高萌科技(08065) - 2024 - 年度财报

Corporate Information This section details the company's governance structure, including its Board of Directors and key personnel, along with essential corporate registration and banking information Board of Directors The company's Board of Directors comprises three executive and three independent non-executive directors, with Mr. Luk Kam Ming as Chairman and Mr. Luk Kwai Nung appointed CEO on August 7, 2023, supported by audit, remuneration, nomination, and risk management committees - The Board members include Luk Kam Ming (Chairman), Luk Kwai Nung (CEO), Luk Yin Cheung (Executive Director), and Lau On Kwok, Lo Wing Chi, Tse Chi Keung (Independent Non-executive Directors)[14][16] - Mr. Chan Chak Lam retired as Executive Director and CEO on August 7, 2023, and Mr. Yu Wing Luk retired as Independent Non-executive Director on the same day[14][16] - The company has established Audit, Remuneration, Nomination, and Risk Management Committees, all with independent non-executive director participation[14][15][16] Key Personnel and Corporate Details Ms. Wu Siu Wai is the Company Secretary, Mr. Luk Yin Cheung is the Compliance Officer, and Ernst & Young is the auditor; the company is registered in the Cayman Islands with its Hong Kong headquarters in Sha Tin Industrial Centre, banking with HSBC and DBS Bank (Hong Kong) - Ms. Wu Siu Wai serves as the Company Secretary, and Mr. Luk Yin Cheung as the Compliance Officer[16][17] - Ernst & Young is the auditor[16][17] - The company's registered office is in the Cayman Islands, with its Hong Kong headquarters and principal place of business located in Sha Tin Industrial Centre, Siu Lek Yuen Road, Sha Tin, New Territories, Hong Kong[18][19] - The principal bankers are The Hongkong and Shanghai Banking Corporation Limited and DBS Bank (Hong Kong) Limited[19][20] - The company's stock code is 8065[19][20] Chairman's Statement The Chairman's Statement reviews the Group's financial performance, R&D achievements, market expansion, and future strategic outlook, highlighting ESG commitments and technological advancements Business Review For the reporting year, the Group's revenue grew by 26.5% to HKD 194.1 million, with net loss significantly narrowed to HKD 13.8 million; the company actively invested in IoT, robotics, and AI R&D, applying results to automated toll system verification and smart maintenance services, expanding its client base to ferry and airport sectors, and receiving multiple awards for social responsibility and employee welfare FY2023/24 Key Financial Performance | Metric | FY2024 (Million HKD) | FY2023 (Million HKD) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 194.1 | 153.4 | +26.5% | | Net Loss | (13.8) | (32.2) | Loss narrowed | - The company is committed to R&D, investing in IoT, robotics, and AI technologies, successfully applying results to automated toll system reliability verification and smart maintenance services to enhance efficiency and reduce costs[23][28] - In Hong Kong's transportation M&E services, the company successfully implemented a one-stop automated toll system solution, expanding its client base to ferry and airport sectors[24][29] - Received the 'Caring Company Award' (over fifteen years) and 'Heart-Friendly Organisation Award – Outstanding Organisation', demonstrating the company's commitment to social impact and employee welfare[25][30] Outlook The company anticipates new opportunities from ESG factors and EV charging projects, planning collaborations with academic institutions; it strategically expands into Greater China and Southeast Asian markets, focusing on mobile ticketing and digital payment solutions, while enhancing operational efficiency and gross profit margins through advanced technologies like smart site safety and VR training systems - Anticipates increased awareness of ESG factors will bring more business opportunities, especially in electric vehicle charging projects and clean energy utilization, actively seeking collaboration with Hong Kong academic institutions[31][36] - Strategically expanding business to the Greater Bay Area, Taiwan, and Southeast Asian countries, focusing on mobile ticketing and digital payment solutions and services to achieve market diversification and brand enhancement[32][36] - Plans to adopt advanced technologies like smart construction site safety systems and virtual reality training systems to improve operational efficiency, monitor site safety, and optimize processes, expecting positive contributions to financial health and gross profit margin[33][37] Financial Highlights This section provides a concise overview of the Group's key financial figures for the reporting year, including revenue, gross profit, net loss, and dividend recommendations Key Financial Figures For the reporting year, the Group's revenue was approximately HKD 194.1 million, a 26.5% year-on-year increase; gross profit significantly grew to HKD 29.9 million, and net loss narrowed to HKD 13.8 million, with no final dividend recommended by the Board FY2024 Financial Highlights | Metric | FY2024 (Million HKD) | FY2023 (Million HKD) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 194.1 | 153.4 | +26.5% | | Gross Profit | 29.9 | 9.9 | +202% | | Net Loss | (13.8) | (32.2) | Loss narrowed | - The Board does not recommend a final dividend for the reporting year (2023: nil)[41][43] Management Discussion and Analysis This section offers a comprehensive review of the Group's business and financial performance, future outlook, and key risks and uncertainties, providing management's perspective on operational and strategic developments Business Review For the reporting year, the Group's revenue grew 26.5% to HKD 194.1 million, primarily due to improved project progress and the reversal of onerous contract provisions, significantly boosting gross profit; M&E technology solutions and engineering services remained the largest revenue source, while mobile ticketing and digital payment solutions and services revenue surged 176.3%; the company achieved multiple ESG milestones, including data privacy awards, employee welfare commitments, and environmental initiatives FY2024 Business Performance | Metric | FY2024 (Million HKD) | FY2023 (Million HKD) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 194.1 | 153.4 | +26.5% | | Gross Profit | 29.9 | 9.9 | +202% | | Outstanding Contracts on Hand | 342.0 (as of 2024/3/31) | 438.3 (as of 2023/3/31) | -22% | FY2024 Revenue by Business Segment | Business Segment | FY2024 (Million HKD) | FY2023 (Million HKD) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | M&E Technology Solutions & Engineering Services | 102.8 | 80.3 | +28.0% | | Mobile Ticketing & Digital Payment Solutions & Services | 54.7 | 19.8 | +176.3% | | Traffic Critical System Solutions | 10.5 | 24.5 | -57.1% | | Digital Assembly & Maintenance Services | 25.2 | 23.3 | +8.2% | | Sales of Products, Parts & Components | 1.0 | 5.5 | -81.8% | - In ESG, the company received the Privacy-Friendly Awards Silver Award from the Hong Kong Privacy Commissioner for Personal Data, the 'Caring Company Award', and the 'Heart-Friendly Organisation Award – Outstanding Organisation', while adding electric vehicles to its fleet to support carbon reduction goals[69][74] Outlook The company anticipates ongoing challenges from Hong Kong's talent shortage and rising labor costs, addressing them through recruitment, educational partnerships, and advanced technologies like smart site safety and VR training; stable demand for M&E engineering services is expected from new railway construction and upgrades, with significant opportunities in the EV charger installation market; the company plans to expand into the Greater Bay Area, Taiwan, and Southeast Asian markets - Hong Kong's talent shortage and rising labor costs will continue to challenge business, with the company actively recruiting talent and collaborating with educational institutions[70][75] - The company will enhance operational efficiency and reduce labor costs by adopting advanced technologies such as smart construction site safety systems and virtual reality training systems[71][75] - Stable demand for M&E engineering services in the transportation sector is expected in the coming years, with significant opportunities in the EV charger installation market, particularly for the 140,000 chargers under the EHSS scheme[73][75][77] - The company plans to expand its business footprint to the Greater Bay Area, Taiwan, and other Southeast Asian countries, focusing on mobile ticketing and digital payment solutions and services[79][85] Financial Review For the reporting year, the Group's revenue grew 26.5% to HKD 194.1 million, with gross profit surging 202% to HKD 29.9 million, mainly due to improved project completion and no onerous contract provisions; net loss narrowed to HKD 13.8 million, administrative expenses rose 6.9% due to increased staff costs, and the Group incurred HKD 15 million in bank borrowings, resulting in an 11.0% gearing ratio FY2024 Financial Performance Overview | Metric | FY2024 (Million HKD) | FY2023 (Million HKD) | Y-o-Y Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 194.1 | 153.4 | +26.5% | | Cost of Sales | 164.2 | 143.5 | +14.4% | | Gross Profit | 29.9 | 9.9 | +202% | | Impairment Loss on Financial & Contract Assets | 50 (Reversal) | 5.2 (Loss) | Improved | | Administrative Expenses | 46.5 | 43.5 | +6.9% | | Net Loss Attributable to Owners | (13.8) | (32.2) | Loss narrowed | - As of March 31, 2024, the Group had HKD 15 million in outstanding bank borrowings, with a gearing ratio of 11.0% (2023: not applicable)[92][100] - As of March 31, 2024, the Group employed 179 staff (2023: 190), with remuneration policies consistent with market practices, offering retirement benefits, medical, and life insurance[98][104] - The Board does not recommend a final dividend for the reporting year (2023: nil)[97][103] Other Financial Information The Group faces foreign exchange risks from RMB, GBP, EUR, or USD fluctuations, currently without a hedging policy; the company adopts prudent financial management, closely monitoring liquidity; no material investments, acquisitions, or