Financial Performance - The Group recognized revenue of approximately HK$44.7 million for the year ended 31 May 2020, representing a decrease of approximately HK$49.6 million or 52.6% compared to the year ended 31 May 2019[14]. - The gross profit of the Group for the year ended 31 May 2020 decreased by approximately 94.1% to approximately HK$2.7 million from HK$46.1 million for the year ended 31 May 2019[14]. - The Group's net loss was approximately HK$24.3 million for the year ended 31 May 2020, representing a decrease of approximately HK$46.8 million compared to a net profit of approximately HK$22.5 million for the year ended 31 May 2019[14]. - For the year ended May 31, 2020, the Group recorded revenue of approximately HKD 44.7 million, a decrease of about HKD 49.6 million or 52.6% compared to the previous year[17]. - The Group's gross profit for the year ended May 31, 2020, decreased by approximately 94.1% to about HKD 2.7 million from HKD 46.1 million in the previous year[17]. - The net loss for the year ended May 31, 2020, was approximately HKD 24.3 million, a decrease of about HKD 46.8 million compared to a net profit of HKD 22.5 million in the previous year[17]. - The Group's revenue decreased from approximately HK$94.3 million for the year ended 31 May 2019 to approximately HK$44.7 million for the year ended 31 May 2020, representing a decrease of approximately 52.6%[39]. - The Group's gross profit for the year ended 31 May 2020 was approximately HK$2.7 million, a significant decrease from approximately HK$46.1 million in 2019, resulting in a gross profit margin of approximately 6.1% compared to 48.9% in 2019[92]. - The Group reported a loss of approximately HK$24.3 million for the year ended 31 May 2020, a decrease of approximately HK$46.8 million compared to a profit of approximately HK$22.5 million for the year ended 31 May 2019[95]. Business Operations - The Group was engaged in 269 pop concert shows during the year, a decrease from 420 shows in 2019[22]. - Approximately 66.7% of the Group's total revenue for the year ended May 31, 2020, was derived from pop concerts, down from 74.5% in 2019[23]. - The Group's revenue from other live events, including corporate events and exhibitions, contributes to its overall income alongside pop concerts[26]. - The number of pop concert shows decreased from 420 in 2019 to 269 in 2020 due to the impact of COVID-19[46]. - The number of other live events undertaken by the Group decreased from 961 for the year ended 31 May 2019 to 778 for the year ended 31 May 2020, primarily due to cancellations related to the COVID-19 pandemic[47]. - The Group has been able to conduct new business with shopping malls in Hong Kong by installing large advertising/signage boards in various ready-to-rent shops in the malls[15]. - The Group has successfully engaged in new business with shopping malls in Hong Kong by installing large advertising/signage boards[95]. - The Group is exploring the possibility to expand the application of its visual display solutions to industries other than the live events industry to broaden income sources[15]. - The Group is actively seeking new business opportunities to diversify its revenue sources, including applying visual display solutions in the film industry and installing large advertisements in shopping malls[18]. Financial Risks and Management - The Group's operations are exposed to various financial risks, including cash flow and fair value interest rate risk, foreign exchange risk, credit risk, and liquidity risk[24]. - The success of the Group's business relies on its ability to keep pace with the latest developments in visual display technology to provide cost-effective solutions[25]. - The Group aims to strengthen management governance and open up more business opportunities for diversification[21]. - Management believes that the business will return to normal and potentially experience explosive growth once the COVID-19 pandemic is over[97]. - The Group has maintained a healthy liquidity position throughout the year ended 31 May 2020 by adopting a prudent financial management approach[101]. Cost Structure - For the year ended 31 May 2020, total cost of services was HKD 42,001 million, a decrease from HKD 48,135 million in 2019[83]. - Depreciation expenses accounted for approximately 46.6% of total cost of services in 2020, up from 36.2% in 2019[84]. - Direct labour costs represented approximately 33.4% of total cost of services in 2020, compared to 31.6% in 2019[85]. - Subcontracting charges were approximately 7.8% of total cost of services in 2020, down from 12.0% in 2019[90]. - Freight and logistics expenses accounted for approximately 8.2% of total cost of services in 2020, a decrease from 10.4% in 2019[90]. - Cost of equipment and spare parts represented approximately 1.1% of total cost of services in 2020, down from 2.4% in 2019[90]. - Rental expenses related to lease of equipment were approximately 2.9% of total cost of services in 2020, compared to 7.4% in 2019[90]. - Administrative expenses increased by approximately 49.0% from approximately HK$19.6 million in 2019 to approximately HK$29.2 million in 2020, primarily due to non-recurring professional service fees of HK$7.2 million related to the proposed transfer of listing[92]. Corporate Governance - The Group's corporate governance practices are based on the Corporate Governance Code, ensuring high standards of governance[116]. - The Group has complied with all applicable code provisions of the Corporate Governance Code, except for the separation of roles of chairman and chief executive[117]. - The Board is responsible for formulating the Group's overall strategies and supervising management performance[118]. - The company has adhered to all applicable corporate governance code provisions except for the separation of the roles of Chairman and CEO, which is deemed appropriate for effective management and business development[120]. - The Board comprises five Directors, including two executive Directors and three independent non-executive Directors, ensuring a balance of skills and experience[128]. - The independent non-executive Directors bring diverse expertise and independent judgment to ensure shareholder interests are considered[129]. - The Board has established three committees: Audit, Remuneration, and Nomination, to oversee specific aspects of the company's affairs[134]. - The Audit Committee is responsible for overseeing the effectiveness of the financial reporting process, risk management, and internal control systems of the Group[153]. - The Remuneration Committee, comprising three independent non-executive Directors, is tasked with making recommendations regarding the remuneration policy for all Directors and senior management[154]. - The Nomination Committee is responsible for reviewing the Board's structure, size, and composition, and assessing the independence of non-executive Directors[165]. Taxation and Financial Position - The Group's PRC subsidiaries were subject to a 25.0% Enterprise Income Tax rate during the years ended 31 May 2020 and 2019[92]. - The Hong Kong subsidiary was subject to a profit tax rate of 16.5% on estimated assessable profits for the years ended 31 May 2020 and 2019, with the first HK$2 million of assessable profits taxed at a reduced rate of 8.25%[92]. - The effective income tax rate of the Group decreased to 8.7% for the year ended 31 May 2020, down from 15.1% in 2019[95]. - As of 31 May 2020, the Group's net current assets were approximately HK$13.2 million, a decrease from approximately HK$46.8 million in 2019[98]. - The Group's current ratio was approximately 1.7 as of 31 May 2020, down from approximately 3.0 in 2019[98]. - The maximum limit of banking facilities available to the Group was HK$4.4 million as of 31 May 2020, compared to HK$7.5 million in 2019[98]. - The Group's gearing ratio was approximately 6.8% as of 31 May 2020, compared to approximately 5.2% in 2019[98]. Future Outlook and Investments - The Group completed the procurement of additional LED panels and video control units for business expansion in Shanghai[109]. - A total of 12 staff were recruited for business expansions in Macau as of May 31, 2020[109]. - The Group did not have any significant investments, material acquisitions, or disposals of subsidiaries during the year ended May 31, 2020[104]. - The Group's pledged short-term bank deposits amounted to approximately HK$3.0 million as of May 31, 2020, unchanged from 2019[104]. Shareholder Communication - The Company maintains an open and effective investor communication policy to update investors on relevant business information in a timely manner[197]. - The forthcoming annual general meeting is scheduled for November 3, 2020[198].
耀星科技集团(08446) - 2020 - 年度财报