剑虹集团控股(01557) - 2025 - 年度业绩

Company Overview Company Basic Information Kim Hung Group Holdings Limited is a Cayman Islands-incorporated investment holding company listed on the Hong Kong Stock Exchange, primarily engaged in foundation and construction services and the sale of chemical products in China, with Mr Chan Yung Shing as the ultimate controlling party - The company was incorporated in the Cayman Islands on July 23, 2015, and listed on the Main Board of the Hong Kong Stock Exchange on March 18, 2016[6] - As an investment holding company, its principal businesses include foundation and construction services, and the sale of chemical products in China[6] - Mr Chan Yung Shing is the ultimate controlling party of the company[6] Basis of Preparation and Going Concern The Group's financial statements are prepared under HKFRS, but a loss of HK$57,592,000, significant net current and total liabilities, and a winding-up petition indicate a material uncertainty regarding its ability to continue as a going concern - The Group incurred a loss of approximately HK$57,592,000 for the year ended March 31, 2025[8] Key Financial Position for FY2025 | Metric | Amount (HK$ '000) | | :--- | :--- | | Net Current Liabilities | (191,632) | | Net Liabilities | (84,204) | - Material uncertainties exist that may cast significant doubt on the Group's ability to continue as a going concern, but management has implemented measures including financial support from the ultimate controlling party, fundraising considerations, business expansion in China, and cost-saving initiatives to ensure working capital for the next 12 months[8][9][11] Adoption of Accounting Standards The Group adopted several new and revised HKFRSs, which had no material impact on its financial position or performance, while the upcoming HKFRS 18 is expected to significantly alter financial statement presentation - The application of new and revised Hong Kong Financial Reporting Standards this year had no material impact on the Group's financial position and performance[12] - HKFRS 18 "Presentation and Disclosure in Financial Statements", effective January 1, 2027, will replace HKAS 1 and introduce significant changes to the income statement structure, management-defined performance measures, and data aggregation categories[14][15] Financial Performance Consolidated Statement of Profit or Loss and Other Comprehensive Income The Group's revenue declined significantly by 26.0% to HK$129,580 thousand, with an expanded gross loss and a sharp drop in other income, leading to an increased loss for the year of HK$57,592 thousand despite lower finance costs Summary of Consolidated Statement of Profit or Loss and Other Comprehensive Income | Metric | 2025 (HK$ '000) | 2024 (HK$ '000) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 129,580 | 175,174 | -26.0% | | Gross Loss | (43,738) | (31,039) | +40.9% | | Other Income | 5,383 | 90,925 | -94.1% | | Gain on Bargain Purchase of a Subsidiary | 40,947 | – | N/A | | Administrative and Other Operating Expenses | (35,376) | (33,584) | +5.3% | | Loss from Operations | (56,101) | (42,381) | +32.4% | | Finance Costs | (946) | (9,179) | -89.7% | | Loss Before Tax | (57,047) | (51,560) | +10.6% | | Loss for the Year | (57,592) | (51,560) | +11.7% | | Basic Loss Per Share (HK cents) | (12.0) | (12.2) | -1.6% | Consolidated Statement of Financial Position The Group's non-current assets surged due to growth in property, plant and equipment and right-of-use assets, but declining current assets and rising current liabilities widened net current liabilities and net liabilities, exacerbating the equity deficit Summary of Consolidated Statement of Financial Position | Metric | 2025 (HK$ '000) | 2024 (HK$ '000) | Change (%) | | :--- | :--- | :--- | :--- | | Non-current Assets | 157,468 | 12,667 | +1143.2% | | Current Assets | 116,479 | 189,322 | -38.5% | | Current Liabilities | 308,111 | 227,597 | +35.4% | | Net Current Liabilities | (191,632) | (38,275) | +400.7% | | Total Assets less Current Liabilities | (34,164) | (25,608) | +33.4% | | Non-current Liabilities | 50,040 | 156 | +31976.9% | | Net Liabilities | (84,204) | (25,764) | +226.8% | | Equity Deficit | (84,204) | (25,764) | +226.8% | Segment Information The Group operates two main segments, with foundation and construction