disposals of subsidiaries, capital commitments, or contingent liabilities occurred during the period; certain bank deposits and life insurance policies are pledged for banking facilities - The Group faces foreign exchange risks from fluctuations in RMB, GBP, EUR, or USD, but currently has no hedging policy; management will consider hedging when necessary[106][113] - The company adopts a prudent financial management approach, managing liquidity risk through continuous credit assessment and monitoring of liquidity positions[107][114] - As of March 31, 2024, the Group had no material investments, significant acquisitions or disposals of subsidiaries, associates, or joint ventures, nor any capital commitments or significant contingent liabilities[108][109][111][112][115][116][118][119] - As of March 31, 2024, the Group pledged certain bank deposits and investments in life insurance policies to secure general banking facilities[110][117] Principal Risks and Uncertainties The Group identified several principal risks, including poor project management leading to delays and cost overruns, inaccurate tender cost assessments, over-reliance on a few major clients, challenges from talent drain in Hong Kong, and potential legal risks and reputational damage from failing to maintain high quality and safety standards; the company adopted a three-tier risk management approach to identify, assess, mitigate, and respond to these risks - Principal risks include: poor project management leading to delays and cost overruns, damaging reputation and client relationships[124] - Inaccurate assessment of tender project costs and complexities may impact project financial viability[124] - Over-reliance on a few major clients, potentially leading to significant revenue impact due to client loss or downsizing[124] - Talent drain in Hong Kong poses a challenge to achieving long-term goals; the company needs to develop, attract, and retain employees with required capabilities[124] - Failure to effectively supervise subcontractors and maintain high quality and safety standards may lead to legal risks, potential penalties, and loss of tender opportunities[124] - The company has adopted a three-tier risk management approach, involving operational units, management, and the Risk Management Committee, to identify, assess, mitigate, and respond to risks, with a risk register for tracking and monitoring[121][122][123] Directors and Senior Management This section provides biographical details of the Executive Directors, Independent Non-executive Directors, and senior management, outlining their roles, experience, and family relationships within the company Executive Directors Executive Directors include Chairman Mr. Luk Kam Ming, with over 50 years of M&E engineering experience, responsible for overall strategic planning and financial management; Mr. Luk Kwai Nung serves as CEO, overseeing overall business operations and strategy execution; Mr. Luk Yin Cheung supervises operational support and procurement; all three executive directors are family members - Mr. Luk Kam Ming (77 years old) is an Executive Director and Chairman of the Board, with over 50 years of M&E engineering experience, specializing in automated toll and railway traffic monitoring system development, responsible for the Group's overall strategic planning and financial management[125][126][129] - Mr. Luk Kwai Nung (47 years old) is an Executive Director and CEO, responsible for managing the Group's overall business operations and development, executing business strategies, and possessing extensive process management experience across various departments at KML Technology Engineering[132][133][139] - Mr. Luk Yin Cheung (45 years old) is an Executive Director, overseeing the Group's operational support, including procurement and sourcing, with extensive experience in occupational safety training, procurement, inventory, and logistics management[136][137][140][141] - Mr. Luk Kam Ming is the father of Mr. Luk Kwai Nung and Mr. Luk Yin Cheung; Mr. Luk Yin Cheung is the spouse of Ms. Wu Siu Wai, the Company Secretary, indicating family relationships within the Board[128][130][135][140][143][148] Independent Non-executive Directors Independent Non-executive Directors include Mr. Lau On Kwok, Mr. Lo Wing Chi, and Dr. Tse Chi Keung; Mr. Lau is experienced in financial management, corporate governance, and direct investment; Mr. Lo is experienced in financial management and professional accounting; Dr. Tse is a Chair Professor of Electronic Engineering at City University of Hong Kong, with a strong academic and research background - Mr. Lau On Kwok (57 years old) is an Independent Non-executive Director and Chairman of the Audit Committee, with extensive experience in financial management, corporate governance, and direct investment[144][145][149][150] - Mr. Lo Wing Chi (54 years old) is an Independent Non-executive Director and Chairman of the Risk Management Committee, with extensive experience in financial management and professional accounting[154][155][159] - Dr. Tse Chi Keung (59 years old) is an Independent Non-executive Director and Chairman of the Remuneration Committee, a Chair Professor of Electronic Engineering at City University of Hong Kong, renowned in academic research and engineering, and a recipient of the IEEE Technical Achievement Award[156][157][158][160][161] Senior Management and Company Secretary Senior management includes Mr. Tung Tsz On, Chief Operating Officer, responsible for R&D, planning, and project execution; Mr. Wong Chun Hung, Financial Controller, responsible for corporate financial matters and capital management; and Ms. Wu Siu Wai, Company Secretary, responsible for company secretarial, HR, and administrative duties - Mr. Tung Tsz On (54 years old) is the Group's Chief Operating Officer, responsible for R&D, planning, formulating, and overseeing project execution, providing daily technical and expert advice, promoted in August 2023[163][164][169] - Mr. Wong Chun Hung (39 years old) is the Group's Financial Controller, primarily responsible for overall corporate financial matters and capital management, joined in October 2023, with extensive accounting and finance experience[172][173][179] - Ms. Wu Siu Wai (44 years old) is the Company Secretary, responsible for company secretarial matters, human resources, and administrative duties, meeting the qualification requirements of the GEM Listing Rules[175][176][180] Report of Directors The Report of Directors covers general company information, business and operational review, environmental and social commitments, client and supplier concentration, capital and governance matters, and details on directors' and major shareholders' interests General Information The company's principal business is investment holding, with subsidiaries primarily providing M&E engineering solutions and services; the Group recorded a loss for the reporting year, and the Board does not recommend a final dividend; share transfer registration will be suspended from August 2 to August 7, 2024, to determine eligibility for the AGM - The Company's principal business is investment holding, with its subsidiaries primarily engaged in providing M&E engineering solutions and services[185][190] - The Board does not recommend a final dividend for the reporting year (2023: nil)[187][192] - To determine shareholders eligible to attend the Annual General Meeting, the company will suspend share transfer registration from August 2 to August 7, 2024 (both dates inclusive)[188][193] Business and Operational Review The Group is committed to environmental protection and sustainable development, complying with relevant environmental laws during the reporting year; the company maintains good relationships with employees, clients, and suppliers, with no labor disputes; sales to the top five clients accounted for 90.6% of total revenue, and to the largest client 79.6%, indicating high client concentration; purchases from the top five suppliers accounted for 50.2% of total purchases - The Group is committed to environmental protection by avoiding pollution, mitigating negative climate change impacts, and enhancing sustainability, complying with relevant environmental laws and regulations during the reporting year[197][198][202] - The Group maintains good working relationships with employees, with no labor disputes during the reporting year, attracting talent by offering competitive compensation, benefits, and training[206][210] - The Group's clients primarily include public transport operators in Hong Kong and Taiwan, and various Hong Kong government departments, maintaining a business relationship with its largest client since 1978[207][211] FY2024 Key Customer and Supplier Concentration | Metric | FY2024 (%) | FY2023 (%) | | :--- | :--- | :--- | | Sales to Top 5 Clients as % of Total Revenue | 90.6 | 90.4 | | Sales to Largest Client as % of Total Revenue | 79.6 | 74.6 | | Purchases from Top 5 Suppliers as % of Total Purchases | 50.2 | 39.1 | | Purchases from Largest Supplier as % of Total Purchases | 10.9 | 10.4 | Capital and Governance Matters During the period, the Group's property, plant, and equipment changed, share capital remained constant, and distributable reserves were approximately HKD 18.7 million; the Group had HKD 15 million in outstanding bank borrowings; Board members changed, and independent non-executive directors' independence was confirmed; the company has share option and share award schemes to incentivize employees; a lease agreement with related party To Yuen Limited for its Hong Kong headquarters and workshop constituted a connected transaction - As of March 31, 2024, the company's issued share capital was HKD 4,049,600, divided into 404,960,000 shares of HKD 0.01 par value each[95][101] - As of March 31, 2024, the company's distributable reserves to shareholders were approximately HKD 18.7 million (2023: HKD 21 million)[222][230] - As of March 31, 2024, the Group had HKD 15 million in outstanding bank borrowings (2023: nil)[223][231] - Board members changed during the reporting year, with Mr. Chan Chak Lam and Mr. Yu Wing Luk retiring