STERLING GP(01825) - 2025 - 年度业绩

Financial Highlights Operating Performance Overview The Group's 2025 operating results show a 16.4% revenue decrease, a shift to operating loss, and a net loss of HK$6,143 thousand, offset by improved gross margin and reduced credit losses | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 477,728 | 571,391 | -16.4% | | Gross Profit | 87,531 | 91,981 | -4.8% | | Gross Profit Margin | 18.3% | 16.1% | +2.2pp | | Operating (Loss)/Profit | (1,309) | 7,442 | N/A (from profit to loss) | | Net Expected Credit Losses on Financial Assets | (4,834) | (25,802) | -81.2% | | Net Loss for the Year | (6,143) | (18,360) | -66.6% | | EBITDA before Expected Credit Losses | 27,164 | 30,836 | -11.9% | | EBITDA after Expected Credit Losses | 22,330 | 5,034 | +343.6% | Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income The Group's 2025 revenue decreased, leading to a net loss of HK$6,143 thousand, an improvement from the prior year, driven by narrowed credit losses despite higher finance costs | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Revenue | 477,728 | 571,391 | | Cost of Sales | (390,197) | (479,410) | | Gross Profit | 87,531 | 91,981 | | Other Income | 6,479 | 7,757 | | Net Other Gains and Losses | 50 | 1,608 | | Selling and Distribution Costs | (20,668) | (24,315) | | General and Administrative Expenses | (53,294) | (52,657) | | Net Expected Credit Losses on Financial Assets | (4,834) | (25,802) | | Finance Costs | (21,323) | (16,226) | | Loss Before Tax | (6,059) | (17,654) | | Income Tax Expense | (84) | (706) | | Loss for the Year | (6,143) | (18,360) | | Loss Per Share (HK cents) | (2.17) | (7.65) | Consolidated Statement of Financial Position As of March 31, 2025, the Group's total assets and liabilities decreased, with current assets significantly declining, resulting in expanded net current liabilities and a slight increase in net assets | Indicator | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Total Non-Current Assets | 154,055 | 102,528 | | Total Current Assets | 96,198 | 218,952 | | Total Assets | 250,253 | 321,480 | | Total Current Liabilities | 208,341 | 280,584 | | Net Current Liabilities | (112,143) | (61,632) | | Total Non-Current Liabilities | 11,407 | 13,567 | | Total Liabilities | 219,748 | 294,151 | | Net Assets | 30,505 | 27,329 | | Total Equity | 30,505 | 27,329 | Notes to the Consolidated Financial Statements General Information Meizhen Group Holdings Limited is incorporated in the Cayman Islands and listed on the Main Board of the Hong Kong Stock Exchange, primarily engaged in manufacturing and trading apparel products and trademark licensing in the US and European markets - The company is an investment holding company, primarily engaged in manufacturing and trading apparel products and trademark licensing in the US and European markets[7] Accounting Policies The Group adopted revised HKFRS this year with no significant impact, but new standards like HKFRS 18 are expected to affect future financial statement presentation and disclosures - This year marks the first application of the revised Hong Kong Financial Reporting Standards issued by the HKICPA, with no significant impact on the Group's financial position, performance, and/or disclosures in these consolidated financial statements for the current and prior years[8] - HKFRS 18 will replace HKAS 1, introducing new requirements for the presentation of specific categories and defined subtotals in the statement of profit or loss, and improving the aggregation and classification of financial statement information, expected to affect the presentation of the statement of profit or loss and future financial statement disclosures, effective for annual periods beginning on or after January 1, 2027[10] Basis of Preparation of Financial Statements Despite a net loss, net current liabilities, and bank covenant breaches as of March 31, 2025, the Group's HKFRS-prepared financial statements reflect management's belief in continued operations via cost control and negotiations - For the year ended March 31, 2025, the Group incurred a net loss of HK$6,143,000, with net current liabilities exceeding current assets by HK$112,143,000, and a breach of bank loan covenants totaling HK$67,517,000, indicating significant uncertainty regarding its ability to continue as a going concern[14] - To improve liquidity and financial position, the Group has taken measures: * Continue to improve operational efficiency and tighten cost control to enhance profitability and future operating cash flows * Communicate with banks regarding the breach of bank loan covenants and are negotiating waivers; management believes banks may grant approximately HK$36,033,000 in unutilized bank facilities[15][18] - The consolidated financial statements are presented in Hong Kong Dollars, which