INTERIM REPORT
1
Contents
2 Definitions
- Corporate Information
- Chairman's Statement
- Management's Discussion and Analysis
- Independent Review Report
- Condensed Consolidated Interim Financial Information
- Notes to the Condensed Consolidated Interim Financial Information
- Disclosure of Interests
- Corporate Governance
- Other Information
- Information for Shareholders
Disclaimer
If there is any inconsistency or conflict between the English and the Chinese versions, the English version shall prevail.
TOM Group Limited Interim Report 2024
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Definitions | |
"Associate(s)" | has the meaning ascribed to it in the Listing Rules |
"B2B" | means business-to-business |
"B2C" | means business-to-consumer |
"Board" | means the board of Directors |
"China Post" | means China Post Group Corporation Limited*, a |
state-owned enterprise of the People's Republic of China, | |
and its subsidiaries | |
"China Post HK" | means Telpo Philatelic Company Limited, a company |
incorporated under the laws of Hong Kong and a subsidiary | |
of China Post | |
"CKH" | means Cheung Kong (Holdings) Limited, a company |
incorporated in Hong Kong with limited liability, whose | |
listing status on the Stock Exchange was replaced by CKHH | |
on 18 March 2015 | |
"CKHH" | means CK Hutchison Holdings Limited, an exempted |
company incorporated in the Cayman Islands with limited | |
liability, the shares of which are listed on the Main Board of | |
the Stock Exchange on 18 March 2015 (Stock Code: 0001) | |
"Company" or "TOM" | means TOM Group Limited, an exempted company |
incorporated in the Cayman Islands with limited liability, the | |
shares of which are listed on the Main Board of the Stock | |
Exchange (Stock Code: 2383) | |
"Corporate Governance Code" | means the Corporate Governance Code sets out in Appendix |
C1 to the Listing Rules | |
"Director(s)" | means the director(s) of the Company |
"ESG" | means environmental, social and governance |
"Group" or "TOM Group" | means the Company and its subsidiaries |
"Hong Kong" | means the Hong Kong Special Administrative Region of the |
People's Republic of China | |
"HWL" | means Hutchison Whampoa Limited, a company |
incorporated in Hong Kong with limited liability, which was | |
listed on the Stock Exchange until it was privatised in June | |
2015 |
TOM Group Limited Interim Report 2024
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Definitions | |
"Listing Rules" | means the Rules Governing the Listing of Securities on the |
Stock Exchange | |
"Main Board" | means the main board of the Stock Exchange |
"Mainland China" | means for the purpose of the segment differentiation of this |
report, the People's Republic of China, excluding coverage | |
of Hong Kong, Macau Special Administrative Region and | |
Taiwan region | |
"Media Business" | means two reportable operating segments of Publishing |
Group and Advertising Group | |
"MioTech" | means Mioying Holdings Inc., a company incorporated in the |
Cayman Islands with limited liability | |
"Model Code" | means Model Code for Securities Transactions by Directors of |
Listed Issuers contained in Appendix C3 to the Listing Rules | |
"SFO" | means the Securities and Futures Ordinance, Chapter 571 of |
the Laws of Hong Kong | |
"Stock Exchange" | means The Stock Exchange of Hong Kong Limited |
"Technology Platform and | means three reportable operating segments of E-Commerce |
Investments" | Group, Social Network Group and Mobile Internet Group; |
and investments in Fintech and Advanced Data Analytics | |
sectors | |
"Ule" or "Ule Group" | means Ule Holdings Limited or Ule Holdings Limited and |
its subsidiaries, a material associate of the Company | |
which undertakes an e-commerce/supply chain business in | |
Mainland China and from time to time raises funds for its | |
growing business | |
"WeLab" | means WeLab Holdings Limited, a BVI business company |
incorporated in the British Virgin Islands with limited liability |
- For identification purposes only
TOM Group Limited Interim Report 2024
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Corporate Information | |
Board of Directors | Audit Committee |
Chairman | Fong Chi Wai, Alex (Committee Chairman) |
Frank John Sixt | James Sha |
Lee Pui Ling, Angelina | |
Executive Director | Chan Tze Leung |
Yeung Kwok Mung | |
Remuneration Committee | |
Non-executive Directors | Fong Chi Wai, Alex (Committee Chairman) |
Chang Pui Vee, Debbie | Frank John Sixt |
Lee Pui Ling, Angelina | Chan Tze Leung |
Independent Non-executive Directors | Nomination Committee |
James Sha | James Sha (Committee Chairman) |
Fong Chi Wai, Alex | Frank John Sixt |
Chan Tze Leung | Chan Tze Leung |
Alternate Director | Sustainability Committee |
Lai Kai Ming, Dominic | Yeung Kwok Mung (Committee Chairman) |
(Alternate to Frank John Sixt) | Fong Chi Wai, Alex |
Man Tak Cheung | |
Company Secretary | |
Man Tak Cheung | Principal Bankers |
The Hongkong and Shanghai Banking | |
Authorised Representatives | Corporation Limited |
Yeung Kwok Mung | Industrial and Commercial Bank of China |
Man Tak Cheung | (Asia) Limited |
Bank of China (Hong Kong) Limited | |
Auditor | DBS Bank Ltd., Hong Kong Branch |
PricewaterhouseCoopers | Citibank, N.A., Hong Kong Branch |
(Certified Public Accountants and | United Overseas Bank Limited |
Registered PIE Auditor) | Bank of America, N.A. |
Hang Seng Bank Limited | |
Standard Chartered Bank (Hong Kong) Limtied |
TOM Group Limited Interim Report 2024
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Chairman's Statement
For the six months ended 30 June 2024, TOM Group continued to focus on our growth opportunities including our investments in China rural e-commerce/supply chain, fintech and advanced data analytics.