on August 7, 2023; the company has received independence confirmations from its independent non-executive directors[233][234][238][241][243] Directors' and Chief Executives' Interests and Short Positions in Shares (as of March 31, 2024) | Name | Capacity/Nature of Interest | Number of Shares/Related Shares Held/Owned | Long/Short Position | Approx. % Shareholding in Company | | :--- | :--- | :--- | :--- | :--- | | Mr. Luk Kam Ming | Beneficial Owner; Spouse's Interest | 157,000,000 | L | 38.77 | | Mr. Luk Kwai Nung | Interest in Controlled Corporation | 138,000,000 | L | 34.08 | | Mr. Luk Yin Cheung | Interest in Controlled Corporation; Spouse's Interest | 139,000,000 | L | 34.32 | Major Shareholders' Interests and Short Positions in Shares (as of March 31, 2024) | Name | Capacity/Nature of Interest | Number of Shares/Related Shares Held/Owned | Long/Short Position | Approx. % Shareholding in Company | | :--- | :--- | :--- | :--- | :--- | | KML Holdings | Beneficial Owner | 138,000,000 | L | 34.08 | | Ms. Leung | Beneficial Owner; Spouse's Interest | 157,000,000 | L | 38.77 | | Ms. Chan Pui Kwan | Spouse's Interest | 138,000,000 | L | 34.08 | | Ms. Wu | Beneficial Owner; Spouse's Interest | 139,000,000 | L | 34.32 | - The company has a share option scheme and a share award scheme to recognize and incentivize directors and employees; as of the report date, the share option scheme has approximately 3 years and 3 months remaining, and the share award scheme approximately 9 years and 4 months remaining[270][271][280][290][304][310] - During the reporting year, the Group entered into a lease agreement with related party To Yuen Limited for its Hong Kong headquarters and workshop, constituting a connected transaction[326][327][328][332][333][334] Corporate Governance Report This report outlines the company's corporate governance framework, board operations, committee structures, financial reporting, risk management, and other governance matters, demonstrating adherence to GEM Listing Rules Corporate Governance Framework The company is committed to high corporate governance standards, adopting and complying with the GEM Listing Rules' Corporate Governance Code; the Board is responsible for overall leadership, strategic decisions, and business monitoring, delegating daily management, and its composition meets GEM Listing Rules, with a Board Diversity Policy in place - The company has adopted the Corporate Governance Code set out in Appendix C1 of the GEM Listing Rules and complied with all applicable provisions during the reporting year[357][361] - The Board is responsible for the Group's overall leadership, strategic decision-making, and business monitoring, having delegated day-to-day management responsibilities to senior management[358][362] - The Board composition complies with GEM Listing Rules, requiring at least three independent non-executive directors, with at least one possessing professional accounting or relevant financial management expertise, and independent non-executive directors constituting at least one-third of the Board[367][368][374][375] - The company has adopted a Board Diversity Policy, considering factors such as age, culture, educational background, professional experience, skills, and knowledge to ensure a diverse Board[369][375][424][425] Board Operations and Committees The company provides induction training and continuous professional development for new directors; the roles of Chairman and CEO are separate; the Board holds regular meetings and has Audit, Nomination, Remuneration, and Risk Management Committees, each with clear responsibilities and operating procedures to ensure effective corporate governance, with good attendance rates among Board members - The company provides necessary induction training and information to new directors, regularly updates on the latest developments in GEM Listing Rules and other laws, and encourages directors to participate in continuous professional development seminars[379][380][381] - The roles of Chairman and Chief Executive Officer are separate, held by Mr. Luk Kam Ming and Mr. Luk Kwai Nung respectively, with clearly defined responsibilities[384][385] - The Board holds at least four meetings annually, ensuring meeting notices and documents are sent in advance, with minutes thoroughly documenting discussions and decisions[402][403][404][405] FY2024 Board and General Meeting Attendance | Director | Board Meetings (Attended/Held) | General Meetings (Attended/Held) | | :--- | :--- | :--- | | Mr. Luk Kam Ming | 4/4 | 1/1 | | Mr. Luk Kwai Nung | 4/4 | 1/1 | | Mr. Luk Yin Cheung | 4/4 | 1/1 | | Mr. Lau On Kwok | 4/4 | 1/1 | | Mr. Lo Wing Chi | 4/4 | 1/1 | | Dr. Tse Chi Keung | 3/4 | 1/1 | - The Audit Committee is responsible for reviewing the relationship with auditors, examining financial statements, and assessing the effectiveness of financial reporting, risk management, and internal control systems[411][413][414] - The Nomination Committee is responsible for reviewing Board structure, identifying suitable director candidates, assessing the independence