is also the functional currency of the Company[17] Segment Information The Group's apparel manufacturing and trademark licensing segments experienced decreased revenue and profit, with the US market as the main, but declining, revenue source, and non-current assets primarily in Sri Lanka, Hong Kong, and China - The Group's operating segments include: * Manufacturing and trading of apparel products * Trademark licensing for royalty income[22] Segment Revenue and Profit (HK$ thousand) | Segment | 2025 Revenue | 2024 Revenue | 2025 Profit | 2024 Profit | | :--- | :--- | :--- | :--- | :--- | | Manufacturing and Trading of Apparel Products | 477,073 | 570,736 | 23,257 | 28,897 | | Trademark Licensing | 655 | 655 | 552 | 618 | | Total | 477,728 | 571,391 | 23,809 | 29,515 | External Customer Revenue by Geographical Location (HK$ thousand) | Region | 2025 Revenue | 2024 Revenue | | :--- | :--- | :--- | | United States | 475,971 | 567,791 | | Hong Kong | 302 | 519 | | Other (mainly Germany and Netherlands) | 1,455 | 3,081 | | Total | 477,728 | 571,391 | Non-Current Assets by Geographical Location (HK$ thousand) | Region | 2025 | 2024 | | :--- | :--- | :--- | | Hong Kong | 24,469 | 32,776 | | China | 13,495 | 15,584 | | Sri Lanka | 47,297 | 44,096 | | Total | 85,261 | 92,456 | Major Customer Revenue (HK$ thousand) | Customer | 2025 | 2024 | | :--- | :--- | :--- | | Customer A | 419,699 | 445,890 | Revenue Disaggregation The Group's revenue primarily derives from sales of garments and royalty and related income; outerwear and bottoms are the main contributors to garment sales, though revenue from all major product categories decreased, with revenue recognition predominantly occurring at a point in time Revenue by Major Category (HK$ thousand) | Revenue Category | 2025 | 2024 | | :--- | :--- | :--- | | Sales of Garments | 477,073 | 570,736 | | Royalty and Related Income | 655 | 655 | | Total | 477,728 | 571,391 | Revenue by Major Product and Service (HK$ thousand) | Product Category | 2025 | 2024 | | :--- | :--- | :--- | | Outerwear | 219,198 | 243,226 | | Bottoms | 208,488 | 208,864 | | Tops | 17,050 | 29,153 | | Others | 32,992 | 90,148 | | Total | 477,728 | 571,391 | - Revenue recognition timing: Revenue recognized at a point in time was HK$477,073 thousand (2024: HK$570,736 thousand), and revenue recognized over time was HK$655 thousand (2024: HK$655 thousand)[32] Other Income For the year ended March 31, 2025, the Group's other income was HK$6,479 thousand, a decrease from HK$7,757 thousand in the prior year, primarily comprising sample sales, bank interest income, and newly added interest income from loans and other receivables | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Bank Interest Income | 648 | 492 | | Sample Sales Income | 2,474 | 4,219 | | Claim Income | 96 | 1,340 | | Government Subsidies | 48 | 66 | | Interest Income from Loans and Other Receivables | 2,707 | – | | Imputed Interest Income from Trade and Other Receivables | – | 829 | | Others | 506 | 811 | | Total | 6,479 | 7,757 | Net Other Gains and Losses For the year ended March 31, 2025, the Group recorded net other gains of HK$50 thousand, a significant decrease from HK$1,608 thousand in the prior year, mainly due to net exchange losses in the current year | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | (Loss)/Gain on Disposal of Property, Plant and Equipment | (16) | 288 | | Gain on Lease Modification | 87 | – | | Fair Value Change of Prepaid Insurance | 302 | 268 | | Net Exchange (Loss)/Gain | (453) | 1,051 | | Others | 130 | 1 | | Total | 50 | 1,608 | Loss Before Tax Loss before tax reflects deductions for auditor's fees, depreciation, inventory, and staff costs; net expected credit losses increased for trade receivables but reversed for other receivables this year | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Auditor's Remuneration | 1,000 | 980 | | Depreciation (Property, Plant and Equipment) | 5,666 | 4,852 | | Depreciation (Right-of-Use Assets) | 1,400 | 1,610 | | Fair Value Change of Prepaid Insurance | (302) | (268) | | Net Expected Credit Losses on Trade Receivables | 12,172 | 17,856 | | Net Expected Credit Losses on Other Receivables | (7,338) | 7,946 | | Cost of Inventories Recognized as Expense | 341,033 | 405,823 | | Short-Term Lease Expenses | 4,224 | 4,091 | | Staff Costs | 85,148 | 93,638 | - Of the depreciation expense, HK$3,973 thousand (2024: HK$1,883 thousand) was included in cost of sales, and HK$3,093 thousand (2024: HK$4,579 thousand) in general and administrative expenses[35] - Of the staff costs, HK$45,191 thousand (2024: HK$46,527 thousand) was included in cost of sales; HK$11,685 thousand (2024: HK$15,095 thousand) in selling and distribution costs; and HK$28,272 thousand (2024: HK$32,016 thousand) in general and administrative expenses[35] Income