香港科技探索(01137) - 2023 - 中期财报

Company Information Hong Kong Technology Venture Company Limited (stock code: 1137) is listed on The Stock Exchange of Hong Kong Limited - Hong Kong Technology Venture Company Limited (stock code: 1137) is listed on The Stock Exchange of Hong Kong Limited[8][11] - The company's American Depositary Shares were delisted from the US Securities and Exchange Commission (SEC) in December 2015 and deregistered in December 2016, now eligible for over-the-counter trading in the US[11] - Key executive directors include Mr. Cheung Chi Kin (Chairman), Mr. Ricky Wong (Vice Chairman and Group Chief Executive Officer), Ms. Alice Wong (Group Chief Financial Officer), Mr. Frank Liu (Chief Executive Officer (International Business)), and Ms. Vivian Chow (Chief Executive Officer (Hong Kong))[12] - KPMG is the company's auditor[12][13] Chairman's Statement The Chairman's Statement highlights challenges in Hong Kong's retail sector, the Group's stable H1 2023 performance despite reduced profitability, and strategic expansions in logistics and international markets - Hong Kong's retail sector faces multiple challenges, including a decline in mid-to-high-end consumers, a shift towards overseas or online shopping, reduced evening outings, and recruitment difficulties[16] - Despite economic pressures and intense competition, the Group maintained stable development in H1 2023, though profitability decreased due to lower gross margins[18] - The shift from offline to online consumption is a major trend, with the Group's customers maintaining online shopping habits post-pandemic[19] - The Group is expanding its logistics infrastructure, including a 144,000 sq ft third-party logistics distribution center in Tsing Yi and an additional 200,000 sq ft automated logistics center at Tseung Kwan O headquarters within three years[19] - The Group has established technology R&D centers in Taiwan, the UK, Australia, and Israel, focusing on international market expansion for broader and more stable revenue streams[19][25] - The first self-developed fully automated retail store and system, 'in:Five,' has commenced trial operations in Manchester, UK, marking a significant milestone in retail automation[25] - Everuts personal shopper service has built a global network of 2,000 'Exploruts,' extending beyond Hong Kong to offer consumers international shopping options[22] Management Discussion and Analysis Operating Summary This chapter provides an overview of key operating metrics for H1 2023, showing a slight decrease in GMV and average order value, but an increase in unique customers H1 2023 Operating Summary | Metric | Six Months Ended June 30, 2023 (HK$ Thousand) | Six Months Ended June 30, 2022 (HK$ Thousand) | Percentage Change | | :--- | :--- | :--- | :--- | | Gross Merchandise Value (GMV) | 4,028,000 | 4,186,000 | (3.8%) | | Average Daily Order Volume | 48,400 | 49,100 | (1.4%) | | Average Order Value (HK$) | 460 | 471 | (2.3%) | | Consolidated Unique Customers | 1,229,000 | 1,107,000 | 11.0% | | For the Month Ended June 30, 2023 | | | | | Gross Merchandise Value (GMV) | 686,383 | 615,617 | 11.5% | | Average Daily Order Volume | 49,300 | 46,400 | 6.3% | | Average Order Value (HK$) | 464 | 442 | 5.0% | Financial Summary This chapter outlines the company's H1 2023 financial performance, indicating decreased revenue and profit, but stable total equity and cash position H1 2023 Financial Summary | Metric | Six Months Ended June 30, 2023 (HK$ Thousand) | Six Months Ended June 30, 2022 (HK$ Thousand) | Percentage Change | | :--- | :--- | :--- | :--- | | Completed Order Gross Merchandise Value (GMV) | 3,986,636 | 4,135,323 | (3.6%) | | Revenue | 1,828,567 | 1,922,144 | (4.9%) | | Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) | 87,844 | 141,328 | (37.8%) | | Adjusted EBITDA | 82,580 | 195,590 | (57.8%) | | Profit for the Period | 48,696 | 127,849 | (61.9%) | | Capital Expenditure - Property, Plant and Equipment | 140,926 | 214,114 | (34.2%) | | As of June 30, 2023 | | | | | Cash Position | 660,610 | 705,807 (December 31, 2022) | (6.4%) | | Total Equity | 2,263,621 | 2,208,793 (December 31, 2022) | 2.5% | Business Review This chapter reviews the performance of the company's e-commerce (HKTVmall) and new initiatives, highlighting HKTVmall's efforts in customer expansion and new feature development amidst a challenging market, and the internationalization of technology businesses E-commerce Business — HKTVmall HKTVmall faced challenges in H1 2023 from slow economic recovery and increased overseas travel, leading to a slight GMV decrease; however, the company successfully expanded its online