The strong US dollar, geopolitical volatility, global inflation and interest rates continued to affect business confidence and customer spending. As a result, the Group's consolidated revenue decreased 9.6% to HK$342 million. Gross revenue from the Group's Media Business and Technology Platform and Investments was HK$332 million and HK$10 million respectively. Gross profit was HK$137 million and gross profit margin was maintained at 40.2%.
Due to increased finance costs and unfavorable exchange translation that weighed on earnings in this period, the Group's underlying loss for the period attributable to shareholders was HK$145 million. Excluding the one-off effect of reversal of impairment loss of approximately HK$14 million in relation to Ule in the first half of 2023, loss before net finance costs and taxation increased from HK$16 million in the first half of 2023 to HK$27 million.
Ule, the Group's investment in E-Commerce business with China Post, continued the development of its rural e-commerce business with a focus on supply chain innovation. Net loss of Ule narrowed by 40.8% from the same period last year to RMB33 million. No reversal of impairment loss was recognised in the period under review.
The Publishing Group in Taiwan remained the leader in its markets during the period. Despite unfavorable exchange rate translation, the impacts of geopolitical volatility and the slowdown of business activities associated with elections held in the first half of 2024, the Publishing Group showed resilience and delivered gross revenue of HK$328 million and segment profit of HK$22 million in the period. The publishing markets in Taiwan remain challenging and the Group will continue to seek opportunities to diversify its revenue streams and step up the digital adoption of this business.
Pixnet, the Group's social digital media business, continues to be the largest user-generated content platform in Taiwan. Pixnet reported gross revenue of HK$8 million and segment loss of HK$8 million.
Going forward, management will remain focused on selectively pursuing growth opportunities while maintaining stable performances in our businesses. The Group will also maintain a prudent financial profile by closely monitoring operating and capital expenses and investments, and implementing disciplined cash flow and working capital management.
I would like to take this opportunity to thank our shareholders, business partners, the management and all our dedicated staff for their contributions to the Group.
Frank John Sixt
Chairman
Hong Kong, 5 August 2024
TOM Group Limited Interim Report 2024
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Management's Discussion and Analysis
Financial Highlights
For the six months ended | |||
30 June | 30 June | ||
2024 | 2023 | ||
HK$'000 | HK$'000 | ||
Consolidated revenue | 342,339 | 378,672 | |
Loss(1) before reversal of provision for impairment in amounts | |||
due from associated companies | (26,885) | (16,222) | |
Reversal of provision for impairment in amounts due from | |||
associated companies | - | 14,471 | |
Loss before net finance costs and taxation | (26,885) | (1,751) | |
Loss attributable to equity holders of the Company | (145,414) | (94,547) | |
Total comprehensive expense attributable to equity holders | |||
of the Company | (249,465) | (115,747) | |
Loss per share (HK cents) | (3.67) | (2.39) | |
Net liabilities | (1,551,841) | (1,033,804) |
- Being loss before net finance costs and taxation (including share of results of investments accounted for using the equity method)
TOM Group Limited Interim Report 2024
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Management's Discussion and Analysis
Business Review
In the first half of 2024, geopolitical volatility and economic concerns continued to present a challenging operating environment for businesses in the Greater China region. During the review period, TOM Group stayed focused on achieving efficiencies and optimising costs to further enhance operating performance. Gross revenue from the Group's Media Business was HK$332 million with a segment profit of HK$22 million. Gross revenue from the Group's Technology and Investments was HK$10 million with a segment loss of HK$14 million.
Media Business
Cite, TOM Group's media and publishing arm in Taiwan, is a market leader in the industry. During the review period, Cite continued to optimise its operations and content products as well as expand new revenue streams with innovative digital offerings for its users and clients. Amid the slowdown of economic activity in the first quarter of 2024 associated with the elections in Taiwan, the Publishing Group recorded a 7.8% decrease in gross revenue to HK$328 million with a segment profit of HK$22 million during the review period.
Technology Platform and Investments
Pixnet is the Group's social media business and is morphing into a multimedia social platform allowing users, KOLs, brands and merchants to share meaningful print and video content to unveil the best of Taiwan in terms of food, lifestyle and travel. During the review period, Taiwan's 2024 elections impacted investor sentiment and advertising spend. Pixnet's business was adversely affected by the geopolitical and economic uncertainty in Taiwan and recorded a gross revenue of HK$8 million with a segment loss of HK$8 million. As Taiwan's economy is expected to have a modest recovery in the second half of 2024, Pixnet will continue to focus on cost optimisation while developing new products and services that cater to the evolving user preference for watching short-form content in order to capture growth opportunities in the online video platforms market.
