Definición de los niveles

Revenue

Our overall revenue increased by approximately 16.7% from HK$441.8 million for the year ended 31 December 2014 to HK$515.7 million for the year ended 31 December 2015. Such increase was mainly attributable to the increase in the business volume of our Group, which was in line with the increase in demand for integrated systems and maintenance service in Korea.

System integration

Our revenue derived from the system integration segment increased by approximately 11.2% from HK$395.4 million for the year ended 31 December 2014 to HK$439.7 million for the year ended 31 December 2015. Such increase was mainly attributable to the increase in the number of projects undertook by us, from 291 projects for the year ended 31 December 2014 to 342 projects for the year ended 31 December 2015.

Maintenance service

Our revenue derived from maintenance service increased by approximately 63.6% from HK$46.4 million for the year ended 31 December 2014 to HK$76.0 million for the year ended 31 December 2015. In 2015, we entered into two new sizeable maintenance service contracts with Korea government entities. The revenue recognised for each of these projects was over HK$8 million each, which was the main reason for the increase in revenue in this segment.

Cost of sales

Our total cost of sales increased by approximately 16.6% from HK$379.7 million for the year ended 31 December 2014 to HK$442.6 million for the year ended 31 December 2015. Such increase was mainly attributable to the increase in our business volume and was in line with our revenue growth.

Hardware and software components

The cost of hardware and software components was the most significant component of our cost of sales throughout the Track Record Period. Such amount increased by approximately 33.7% from HK$281.1 million for the year ended 31 December 2014 to HK$375.8 million for the year ended 31 December 2015.

The percentage increase in the cost of hardware and software components was higher than the percentage increase in total cost of sales, which was mainly due to the change in the mixture of hardware and software components required for our projects. As discussed below, we incurred less subcontracting cost in 2015 and therefore the percentage of hardware and software components to the total cost rose in 2015.

Direct labour

Direct labour cost increased by approximately 52.7% from HK$17.6 million for the year ended 31 December 2014 to HK$26.9 million for the year ended 31 December 2015. Such increase was mainly attributable to the hiring of additional engineers in response to our business needs. The number of engineers increased from 64 as at 31 December 2014 to 103 as at 31 December 2015.

Subcontracting cost

Subcontracting cost decreased by approximately 51.8% from HK$79.0 million for the year ended 31 December 2014 to HK$38.1 million for the year ended 31 December 2015. In 2014, we undertook several sizeable system integration projects such as projects codenamed P1, P2 and P5 as described in the paragraph headed “1. System Integration — Our top 10 projects” under the section headed “Business”, where the relevant project sites were located in some distanced cities from our office in Seoul. It was more efficient for us to engage subcontractor based in the vicinity of the project sites to handle those projects, which resulted in the subcontracting cost amounting to HK$79.0 million in 2014. As our projects in 2015 were generally located closer to Seoul, we therefore recorded a decrease in our subcontracting cost.

Gross profit and gross profit margin

Our gross profit increased by approximately 17.7% from HK$62.1 million for the year ended 31 December 2014 to HK$73.1 million for the year ended 31 December 2015. Such increase was in line with the increase in our revenue. Our gross profit margin improved slightly from 14.0% for the year ended 31 December 2014 to 14.2% for the year ended 31 December 2015.

System integration

For the system integration segment, our gross profit decreased by approximately 0.4% from HK$47.1 million for the year ended 31 December 2014 to HK$46.9 million for the year ended 31 December 2015. Our gross profit margin also decreased from 11.9% for the year ended 31 December 2014 to 10.7% for the year ended 31 December 2015. Such decrease was mainly attributable to the relatively lower profit margin of the Incheon International Airport Project (the project codenamed P11 in the paragraph headed “1. System Integration — Our top 10 projects” under the section headed “Business” in this prospectus) we undertook in 2015. Owing to the fierce competition we perceived in the tendering process for this project, we priced our services with a lower profit margin as we believe that Incheon International Airport Corporation is a reputable customer which can help improve our market recognition.