Tax Expense The income tax expense for the current year was HK$84 thousand, primarily due to deferred tax and under-provision for overseas profits tax in prior years; no provision for Hong Kong, China, or Sri Lanka profits tax was made in either year due to carried forward tax losses or no taxable profits | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Hong Kong Profits Tax - Under-provision in prior years | – | 3 | | Overseas Profits Tax - Under-provision in prior years | 29 | – | | Deferred Tax - Current year | 55 | 703 | | Income Tax Expense | 84 | 706 | - No provision for Hong Kong profits tax, China corporate income tax, or Sri Lanka corporate income tax was made in the consolidated financial statements for either year, as the Group's subsidiaries utilized carried forward tax losses or did not generate taxable profits[37] Loss Per Share For the year ended March 31, 2025, the loss attributable to owners was HK$6,143 thousand, with basic and diluted loss per share of 2.17 HK cents, an improvement from the prior year, as no potential dilutive ordinary shares exist | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Loss for the year attributable to owners of the Company (HK$ thousand) | (6,143) | (18,360) | | Weighted average number of ordinary shares (thousands) | 282,792 | 240,000 | | Basic and Diluted Loss Per Share (HK cents) | (2.17) | (7.65) | - The weighted average number of ordinary shares for calculating basic loss per share for the year ended March 31, 2025, has been adjusted for the share placements on August 16, 2024, and January 8, 2025[40] Dividends The Board does not recommend the payment of a final dividend for the years ended March 31, 2025, and 2024 - The Board does not recommend the payment of a final dividend for the years ended March 31, 2025, and 2024[41] Trade and Other Receivables As of March 31, 2025, total trade and other receivables significantly decreased, with net trade receivables falling to HK$50,321 thousand due to reclassification and credit loss provisions | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Trade Receivables | 107,061 | 172,953 | | Less: Loss Allowance for Trade Receivables | (56,740) | (49,322) | | Net Trade Receivables | 50,321 | 123,631 | | Prepayments | 4,662 | 2,484 | | Other Receivables | 15,217 | 48,962 | | Less: Loss Allowance for Other Receivables | (10,000) | (22,197) | | Total Trade and Other Receivables | 60,810 | 153,554 | - Trade receivables aging analysis shows that amounts over 365 days increased from HK$71,868 thousand to HK$94,466 thousand * Total trade receivables due from Suntai Global Asset Management Limited ("Suntai") and JP Outfitters Inc. ("JPO") were HK$93,285 thousand (2024: HK$106,337 thousand) and HK$3,348 thousand (2024: HK$20,830 thousand), respectively * For the year ended March 31, 2025, trade receivables of HK$33,422 thousand due from Suntai and JPO were reclassified as loans and other receivables[42][43] - Expected credit loss allowances for trade receivables due from Suntai and JPO were HK$54,451 thousand (2024: HK$41,070 thousand) and HK$1,761 thousand (2024: HK$6,742 thousand), respectively[44] Trade, Bills and Other Payables As of March 31, 2025, total trade, bills and other payables amounted to HK$95,539 thousand, an increase from HK$90,978 thousand in the prior year, driven by a significant rise in trade payables and a notable decrease in bills payable | Item | 2025 (HK$ thousand) | 2024 (HK$ thousand) | | :--- | :--- | :--- | | Trade Payables | 54,374 | 21,178 | | Bills Payable | 24,784 | 53,561 | | Other Payables and Accruals | 16,381 | 16,239 | | Total | 95,539 | 90,978 | - The aging analysis of trade payables shows that amounts due between 91 and 365 days significantly increased from HK$251 thousand to HK$27,628 thousand, and amounts due between 31 and 90 days increased from HK$2,714 thousand to HK$23,399 thousand[46] Leases The Group's leased assets, including land and properties, saw right-of-use assets decrease to HK$23,495 thousand and total lease liabilities fall to HK$3,976 thousand, with stable short-term repayments Carrying Amount of Right-of-Use Assets (HK$ thousand) | Item | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Leasehold Land | 19,941 | 20,511 | | Properties | 3,554 | 5,010 | | Total | 23,495 | 25,521 | Lease Liabilities (HK$ thousand) | Item | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Within one year | 1,064 | 1,056 | | More than one year but not more than two years | 422 | 1,221 | | More than two years but not more than five years | 704 | 1,386 | | More than five years | 1,786 | 1,887 | | Total Lease Liabilities Payable | 3,976 | 5,550 | | Less: Amounts repayable within 12 months | (1,064) | (1,056) | | Amounts repayable after 12 months | 2,912 | 4,494 | - The weighted average incremental borrowing rate applicable