customer base and enhanced engagement through new features like "Add-on Order," "Elderly Club," and "Fresh Market Same-Day Delivery" - HKTVmall's Gross Merchandise Value (GMV) slightly decreased by 3.8% to HK$4.028 billion in H1 2023, primarily due to a weak Hong Kong supermarket sector and the absence of pandemic-driven demand surges from H1 2022[36][40] - Unique customers grew by 11.0% to 1.229 million in H1 2023, with monthly active app users climbing to 1.65 million in July 2023, indicating sustained online shopping habits[28][38][42] - The proportion of 1P (direct merchandise sales) and 3P (merchant concessionaire sales) businesses remained stable at 29.7% and 70.3% of completed order GMV, respectively[51] - Overall gross margin and blended commission rate decreased to 22.2% (H1 2022: 23.5%), mainly due to a strategic reduction in 1P business gross margin to 23.5% to maintain competitiveness and drive online sales[53][55] - Delivery costs as a percentage of completed order GMV remained at 10.8% (Q1 2023) and 10.4% (Q2 2023), benefiting from reduced pandemic-related operating expenses and efficient merchant delivery solutions[72] - The 'Add-on Order' feature performed strongly, with the average GMV per online add-on order increasing from HK$86.0 in Q2 2020 to HK$155.0 in Q2 2023, and the conversion rate improving from 8.8% to 21.5%[79][80] - The 'HKTVmall Elderly Club' has over 110,000 registered members, with an average retention rate 64.0% higher than general customers, and Q2 2023 GMV grew by 97.0% year-on-year[84] - 'Fresh Market Same-Day Delivery' service has expanded to cover approximately 91.5% of existing HKTVmall customers, exceeding the 2023 target of 75.0%, and enhances customer engagement through social media groups[86][87] - HKTVLive launched an upgraded 24/7 interactive live shopping channel in May 2023, significantly increasing live broadcast sessions (159 in June 2023 vs 17 in June 2022)[88] Technology Business and New Initiatives The company actively advances its technology business and new initiatives, including the social shopping platform ShareHub, international expansion of cross-border personal shopper service Everuts, and trial operations of a third-party logistics (3PL) distribution center - Since its August 2022 launch, the ShareHub social platform has rapidly acquired over 680,000 unique users and introduced the 'More! Duo Na!' follow-buy repurchase program to enhance stickiness[92][95] - Everuts cross-border personal shopper service officially launched in January 2023, connecting Hong Kong consumers with over 2,000 'Exploruts' in more than 30 countries and regions globally, expanding the shopping experience through HKTVLive and interactive chat groups[93][96] - The 144,000 sq ft distribution center designed for 3PL services began trial operations in May 2023, with full launch expected in Q4 2023, capable of processing over 20,000 orders and approximately 100,000 merchant products daily[97] Financial Review This chapter details the H1 2023 financial performance, showing significant declines in revenue and profit, primarily due to strategic gross margin reductions, increased marketing, and investment losses in new technology businesses - H1 2023 revenue decreased by 4.9% to HK$1.8286 billion (H1 2022: HK$1.9221 billion), with direct merchandise sales declining by 3.9%[100][101] - Direct merchandise sales gross margin decreased to 23.5% (H1 2022: 26.8%), aimed at maintaining competitiveness for online grocery products and expanding the customer base[101] - Total other operating expenses slightly decreased to HK$913.7 million, but as a percentage of completed order GMV, it marginally increased from 19.9% to 20.3%[101] - Delivery costs as a percentage of completed order GMV decreased from 11.4% to 10.6%, primarily due to reduced pandemic-related operating expenses and improved efficiency of merchant delivery solutions[104][107] - Marketing, advertising, and O2O store promotion expenses increased to 2.2% (H1 2022: 1.9%) due to more promotional activities launched post-pandemic[104][108] - The Technology and Other Businesses segment incurred an adjusted EBITDA loss of HK$62.0 million (H1 2022: HK$28.2 million loss), mainly due to new initiative developments[116] - Net other income was HK$41.9 million (H1 2022: HK$14.4 million expense), driven by increased investment returns, investment property rental income, and foreign exchange gains[120][221] - Profit for H1 2023 was HK$48.7 million (H1 2022: HK$127.8 million), with adjusted EBITDA at HK$82.6 million (H1 2022: HK$195.6 million)[115] Liquidity and Capital Resources This chapter details the company's liquidity