TOM Group invested in WeLab, a leading pan-Asian fintech platform, in 2014. WeLab operates two digital banks as well as multiple online financial services in Hong Kong, Mainland China, Indonesia, and Malaysia. With more than 64 million users, WeLab has facilitated and originated over US$13 billion of loans. WeLab uses game-changing technology to help customers access credit, save money, and enjoy their financial journey. Powered by proprietary risk management technology, patented privacy computing techniques, and advanced AI capabilities, WeLab offers mobile-based consumer financing solutions and digital banking services to retail individuals and technology solutions to enterprise customers. WeLab operates in four markets under multiple brands, including WeLend and WeLab Bank in Hong Kong, various business lines in Mainland China, Maucash and Bank Saqu by Bank Jasa Jakarta in Indonesia. WeLab Bank is the most innovative company named by the Chinese University of Hong Kong and is also one of the first fully licensed digital banks in Asia. WeLab's Indonesia digital bank, Bank Saqu, continues to be a key focus, highlighted by strong initial momentum - attracting over 1 million customers within 6 months of launch. As at 30 June 2024, TOM Group owns 8.00% in WeLab on an issued basis.
TOM Group Limited Interim Report 2024
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Management's Discussion and Analysis
In March 2020, TOM Group invested in MioTech which is a leading sustainability data and software provider in Asia. Currently, its software ESGhub has gained significant traction in Mainland China, Hong Kong and Southeast Asia, overtaking many consulting firms as a major player in sustainability reporting and data management. On the data side, MioTech further cemented its leading position as the best ESG data provider in Asia, as it expands its clientele and use cases among financial institutions. As at 30 June 2024, TOM Group owns 6.22% of MioTech on an issued basis.
Ule, TOM Group's investment in E-Commerce business with China Post, continued the development of its rural e-commerce business with a focus on supply chain innovation. Net loss of Ule narrowed by 40.8% from the same period last year to RMB33 million.
For the six months ended 30 June 2024, the Group recorded a revenue of HK$342 million with a gross profit margin of 40.2%. The Group's underlying loss for the period attributable to shareholders was HK$145 million. Excluding the one-off effect of reversal of impairment loss of approximately HK$14 million in relation to Ule in the first half of 2023, loss before net finance costs and taxation increased from HK$16 million in the first half of 2023 to HK$27 million.
Going forward, TOM Group will continue to remain agile and prudent in managing its operations and investments in the Greater China region, and accelerate its digital business development to capture market opportunities and drive further growth.
TOM Group Limited Interim Report 2024
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Management's Discussion and Analysis
Group Capital Resources and Other Information
As at 30 June 2024, TOM Group had cash and bank balances, excluding pledged deposits, of approximately HK$422 million. A total of HK$4,520 million financing facilities were available, of which HK$3,719 million or 82.3% had been utilised as at 30 June 2024, to finance the Group's investments, capital expenditures and for working capital purposes.
The principal of the total borrowings of TOM Group amounted to approximately HK$3,719 million as at 30 June 2024, which are denominated in Hong Kong dollar. The borrowings included long-term bank loans of approximately HK$3,719 million. All bank loans borne floating interest rates. The gearing ratio (Total principal amount of bank borrowings/(Total principal amount of bank borrowings + Deficit)) of TOM Group was 171.6% as at 30 June 2024, compared to 154.4% as at 31 December 2023.
As at 30 June 2024, the Group had net current assets of approximately HK$215 million, compared to approximately HK$335 million as at 31 December 2023. The current ratio (Current assets/Current liabilities) of TOM Group as at 30 June 2024 was 1.41, compared to
1.62 as at 31 December 2023. The Group recorded net liabilities of approximately HK$1,552 million as at 30 June 2024, compared to net liabilities of HK$1,290 million as at 31 December 2023. Net cash outflow from operating activities after interest and taxation paid was HK$62 million, compared to outflow of HK$31 million in the same period last year as a result of the increased borrowings interest rates. Net cash outflow from investing activities was HK$32 million, compared to inflow of HK$72 million in the same period last year, which was mainly due to settlement of amounts due from Ule in the first half of 2023.
Loss before Net Finance Costs and Taxation
Despite the resilience of the Publishing Group, revenue and loss before net finance costs and taxation of the Group for the period under review arrived at HK$342 million and HK$27 million respectively against the backdrop of strong US dollar, global inflation and the slowdown of Taiwan business activities in the period associated with elections in Taiwan. In the first half of 2023, reversal of provision for impairment losses of approximately HK$14 million was recognised for the Group's amounts due from associated companies to reflect the reduction in credit risk subsequent to settlement of amounts due from Ule in January 2023. No reversal of impairment loss was recognised in the period under review.
Excluding the effect on non-cash events such as reversal of provision for impairment losses, the recurring loss before net finance costs and taxation increased from HK$16 million in the first half of 2023 to HK$27 million.
TOM Group Limited Interim Report 2024