services revenue declining and losses widening, while chemical product sales revenue grew and turned profitable, reflecting a significant shift in assets and liabilities toward the latter - The Group has identified "Foundation and Construction Services" and "Sale of Chemical Products" as its reportable operating segments[17] Operating Segment Revenue and Results The foundation and construction services segment's revenue fell while its losses widened, whereas the chemical product sales segment's revenue increased, turning a prior-year loss into a profit Segment Revenue and Results | Segment | 2025 Revenue (HK$ '000) | 2024 Revenue (HK$ '000) | Revenue Change (%) | 2025 Result (HK$ '000) | 2024 Result (HK$ '000) | Result Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Provision of foundation and construction services | 125,885 | 171,856 | -26.86% | (94,311) | (32,615) | +189.17% | | Sale of chemical products | 3,695 | 3,318 | +11.36% | 173 | (3,089) | N/A (Turned to profit) | | Total | 129,580 | 175,174 | -26.03% | (94,138) | (35,921) | +162.07% | Segment Assets and Liabilities Assets in the foundation services segment decreased while liabilities grew, whereas the chemical products segment saw a substantial increase in both assets and liabilities, indicating significant business expansion Segment Assets and Liabilities | Segment | 2025 Assets (HK$ '000) | 2024 Assets (HK$ '000) | Asset Change (%) | 2025 Liabilities (HK$ '000) | 2024 Liabilities (HK$ '000) | Liability Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Provision of foundation and construction services | 47,323 | 122,208 | -61.28% | 207,059 | 192,897 | +7.34% | | Sale of chemical products | 178,169 | 6,680 | +2567.20% | 69,358 | 7,818 | +787.19% | | Others | 42,289 | 45,450 | -6.95% | – | 1,928 | -100.00% | | Total | 267,781 | 174,338 | +53.61% | 276,417 | 202,643 | +36.41% | Geographical Information Revenue from Hong Kong declined sharply while non-current assets were eliminated, whereas revenue and non-current assets from China grew substantially, indicating a strategic shift in business focus Geographical Revenue and Non-current Assets | Region | 2025 Revenue (HK$ '000) | 2024 Revenue (HK$ '000) | Revenue Change (%) | 2025 Non-current Assets (HK$ '000) | 2024 Non-current Assets (HK$ '000) | Non-current Asset Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Hong Kong | 95,423 | 171,856 | -44.59% | – | 12,636 | -100.00% | | China | 34,157 | 3,318 | +929.60% | 157,468 | 31 | +507861.29% | | Total | 129,580 | 175,174 | -26.03% | 157,468 | 12,667 | +1143.20% | Revenue from Major Customers Revenue from Customer 1 decreased significantly, Customer 2 was no longer a major client in 2025, and two new major customers, Customer 3 and Customer 4, emerged during the year Revenue from Major Customers (Foundation and Construction Services) | Customer | 2025 (HK$ '000) | 2024 (HK$ '000) | | :--- | :--- | :--- | | Customer 1 | 55,588 | 100,009 | | Customer 2 | N/A | 41,209 | | Customer 3 | 39,835 | N/A | | Customer 4 | 16,254 | N/A | Revenue Analysis The Group's total revenue decreased by 26.0% to HK$129,580 thousand, driven by a sharp decline in foundation and construction services, while the value of unfulfilled performance obligations also fell substantially Revenue Analysis | Revenue Source | 2025 (HK$ '000) | 2024 (HK$ '000) | Change (%) | | :--- | :--- | :--- | :--- | | Provision of foundation and construction services | 125,885 | 171,856 | -26.75% | | Sale of chemical products | 3,695 | 3,318 | +11.36% | | Total | 129,580 | 175,174 | -26.03% | - The total amount of unsatisfied performance obligations expected to be recognized in the future has significantly decreased to approximately HK$18,199 thousand (2024: HK$305,204 thousand)[26] Other Income The Group's other income plummeted from HK$90,925 thousand to HK$5,383 thousand, primarily due to a sharp reduction in compensation from the former ultimate holding company under a project performance guarantee Other Income | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | Change (%) | | :--- | :--- | :--- | :--- | | Compensation from former ultimate holding company for write-off of contract assets | 5,000 | 90,000 | -94.44% | | Interest income | 2 | 361 | -99.45% | | Sundry income | 381 | 557 | -31.60% | | Total | 5,383 | 90,925 | -94.08% | - The