and capital resources, showing a slight decrease in cash position but an increase in other financial asset investments, with sufficient unused bank facilities to support business development - As of June 30, 2023, total cash position (cash and cash equivalents and time deposits) was HK$660.6 million, a 6.4% decrease from HK$705.8 million as of December 31, 2022[30][125] - Investments in other financial assets increased by 8.9% to HK$375.2 million (December 31, 2022: HK$344.5 million)[30][126] - Capital expenditure for H1 2023 was HK$55.7 million (H1 2022: HK$197.3 million), primarily for expanding the Tseung Kwan O headquarters e-commerce fulfillment center and new initiatives[128] - As of June 30, 2023, the Group had HK$1.0077 billion in unutilized bank facilities[127] Fundraising Activities This chapter reviews the company's 2020 fundraising activities, including details of the placing and subscription, use of proceeds, and pledging of group assets - The company completed a placing and subscription in February 2020, raising approximately HK$453.2 million net proceeds by issuing 90 million new shares at HK$5.15 per share[130] - Proceeds were primarily used for expanding e-commerce and related businesses (HK$400 million) and as general working capital (HK$53.2 million to HK$73.2 million)[131] Use of Proceeds from 2020 Fundraising (HK$ Million) | Intended Use | Intended Amount to be Used | Amount Used as of December 31, 2022 | Amount Used as of June 30, 2023 | Expected Timeline for Use | | :--- | :--- | :--- | :--- | :--- | | Expansion of Tseung Kwan O Headquarters E-commerce Fulfillment Center | 200 | 150.5 | 200.0 | By end of 2023 or earlier | | Addition of a Sixth Fulfillment Center | 40 | 40.0 | 40.0 | By end of 2022 or earlier | | Addition of approximately 200 to 250 Delivery Vehicles | 90 to 110 | 35.7 | 36.0 | By end of 2023 or earlier | | Upgrade of Computer Hardware and Software | 50 | 50.0 | 50.0 | By end of 2021 or earlier | | General Working Capital of the Group | 53.2 to 73.2 | 73.2 | 73.2 | By end of 2021 or earlier | | Total | 453.2 | 349.4 | 399.2 | | - As of June 30, 2023, the Group's HK$1.0341 billion bank facilities were secured by HK$313.6 million in other financial assets and HK$185.2 million in bank balances[132] Outlook This chapter outlines the company's future development, including updated HKTVmall business targets to address economic challenges, expansion of HKTVLive features, international market expansion, and continued investment in logistics infrastructure - Given the weaker-than-expected Hong Kong economic recovery and high-interest rate environment, HKTVmall anticipates moderate full-year GMV growth in 2023 and will make additional investments in marketing and promotional activities[137] Updated 2023 HKTVmall Business Targets (vs. Original Targets) | Business Target | 2023 Revised Target | 2023 Original Target | | :--- | :--- | :--- | | Full-year Gross Merchandise Value (GMV) | HK$8.4 billion to HK$8.8 billion | HK$8.8 billion to HK$9.2 billion | | Blended Gross Margin and Commission (before multimedia advertising revenue) | 22.2% | 24.0%-24.5% | | Multimedia Advertising Revenue | HK$140 million to HK$150 million | HK$156 million | | Adjusted EBITDA as a percentage of Completed Order GMV | 3.2%-3.4% (approx. HK$270 million to HK$300 million) | 5.0%–5.5% (approx. HK$440 million to HK$506 million) | - HKTVLive plans to launch a 'Video-on-Demand' feature in Q3 2023, offering diverse content to extend user viewing time and increase cross-selling opportunities[137] - International expansion plans include extending direct delivery services to Australia and Canada in Q3-Q4 2023, following the launch of 'Direct Delivery to Macau' in December 2022 and 'Direct Delivery to UK' in May 2023[138] - Everuts will further strengthen its international reach through the 'Travel Personal Shopper Program' and expansion into the Thailand market in July 2023[140] - Core capital expenditure plans include: Phase 1 completion of an additional 33,000 sq ft floor on top of the existing distribution center in Q3 2023; Phase 2 planned completion of a 30,000 sq ft facility renovation in Q1 2025; and Phase 3 planned construction of a new approximately 200,000 sq ft distribution center by 2027[4][141][146][147] - As of June 30, 2023, the number of full-time employees slightly decreased to 2,153 (December 31, 2022: 2,186)[148] Financial Information Unaudited Consolidated Income Statement This chapter presents the unaudited consolidated income statement for H1 2023, showing a decrease in revenue and profit attributable to equity holders compared to the same period last year Summary