FINANCIAL HIGHLIGHTS Financial Results The Group's FY2025 revenue grew 47.9% to HKD 929.24 million, but it incurred an HKD 89.84 million annual loss, reversing last year's profit, with basic loss per share at 5.02 HK cents | Metric | 2025 (HKD thousands) | 2024 (HKD thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 929,235 | 628,236 | 47.9% | | Gross Profit | 58,989 | 61,091 | -3.4% | | (Loss) Profit for the Year | (89,835) | 32,061 | -380.2% | | (Loss) Profit Attributable to Owners of the Company | (80,707) | 2,863 | -2,919.0% | | (Loss) Earnings Per Share (HK cents) | (5.02) | 0.18 | -2,888.9% | | EBITDA | (48,298) | 73,748 | -165.5% | - The Board did not recommend a final dividend for the year ended March 31, 20255 Financial Position As of March 31, 2025, the Group's gearing ratio sharply increased to 196.2%, and the current ratio declined to 89.8%, indicating heightened solvency pressure | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Gearing Ratio (%) | 196.2% | 118.4% | | Current Ratio (%) | 89.8% | 104.2% | | Cash and Cash Equivalents (HKD thousands) | 115,170 | 37,321 | | Net Assets (HKD thousands) | 377,655 | 466,479 | Consolidated Financial Statements CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FY2025 revenue reached HKD 929.24 million, but increased costs, reduced other income, and higher credit loss provisions led to an HKD 89.84 million annual loss | Item (HKD thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | 929,235 | 628,236 | | Gross Profit | 58,989 | 61,091 | | Other Income and Gains, Net | 11,022 | 81,744 | | Impairment losses under expected credit loss model | (35,217) | (1,805) | | Administrative Expenses | (110,962) | (97,160) | | (Loss) Profit Before Tax | (92,710) | 31,784 | | (Loss) Profit for the Year | (89,835) | 32,061 | - Total comprehensive expense for the year was HKD 91.59 million, compared to total comprehensive income of HKD 5.98 million in the prior year, primarily impacted by the annual loss and exchange differences from translating foreign operations12 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As of March 31, 2025, total assets reached HKD 1.21 billion, but current liabilities exceeded current assets by HKD 44.76 million, indicating increased short-term liquidity pressure | Item (HKD thousands) | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Total Non-Current Assets | 816,760 | 752,678 | | Total Current Assets | 394,828 | 351,391 | | Total Assets | 1,211,588 | 1,104,069 | | Total Current Liabilities | 439,585 | 337,384 | | Total Non-Current Liabilities | 394,348 | 300,206 | | Total Liabilities | 833,933 | 637,590 | | Net Current (Liabilities) / Assets | (44,757) | 14,007 | | Net Assets | 377,655 | 466,479 | NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. GENERAL INFORMATION and 2. APPLICATION OF NEW AND AMENDMENTS TO HKFRS ACCOUNTING STANDARDS The Group, primarily in construction and environmental businesses, applied new HKFRS amendments this year with no significant financial impact, and did not early adopt other new standards - The Group primarily operates in two business segments: construction engineering and environmental protection2225 - HKFRS amendments concerning lease liabilities, liability classification, and supplier financing arrangements were first applied this year, with no material impact on financial statements2329 3. BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS Despite preparing on a going concern basis, the Group's HKD 80.71 million loss and HKD 44.76 million net current liabilities raise significant going concern doubts, though management has implemented mitigating measures - As of March 31, 2025, the Group recorded a loss attributable to owners of HKD 80.71 million and net current liabilities of HKD 44.76 million, raising significant doubt about its ability to continue as a going concern4546 - To address liquidity risks, management has secured HKD 40 million in standby credit, implemented cost savings, negotiated loan extensions, and accelerated accounts receivable collection47 4. REVENUE, OTHER INCOME AND GAINS, NET FY2025 total revenue was HKD 929.24 million, driven by construction growth, but net other income significantly declined due to the absence of a prior-year non-cash gain | Revenue Source (HKD thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Construction Business | 832,123 | 511,281 | | Environmental Protection Business | 97,112 | 116,955 | | Of which: Food Waste Treatment | 94,032 | 74,329 | | Of which: New Energy Materials | 3,080 | 42,626 | | Total Revenue | 929,235 | 628,236 | - Net other income and gains sharply decreased from HKD 81.74 million to HKD 11.02 million, primarily due to a non-cash gain of HKD 52.95 million from patent technology injection into an associate recognized in the prior year not recurring this year5255 - Customer A (construction business) was the Group's major client, contributing HKD 740 million, or 79.6% of total revenue72 - By geographical segment, Hong Kong was the primary source of revenue, contributing HKD 854 million, or 91.9% of total revenue75 5. FINANCE COSTS FY2025 finance costs slightly rose to HKD 12.47 million, driven by increased interest expenses on borrowings, partially offset by capitalized interest | Item (HKD thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Total Interest Expense | 17,955 | 17,140 | | Less: Capitalized Interest | (6,155) | (5,170) | | Net Finance Costs | 12,469 | 11,970 | 6. (LOSS) PROFIT BEFORE TAX The Group's pre-tax (loss) profit was significantly impacted by increased construction costs and new write-offs for receivables | Key Expense Items (HKD thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Construction Costs | 800,132 | 502,384 | | Total Staff Costs | 134,628 | 134,369 | | Depreciation and Amortization | 31,943 | 29,994 | | Write-off of Retention Receivables | 4,225 | — | | Write-off of Other Receivables | 4,338 | — | 7. INCOME TAX (CREDIT) EXPENSE The Group recorded an HKD 2.88 million income tax credit in FY2025, mainly due to recognized deferred tax credits | Item (HKD thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Expense for the Year | 2,057 | 8 | | Deferred Tax | (4,932) | (285) | | Total Income Tax Credit for the Year | (2,875) | (277) | 8. (LOSS) EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE COMPANY FY2025 loss attributable to owners was HKD 80.71 million, resulting in basic and diluted loss per share of 5.02 HK cents, with no dilutive effect | Item | 2025 | 2024 | | :--- | :--- | :--- | | (Loss) / Profit Attributable to Owners (HKD thousands) | (80,707) | 2,863 | | Basic (Loss) / Earnings Per Share (HK cents) | (5.02) | 0.18 | | Diluted (Loss) / Earnings Per Share (HK cents) | (5.02) | 0.18 | 9. TRADE AND RETENTION RECEIVABLES Trade and retention receivables (net of provisions) significantly increased to HKD 180.50 million, with overdue amounts over 90 days rising, indicating higher credit risk | Item (HKD thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Trade Receivables (net of provision) | 139,400 | 95,964 | | Retention Receivables (net of provision) | 41,103 | 26,018 | | Total | 180,503 | 121,982 | - Trade receivables overdue by more than 90 days increased from HKD 11.41 million to HKD 25.63 million, indicating increased collection pressure93 10. TRADE AND RETENTION PAYABLES Total trade and retention payables increased to HKD 195.49 million, while trade payables overdue by more than 90 days decreased | Item (HKD thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Trade Payables | 168,286 | 144,157 | | Retention Payables | 27,207 | 15,629 | | Total | 195,493 | 159,786 | EXTRACT OF THE INDEPENDENT AUDITOR'S REPORT MATERIAL UNCERTAINTY RELATED TO GOING CONCERN The independent auditor noted significant going concern uncertainties due to the Group's substantial loss and net current liabilities, without modifying their audit opinion - The auditor drew attention to the Group's loss attributable to owners of approximately HKD 80.71 million and current liabilities exceeding current assets by approximately HKD 44.76 million in FY2025105109 - These events or conditions indicate a material uncertainty that may cast significant doubt on the company's ability to continue as a going concern, and the auditor did not modify their opinion on this matter105109 MANAGEMENT DISCUSSION AND ANALYSIS BUSINESS REVIEW The Group's business review shows strong construction growth driven by large projects, while environmental business revenue declined, alongside progress on historical issues and new collaborations - The Group primarily operates in two major business segments: (i) Hong Kong's construction business (foundation, civil engineering, etc.); and (ii) mainland China and Hong Kong's environmental protection business (waste treatment, environmental industrial parks, new energy materials)112115 Construction Business Construction revenue surged 62.7% to HKD 832.12 million, driven