to lease liabilities ranged from 3.10% to 8.63% (2024: 4.08% to 8.49%)[50] Loans and Other Receivables As of March 31, 2025, total loans and other receivables were HK$59,376 thousand, mainly from Suntai Group, with a HK$9,613 thousand loss allowance, reclassified from trade receivables, collateralized by JPO shares, and repayable in 2026 at 7% interest | Item | 2025 (HK$ thousand) | | :--- | :--- | | Loans Receivable | 34,202 | | Other Receivables from Suntai Group | 34,787 | | Less: Loss Allowance | (9,613) | | Total | 59,376 | - The Group reclassified trade receivables of HK$33,422 thousand and other receivables of HK$32,860 thousand related to Suntai Group under financial assistance as loans and other receivables[52] - Loans receivable advanced to Suntai are denominated in USD, collateralized by JPO shares, bear interest at an effective annual rate of 7%, and are repayable in 2026; as of March 31, 2025, the contractual maturity date of the loans receivable is more than 12 months from the end of the reporting period, thus classified as non-current[53] - A loss allowance of HK$9,613 thousand (2024: nil) has been recognized for loans and other receivables[55] Management Discussion and Analysis Company Background Meizhen Group Holdings Limited is a Hong Kong-based apparel manufacturer providing one-stop solutions to international apparel brands, primarily in the US, with production facilities in China and Sri Lanka, and outsourced production in the Philippines - The Group is a Hong Kong-based apparel manufacturer providing one-stop apparel manufacturing solutions to its customers, primarily international apparel brands headquartered in the US[56] - As of March 31, 2025, the Group operates three production facilities (one in China, two in Sri Lanka) and outsources production to accredited factories in the Philippines[57] Results and Business Review The Group's revenue decreased by 16.4% to HK$477,728 thousand due to reduced sales and credit issues; gross margin improved to 18.3%, selling costs decreased, but finance costs rose, while credit loss provisions fell, resulting in a narrowed net loss - Revenue for the review year was approximately HK$477,728 thousand, a 16.4% decrease from the prior year, mainly due to a HK$26,191 thousand (5.9%) reduction in sales to the largest customer and a HK$67,471 thousand reduction due to deteriorating credit conditions of new customers[58] - Gross profit margin improved from 16.1% in the prior year to 18.3%, primarily due to increased efficiency in manufacturing operations and sourcing products from different suppliers[58][65] - Selling and distribution costs decreased by 15.0% to approximately HK$20,668 thousand, mainly due to staff cost savings of approximately HK$3,647 thousand[59][68] - Finance costs significantly increased by 31.4% to approximately HK$21,323 thousand, primarily due to rising interest rates throughout the year and guarantee fees of approximately HK$3,904 thousand for bank loan arrangements[60][70] - Expected credit losses recorded approximately HK$4,834 thousand, a significant decrease from HK$25,802 thousand in the prior year, mainly due to Suntai's repayment of approximately HK$27,300 thousand in April and May 2025[61] - The Group recorded a loss of approximately HK$6,143 thousand for the review year, compared to a loss of approximately HK$18,360 thousand in the prior year, indicating a narrowed loss[61] Revenue The Group's revenue primarily comes from outerwear, bottoms, tops, and other apparel products; due to reduced sales orders from a major US customer, revenue declined across most product categories, with the US market remaining the primary revenue source, accounting for 99.6% of total revenue - Apparel products are categorized into four main types: * Outerwear (jackets, coats, blazers) * Bottoms (trousers, shorts, skirts) * Tops (shirts, blouses, tank tops) * Others (dresses, suits, gowns, scarves, jumpsuits, sleepwear, vests, face masks)[62] Contribution to Revenue by Product Category (HK$ thousand) | Product Category | 2025 Revenue | 2024 Revenue | 2025 Quantity (thousand pieces) | 2024 Quantity (thousand pieces) | | :--- | :--- | :--- | :--- | :--- | | Outerwear | 219,198 | 243,226 | 616 | 708 | | Bottoms | 208,488 | 208,864 | 1,384 | 1,411 | | Tops | 17,050 | 29,153 | 165 | 193 | | Others | 32,337 | 89,493 | 133 | 474 | | Royalty and Related Income | 655 | 655 | – | – | | Total | 477,728 | 571,391 | 2,298 | 2,786 | - The US market contributed 99.6% of the Group's revenue (2024: 99.4%), with revenue of HK$475,971 thousand (2024: HK$567,791 thousand)[64] Gross Profit The gross profit margin for the review year was approximately 18.3%, an increase from 16.1% in the prior year, primarily attributable to enhanced efficiency in manufacturing operations and diversified product sourcing from various