Maintenance service

For the maintenance service segment, our gross profit increased by approximately 74.7% from HK$15.0 million for the year ended 31 December 2014 to HK$26.2 million for the year ended 31 December 2015. Such increase was in line with the increase in revenue derived from the maintenance service segment. Our gross profit margin also improved from 32.2% for the year ended 31 December 2014 to 34.4% for the year ended 31 December 2015. Our customers who engaged us in their system integration projects often recognise the quality of our services and request us to provide maintenance service to keep their systems in good working order. As an entrusted service provider to our customers, we were able to price our maintenance service higher which had led to the improvement in the gross profit margin.

Other income

Other income increased by approximately 66.0% from HK$1.2 million for the year ended 31 December 2014 to HK$1.9 million for the year ended 31 December 2015. Such increase was mainly attributable to the receipt of claims awarded by the court in respect of a dispute with our business partner (the “Defendant”) in a completed project. The Defendant and us acted as joint contractors in the said project. For the smooth completion of the project, we settled certain project costs on behalf of the Defendant in 2014. The Defendant subsequently denied reimbursing us for such costs and therefore we brought action against it. The case had been concluded and settled in 2015.

Selling and administrative expenses

Our operating expenses increased by approximately 26.4% from HK$50.1 million for the year ended 31 December 2014 to HK$63.3 million for the year ended 31 December 2015.

Salaries and staff benefits represented the largest component of our operating expenses for both years ended 31 December 2014 and 2015. Such amount increased by approximately 13.2% from HK$28.4 million for the year ended 31 December 2014 to HK$32.1 million for the year ended 31 December 2015, which was mainly attributable to the hiring of additional salespersons along with the expansion of the Group. The number of salespersons increased from 33 as at 31 December 2014 to 44 as at 31 December 2015.

Legal and professional fees increased significantly from HK$1.1 million for the year ended 31 December 2014 to HK$8.5 million for the year ended 31 December 2015. Such increase was mainly attributable to the expenses incurred in 2015 in connection with the Listing, details of which are set forth in the paragraph headed “Listing Expenses” in this section.

Travelling and entertainment expenses increased by approximately 9.4% from HK$5.9 million for the year ended 31 December 2014 to HK$6.4 million for the year ended 31 December 2015. Such increase was in line with the increase in the business activities of our Group, which is consistent with the increase in revenue as well as the increase in the number of staff.

The remaining operating expenses mainly represented rental expenses, miscellaneous office expenses, research and development costs, impairment of trade receivables, insurance costs and exchange losses. Such amount increased by approximately 10.3% from HK$14.7 million for the year ended 31 December 2014 to HK$16.3 million for the year ended 31 December 2015. Such increase was mainly attributable to the increase in rental and management fee expenses as our Group moved to a new office in 2015, and the increase in other office expenses due to the increase in our Group’s business activities.

Finance costs

Finance costs decreased by approximately 28.3% from HK$0.3 million for the year ended 31 December 2014 to HK$0.2 million for the year ended 31 December 2015. Such decrease was mainly attributable to the decrease in interest paid for our Group’s borrowings for the year ended 31 December 2015.

Income tax

Income tax increased by approximately 59.3% from HK$2.1 million for the year ended 31 December 2014 to HK$3.3 million for the year ended 31 December 2015. Despite the decrease in profit before tax, our Group recorded an increase in assessable profits as the expenses incurred in relation to the Listing in 2015 are non-deductible for taxation purpose.

Profit for the year

As a result of the foregoing, our profit for the year decreased by approximately 24.5% from HK$10.8 million for the year ended 31 December 2014 to HK$8.1 million for the year ended 31 December 2015. Despite the increase in our revenue, we incurred significantly higher operating expenses, which included non-recurring expenses in connection with the Listing during the year ended 31 December 2015 and hence led to the decline in our net profit.