by new large projects totaling HKD 1.41 billion, maintaining a stable 4% gross profit margin | Metric | FY2025 | FY2024 | | :--- | :--- | :--- | | Revenue | HKD 832.1 million | HKD 511.3 million | | Revenue Growth Rate | 62.7% | - | | Gross Profit Margin | ~4% | ~4% | - Seven new projects were secured during the year, with a total contract value of approximately HKD 1.41 billion, a significant increase compared to HKD 314 million in the prior year119120 - As of March 31, 2025, eight projects were ongoing, more than the five in the prior year119 Environmental Protection Business Environmental business revenue declined 17.0% to HKD 97.10 million, with food waste treatment growing but new energy materials sharply falling due to factory relocation, and several projects facing delays - Total environmental business revenue decreased by 17.0% to HKD 97.10 million127130 - Food waste treatment business revenue increased to HKD 94.03 million, primarily driven by the launch of Hong Kong's food waste collection business in April 2024, which contributed approximately HKD 22.20 million in revenue129132178 - New energy materials business (Shenzhen Huamingsheng) revenue sharply declined from HKD 42.60 million last year to HKD 3.08 million, due to factory shutdown and relocation to Deyang, Sichuan, with production expected to resume in October 2025205206 - Several ongoing or planned environmental projects face setbacks, including the Dunhua project suspended due to incomplete government land acquisition, the Hanzhong project stalled over concession rights, and the Hancheng project unresolved due to design flaws and land issues143151160 Other on-going matters The Group is managing two ongoing issues: disposing of 18.98 million Clear Industry consideration shares after a cash refund, and negotiating the unlocking of 19.49 million Vimab restricted shares - Regarding the Clear Industry matter, 18.98 million consideration shares are still pending disposal, and an impairment loss of HKD 3.80 million was recognized this fiscal year due to the decline in the company's share price238242 - For the Vimab acquisition, 19.49 million restricted shares remain unlocked as performance commitments could not be audited, and the company is still negotiating a resolution with Seller B245248 Significant event during/after the year under review The Group completed significant capital activities, including a RMB 56 million sale-and-leaseback deal and a USD 3.60 million investment in a biomass project - A financing lease agreement for RMB 56 million was signed with Jiangsu Financial Leasing for the Hefei food waste treatment equipment through a sale-and-leaseback arrangement257 - On June 24, 2025, the company agreed to invest USD 3.60 million to construct and operate a food waste treatment facility project in Haimen Economic and Technological Development Zone259260 Outlook The Group plans to expand its environmental business in mainland China, cautiously invest in new energy materials, and actively seek financing amidst a challenging Hong Kong construction market - Environmental business: The Group plans to expand its scale through business model transformation and technological upgrades, and intends to allocate more resources to the recycling and deep processing of waste cooking oil to create new revenue growth points263268 - New energy materials business: Facing intense market competition, the Group will prudently determine the timing of capacity deployment with partners and strengthen product and technology R&D to gain a competitive advantage266270 - Construction business: The Hong Kong construction market is expected to remain highly competitive in 2025, with the business facing challenges from economic slowdown272 FINANCIAL REVIEW The Group reported an HKD 89.84 million net loss in FY2025, primarily due to the absence of a prior-year one-off gain and a significant increase in credit loss provisions Results of the Group The Group's FY2025 results reversed to an HKD 80.70 million loss attributable to owners, mainly due to the absence of a prior-year one-off gain and increased credit loss impairments - The primary reasons for the shift from profit to loss include the absence of a one-off gain of HKD 52.90 million from the prior year, and an increase of HKD 33.40 million in impairment losses under the expected credit loss model this year275278 Revenue and Gross Profit Revenue grew 47.9% to HKD 929.24 million, driven by construction and food