Financial Performance - For the financial year ended 31 May 2019, the Group recorded a revenue decrease of approximately 4.0%, from approximately HK$85.3 million in 2018 to approximately HK$81.9 million in 2019[26]. - The Group reported a loss of approximately HK$27.5 million for the year ended 31 May 2019, compared to a loss of approximately HK$25.8 million for the year ended 31 May 2018[26]. - The loss was primarily due to decreased revenue from restaurant operations, increased property rentals and related expenses, and significant impairment losses on goodwill and property, plant, and equipment[26]. - Excluding non-cash items, the adjusted loss and total comprehensive expenses decreased by 17.9% to approximately HK$17.0 million for the year ended May 31, 2019[52]. - The Group's operating loss before working capital changes for the year ended May 31, 2019, was narrower than the prior year due to cost minimization measures[34]. - Loss before income tax increased from approximately HK$23.9 million for the year ended 31 May 2018 to approximately HK$27.7 million for the year ended 31 May 2019[102]. - Loss and total comprehensive expenses increased from approximately HK$25.8 million for the year ended 31 May 2018 to approximately HK$27.5 million for the year ended 31 May 2019[102]. - The Group recorded net cash generated from operating activities of approximately HK$1.2 million for the year ended 31 May 2019, a significant improvement from net cash used of approximately HK$49.2 million for the year ended 31 May 2018[102]. - As at 31 May 2019, the Group's total cash and bank balances were approximately HK$29.8 million, down from approximately HK$35.7 million in 2018[102]. - The current ratio decreased from approximately 1.6 times as at 31 May 2018 to approximately 1.0 times as at 31 May 2019[102]. - The equity attributable to owners of the Company amounted to approximately HK$15.8 million as at 31 May 2019, down from approximately HK$42.6 million in 2018[105]. Revenue Breakdown - For the year ended May 31, 2019, the Group's revenue was approximately HK$81.9 million, representing a decrease of approximately 4.0% compared to HK$85.3 million for the year ended May 31, 2018[30]. - Revenue from clubbing and entertainment operations increased by approximately HK$0.8 million, or approximately 1.2%, from approximately HK$66.7 million for the year ended 31 May 2018 to approximately HK$67.5 million for the year ended 31 May 2019[60]. - Revenue from restaurant operations decreased by approximately HK$4.2 million, or approximately 22.7%, from approximately HK$18.6 million for the year ended 31 May 2018 to approximately HK$14.4 million for the year ended 31 May 2019[70]. - Clubbing and entertainment operations accounted for 82.4% of total revenue in 2019, compared to 78.2% in 2018[81]. - As of May 31, 2019, revenue from Volar accounted for approximately 60.1% of total revenue, down from 64.9% in the previous year[120]. Operational Challenges and Strategies - The overall business environment is expected to become more challenging due to the impact of US-China trade tensions and local political issues on consumer spending[36]. - The Group plans to enhance operational efficiency and strengthen cost control measures in response to challenges posed by global economic uncertainties and local political turmoil[36]. - The Group plans to strengthen its market position by upgrading club facilities, refining business strategies, and enhancing operational efficiency[72]. - The ongoing US-China trade tensions and local political turmoil are expected to continue affecting consumption and the overall business environment in Hong Kong[71]. - Operational difficulties that lead to temporary or permanent closure of venues could significantly impact financial performance[124]. Corporate Governance - The Board is committed to high standards of corporate governance, emphasizing transparency, independence, accountability, responsibilities, and fairness[175]. - The Company has complied with the Corporate Governance Code throughout the year ended 31 May 2019[176]. - The Board is responsible for formulating strategies, monitoring performance, and managing risks of the Group[179]. - The Board comprises seven Directors, including Executive, Non-Executive, and Independent Non-Executive Directors[188]. - The company has established various committees to enhance oversight and strategic direction, including audit, remuneration, and nomination committees[165]. - The independent non-executive directors play a crucial role in overseeing the company's financial reporting and compliance matters[165]. Management and Leadership - The Group's strategic direction is primarily formulated by its executive directors, including Mr. Ng and Ms. Lau, focusing on industry trends and operational challenges[150]. - The management team includes professionals with extensive backgrounds in both finance and the food and beverage industry, enhancing the Group's operational capabilities[153]. - The Group's leadership is committed to strategic business planning and legal compliance, ensuring robust governance and operational efficiency[158]. - The executive team is focused on leveraging their industry experience to navigate competitive challenges and drive growth[150]. Expansion and Market Position - The Group opened a sports-themed bar, Paper Street, on 20 July 2018, and an entertainment studio, Maximus Studio, on 21 January 2019, contributing to revenue growth[60]. - The company is actively conducting feasibility studies for further expansion of its outlet network[120]. - The company has established a project team to explore potential locations for new outlets, focusing on accessibility, visibility, and demographics[118]. - The competitive nature of the food and beverage industry in Hong Kong poses risks to the successful opening of new outlets[120]. - The company faces challenges in securing suitable locations and necessary governmental approvals for new establishments[120]. Employee and Operational Costs - Employee benefits expenses decreased by approximately HK$4.0 million, or 14.9%, from approximately HK$27.2 million for the year ended 31 May 2018 to approximately HK$23.2 million for the year ended 31 May 2019[95]. - The company reduced its workforce from 125 to 102 employees, reflecting a reduction in employee benefit expenses[146]. - Advertising and marketing expenses decreased by approximately HK$2.9 million, or 20.2%, from approximately HK$14.1 million for the year ended 31 May 2018 to approximately HK$11.2 million for the year ended 31 May 2019[93]. - Property rentals and related expenses increased by approximately HK$1.5 million, or 6.1%, from approximately HK$25.2 million for the year ended 31 May 2018 to approximately HK$26.7 million for the year ended 31 May 2019[88]. Supplier Dependency and Risks - Purchases from the largest supplier accounted for approximately 53.4% and 51.4% of total purchases for the years ended 31 May 2018 and 2019, respectively, indicating a high dependency on a single supplier[126][128]. - The company is exposed to fluctuations in the commercial real estate market due to leasing all properties, which may lead to significant risks including increased vulnerability to adverse economic conditions and reduced cash availability for other purposes[125][127].
新爱德集团(08412) - 2019 - 年度财报