remaining undrawn guaranteed amount under the project performance guarantee was zero as of March 31, 2025 (2024: HK$5,000 thousand)[27] Finance Costs The Group's finance costs decreased substantially from HK$9,179 thousand to HK$946 thousand, mainly due to a significant reduction in interest expenses on bank borrowings and imputed interest on other borrowings Finance Costs | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | Change (%) | | :--- | :--- | :--- | :--- | | Interest expense on bank borrowings | 906 | 6,154 | -85.28% | | Interest expense on lease liabilities | 77 | 233 | -66.95% | | Imputed interest expense on other borrowings | – | 6,211 | -100.00% | | Total (net of amount attributable to contract works) | 946 | 9,179 | -89.70% | Income Tax Expense The Group incurred a PRC Enterprise Income Tax expense of HK$545 thousand in 2025, compared to none in 2024, and made no provision for Hong Kong Profits Tax due to the absence of assessable profits Income Tax Expense | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | | :--- | :--- | :--- | | PRC Enterprise Income Tax - Provision for the year | 545 | – | - The Group had no assessable profits in Hong Kong, hence no provision for Hong Kong Profits Tax was made[29] Items Deducted from Loss for the Year The loss for the year included higher auditor's remuneration, lower construction material and inventory costs, reduced depreciation, a smaller write-off of contract assets, and a significant new impairment loss on right-of-use assets Summary of Items Deducted from Loss for the Year | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | | :--- | :--- | :--- | | Auditor's remuneration (Total) | 1,480 | 830 | | Cost of construction materials recognised as cost of services | 33,140 | 59,080 | | Cost of inventories recognised as cost of services | 3,515 | 3,153 | | Depreciation of property, plant and equipment | 1,123 | 2,101 | | Depreciation of right-of-use assets | 1,734 | 2,354 | | Write-off of contract assets | 18,008 | 65,932 | | Provision for expected credit losses | 2,627 | 768 | | Impairment of property, plant and equipment | 842 | 1,983 | | Impairment loss on right-of-use assets | 1,840 | – | | Short-term lease payments | 2,701 | 6,126 | Loss Per Share The Group's basic loss per share for the year ended March 31, 2025, was 12.0 HK cents, a slight improvement from 12.2 HK cents in 2024, with no diluted loss per share presented due to the absence of potential dilutive ordinary shares Loss Per Share | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Loss for the purpose of basic loss per share (HK$ '000) | (57,592) | (51,560) | | Weighted average number of ordinary shares for basic loss per share ('000) | 480,000 | 424,044 | | Basic loss per share (HK cents) | (12.0) | (12.2) | - No diluted loss per share was presented as the Company had no potential dilutive ordinary shares for the years ended March 31, 2025 and 2024[34] Details of Financial Position Trade Receivables The Group's net trade receivables decreased slightly, with an increased provision for bad debts, a significant rise in receivables aged over 60 days, and a substantial shift towards RMB-denominated balances Trade Receivables | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | Change (%) | | :--- | :--- | :--- | :--- | | Trade receivables (Gross) | 41,218 | 40,513 | +1.74% | | Less: Provision for bad debts under expected credit losses | (11,098) | (8,571) | +29.48% | | Net | 30,120 | 31,942 | -5.70% | Ageing Analysis of Trade Receivables (Net of Provision) | Ageing | 2025 (HK$ '000) | 2024 (HK$ '000) | Change (%) | | :--- | :--- | :--- | :--- | | 0 to 30 days | 18,188 | 30,466 | -40.30% | | 31 to 60 days | 5,181 | – | N/A | | Over 60 days | 6,751 | 1,476 | +357.38% | | Total | 30,120 | 31,942 | -5.70% | Currency of Trade Receivables | Currency | 2025 (HK$ '000) | 2024 (HK$ '000) | Change (%) | | :--- | :--- | :--- | :--- | | HKD | 13,788 | 30,639 | -54.94% | | RMB | 16,332 | 1,303 | +1153.49% | | Total | 30,120 | 31,942 | -5.70% | Contract Assets and Liabilities The Group's contract assets decreased sharply due to project completions and write-offs, while contract liabilities also plummeted following a reduction in advance payments for construction services Contract Assets | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | Change (%) | | :--- | :--- | :--- | :--- | | From performance of construction contracts | 23,798 | 68,831 | -65.30% | | Less: Provision for contract assets under expected credit losses | (3,185) | (3,152) | +1.05% | | Net | 20,613 | 65,679 | -68.64% | - The decrease in contract assets was mainly due to the completion and finalization of certain construction projects and the write-off of approximately HK$18,008 thousand (2024: HK$65,932 thousand) in contract assets during the year ended March 31, 2025[37] Contract Liabilities | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | Change (%) | | :--- | :--- | :--- | :--- | | Advance settlement for performance obligations - construction contracts | 162 | 11,961 | -98.64% | - The decrease in contract liabilities was mainly due to the reduction in advance payments received from customers for the provision of construction services during the year ended March 31, 2025[42] Trade Payables and Retention Money Payables The Group's total trade and retention money payables increased, with a significant rise in trade payables aged over 90 days, while retention money payable after 12 months was reduced to zero Trade Payables and Retention Money Payables | Item | 2025 (HK$ '000) | 2024 (HK$ '000) | Change (%) | | :--- | :--- | :--- | :--- | | Trade payables | 148,795 | 120,340 | +23.65% | | Retention money payables | 35,065 | 29,381 | +19.35% | | Total | 183,860 | 149,721 | +22.80% | Ageing Analysis of Trade Payables | Ageing | 2025 (HK$ '000) | 2024 (HK$ '000) | Change (%) | | :--- | :--- | :--- | :--- | | 0 to 30 days | 42,930 | 32,298 | +33.08% | | 31 to 60 days | 4,253 | 11,487 | -62.98% | | 61 to 90 days | 1,506 | 1,829 | -17.66% | | Over 90 days | 100,106 | 74,726 | +33.96% | | Total | 148,795 | 120,340 | +23.65% | - As of March 31, 2025, the amount of retention money payables expected to be due after more than twelve months was approximately zero (2024: HK$2,659 thousand)[44] Liquidity and Capital Management Indebtedness and Pledge of Assets The Group's total debt increased to HK$54,061 thousand, with collateral for bank facilities shifting to property, plant and equipment and right-of-use assets, while an unsecured loan from the former ultimate holding company was fully settled Total Indebtedness | Metric | 2025 (HK$ '000) | 2024 (HK$ '000) | Change (%) | | :--- | :--- | :--- | :--- | | Total Indebtedness (including bank borrowings, lease liabilities, and other borrowings) | 54,061 | 25,667 | +110.63% | - As of March 31, 2025, bank facilities were secured by property, plant and equipment of approximately HK$130,342 thousand and right-of-use assets of approximately HK$26,375 thousand[66] - The unsecured loan from the former ultimate holding company was fully settled to zero as of March 31, 2025 (2024: HK$10,000 thousand)[69] Liquidity, Financial Resources and Capital Structure The Group's bank and cash balances decreased, the gearing ratio was not applicable due to an equity deficit, and the current ratio fell from 0.8 to 0.4, indicating increased liquidity pressure Liquidity Metrics | Metric | 2025 (HK$ '000) | 2024 (HK$ '000) | Change (%) | | :--- | :--- | :--- | :--- | | Bank and cash balances | 48,481 | 84,497 | -42.62% | | Current ratio | 0.4 | 0.8 | -50.00% | - The gearing ratio is not applicable as the Group recorded a deficit attributable to the owners of the Company as of March 31, 2025 and 2024[70] - The Group did not use any financial instruments for hedging purposes during the year ended March 31, 2025[71] Use of Proceeds The Company raised net proceeds of approximately HK$29.6 million from a share placement and, due to a winding-up petition, reallocated funds to prioritize the repayment of bank borrowings - The Company completed a placement of 80,000,000 new ordinary shares on November 30, 2023, raising net proceeds of approximately HK$29.6 million[72] - Due to a winding-up petition, the Board reallocated the use of proceeds to prioritize the repayment of bank borrowings[73] Use of Net Proceeds (HK$ million) | Purpose | Available Balance at 1 Apr 2024 | Utilised before Re-allocation | Revised Allocation after Re-allocation | Utilised at 31 Mar 2025 | Unutilised at 31 Mar 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Business development opportunities | 9.6 | – | – | – | – | | General