environment improvement | 6,857 | 6,857 | – | | Growth through selective acquisitions | 5,060 | 5,060 | – | | General working capital | 2,668 | 2,668 | – | | Total | 26,680 | 26,680 | – | Dividends The Board does not recommend the payment of any interim dividend for the six months ended September 30, 2021 - The Board does not recommend the payment of an interim dividend for the relevant period[24] Financial Review The Group's financial performance was weak, with revenue decreasing by 24.9% and gross profit by 49.5%, leading to an expanded net loss of HKD 5.32 million Changes in Income Statement Items | Item | Relevant Period (HKD '000) | Previous Period (HKD '000) | Reason for Change | | :--- | :--- | :--- | :--- | | Revenue | 8,418 | 11,216 | Primarily due to reduced sales in Taiwan | | Gross Profit | 2,852 | 5,649 | Revenue decline led to 49.5% decrease in gross profit | | Selling and Distribution Costs | 3,377 | 3,895 | Decrease in promotional expenses | | Administrative and Other Operating Expenses | 5,708 | 6,181 | Decrease in professional fees | | Net Loss | 5,324 | 3,604 | Revenue decrease is the main reason for increased net loss | Liquidity and Financial Resources As of September 30, 2021, the Group maintained a healthy current ratio of 5.4 times with zero gearing, indicating strong liquidity and no significant currency risk Financial Position and Ratios (As of September 30, 2021) | Indicator | Amount/Ratio | Comparative Period (As of March 31, 2021) | | :--- | :--- | :--- | | Total Assets | 49,777,000 HKD | 56,243,000 HKD | | Total Liabilities | 8,467,000 HKD | 9,400,000 HKD | | Shareholders' Equity | 41,310,000 HKD | 46,843,000 HKD | | Current Ratio | 5.4 times | 5.5 times | | Gearing Ratio | Zero | Zero | - The Group did not face any significant currency risk during the relevant period[38] Significant Investments Held The Group holds two significant investments classified as financial assets at fair value through profit or loss: an equity investment in Asia Interactive Media and a wealth management product from UBS Details of Significant Investments (As of September 30, 2021) | Investment Name | Investment Cost (HKD '000) | Fair Value (HKD '000) | % of Total Assets | | :--- | :--- | :--- | :--- | | Asia Interactive Media Holdings Limited (unlisted shares) | 5,000 | 1,885 | 3.8% | | UBS Wealth Management Product | 15,503 | 18,230 | 36.6% | - The investment in Asia Interactive Media aims to expand social media coverage and enter the Chinese market; the wealth management product subscribed from UBS invests in liquid assets, bonds, and equity instruments[44] Employees and Remuneration Policy The Group employed 36 staff as of September 30, 2021, with staff costs of approximately HKD 5.86 million, reflecting a competitive remuneration policy - As of September 30, 2021, the Group had a total of 36 employees (2020: 37 employees)[45] - Staff costs (including directors' emoluments) for the relevant period were approximately HKD 5,861,000, an increase from HKD 5,625,000 in the same period last year[45] Other Information This section details directors' and major shareholders' interests, corporate governance practices, and the audit committee's review Directors' and Chief Executives' Interests The three executive directors collectively hold 50.14% of the company's shares through Source Think Investment Limited, making them controlling shareholders, alongside a 7.00% stake held by Mr. Wang Zenglin - Executive Directors Ms. Zhang Li, Mr. Luo Jiajian, and Mr. Li Yongliang, each holding 33.33% equity in Source Think Investment Limited, are deemed to jointly hold 100,280,000 shares of the Company, representing 50.14% of the issued share capital[49][50] - Major shareholder Mr. Wang Zenglin beneficially holds 14,000,000 shares, representing 7.00% of the issued share capital[51] Corporate Governance The company largely complied with the Corporate Governance Code, with a noted deviation where Chairman and CEO duties are jointly performed by three executive directors to ensure effective decision-making - The company deviated from the Corporate Governance Code provision (A.2.1) regarding the separation of duties for Chairman and Chief Executive Officer[55] - The responsibilities of the Chairman and Chief Executive Officer are jointly performed by the three Executive Directors (Ms. Zhang Li, Mr. Luo Jiajian, and Mr. Li Yongliang), an arrangement the Board believes ensures effective business planning and decision-making due to their founding roles and deep business understanding[55] Audit Committee The Audit Committee, composed of three independent non-executive directors, has reviewed the unaudited condensed consolidated financial statements and confirmed their compliance and adequate disclosure - The Audit Committee comprises three independent non-executive directors: Mr. Ho Ho Tung (Chairman), Mr. Fan Tak Wai, and Mr. Kwan Chi Hong[62] - The Audit Committee has reviewed the Group's unaudited condensed consolidated financial statements for the relevant period and believes they comply with applicable accounting standards, GEM Listing Rules, and statutory requirements, and are adequately disclosed[62] Condensed Consolidated Financial Statements This section presents the Group's unaudited condensed consolidated financial statements, including the statement of profit or loss, financial position, cash flows, and accompanying notes Unaudited Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended September 30, 2021, the Group reported revenue of HKD 8.418 million, a gross profit of HKD 2.852 million, and an expanded loss for the period of HKD 5.324 million Summary of Consolidated Statement of Profit or Loss (For the Six Months Ended September 30, 2021) | Item | Amount (HKD '000) | | :--- | :--- | | Revenue | 8,418 | | Gross Profit | 2,852 | | Operating Loss | (5,280) | | Loss for the Period | (5,324) | | Total Comprehensive Income for the Period | (5,533) | | Basic Loss Per Share | 0.03 HKD | Unaudited Condensed Consolidated Statement of Financial Position As of September 30, 2021, the Group's total assets were HKD 49.777 million, with total liabilities of HKD 8.467 million, resulting in total equity of HKD 41.310 million Summary of Consolidated Statement of Financial Position (As of September 30, 2021) | Item | Amount (HKD '000) | | :--- | :--- | | Assets | | | Non-current assets | 3,958 | | Current assets | 45,819 | | Total Assets | 49,777 | | Liabilities and Equity | | | Current liabilities | 8,467 | | Total Liabilities | 8,467 | | Total Equity | 41,310 | Unaudited Condensed Consolidated Statement of Cash Flows For the six months ended September 30, 2021, the Group's net cash used in operating activities was HKD 7.295 million, leading to a net decrease in cash and cash equivalents of HKD 7.300 million Summary of Consolidated Statement of Cash Flows (For the Six Months Ended September 30, 2021) | Item | Amount (HKD '000) | | :--- | :--- | | Net cash used in operating activities | (7,295) | | Net cash used in investing activities | (1) | | Net cash used in financing activities | (4) | | Decrease in cash and cash equivalents | (7,300) | | Cash and cash equivalents at end of period | 18,379 | Notes to the Unaudited Condensed Consolidated Financial Statements These notes detail the financial statements' basis of preparation, revenue recognition, segment information, and item composition, highlighting the Group's single business segment and trade receivable terms - The Group has only one reportable segment, which is the provision of online advertising services[73] Revenue from External Customers by Geographical Area (For the Six Months Ended September 30) | Region | 2021 (HKD '000) | 2020 (HKD '000) | | :--- | :--- | :--- | | Hong Kong | 6,544 | 7,019 | | Taiwan | 1,103 | 3,004 | | Southeast Asia | 771 | 1,193 | | Total | 8,418 | 11,216 | - The credit period for trade receivables is generally 60 to 130 days from the invoice date, with approximately 74% of total receivables aged within 90 days at the end of the reporting period[85]