Dividend Policy - For the fiscal year ended September 30, 2022, Shine Union declared dividends of HK$25.3 million, while Fortune Jet declared HK$0.4 million, totaling HK$25.7 million[37]. - For the fiscal years ended September 30, 2023 and 2024, no dividends were declared by either Shine Union or Fortune Jet, reflecting a shift in dividend policy[37]. - The company intends to retain all available funds and future earnings for business operations and expansion, with no anticipated dividends in the foreseeable future[36]. - The company does not expect to pay dividends in the foreseeable future, which may affect the return on investment for shareholders[36]. - The Company declared dividends of HK$8.0 million for the fiscal year ended September 30, 2022, with no dividends declared for 2023 and 2024[183]. - The company does not expect to pay dividends in the foreseeable future, focusing instead on business development and growth[198]. Financial Performance - Revenues increased from HK$ 136.45 million in 2022 to HK$ 163.69 million in 2023, representing a growth of 20.5%[46]. - Gross profit for 2023 was HK$ 48.04 million, a 22.4% increase compared to HK$ 39.23 million in 2022[46]. - Net income rose to HK$ 9.80 million in 2023, up 18.8% from HK$ 8.25 million in 2022[46]. - For the fiscal years ended September 30, 2022, 2023, and 2024, the company's revenues were HK$136.4 million, HK$163.7 million, and HK$182.2 million (US$23.4 million), respectively[181]. - The net income for the same periods was HK$8.3 million, HK$9.8 million, and HK$10.9 million (US$1.4 million), respectively[181]. Assets and Liabilities - As of September 30, 2022, the company reported total assets of HK$XXX million (exact figure not provided in the content) and total liabilities of HK$XXX million (exact figure not provided in the content)[44]. - Total assets grew significantly from HK$ 93.54 million in 2022 to HK$ 157.08 million in 2024, marking a 77.9% increase[47]. - Total liabilities increased slightly from HK$ 58.02 million in 2023 to HK$ 59.36 million in 2024, indicating a modest growth of 2.3%[47]. - Total shareholders' equity surged from HK$ 56.42 million in 2023 to HK$ 97.72 million in 2024, reflecting a growth of 73.2%[47]. Cash Flow and Management - Cash and cash equivalents at the end of 2024 reached HK$ 52.34 million, a substantial increase from HK$ 16.40 million in 2023[47]. - Net cash provided by operating activities turned positive in 2024 at HK$ 14.10 million, recovering from a negative HK$ 13.54 million in 2023[47]. - The company has implemented an internal cash management policy to ensure financial control and liquidity management, overseen by the Chief Financial Officer[39]. Regulatory Environment - The company has not been identified as a Commission-Identified Issuer under the Holding Foreign Companies Accountable Act, reducing the risk of trading prohibitions in the U.S.[42]. - The PRC government has initiated regulatory actions that could impact business operations, including increased supervision of companies listed overseas[64]. - The company believes it is not currently required to obtain approval from the PRC government for trading its ordinary shares on Nasdaq[63]. - The company is not subject to cybersecurity review by the CAC, as it does not possess a large amount of personal information from mainland China[64]. - The company has determined it is not subject to merger control review by China's anti-monopoly enforcement agency due to its revenue levels[64]. - The implementation of the national security law in Hong Kong could trigger sanctions that may economically harm the company[69]. - The company faces uncertainties regarding the interpretation and enforcement of PRC laws, which could materially affect its operations[70]. - Future government actions in the PRC could significantly limit the company's ability to offer securities to investors, potentially causing a decline in share value[66]. Customer Base and Revenue Sources - For the fiscal years ended September 30, 2022, 2023, and 2024, the company had 319, 351, and 352 recurring customers, representing approximately 72.7%, 79.8%, and 81.5% of the total number of customers, respectively[101]. - Approximately 80.9%, 81.1%, and 61.8% of the company's revenues from security-related engineering services were contributed by recurring customers for the fiscal years ended September 30, 2022, 2023, and 2024, respectively[101]. - Approximately 74.2%, 76.9%, and 88.2% of the company's revenues from security guarding and screening services were contributed by recurring customers for the fiscal years ended September 30, 2022, 2023, and 2024, respectively[101]. - Revenue from private sector projects accounted for 86.8%, 82.3%, and 86.2% of total revenue for the fiscal years ended