Financial Performance - The Group recorded a historical high revenue of approximately HK$94.3 million for the year ended 31 May 2019, representing an increase of approximately HK$10.7 million or 12.8% compared to the previous year[15]. - The gross profit for the year ended 31 May 2019 increased by approximately 9.5% to approximately HK$46.1 million from HK$42.1 million for the year ended 31 May 2018[15]. - The Group's profit for the year ended 31 May 2019 was approximately HK$22.5 million, an increase of approximately HK$4.6 million compared to approximately HK$17.9 million for the year ended 31 May 2018[15]. - The Group's revenue increased from approximately HK$83.6 million for the year ended May 31, 2018, to approximately HK$94.3 million for the year ended May 31, 2019, representing an increase of approximately 12.8%[33]. - For the year ended 31 May 2019, the Group's gross profit amounted to approximately HK$46.1 million, representing a gross profit margin of approximately 48.9%[84]. - The Group's profit for the year ended 31 May 2019 was approximately HK$22.5 million, an increase of approximately HK$4.6 million compared to HK$17.9 million for the year ended 31 May 2018[90]. - Revenue for Q1 FY19/20 is anticipated to drop by approximately 30% to 35% compared to the same period in 2018, primarily due to a decrease in the number of pop concerts and average revenue per concert[93]. - The Group is expected to record a net loss for Q1 FY19/20, contrasting with a profit of HK$9.5 million for the same period in 2018[98]. - The effective income tax rate of the Group was 15.1% for the year ended 31 May 2019, down from 20.3% in 2018[88]. Revenue Sources - Approximately 74.5% of the Group's total revenue for the year ended May 31, 2019, was derived from pop concerts, down from 88.7% in 2018[23]. - Visual display solutions accounted for approximately 99.5% of the Group's total revenue in 2019, slightly down from 99.6% in 2018[33]. - Revenue from pop concerts decreased due to a drop in average revenue per show from approximately HK$203,000 in 2018 to approximately HK$167,000 in 2019[41]. - The number of shows for pop concerts decreased, while the number of other live events increased from 300 in 2018 to 961 in 2019, primarily due to more corporate events undertaken in the PRC and Macau[42]. - Total revenue from visual display solutions for the year ended May 31, 2019, was HK$93.8 million, with 1,381 shows conducted[40]. - The number of other live events increased significantly to 381 in Macau, up from 30 in 2018, contributing to a total revenue of HK$12,975,000 from Macau[66]. - Total revenue from other live events was HK$23,562,000, with Hong Kong contributing HK$10,535,000, which accounted for 44.7% of total revenue from other live events[66]. Cost Structure - The Group's total cost of services for the year ended 31 May 2019 was HK$48,135,000, an increase from HK$41,463,000 in 2018[75]. - Direct labour costs represented approximately 31.6% of total cost of services for the year ended 31 May 2019, compared to 34.4% in 2018[77]. - Depreciation expenses for visual display equipment accounted for approximately 36.2% of total cost of services in 2019, slightly up from 35.7% in 2018[76]. - Subcontracting charges represented approximately 12.0% of total cost of services for the year ended 31 May 2019, down from approximately 13.2% in 2018[82]. - Freight and logistics expenses accounted for approximately 10.4% of total cost of services in 2019, up from approximately 9.1% in 2018[82]. - Equipment rental charges represented approximately 7.4% of total cost of services for the year ended 31 May 2019, compared to approximately 4.4% in 2018[82]. - Cost of equipment and spare parts represented approximately 2.4% of total cost of services in 2019, down from approximately 3.2% in 2018[82]. Business Strategy and Expansion - Net proceeds from the Share Offer amounted to approximately HK$34.5 million, which will support business strategies including expansion in Macau and enhancing corporate event solutions[16]. - The Group aims to broaden income sources by exploring applications of visual display solutions in industries beyond live events[17]. - The Group plans to develop a tracking system to enhance equipment management and utilization[19]. - The Group has established a wholly owned subsidiary in Macau to enhance revenue generation from live events[67]. - The Group successfully completed the procurement of additional LED panels and video control units as part of its business expansion strategy in Shanghai[111]. - A total of 12 staff were recruited for business expansions in Macau, aligning with the Group's strategic growth plans[111]. Corporate Governance - The Company has complied with all applicable code provisions of the Corporate Governance Code, except for the separation of the roles of chairman and chief executive officer[126]. - The Board consists of five Directors, including two executive Directors and three independent non-executive Directors, ensuring a balance of skills and experience[135]. - The management is responsible for day-to-day operations and must report significant matters to the Board for prior approval[131]. - The Board is committed to high standards of corporate governance to safeguard and enhance shareholders' interests[125]. - The Company has established an Audit Committee comprising three independent non-executive Directors to oversee the financial reporting process and internal control systems[167]. - The Audit Committee has recommended the re-appointment of PricewaterhouseCoopers as the Company's auditors for the financial year ending May 31, 2019, subject to shareholder approval[170]. - The Remuneration Committee, consisting of three independent non-executive Directors, is responsible for determining the remuneration policy for all Directors and senior management[176]. - The Company emphasizes the importance of continuous professional development for all Directors to enhance their knowledge and skills[158]. Risk Management - The Group faces various financial risks, including cash flow and foreign exchange risks, which are detailed in the annual report[23]. - The Group's critical information management is overseen by executive directors and key management to mitigate risks of data fraud or theft[34]. - The Group has implemented anti-virus software and internet firewalls to protect against cyber-attacks[34]. - The overall market risk control framework is monitored by the Group's executive directors to address adverse factors affecting performance[34].
耀星科技集团(08446) - 2019 - 年度财报