of independent non-executive directors, and making recommendations on director appointments and succession planning[416][418][421] - The Remuneration Committee is responsible for recommending remuneration policies and structures for directors and senior management, and reviewing and approving management's remuneration proposals[434][435][436] - The Risk Management Committee is responsible for reviewing the Group's risk management system, including risk, capital, and liquidity management frameworks, and annually reviewing changes in the nature and extent of significant risks and the effectiveness of internal control systems[440][441][444] Financial Reporting and Risk Management The Board confirms its responsibility for preparing true and fair financial statements and ensuring robust risk management and internal control systems; the company has an inside information disclosure policy for timely, confidential disclosure of material information and a dividend policy that considers various factors for dividend distribution - The Board confirms its responsibility for preparing true and fair financial statements and ensuring the Group establishes and maintains robust risk management and internal control systems[452][455] - The company has established an inside information disclosure policy, ensuring timely public disclosure of inside information as soon as reasonably practicable, and strict confidentiality prior to disclosure[461][463][465][468] - The company has adopted a dividend policy, where the Board considers financial performance, retained earnings, working capital needs, future expansion plans, liquidity position, business strategy, and shareholder returns when deciding on dividend distribution[464][466][469][470][478] Other Governance Matters During the reporting year, Ernst & Young provided audit and non-audit services; Ms. Wu Siu Wai, Company Secretary, handled corporate governance and completed professional training; the company prioritizes effective shareholder communication via general meetings and its website, ensuring shareholder rights are protected with all resolutions voted by poll; shareholders can requisition extraordinary general meetings or propose resolutions per the Articles of Association FY2024 Auditor Remuneration | Service Type | Amount (Thousand HKD) | | :--- | :--- | | Audit Services | 1,390 | | Non-Audit Services | 934 | - Ms. Wu Siu Wai, the Company Secretary, advises the Board on corporate governance matters and completed no less than 15 hours of relevant professional training during the reporting year[472][476] - The company promotes effective communication with shareholders through its shareholder communication policy and provides updated information on its website; general meetings offer shareholders direct communication opportunities with directors[473][474][477] - To protect shareholder interests, all general meeting resolutions are voted on by poll, with results published promptly; shareholders may requisition extraordinary general meetings or propose resolutions according to the Articles of Association[482][483][488][489] Independent Auditor's Report This report presents the independent auditor's opinion on the consolidated financial statements, highlighting key audit matters, and outlining the responsibilities of both directors and auditors Auditor's Opinion and Basis Ernst & Young issued an unmodified opinion on KML Technology Group Limited's consolidated financial statements for the year ended March 31, 2024, deeming them to present a true and fair view of the Group's financial position, performance, and cash flows, in compliance with HKFRS and the Hong Kong Companies Ordinance; the audit was conducted according to Hong Kong Standards on Auditing, with auditor independence maintained - Ernst & Young issued an unmodified opinion on the Group's consolidated financial statements for the year ended March 31, 2024[493][497] - The consolidated financial statements present a true and fair view of the Group's consolidated financial position, financial performance, and cash flows in accordance with Hong Kong Financial Reporting Standards issued by the HKICPA, and comply with the disclosure requirements of the Hong Kong Companies Ordinance[493][497] - The audit was conducted in accordance with Hong Kong Standards on Auditing issued by the HKICPA; the auditor is independent of the Group and fulfilled professional ethical responsibilities[494][498] Key Audit Matters Key audit matters for this period include contract revenue and costs from traffic critical system solutions, mobile ticketing and digital payment solutions and services, and M&E technology solutions and engineering services; revenue recognition for these services uses the input method, based on the ratio of actual costs to budgeted contract costs, where budgeted costs involve significant management estimates and uncertainties - Key audit matters include contract revenue and contract costs from traffic critical system solutions, mobile ticketing and digital payment solutions and services, and M&E technology solutions and