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                As of               As of

                                                                                                                                           September 30,              March 31,           March 31,
                                                                                                                                      2023           2024     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                                                      120,000          132,500     16,931


         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.)



     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                                               56,424,541       90,585,749 11,575,418


     
                  shareholders' equity



     
              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                                        9,997,960       10,123,869               1,293,669


     
                    ordinary shareholders





     
                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