waste collection, but overall gross profit slightly declined due to losses in new energy materials - Revenue increased by 47.9% to HKD 929.24 million, primarily driven by the construction business and Hong Kong's food waste collection business281285 - Despite increased revenue, the gross profit slightly decreased by HKD 2.10 million to HKD 59.00 million due to a gross loss recorded in the new energy materials business282286 Other Income and Gains, Net Net other income and gains significantly decreased by HKD 70.70 million, mainly due to the absence of a prior-year one-off gain and reduced fair value gains - Net other income and gains significantly decreased by HKD 70.70 million, primarily due to the absence of a one-off gain of HKD 52.90 million from the prior year283288 Administrative Expenses Administrative expenses rose by HKD 13.80 million to HKD 111 million, driven by increased construction-related costs, various write-offs, and impairment losses - Administrative expenses increased by 14.2% to HKD 111 million, primarily driven by increased construction-related expenses, write-offs of receivables, and impairment losses on consideration shares290294 Impairment losses under expected credit loss model, net of reversal Expected Credit Loss (ECL) surged to HKD 35.20 million, mainly due to a HKD 27.70 million provision for defaulting loans, prompting legal action and PD model impairment assessment - Expected Credit Loss (ECL) surged from HKD 1.80 million to HKD 35.20 million, an increase of HKD 33.40 million year-on-year293296 - The loss primarily stemmed from provisions for loans receivable (HKD 27.70 million) due to two defaulting Chinese private companies, for which the Group has initiated legal proceedings293298 - The Group engaged independent valuers to measure ECL provisions using Probability of Default (PD) and Loss Given Default (LGD) models300303 CAPITAL STRUCTURE, LIQUIDITY, FINANCIAL RESOURCES AND FINANCIAL POSITION The Group's gearing ratio rose to 196.2%, with HKD 44.80 million net current liabilities indicating high short-term pressure, and authorized share capital was doubled for future financing - As of March 31, 2025, the Group reported net current liabilities of HKD 44.80 million, a reversal from net current assets of HKD 14.00 million in the prior year, with the current ratio decreasing to 89.8%313318 - The gearing ratio significantly increased from 118.4% to 196.2%325331 - During the year, the company increased its authorized share capital from HKD 200 million to HKD 400 million in preparation for future financing323329 - As of March 31, 2025, the Group pledged various assets, including properties, investment properties, deposits, and receivables, to secure bank financing327333 Human resources management The Group's headcount increased to 439, with stable staff costs, while contingent liabilities from performance bonds significantly rose, and no major investments occurred | Metric | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Number of Employees | 439 | 363 | | Total Staff Costs (Annual) | ~HKD 134.6 million | ~HKD 134.4 million | | Contingent Liabilities (Performance Bonds) | ~HKD 85.6 million | ~HKD 44.6 million | Corporate Governance and Other Information CHANGE IN INFORMATION OF DIRECTORS The Board saw multiple changes, including the retirement of Dr. Ge Xiaolin, removal of Mr. Lam Ka Hong, resignation of Mr. Li Xixun, and new appointments to the Nomination Committee - Non-executive Director Dr. Ge Xiaolin retired, and Mr. Lam Ka Hong was removed357358 - Executive Director Mr. Li Xixun resigned359 FINAL DIVIDEND, PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES, SHARE CAPITAL Due to the annual loss, no final dividend was recommended, and no listed securities were purchased, sold, or redeemed during FY2025 - The Board recommended no final dividend for FY2025 (FY2024: nil)385390 - During the year, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities369376 CHANGE OF AUDITORS, AUDIT COMMITTEE AND REVIEW OF THE ANNUAL RESULTS The Group changed its auditor to Asian Alliance (HK) CPA Limited, effective April 2025, and the Audit Committee, composed of independent non-executive directors, reviewed the annual results - The company's auditor changed from BDO Limited to Asian Alliance (HK) CPA Limited, effective April 2025386391 - The Audit Committee, comprising three independent non-executive directors, has reviewed the annual results for FY2025394397
创业集团控股(02221) - 2025 - 年度业绩