engineering services[501][504] - Revenue for these services is recognized using the input method, based on the proportion of actual costs incurred to the estimated total contract costs for completing the services, where estimated contract costs involve significant management judgment and uncertainty[502][503][505][506] - Audit procedures included understanding the estimation method for budgeted contract costs, sampling management's estimates, recalculating recognized revenue, and sampling contract costs in direct labor, subcontractor payments, and supplier invoices[508] Responsibilities and Other Information Directors are responsible for preparing true and fair consolidated financial statements and ensuring effective internal controls; auditors' responsibility is to obtain reasonable assurance, identify material misstatement risks, evaluate accounting policies and going concern assumptions, and communicate audit scope and findings with the Audit Committee; no material inconsistencies were found between other information and the consolidated financial statements in the report - The company's directors are responsible for preparing true and fair consolidated financial statements and for internal controls necessary to ensure financial statements are free from material misstatement[512][517] - The auditor's responsibility is to obtain reasonable assurance, identify and assess risks of material misstatement, understand internal controls, evaluate accounting policies and going concern assumptions, and communicate audit scope and significant findings with the Audit Committee[520][522][523][525][526][527][531] - The auditor has read other information in the annual report and found no material inconsistencies or misstatements with the consolidated financial statements or audit knowledge[511][516] Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement presents the Group's financial performance for the year, detailing revenue, cost of sales, gross profit, other income, expenses, and net loss, culminating in total comprehensive loss attributable to owners Consolidated Statement of Profit or Loss and Other Comprehensive Income Summary For the year ended March 31, 2024, the Group's revenue grew to HKD 194.1 million, with gross profit significantly increasing to HKD 29.9 million; despite higher administrative expenses, net loss for the year narrowed substantially to HKD 13.8 million due to impairment loss reversals and no onerous contract provisions Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data | Metric | 2024 (Thousand HKD) | 2023 (Thousand HKD) | | :--- | :--- | :--- | | Revenue | 194,111 | 153,409 | | Cost of Sales | (164,176) | (143,523) | | Gross Profit | 29,935 | 9,886 | | Other Income | 3,729 | 7,326 | | Reversal of Impairment Loss on Financial & Contract Assets / (Impairment Loss) Net | 50 | (5,221) | | Administrative Expenses | (46,473) | (43,479) | | Finance Costs | (810) | (178) | | Loss Before Tax | (13,944) | (32,399) | | Income Tax Credit | 151 | 177 | | Loss for the Year & Total Comprehensive Loss Attributable to Owners of the Company | (13,793) | (32,222) | | Basic Loss Per Share | HK(3.43) HK cents | HK(8.03) HK cents | Consolidated Statement of Financial Position This statement provides a snapshot of the Group's financial position at year-end, detailing assets, liabilities, and equity, reflecting the company's financial health and structure Consolidated Statement of Financial Position Summary As of March 31, 2024, the Group's total assets slightly decreased, with non-current assets down and current assets slightly up; current liabilities significantly rose due to increased bank borrowings and contract liabilities, leading to a reduction in net current assets and total equity; net assets stood at HKD 136.3 million Consolidated Statement of Financial Position Key Data | Metric | 2024 (Thousand HKD) | 2023 (Thousand HKD) | | :--- | :--- | :--- | | Total Non-Current Assets | 14,541 | 21,184 | | Total Current Assets | 188,884 | 185,473 | | Total Current Liabilities | 66,957 | 53,596 | | Total Non-Current Liabilities | 168 | 3,417 | | Net Assets | 136,300 | 149,644 | | Share Capital | 4,050 | 4,050 | | Reserves | 132,250 | 145,594 | | Total Equity | 136,300 | 149,644 | - As of March 31, 2024, total current liabilities increased to HKD 66.96 million, primarily due to HKD 15 million in bank borrowings and an increase in contract liabilities to HKD 15.88 million[534] - As of March 31, 2024, bank balances and cash decreased to HKD 45.57 million (2023: HKD 74.02 million), while pledged bank deposits increased to HKD 24.66 million (2023: HKD 14 million)[534] Consolidated Statement of Changes in Equity This statement illustrates the changes in the Group's total equity over the reporting period, detailing the impact of net loss, share-based payments, and other equity movements Consolidated Statement of Changes in Equity Summary For the year ended March 31, 2024, the Group's total equity decreased from HKD 149.6 million to HKD 136.3 million, primarily due to a HKD 13.8 million loss for the year; equity-settled