working capital | 14.8 | 0.8 | 11.1 | 6.8 | 4.3 | | Repayment of bank borrowings | – | – | 12.5 | 12.5 | – | | Total | 24.4 | 0.8 | 23.6 | 19.3 | 4.3 | Foreign Exchange Risk The Group faces minimal foreign exchange risk as most transactions are denominated in Hong Kong dollars, and while no hedging policy is in place, it closely monitors currency fluctuations - The Group's exposure to foreign exchange risk is minimal as most of its business transactions, assets, and liabilities are denominated in Hong Kong dollars[75] - If the HKD appreciates by 5% against the RMB, the consolidated loss after tax for 2025 would decrease by approximately HK$1,297 thousand; if it depreciates by 5%, the loss would increase by the same amount[76] Material Investments, Acquisitions or Disposals During the year, the Group acquired a subsidiary for approximately HK$68,614 thousand, added right-of-use assets of HK$2,008 thousand, and disposed of property, plant and equipment for HK$8,666 thousand - Acquisition of a subsidiary for approximately HK$68,614 thousand[77] - Addition of right-of-use assets of approximately HK$2,008 thousand[77] - Disposal of property, plant and equipment for approximately HK$8,666 thousand[77] Dividend The Board of Directors does not recommend the payment of any dividend for the year ended March 31, 2025 - The Board does not recommend the payment of any dividend to shareholders for the year ended March 31, 2025 (2024: Nil)[79] Business Review and Prospects Business Review The Group's foundation and construction services had four ongoing projects, but revenue declined due to project terminations and a cautious bidding approach in Hong Kong, partially offset by strong growth in the China segment - As of March 31, 2025, the Group had 4 ongoing foundation and construction projects[57] - Overall revenue decreased by 26.0% to HK$129,580 thousand, mainly due to the termination of two major projects and a cautious bidding approach amid challenges in the Hong Kong construction industry[58][59] - Revenue from the China segment increased significantly from HK$3,318 thousand to HK$34,157 thousand, partially offsetting the decline in the Hong Kong segment[59] Financial Review The Group's revenue fell 26.0%, gross loss widened by 40.9% with a higher gross loss margin, and other income plunged 94.1%, ultimately increasing the net loss to HK$57,592 thousand despite significantly lower finance costs Key Financial Review Metrics | Metric | 2025 (HK$ '000) | 2024 (HK$ '000) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 129,580 | 175,174 | -26.0% | | Gross Loss | (43,738) | (31,039) | +40.9% | | Gross Loss Margin | 33.8% | 17.7% | +16.1pp | | Other Income | 5,383 | 90,925 | -94.1% | | Provision for expected credit losses | 2,627 | 768 | +242.1% | | Write-off of contract assets | 18,008 | 65,932 | -72.7% | | Finance Costs | 946 | 9,179 | -89.7% | | Net Loss | 57,592 | 51,560 | +11.7% | - The increase in gross loss margin was mainly due to higher construction costs incurred during the completion stage of certain projects in the year ended March 31, 2025[58] Future Prospects Facing a challenging Hong Kong construction market, the Board is exploring the disposal of its Hong Kong foundation business while actively reallocating resources to mainland China through acquisitions to diversify into the chemical and environmental sectors - The Group's Hong Kong foundation business recorded a significant loss due to the complex operating environment in the local construction industry[81][82] - The Board is actively evaluating the potential disposal of its Hong Kong foundation business and exploring new business opportunities in other areas[82] - The Group has completed the acquisition of a construction company in mainland China and acquired 100% of Changzhou Yonghong Group to expand into the chemical and environmental sectors for business diversification[82] - The long-term strategy is to reallocate resources to the mainland China market, focusing on rigorous project evaluation, selective market participation, and maintaining operational flexibility[83] Corporate Governance and Risk Corporate Governance The Company maintained a high level of corporate governance, complying with all code provisions except for the combined role of Chairman and CEO, and a temporary non-compliance