of Unaudited Consolidated Income Statement | Metric | Six Months Ended June 30, 2023 (HK$ Thousand) | Six Months Ended June 30, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Revenue | 1,828,567 | 1,922,144 | | Direct Merchandise Sales | 1,162,383 | 1,210,255 | | Concessionaire Sales Income and Other Service Income | 606,010 | 641,745 | | Multimedia Advertising Income and Program Copyright | 59,940 | 64,787 | | Technology and Other Business Income | 234 | 5,357 | | Profit for the Period | 48,696 | 127,849 | | Basic Earnings Per Share (HK$) | 0.05 | 0.14 | | Diluted Earnings Per Share (HK$) | 0.05 | 0.13 | Unaudited Consolidated Statement of Comprehensive Income This chapter presents the unaudited consolidated statement of comprehensive income for H1 2023, showing a significant decrease in total comprehensive income for the period, mainly due to changes in fair value reserves and exchange differences Summary of Unaudited Consolidated Statement of Comprehensive Income | Metric | Six Months Ended June 30, 2023 (HK$ Thousand) | Six Months Ended June 30, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Profit for the Period | 48,696 | 127,849 | | Other Comprehensive Income | 4,492 | (8,334) | | - Equity instruments designated at fair value through other comprehensive income - Net change in fair value reserve | 2,279 | 484 | | - Exchange differences arising from translation of financial statements of overseas subsidiaries | (683) | 554 | | - Debt securities at fair value through other comprehensive income - Net change in fair value reserve | 2,896 | (9,372) | | Total Comprehensive Income for the Period | 53,188 | 119,515 | Unaudited Consolidated Statement of Financial Position This chapter provides the unaudited consolidated statement of financial position as of June 30, 2023, illustrating the composition of the company's assets, liabilities, and equity, showing a slight increase in total equity and a stable asset base Summary of Unaudited Consolidated Statement of Financial Position | Metric | June 30, 2023 (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Property, Plant and Equipment | 1,994,915 | 1,971,551 | | Intangible Assets | 121,067 | 103,209 | | Other Financial Assets (Non-current) | 262,054 | 292,791 | | Deferred Tax Assets | 87,643 | 81,252 | | Total Non-current Assets | 2,537,331 | 2,595,997 | | Other Receivables, Deposits and Prepayments (Current) | 181,000 | 121,175 | | Inventories and Other Contract Costs | 133,278 | 144,791 | | Other Current Financial Assets | 113,115 | 51,742 | | Time Deposits | 50,457 | - | | Cash and Cash Equivalents | 610,153 | 705,807 | | Total Current Assets | 1,088,003 | 1,023,515 | | Trade Payables | 376,003 | 354,627 | | Other Payables and Accruals | 435,406 | 443,665 | | Lease Liabilities (Current) | 152,017 | 164,098 | | Total Current Liabilities | 969,774 | 968,758 | | Lease Liabilities (Non-current) | 390,230 | 440,395 | | Total Non-current Liabilities | 391,939 | 441,961 | | Total Equity | 2,263,621 | 2,208,793 | Unaudited Consolidated Statement of Changes in Equity This chapter presents the unaudited consolidated statement of changes in equity for H1 2023, reflecting the impact of profit for the period, other comprehensive income, and share issuance under the share option scheme on equity Summary of Unaudited Consolidated Statement of Changes in Equity | Metric | Balance as of January 1, 2023 (HK$ Thousand) | Profit for the Period (HK$ Thousand) | Other Comprehensive Income (HK$ Thousand) | Shares Issued under Share Option Scheme (HK$ Thousand) | Share-based Payment Transactions (HK$ Thousand) | Balance as of June 30, 2023 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Share Capital | 1,800,972 | - | - | 3,389 | - | 1,804,361 | | Retained Profits | 203,377 | 48,696 | - | - | - | 252,245 | | Fair Value Reserve (Non-recyclable) | (10,884) | - | 2,279 | - | - | (8,605) | | Fair Value Reserve (Recyclable) | (10,751) | - | 2,896 | - | - | (7,855) | | Exchange Reserve | (2,341) | - | (683) | - | - | (3,024) | | Capital Reserve | 44,493 | - | - | (632) | (1,117) | 42,744 | | Total Equity | 2,208,793 | 48,696 | 4,492 | 2,757 | (1,117) | 2,263,621 | Unaudited Condensed Consolidated Cash Flow Statement This chapter summarizes the unaudited condensed consolidated cash flow statement for H1 2023, showing decreased net cash inflow from operating activities, with investing and financing activities leading to a net decrease in cash and cash equivalents Summary of Unaudited Condensed Consolidated Cash Flow Statement | Metric | Six Months Ended June 30, 2023 (HK$ Thousand) | Six Months Ended June 30, 2022 (HK$ Thousand) | | :--- | :--- | :--- | | Net