share option and share award arrangements increased the share-based payment reserve, partially offset by forfeited options and awards transferred to accumulated profits/losses Consolidated Statement of Changes in Equity Key Data | Metric | 2024 (Thousand HKD) | 2023 (Thousand HKD) | | :--- | :--- | :--- | | Total Equity at Beginning of Year | 149,644 | 189,427 | | Loss & Total Comprehensive Loss for the Year | (13,793) | (32,222) | | Equity-settled Share Option Scheme | 202 | — | | Equity-settled Share Award Scheme | 247 | 494 | | Forfeiture of Share Options | (43) | — | | Forfeiture of Share Awards | (53) | (41) | | Vesting of Share Awards | (18) | (391) | | Total Equity at End of Year | 136,300 | 149,644 | - As of March 31, 2024, total equity was HKD 136.3 million, a decrease of HKD 13.34 million from the prior year, primarily due to the loss for the year[536] - Share-based payment reserve increased due to equity-settled share option expense of HKD 0.202 million and share award expense of HKD 0.247 million, but partially offset by forfeiture of share options and share awards transferred to accumulated profits/losses[536] Consolidated Statement of Cash Flows This statement summarizes the Group's cash inflows and outflows from operating, investing, and financing activities for the year, providing insights into liquidity and cash management Consolidated Statement of Cash Flows Summary For the year ended March 31, 2024, the Group generated a net cash outflow of HKD 39.64 million from operating activities, mainly due to increased trade receivables and contract assets; investing activities generated a net cash inflow of HKD 2.49 million, and financing activities a net cash inflow of HKD 8.71 million, primarily from new bank loans; overall cash and cash equivalents decreased by HKD 28.45 million Consolidated Statement of Cash Flows Key Data | Cash Flow Category | 2024 (Thousand HKD) | 2023 (Thousand HKD) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (39,643) | 10,235 | | Net Cash Generated from Investing Activities | 2,485 | 2,649 | | Net Cash Generated From/(Used In) Financing Activities | 8,706 | (14,260) | | Net Decrease in Cash and Cash Equivalents | (28,452) | (1,376) | | Cash and Cash Equivalents at End of Year | 45,569 | 74,021 | - Net cash outflow from operating activities was HKD 39.64 million, primarily impacted by an increase in trade receivables of HKD 25.03 million and contract assets of HKD 9.62 million[539] - Net cash inflow from financing activities was HKD 8.71 million, mainly from new bank loans of HKD 21 million, partially offset by repayment of bank loans of HKD 6 million and principal portion of lease payments of HKD 5.84 million[539] - As of March 31, 2024, cash and cash equivalents were HKD 45.57 million, a net decrease of HKD 28.45 million from the beginning of the year[541] Notes to Consolidated Financial Statements The notes to the consolidated financial statements provide detailed explanations of the Group's financial position, covering changes in accounting policies, significant judgments and estimates, revenue and segment information, other income and gains/losses, finance costs, directors' and employees' remuneration, loss before tax, income tax, dividends, loss per share, property, plant and equipment, leases, financial assets, trade receivables, contract assets and liabilities, bank deposits, payables, bank borrowings, provisions for contract works, deferred tax, joint ventures, share capital, reserves, commitments, related party transactions, retirement benefit schemes, capital risk management, fair value of financial instruments and fair value hierarchy, performance guarantees, notes to cash flow statement, contingent liabilities, share option scheme, share award scheme, and the company's statement of financial position Financial Summary This section presents a five-year summary of the Group's key financial performance indicators, including revenue, profit/loss, assets, liabilities, and equity, offering a historical perspective Five-Year Financial Performance The Group's financial performance over the past five years (FY2020-2024) shows revenue peaking in 2021, then declining before recovering in 2024; pre-tax profit recorded losses in 2022 and 2023, with a narrowed loss in 2024; total assets and liabilities fluctuated, while equity decreased in 2023 and 2024 Five-Year Financial Summary (Thousand HKD) | Metric | 2024 | 2023 | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 194,111 | 153,409 | 162,559 | 224,839 | 224,228 | | Loss Before Tax / Profit Before Tax | (13,944) | (32,399) | 9,653 | 36,457 | 26,535 | | Income Tax Credit / (Expense) | 151 | 177 | (1,768) | (4,460) | (4,923) | | Loss / Profit and Total Comprehensive Loss / Income for the Year Attributable to Owners of the Company | (13,793) | (32,222) | 7,885 | 31,997 | 21,612 | | Total Assets | 203,425 | 206,657 | 233,246 | 253,423 | 236,418 | | Total Liabilities | (67,125) | (57,013) | (43,819) | (61,612) | (70,232) | | Equity Attributable to Owners of the Company | 136,300 | 149,644 | 189,427 | 191,811 | 166,186 |