with board composition rules which was later rectified - The Company has complied with all code provisions of the Corporate Governance Code as set out in Appendix 14 to the Listing Rules, except for the deviation where the roles of Chairman and Chief Executive Officer are not separated[84] - Following the resignation of Mr Wong Po, the Company temporarily failed to comply with Listing Rules regarding the number of independent non-executive directors and the composition of the Audit and Nomination Committees[85] - Compliance with the relevant Listing Rules was restored upon the appointment of Ms Szeto Tan Nei as an independent non-executive director on April 17, 2025[85] Risk Management and Internal Control Despite lacking a dedicated internal audit department, the Company ensures effective risk management and internal control through management oversight and the engagement of external professionals, with the Board confirming the system's adequacy - The Company does not have an independent internal audit department but fulfills the function through close monitoring by executive directors and senior management, and by engaging an external professional firm[86] - The Board, through the Audit Committee, conducted an annual review of the effectiveness of the risk management and internal control procedures for the year ended March 31, 2025[88] - The Board is satisfied that the internal control procedures applicable to the Group, including financial, operational, and compliance controls, are effective and adequate[88] Litigation and Events After the Reporting Period The Company and its subsidiaries faced several winding-up petitions, most of which have been dismissed after settlement, though one revised petition from Icore International Limited involving approximately HK$2.7 million remains outstanding - The winding-up petitions filed by The Bank of East Asia, Limited against the Company and Kim Hung Foundation were dismissed in September 2024 after the loan was repaid[49][50] - The petition by China Geo-Engineering Corporation against Kim Hung Foundation was dismissed in December 2024 after unsettled subcontracting fees were cleared[50][51][52] - The second petition by Ince & Co against Kim Hung Foundation was dismissed in May 2025 after legal fees were settled[52] - Icore International Limited filed a second amended petition in May 2025 concerning an outstanding amount of approximately HK$2.7 million, with the hearing adjourned to July 16, 2025[53] Employees and Remuneration Policy The Group's employee count decreased to 63, with most staff based in China, and total staff costs amounted to approximately HK$32,928 thousand under a performance-based remuneration policy Employees and Remuneration | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Number of employees | 63 | 81 | | Total staff costs (HK$ '000) | 32,928 | 39,575 | - The majority of the Group's employees are construction workers in China[80] - Remuneration policies and packages are reviewed periodically, with salary increments and discretionary bonuses awarded based on individual performance evaluations[80] Excerpt from the Independent Auditor's Report The independent auditor highlighted a material uncertainty related to going concern, citing the Group's annual loss, net current and total liabilities, and winding-up petitions, without modifying their conclusion on the matter - The auditor draws attention to a material uncertainty related to going concern, citing the Group's loss of approximately HK$57,592 thousand, net current liabilities of HK$191,632 thousand, net liabilities of HK$84,204 thousand, and the winding-up petitions[94] - The auditor's conclusion is not modified in respect of the going concern uncertainty[94] Other Corporate Information The annual results announcement has been published on the websites of the Stock Exchange and the Company, with the annual report to be dispatched to shareholders and published in due course - The annual results announcement is available on the Stock Exchange's website (www.hkexnews.hk) and the Company's website (www.kh-holdings.com)[96](index=96&type=chunk) - The annual report for the year ended March 31, 2025, will be dispatched to shareholders and published on the aforementioned websites in due course in accordance with the Listing Rules[96]