Financial Performance - The Group reported its annual results for the financial year ended May 31, 2024, amidst ongoing challenges in the bars and restaurants sector [9]. - The Group's revenue for the Reporting Period was approximately HK$89,245,000, representing an increase of approximately 14.4% compared to HK$77,981,000 for the Corresponding Period [16]. - The Group recorded a total comprehensive loss of approximately HK$17,321,000 for the Reporting Period, compared to a profit of approximately HK$5,880,000 for the Corresponding Period [17]. - Revenue from the club and entertainment business increased by approximately HK$11,264,000, or approximately 14.4%, from the previous year [22]. - Revenue from club and entertainment operations increased by approximately HK$11,264,000, or approximately 14.4%, from HK$77,981,000 in the Corresponding Period to HK$89,245,000 in the Reporting Period [28]. - The overall economic rebound in Hong Kong was short-lived, with a shift in tourist spending patterns exerting pressure on the Group's business [65]. - The net loss for the Reporting Period was primarily due to high administration expenses, property rental costs, and write-offs of long-aging receivables [127]. - As of May 31, 2024, total cash and bank balances were approximately HK$1,816,000, down from approximately HK$10,589,000 in 2023, with a current ratio of 0.68 compared to 0.81 in 2023 [40]. Operational Challenges - The introduction of new consumption vouchers by the Hong Kong Government in April and July 2023 aimed to stimulate the economy but did not significantly alleviate sector difficulties [9]. - There was a notable surge in northbound consumption in the latter half of 2023, impacting the Group's business due to a general decline in customers' spending power [9]. - The sports-themed bar, Paper Street, ceased operations in March 2024 due to non-renewal of lease [22]. - The nightclub "FAYE" ceased operations on August 4, 2024, due to lease expiration, and the Company is seeking new venues for its business expansion [56]. - The Group plans to expand its outlet network by establishing more lounges and restaurants in Hong Kong, facing risks such as location identification and securing leases [58]. - The Group plans to expand its network by opening more VIP rooms and restaurants in Hong Kong, facing significant risks such as location selection and recruitment challenges [59]. Cost Management - The increase in operating expenses, including marketing and staff costs, was a significant factor in the loss, outweighing revenue growth [17]. - Advertising and marketing expenses increased by approximately HK$4,546,000, or approximately 45.0%, from HK$10,104,000 for the Corresponding Period to HK$14,650,000 for the Reporting Period [34]. - Employee benefits expenses increased by approximately HK$4,240,000, or approximately 25.6%, from HK$16,569,000 for the Corresponding Period to HK$20,809,000 for the Reporting Period [36]. - Total depreciation increased by approximately HK$7,424,000, or approximately 60.1%, from HK$12,350,000 for the Corresponding Period to HK$19,774,000 for the Reporting Period [37]. - Other expenses increased by approximately HK$4,552,000, or approximately 28.9%, from approximately HK$15,771,000 to approximately HK$20,323,000 due to the closure of "Paper Street" and the opening of Wanchai Amante Shop [40]. Liquidity and Financing - The Group entered into a loan facility agreement for HK$30,000,000 for 24 months to support liquidity needs [45]. - An independent third party lender and ex-shareholder agreed not to request repayment of outstanding amounts of approximately HK$3,089,000 and HK$2,563,000 until November 30, 2025 [45]. - The management is confident that the Group will have sufficient liquidity to finance operations for the next 18 months [46]. - As of May 31, 2024, the Group's net current liabilities and net liabilities were approximately HK$15,248,000 and HK$972,000, respectively, indicating material uncertainty about the Group's ability to continue as a going concern [126]. Corporate Governance - The Company has complied with the CG Code throughout the Reporting Period, except for the deviation regarding the separation of the roles of Chairman and CEO, which is currently held by Mr. Wong Chi Yung [81]. - The Board will continue to review its operations and aims to separate the roles of Chairman and CEO when appropriate to enhance corporate governance independence [82]. - The Board emphasizes transparency, independence, accountability, responsibilities, and fairness to protect shareholders' interests and enhance long-term value [80]. - The Company aims to maximize long-term shareholder value while balancing broader stakeholder interests [95]. - The Board comprises 4 male directors and 2 female directors, reflecting a commitment to diversity [104]. Environmental, Social, and Governance (ESG) Initiatives - The Group emphasizes corporate social responsibility as a core value for sustainable development, balancing business needs with environmental stewardship [159]. - The Board oversees the Group's ESG strategy and risk management, ensuring alignment with sustainability initiatives [163]. - No material breaches of environmental laws or regulations were reported during the reporting period, indicating compliance with applicable standards [162]. - The Group conducts annual materiality assessments to understand stakeholder expectations and prioritize ESG issues [164]. - The Group's total GHG emissions for the reporting period were 152.9 tonnes of CO2e, an increase from 102.2 tonnes in the previous year, representing a 49.5% rise [189]. - The Group aims to reduce GHG emissions intensity by 5% by the year 2028 across all scopes [191]. - The Group promotes energy-saving measures, including encouraging employees to switch equipment to energy-saving mode and turning off lights when not in use [199]. Employee Management - The Group employed 149 employees as of May 31, 2024, compared to 88 employees in 2023, reflecting a significant increase in workforce [64]. - The Group will invest in training, retention, and recruitment programs to encourage self-development among staff [108]. - Employee remuneration packages are reviewed annually and are based on individual performance and market compensation [107]. - The Group aims for continuous improvement in managerial staff performance through monitoring and evaluation [108].
新爱德集团(08412) - 2024 - 年度业绩