Key Highlights The group achieved robust financial growth in FY2023/24, driven by strong performance in core business segments and strategic expansion Financial Performance Highlights The group achieved robust financial growth in FY2023/24, with significant increases in revenue and profit, alongside expanded loan portfolios and a stable dividend payout Key Financial Indicators for FY2023/24 | Indicator | Amount/Ratio | YoY Change | | :--- | :--- | :--- | | Revenue | HKD 1,623.3 million | +31.8% | | Annual Profit | HKD 392.3 million | +5.0% | | Operating Profit | HKD 807.9 million | +45.1% | | Total Loans and Receivables | HKD 7.0 billion | +19.3% | | Expense to Revenue Ratio | 46.9% | -6.9 percentage points | | Dividend Payout Ratio | 51.2% | N/A | | Final Dividend | HKD 0.24 per share | N/A | Segment Performance and Growth Strategies The group's core businesses, credit cards and personal loans, demonstrated strong revenue growth driven by effective marketing and channel expansion, supported by strategic focus on digitalization and Greater Bay Area development - Credit card business revenue reached HKD 1.2838 billion, a 33.3% year-on-year increase, primarily benefiting from enhanced brand awareness and well-received marketing programs189811 - Personal loan business revenue was HKD 313.3 million, a 29.6% year-on-year increase, with receivables balance growing by 24.5%, driven by personalized marketing via electronic media and expanded branch network2624101 - The group's future growth strategies include strengthening peripheral businesses, expanding sales channels, accelerating office digitalization, and reinforcing the foundation for Greater Bay Area business development1826 Five-Year Financial Summary The group's financial performance and asset base have shown consistent growth over the past five years, culminating in record highs in FY2024 Consolidated Results and Balance Sheet In the past five years, the group's revenue and annual profit have shown an overall upward trend amidst fluctuations, reaching their highest points in FY2024, while total assets and equity have steadily expanded Five-Year Consolidated Results Summary (HKD Thousands) | Fiscal Year | 2020 | 2021 | 2022 | 2023 | 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 1,297,686 | 1,089,858 | 1,049,589 | 1,231,631 | 1,623,321 | | Profit Before Tax | 444,930 | 357,946 | 397,973 | 449,294 | 472,528 | | Annual Profit | 370,083 | 301,575 | 342,592 | 373,611 | 392,270 | | Earnings Per Share | HKD 0.8837 | HKD 0.7202 | HKD 0.8181 | HKD 0.8922 | HKD 0.9367 | | Dividend Per Share | HKD 0.4400 | HKD 0.4000 | HKD 0.4400 | HKD 0.4400 | HKD 0.4800 | Five-Year Consolidated Assets and Liabilities Summary (HKD Thousands) | As at Fiscal Year-End | 2020 | 2021 | 2022 | 2023 | 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 5,729,718 | 5,083,366 | 5,089,556 | 6,457,680 | 7,561,232 | | Total Liabilities | (2,416,176) | (1,661,336) | (1,456,014) | (2,565,220) | (3,493,239) | | Total Equity | 3,313,542 | 3,422,030 | 3,633,542 | 3,892,460 | 4,067,993 | Management Discussion and Analysis This section provides a comprehensive review of the group's business operations, financial performance, risk management framework, and future strategic outlook Business and Operations Review Despite challenging macroeconomic conditions, the group achieved a 12.4% sales growth and a 19.3% increase in loans and receivables in FY2023, successfully launching new systems and accelerating digital transformation while effectively managing credit risk - During the reporting year, the group's overall sales increased by 12.4%, and total loans and receivables balance grew by 19.3% year-on-year43 - The group successfully launched new credit card and loan systems, revamped its website and mobile application, accelerating digital transformation, with over 400,000 cumulative mobile application users4246 - Credit risk management was effective, with the proportion of higher credit risk receivables decreasing from 4.3% in the previous year to 4.0% in the reporting year43 - For its Mainland China business, the company injected RMB 50 million into Shenzhen AEON Microfinance to support the growth needs of its personal loan business48 Financial Review In FY2023, the group's revenue increased by 31.8% to HKD 1.623 billion, driven by a 32.5% rise in interest income, leading to an improved cost-to-income ratio despite increased operating expenses, with after-tax profit growing by 5.0% Consolidated Income Statement Key Items Analysis (HKD Millions) | Item | FY2023 | FY2022 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 1,623.3 | 1,231.6 | +31.8% | | Interest Income | 1,367.4 | 1,032.1 | +32.5% | | Interest Expense | (108.5) | (44.1) | +146.0% | | Net Interest Income | 1,258.9 | 988.0 | +27.4% | | Operating Income | 1,521.0 | 1,204.2 | +26.3% | | Operating Expenses | (713.0) | (647.5) | +10.1% | | Operating Profit (before impairment) | 807.9 | 556.7 | +45.1% | | Impairment Losses and Provisions | (374.0) | (172.7) | +116.6% | | Profit Before Tax | 472.5 | 449.3 | +5.2% | | Annual Profit | 392.3 | 373.6 | +5.0% | - Total customer loans and receivables increased from HKD 5.836 billion to HKD 6.961 billion, a 19.3% increase95 Performance by Business Segment (HKD Millions) | Business Segment | Revenue (FY2023) | Revenue (FY2022) | Results (FY2023) | Results (FY2022) | | :--- | :--- | :--- | :--- | :--- | | Credit Card | 1,283.8 | 963.4 | 421.0 | 337.6 | | Personal Loan | 313.3 | 241.7 | 40.9 | 99.7 | | Insurance Brokerage | 26.3 | 26.5 | 11.6 | 20.7 | Risk Management The group manages market, credit, liquidity, and operational risks through a comprehensive framework, utilizing derivative instruments for market risk, stringent policies for credit risk, continuous monitoring for liquidity, and measures for emerging risks like cyber and climate change - Market Risk: Primarily exposed to foreign currency exchange and interest rate risks, which are hedged using derivative financial instruments (currency swaps, interest rate swaps) not for speculative purposes154193 - Credit Risk: Primarily arises from customer loans and receivables, managed through policy formulation, credit limit approval, monitoring procedures, and impairment assessment using the Expected Credit Loss (ECL) model159197 - Liquidity Risk: Managed by continuously monitoring forecasted and actual cash flows, maintaining sufficient reserves, and bank financing to meet short, medium, and long-term funding needs198556 - Emerging Risks: The group has incorporated cyber and climate risks into its management framework, developing corresponding defense measures and business continuity plans201600 Outlook and Strategies Looking ahead, the group anticipates a sustained high-interest rate environment, focusing on enhancing operational efficiency and credit risk management, while accelerating digital transformation and expanding market reach in the Greater Bay Area - The group will focus on operational efficiency and credit risk management to address the ongoing high-interest rate environment105 - Digitalization is a core strategy, with continued investment in virtual cards, e-wallets, and plans to apply artificial intelligence in credit operations106132 - Market strategy will focus on large-scale promotional activities and new offers targeting cross-border travel and consumption trends in the Greater Bay Area128 - The group is actively promoting sustainable development (ESG), adopting more paperless and virtual payment solutions, and enhancing ESG disclosures131 Corporate Sustainability Report The report details the group's commitment to sustainable development, encompassing governance, ethical practices, customer engagement, environmental stewardship, and social responsibility Sustainability Governance and Strategy The group's sustainability approach, centered on the "AEON Basic Principles," aims to create long-term value, with the Board overseeing ESG matters and a dedicated committee setting and evaluating goals based on stakeholder materiality assessments - The sustainability governance structure is led by the Board of Directors, with a Sustainability Committee responsible for formulating and overseeing ESG strategies and objectives216217 - Through annual materiality assessments, six key sustainability issues most important to the business and stakeholders were identified, including business ethics, customer satisfaction, cybersecurity, digital transformation, risk management, and climate change254260609 Business Ethics and Customer Commitment The group upholds high standards of business ethics through comprehensive policies and training, prioritizes customer satisfaction via digital services and complaint handling, ensures data privacy and security, and integrates ESG criteria into supply chain management - The group has established a comprehensive anti-corruption and anti-money laundering framework, providing employees with annual compliance training and ICAC lectures266267269 - During the reporting year, 175 customer commendations were received, a 29.6% year-on-year increase, primarily related to branch services; 97 complaints were received and processed according to procedures367368 - The group strictly protects customer data, complying with Payment Card Industry Data Security Standard (PCI DSS) and obtaining ISO 27001 Information Security Management System certification374375 - ESG assessments are integrated into supply chain management to ensure suppliers meet environmental, social, health and safety, and labor practice standards386426 Environmental Commitment The group, ISO 14001 certified since 2009, actively addresses climate change by setting emission reduction targets and implementing various initiatives such as energy conservation, digitalization to reduce paper, waste recycling, and adopting eco-friendly materials FY2023 Environmental Performance Data | Indicator | Unit | Total | | :--- | :--- | :--- | | Total GHG Emissions | tonnes CO2e | 510.10 | | GHG Emission Intensity | tonnes CO2e/sq ft | 0.0069 | | Total Energy Consumption | kWh | 1,034,388.88 | | Energy Consumption Intensity | kWh/sq ft | 13.97 | | Water Consumption | cubic meters | 4,426.56 | | Non-Hazardous Waste Generated | tonnes | 183.13 | - The group has set a target to reduce greenhouse gas emission intensity (Scope 1 and 2) and headquarters office electricity consumption intensity by 5% by FY2025 (based on FY2023)442 - Eco-friendly credit cards made from recycled plastic (rPVC) were launched, reducing approximately 40% of CO2 equivalent per card, and new uniforms made from eco-friendly fabric were provided to employees462505 Social Commitment (Employees and Community) The group values its employees as its most precious asset, fostering a diverse, inclusive, and safe work environment, and actively contributes to the community through donations and volunteer services focused on environmental protection and youth education Employee Profile (FY2023) | Indicator | Data | | :--- | :--- | | Total Employees | 567 people | | Female Employee Ratio | 59.6% | | Employee Turnover Rate | 21.3% | | Trained Employee Ratio | 100% | | Average Training Hours Per Employee | 21.9 hours | | Work-Related Fatalities | 0 | - The group donated approximately HKD 2.136 million and organized 180 hours of volunteer services during the reporting year, primarily dedicated to environmental protection and youth education399568 Corporate Governance Report This report outlines the company's corporate governance framework, including board structure, committee functions, risk management, internal controls, and shareholder communication practices Board and Committees The company is committed to high standards of corporate governance, with a diverse nine-member Board overseeing four specialized committees to ensure checks and balances and effective decision-making - The Board of Directors comprises 9 members, including 4 independent non-executive directors, exceeding the one-third requirement of the Listing Rules704 - Female representation on the Board is approximately 33%, meeting the Board Diversity Policy's target of not less than 30% female representation706 - The Board has four committees: Audit Committee, Nomination Committee, Remuneration Committee, and the Strategy Committee newly established on June 29, 202371 Risk Management, Internal Control and Shareholder Communication The Board is ultimately responsible for the group's risk management and internal control systems, which are annually assessed and supported by a three-lines-of-defense model, while effective communication with shareholders is maintained through various channels - The group has established a three-lines-of-defense risk management model, comprising operating units, risk management department/committee, and internal audit department/audit committee, to identify, assess, and monitor various risks167 - The company has formulated whistleblowing and anti-corruption policies, establishing multiple confidential channels for employees and external parties to report misconduct170 - Shareholder rights are protected, with clear procedures for shareholders holding 5% of shares to request a general meeting, and for shareholders holding 2.5% or 50 shareholders to propose resolutions234235 Directors' Report The report provides an overview of the group's business activities, financial results, dividend distribution, board composition, shareholder interests, and details of continuing connected transactions Business Review, Results and Dividends This report outlines the group's primary business activities in consumer finance services, detailing the interim and proposed final dividends for the period, and noting the net debt to equity ratio as of February 29, 2024 - The group primarily engages in consumer finance services, including credit cards, personal loans, payment processing, and insurance agency businesses241 FY2023/24 Dividend Distribution | Dividend Type | Amount Per Share (HK cents) | Total Amount (HKD) | | :--- | :--- | :--- | | Interim Dividend (Paid) | 24.0 | 100,504,000 | | Final Dividend (Proposed) | 24.0 | 100,504,000 | - As of February 29, 2024, the net debt to equity ratio was 0.7, an increase from 0.4 in the previous year243 Directors and Shareholders' Interests The report lists the Board members for the year and at the reporting date, confirms their eligibility for re-election, and discloses the shareholdings of directors and major shareholders in the company and its associated corporations - Pursuant to the Securities and Futures Ordinance, major shareholder AEON Co., Ltd. (AEON Japan) is deemed to hold 286,088,000 shares, representing 68.32% of the company's issued share capital291 - Directors Mr. Tomoharu Fukayama and Mr. Yuk Kwong Lai hold 100,000 shares and 20,000 shares of the company, respectively285 Continuing Connected Transactions The group engaged in various ongoing transactions with connected parties, including commission collection, gift voucher procurement, and IT/consultancy services, all conducted within annual caps and reviewed by independent non-executive directors for fairness and reasonableness - The group conducted in-network commission transactions and off-network acquiring transactions with AEON Stores, totaling HKD 25,282,000 for the year, which did not exceed the annual cap of HKD 36,900,000345346 - The group paid HKD 6,538,000 for IT services and HKD 9,671,000 for business consultancy fees to AEON Financial Service Co., Ltd. (AFS), both within their respective annual caps346348 Independent Auditor's Report The independent auditor issued an unqualified opinion on the financial statements, highlighting the impairment assessment of customer loans and receivables as a key audit matter Audit Opinion and Key Audit Matters Deloitte Touche Tohmatsu issued an unqualified audit opinion on the group's consolidated financial statements for the year ended February 29, 2024, affirming their fair presentation, with the impairment assessment of customer loans and receivables identified as the most significant key audit matter - The auditor issued an unqualified opinion, stating that the consolidated financial statements fairly and truthfully reflect the group's financial position and performance in accordance with Hong Kong Financial Reporting Standards403 - The key audit matter is the "Impairment assessment of customer loans and receivables" because its carrying amount is approximately HKD 6.714 billion, representing about 89% of total assets, and its impairment assessment involves significant management judgment based on the Expected Credit Loss (ECL) model409 Consolidated Financial Statements This section presents the group's consolidated financial statements, including the statement of profit or loss, financial position, cash flows, and detailed explanatory notes Consolidated Statement of Profit or Loss For the year ended February 29, 2024, the group reported revenue of HKD 1.623 billion, a 31.8% increase from the previous year, with profit before tax at HKD 473 million and annual profit at HKD 392 million, representing a 5.0% year-on-year growth Consolidated Statement of Profit or Loss Summary (HKD Thousands) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Revenue | 1,623,321 | 1,231,631 | | Net Interest Income | 1,258,899 | 988,005 | | Profit Before Tax | 472,528 | 449,294 | | Annual Profit | 392,270 | 373,611 | | Earnings Per Share — Basic | HKD 0.9367 | HKD 0.8922 | Consolidated Statement of Financial Position As of February 29, 2024, the group's total assets significantly increased to HKD 7.561 billion from HKD 6.458 billion in the prior year, with total liabilities rising to HKD 3.493 billion and total equity to HKD 4.068 billion, primarily driven by an increase in customer loans and receivables Consolidated Statement of Financial Position Summary (HKD Thousands) | Item | February 29, 2024 | February 28, 2023 | | :--- | :--- | :--- | | Non-current Assets | 2,007,847 | 1,589,787 | | Current Assets | 5,553,385 | 4,867,893 | | Total Assets | 7,561,232 | 6,457,680 | | Current Liabilities | 1,677,543 | 1,190,832 | | Non-current Liabilities | 1,815,696 | 1,374,388 | | Total Liabilities | 3,493,239 | 2,565,220 | | Total Equity | 4,067,993 | 3,892,460 | Consolidated Statement of Cash Flows This year saw a net cash outflow of HKD 637 million from operating activities due to a significant increase in customer loans, a net outflow of HKD 121 million from investing activities, and a net inflow of HKD 644 million from financing activities, resulting in a net decrease of HKD 114 million in cash and cash equivalents Consolidated Statement of Cash Flows Summary (HKD Thousands) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (637,397) | (1,015,785) | | Net Cash Used in Investing Activities | (121,199) | (9,145) | | Net Cash Generated from Financing Activities | 644,485 | 827,418 | | Net Decrease in Cash and Cash Equivalents | (114,111) | (197,512) | | Cash and Cash Equivalents at Beginning of Year | 387,507 | 588,963 | | Cash and Cash Equivalents at End of Year | 271,658 | 387,507 | Notes to the Consolidated Financial Statements The notes provide detailed explanations of the group's accounting policies, key estimates such as customer loan impairment, and a breakdown of financial statement items, covering revenue recognition, segment information, financial instrument risk management, related party transactions, and share capital structure - The notes detail the group's significant accounting policies, including basis of consolidation, revenue recognition, financial instruments, leases, and taxation, ensuring compliance with Hong Kong Financial Reporting Standards547 - Impairment provisions for customer loans and receivables are a key accounting estimate, utilizing the Expected Credit Loss (ECL) model, which involves judgment on probability of default, loss given default, and forward-looking information818820 - Note 39 provides detailed disclosures on the financial risks faced by the group, including market risk (interest rate, foreign exchange), credit risk, and liquidity risk, along with corresponding management objectives and policies985
AEON CREDIT(00900) - 2024 - 年度财报