Cash from Operating Activities | 130,538 | 215,493 | | Net Cash Used in Investing Activities | (136,775) | (204,985) | | Net Cash Used in Financing Activities | (89,395) | (58,868) | | Net Decrease in Cash and Cash Equivalents | (95,632) | (48,360) | | Cash and Cash Equivalents as of January 1 | 705,807 | 624,247 | | Cash and Cash Equivalents as of June 30 | 610,153 | 575,839 | Notes to the Unaudited Interim Financial Report This chapter provides detailed notes to the interim financial report, explaining the basis of preparation, changes in accounting policies, segment information, operating expenses, fair value measurement of financial instruments, and capital commitments - The interim financial report is prepared in accordance with Hong Kong Accounting Standard 34 and has been reviewed by KPMG, with an unmodified review opinion[170][173][314] - The Group is assessing the impact of new HKICPA guidance on the abolition of the MPF offsetting mechanism, with related accounting policy changes expected to be applied in the annual financial statements for the year ending December 31, 2023[177][178] - The Group's operations are divided into two reportable segments: E-commerce Business (Hong Kong) and Technology and Other Businesses (Local and International)[190][191][210] - Net other income for H1 2023 significantly increased to HK$41.9 million (H1 2022: HK$14.4 million expense), primarily due to increased bank interest income, investment returns, and foreign exchange gains[120][221] - No interim dividend was declared for H1 2023 (H1 2022: HK$0.08 per share) to conserve liquidity for distribution center construction, machinery and related capital expenditure plans, new initiative investments, and share repurchase programs[227][357] - As of June 30, 2023, capital commitments for the purchase of property, plant and equipment amounted to HK$67.105 million, and for the expansion of e-commerce and distribution centers to HK$91.613 million[290] - Key management personnel remuneration for H1 2023 was HK$11.946 million (H1 2022: HK$11.801 million)[291] Independent Review Report The Independent Review Report confirms KPMG's review of the interim financial report, concluding no material non-compliance with HKAS 34 - KPMG conducted an independent review of the interim financial report in accordance with Hong Kong Standard on Review Engagements 2410[293][313] - The review concluded that nothing came to the reviewer's attention that caused them to believe the interim financial report is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 'Interim Financial Reporting'[314] Other Information This section covers share transactions, directors' and major shareholders' interests, share option schemes, corporate governance compliance, and the company's dividend policy - For the six months ended June 30, 2023, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities[316] Directors' Interests in Shares and Share Options (as of June 30, 2023) | Director's Name | Personal Interests (Shares) | Corporate Interests (Shares) | Total Share Interests | Relevant Share Interests under Share Options | Total Interests | Approximate Percentage of the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Mr. Cheung Chi Kin | 26,453,424 | 24,924,339 | 51,377,763 | 9,000,000 | 60,377,763 | 6.54% | | Mr. Ricky Wong | - | 355,051,177 | 355,051,177 | 10,000,000 | 365,051,177 | 39.52% | | Ms. Alice Wong | 50,000 | - | 50,000 | 4,000,000 | 4,050,000 | 0.44% | | Mr. Frank Liu | - | - | - | 4,000,000 | 4,000,000 | 0.43% | | Ms. Vivian Chow | - | - | - | 3,500,000 | 3,500,000 | 0.38% | - Top Group International Limited is a substantial shareholder, holding 355,051,177 shares, representing 38.43% of the issued share capital[327] - The 2012 Share Option Scheme expired on December 31, 2022, with no further options granted under this scheme thereafter, but all options granted before expiry remain valid[300][338] - The 2020 Share Option Scheme and 2021 Share Award Scheme have been approved, but no options or award shares have been granted under these schemes as of the report date[325][326][343][344] - The company has not fully complied with Corporate Governance Code provision B.2.4(b) (regarding the appointment of new independent non-executive directors after nine years of service), but emphasizes the independence, skills, and experience of current INEDs and is seeking suitable candidates[351][352] - The Board has adopted a dividend policy, expecting to distribute dividends between 30% and 60% of adjusted EBITDA, but no interim dividend is recommended for H1 2023 to conserve liquidity for capital investment plans[357][364]