September 30, 2022, 2023, and 2024, respectively[189]. - Revenue from public sector projects represented 13.2%, 17.7%, and 13.8% for the same fiscal years[189]. Operational Risks - The company may face difficulties in maintaining or improving relationships with recurring customers, which could adversely affect its business and financial condition[104]. - The company relies heavily on contracts from recurring customers, and any decrease or loss of business from these customers may adversely affect its financial condition[101]. - The company is subject to various government and regulatory interferences, which could materially change its operations and the value of its ordinary shares[93]. - The company faces risks related to managing multiple service segments, which may adversely affect business operations and financial condition[139]. - The company has a short operating history in security guarding and screening services, which may lead to difficulties in managing and integrating these operations[141]. - The company may face penalties for manpower shortages if it fails to provide the required number of staff as stated in tender contracts[130]. - The company relies on a stable supply of labor for its services, and any labor shortages or increases in labor costs could harm its business and profitability[124]. Shareholder and Corporate Governance - Directors and officers collectively own 71.2% of the total voting power of the company's outstanding ordinary shares[59]. - The Chairman and CEO, Mr. Chan Ming Dave, owns approximately 9,116,800 ordinary shares, representing about 65.8% of the outstanding shares, giving him significant influence over corporate decisions[208]. - The company’s amended and restated memorandum and articles of association contain anti-takeover provisions that could adversely affect shareholders' rights[207]. - Shareholders have limited rights under Cayman Islands law to inspect corporate records or to requisition general meetings[212]. - The company may face challenges in protecting shareholder interests due to its incorporation under Cayman Islands law, which may differ from U.S. regulations[213]. Internal Controls and Compliance - The company identified material weaknesses in its internal control over financial reporting, including a lack of accounting staff knowledgeable in U.S. GAAP and SEC compliance[223]. - The company is required to include a report on its internal control over financial reporting in its annual report for the fiscal year ending September 30, 2024, as mandated by the Sarbanes-Oxley Act[224]. - The company has taken remedial measures to address identified weaknesses but acknowledges that these may not fully resolve the issues[223]. - Ineffective internal controls could result in material misstatements in financial statements and loss of investor confidence, impacting access to capital markets[225]. - The company may experience increased debt service obligations if it incurs additional indebtedness[226]. - The company’s management may conclude that its internal controls are not effective, which could lead to qualified reports from independent auditors[224]. Market Conditions and Competition - The company faces significant competition in the security-related engineering services industry, which may exert downward pressure on pricing and profit margins[186]. - The trading price of the Company's ordinary shares may be volatile, influenced by various external factors[191]. - Nasdaq may apply additional criteria for continued listing due to the large portion of securities held by insiders[200]. - The market price for the company's ordinary shares could be adversely affected by increased tensions between the United States and China, impacting investor confidence[100]. - The company may experience extreme volatility in its ordinary shares, which could make it difficult for prospective investors to assess their value[201]. Legal and Regulatory Compliance - The company may incur substantial legal and accounting expenses as a public reporting company, particularly after it ceases to qualify as an emerging growth company[221]. - The Cayman Islands' Economic Substance Legislation may impact the company, requiring compliance with economic substance tests[216]. - The company is classified as an "emerging growth company," allowing it to take advantage of reduced reporting requirements under the JOBS Act[217]. - The company does not believe it was a Passive Foreign Investment Company (PFIC) for the fiscal year ended September 30, 2024, but future fluctuations in share price could affect this status[205]. - The company is exempt from certain provisions applicable to U.S. domestic public companies, including quarterly reporting requirements[219].
SU Group(SUGP) - 2024 Q4 - Annual Report