SU Group Holdings Reports First Half Fiscal Year 2024 Results

- 11.7% YoY Increase in Security Guarding and Screening Services Segment Revenues
- Cash and Cash Equivalents Increase Nearly 200% YoY

HONG KONG, July 1, 2024 /PRNewswire/ -- SU Group Holdings Limited (Nasdaq: SUGP) ("SU Group" or the "Company"), an integrated security-related engineering services company in Hong Kong, today announced financial results for the six months ended March 31, 2024. All U.S. dollar figures cited in this press release are based on the exchange rate of HK$7.8257 against US$1.00 as of March 29, 2024.

SU Group's Chairman and CEO, Dave Chan, commented, "Our business fundamentals remain strong, supported by our expanding portfolio of security-related engineering services and a strengthened balance sheet following our successful IPO on Nasdaq in January 2024. On a segment basis, we achieved an 11.7% increase in revenues year over year from security guarding and screening services for the six months ending March 31, 2024, compared to the same period last year. Our total revenue, which declined slightly year over year, would have been meaningfully higher if not for the timing shift of certain contracts to the second half of the year. Additionally, we absorbed the impact of a significant, non-recurring government contract recognized in the previous period but not in the current one."

SU Group's Chief Financial Officer, Calvin Kong, noted, "We continue to execute our financial model effectively, with increased revenue from higher-margin segments driving a 4.4% increase in gross profit for the six months ending March 31, 2024, compared to the same period last year. Importantly, our cash and cash equivalents increased nearly 200%, following the successful completion of our initial public offering earlier this year, giving us the resources to support our long-term growth. We remain focused on expanding our gross margins and enhancing operational efficiency as we strive to build value for all shareholders."

"We are in an exciting phase of our company's development, working to leverage our core business platform to drive accelerated growth," added SU Group's Chairman and CEO, Dave Chan. "We will continue to expand our portfolio of security-related engineering services, enhance our position through new strategic partnerships, and capture increased revenue opportunities in our target higher-margin segments. We aim to build upon our advantaged position with customers as we move forward."

Financial Results for the Six Months Ended March 31, 2024

Revenues decreased by approximately 5.4% to approximately HK$91.8 million for the six months ended March 31, 2024, from approximately HK$97.0 million for the six months ended March 31, 2023. The decline reflects a shift in timing of certain contracts from being recognized as revenue in the six months ended March 31, 2024 to now being expected to be recognized as revenue in the six months ended December 31, 2024, combined with the impact of a material non-recurring government contract that was recognized as revenue in the six months ended March 31, 2023 but not in the six months ended March 31, 2024. Revenues from provision of security guarding and screening services increased 11.7% to HK$35.6 million for the six months ended March 31, 2024, from HK$31.9 million for the six months ended March 31, 2023. Revenues from project and maintenance decreased 12.4% to HK$53.6 million for the six months ended March 31, 2024, from HK$61.1 million for the six months ended March 31, 2023. Revenues from equipment leasing decreased 34.1% to HK$2.6 million for the six months ended March 31, 2024, from HK$4.0 million for the six months ended March 31, 2023.

Cost of revenues decreased by 8.8% to HK$65.2 million for the six months ended March 31, 2024, from HK$71.5 million for the six months ended March 31, 2023, mainly due to a change in the contract size mix of the security-related engineering services performed.

Gross profit increased by 4.4% to HK$26.6 million for the six months ended March 31, 2024,  from HK$25.5 million for the six months ended March 31, 2023, mainly resulting from the decrease in cost of revenues.

Selling, general and administrative expenses increased by 12.7% to HK$15.6 million for the six months ended March 31, 2024, from HK$13.8 million for the six months ended March 31, 2023. The increase was mainly due to higher professional service fees required for the Company being a public entity.

Losses on disposal of property and equipment decreased by 20.7% to HK$0.6 million for the six months ended March 31, 2024, from HK$0.8 million for the six months ended March 31, 2023, mainly due to a decrease in the number of X-ray machines disposed.

Other income decreased by 26.8% to HK$0.8 million for the six months ended March 31, 2024, from HK$1.1 million for the six months ended March 31, 2023. The decrease was mainly due to a decrease in government subsidies.

Income tax expenses decreased by 45.0% to HK$1.0 million for the six months ended March 31, 2024, from HK$1.8 million for the six months ended March 31, 2023. The decrease was mainly due to a decrease in income before income tax and the reduction of assessable profits of certain subsidiaries since certain expenses incurred by the Company for and on behalf of the group were allocated to the subsidiaries.

Net income was HK$10.1 million (US$1.3 million) for the six months ended March 31, 2024, compared to HK$10.1 million for the six months ended March 31, 2023.

The Company had a balance of cash and cash equivalents of HK$47.2 million (US$6.0 million) with working capital of approximately HK$77.0 million (US$9.9 million), as of March 31, 2024.

About SU Group Holdings Limited

SU Group (Nasdaq: SUGP) is an integrated security-related services company that primarily provides security-related engineering services, security guarding and screening services, and related vocational training services in Hong Kong. Through its subsidiaries, SU Group has been providing turnkey services to the existing infrastructure or planned development of its customers through the design, supply, installation, and maintenance of security systems for over two decades. The security systems that SU Group provides services include threat detection systems, traffic and pedestrian control systems, and extra-low voltage systems in private and public sectors, including commercial properties, public facilities, and residential properties in Hong Kong. For more information visit www.sugroup.com.hk.

Forward-Looking Statements

Certain statements in this press release are forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company's current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as "anticipate," "estimate," "plan," "project," "continuing," "ongoing," "expect," "we believe," "we intend," "may," "should," "will," "could" and similar expressions. These statements are subject to uncertainties and risks including, but not limited to, the following: the Company's ability to renew contracts with recurring customers; the Company's ability to secure new contracts; the Company's ability to accurately estimate risks and costs and perform contracts based on the Company's estimates; the Company's relationship with the Company's suppliers and ability to manage quality issues of the systems; the Company's ability to obtain or renew the Company's registrations, licenses, and certificates; the Company's ability to manage the Company's subcontractors; the labor costs and the general condition of the labor market; the Company's ability to effectively manage inventories; the Company's ability to compete effectively; the Company's dependence on a small number of suppliers for a substantial portion of the Company's supplies; the Company's ability to successfully manage the Company's capacity expansion and allocation in response to changing industry and market conditions; implementation of the Company's expansion plans and the Company's ability to obtain capital resources for planned growth; the Company's ability to acquire sufficient products and obtain equipment and services from the Company's suppliers in suitable quantity and quality; the Company's dependence on key personnel; the Company's ability to expand into new businesses, industries, or internationally and to undertake mergers, acquisitions, investments, or divestments; changes in technology and competing products; general economic and political conditions, including those related to the security-related engineering services industry; possible disruptions in commercial activities caused by events such as natural disasters, terrorist activities, political, economic, and social instability, and fluctuations in foreign currency exchange rates, and assumptions underlying or related to any of the foregoing and other risks contained in reports filed by the Company with the Securities and Exchange Commission (the "SEC"), including the Company's most recently filed Annual Report on Form 20-F and its subsequent filings. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and other filings with the SEC.

 

(Financial Tables Follow)

 

SU GROUP HOLDINGS LIMITED UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
		As of  September 30, 2023			As of  March 31, 2024			As of  March 31, 2024
		HK$			HK$			US$
Assets
Current assets
Cash and cash equivalents		16,400,123			47,221,060			6,034,100
Trade receivables, net		34,978,153			30,647,497			3,916,263
Inventories		40,919,214			44,977,581			5,747,420
Prepaid expenses and other current assets		1,590,259			6,645,049			849,132
Contract assets		3,187,403			6,176,549			789,265
Prepaid income tax		—			907,025			115,903
Total current assets		97,075,152			136,574,761			17,452,082
Non-current assets
Property and equipment, net		8,405,563			7,563,170			966,453
Intangible assets, net		144,879			102,379			13,082
Goodwill		1,271,160			1,271,160			162,434
Prepaid expenses and other non-current assets		—			2,485,909			317,660
Deferred offering expenses		3,853,500			—			—
Operating lease right-of-use assets, net		1,113,926			2,441,475			311,982
Investment in key management insurance policy		1,157,520			1,157,520			147,913
Deferred tax assets		1,418,419			1,595,125			203,832
Total non-current assets		17,364,967			16,616,738			2,123,356
TOTAL ASSETS		114,440,119			153,191,499			19,575,438
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade payables		16,104,581			6,826,897			872,369
Notes payables		3,503,768			2,738,293			349,910
Other payables		2,633,447			3,669,077			468,850
Accrued payroll and welfare		8,228,964			7,706,548			984,774
Operating lease liabilities – current		204,156			1,012,762			129,415
Income tax payable		1,058,040			—			—
Contract liabilities		22,748,443			37,570,236			4,800,879
Total current liabilities		54,481,399			59,523,813			7,606,197
Non-current liabilities
Operating lease liabilities – non-current		61,229			591,272			75,555
Other payables – non-current		996,069			600,525			76,738
Deferred tax liabilities		1,468,575			1,299,223			166,020
Other liabilities		1,008,306			590,917			75,510
Total non-current liabilities		3,534,179			3,081,937			393,823
Total liabilities		58,015,578			62,605,750			8,000,020
Commitments and contingencies
Shareholders' equity
Ordinary shares (par value of HK$0.01 per share; 750,000,000 ordinary     shares authorized and 12,000,000 and 13,647,500 ordinary shares     issued and outstanding as of September 30, 2023 and March 31, 2024,     respectively.)		120,000			132,500			16,931
Shares subscription receivables		(119,990)			(90)			(12)
Additional paid-in capital		14,642,029			39,691,720			5,071,971
Retained earnings		41,782,502			50,761,619			6,486,528
Total SU Group Holdings Limited shareholders' equity and total     shareholders' equity		56,424,541			90,585,749			11,575,418
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		114,440,119			153,191,499			19,575,438

 

 

SU GROUP HOLDINGS LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
		For the Six Months Ended March 31,
		2023			2024			2024
		HK$			HK$			US$
Revenues		97,043,825			91,845,615			11,736,409
Cost of revenues		(71,545,676)			(65,231,088)			(8,335,496)
Gross profit		25,498,149			26,614,527			3,400,913
Operating expenses
Selling, general and administrative expenses		(13,835,332)			(15,598,350)			(1,993,221)
Losses on disposal of property and equipment		(802,010)			(636,289)			(81,308)
Income from operations		10,860,807			10,379,887			1,326,384
Other income (expenses)
Other income		1,053,080			771,005			98,522
Finance expenses		(36,798)			(50,854)			(6,498)
Total other income, net		1,016,282			720,151			92,024
Income before income tax expenses		11,877,089			11,100,038			1,418,408
Income tax expenses		(1,773,354)			(976,169)			(124,739)
Net income		10,103,735			10,123,869			1,293,669
Less: Net income attributable to non-controlling interests		(105,775)			—			—
Net income attributable to SU Group Holdings Limited's     ordinary shareholders		9,997,960			10,123,869			1,293,669
Net income per share
Basic and diluted		0.83			0.81			0.10
Weighted average number of shares
Basic and diluted		12,000,000			12,464,481			12,464,481

 

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SOURCE SU Group Holdings Limited

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