suppliers - The gross profit margin for the review year was approximately 18.3% (2024: approximately 16.1%); the improvement in gross profit margin was mainly due to increased efficiency in manufacturing operations and sourcing products from different suppliers[65] Other Income Other income for the review year was approximately HK$6,479 thousand, a decrease from HK$7,757 thousand in the prior year, primarily comprising sample income, claim income, and newly recognized interest income from loans and other receivables - Other income for the review year was approximately HK$6,479 thousand (2024: approximately HK$7,757 thousand); it included sample income of approximately HK$2,474 thousand (2024: approximately HK$4,219 thousand), claim income of approximately HK$96 thousand (2024: approximately HK$1,340 thousand), and interest income from loans and other receivables of approximately HK$2,707 thousand (2024: nil)[66] Net Other Gains and Losses Net other gains amounted to approximately HK$50 thousand, a significant decrease from HK$1,608 thousand in the prior year, primarily due to net exchange losses incurred during the review year - Net other gains amounted to approximately HK$50 thousand (2024: approximately HK$1,608 thousand); this decrease was mainly due to net exchange losses during the review year[67] Selling and Distribution Costs Selling and distribution costs for the review year decreased by approximately 15.0% to about HK$20,668 thousand, mainly attributable to reduced staff costs - Selling and distribution costs for the review year decreased by approximately 15.0% to approximately HK$20,668 thousand (2024: approximately HK$24,315 thousand); the decrease in selling and distribution costs was mainly due to reduced staff costs during the review year[68] General and Administrative Expenses General and administrative expenses remained stable at approximately HK$53,294 thousand during the review year, largely consistent with the prior year - General and administrative expenses remained stable at approximately HK$53,294 thousand (2024: approximately HK$52,657 thousand) during the review year[69] Finance Costs The Group's finance costs increased by approximately 31.4% to about HK$21,323 thousand in the review year from HK$16,226 thousand in the prior year, primarily due to rising interest rates throughout the year and guarantee fees for bank loan arrangements - The Group's finance costs increased by approximately 31.4% to approximately HK$21,323 thousand in the review year from approximately HK$16,226 thousand in the prior year, mainly due to rising interest rates throughout the year and guarantee fees for bank loan arrangements[70] Income Tax Expense During the review year, the Group incurred an income tax expense of approximately HK$84 thousand, a significant reduction from HK$706 thousand in the prior year, primarily due to the impact of deferred tax - During the review year, income tax expense was approximately HK$84 thousand (2024: income tax expense of approximately HK$706 thousand), mainly due to the Group's deferred tax[71] Financial Position As of March 31, 2025, cash and cash equivalents decreased to HK$14,710 thousand due to loan repayments, inventories fell by 27.5%, and related party payables included rental and guarantee fees to a director's companies - As of March 31, 2025, the Group's cash and cash equivalents were approximately HK$14,710 thousand (2024: approximately HK$36,949 thousand), mainly due to bank loan repayments[72] - Inventories decreased by approximately HK$7,770 thousand (27.5%) from approximately HK$28,272 thousand as of March 31, 2024, to approximately HK$20,502 thousand as of March 31, 2025[72] - Amounts due to related parties include rental expenses payable to Win 18 Limited and Win 19 Limited (both wholly owned by an executive director of the Company) and guarantee fees payable to the same director[72] Dividends The Company does not recommend the declaration of a final dividend for the year ended March 31, 2025 - The Company does not recommend the declaration of a final dividend for the year ended March 31, 2025 (2024: nil)[73] Outlook US economic policies, including 'reciprocal tariffs,' create market uncertainty and dampen consumer confidence, leading to a 30% drop in the Group's order book and a cautious outlook, prompting exploration of new digital marketing services - The new US administration, starting early April 2025, imposed "reciprocal tariffs" on most countries, with varying rates, and although some high tariff rates have significantly decreased, they remain well above pre-tariff war levels[75] - Fluctuating tariff policies and their impact on US consumers will undermine confidence and expectations for the economy, thereby affecting their willingness to spend on non-essential consumption like apparel, potentially leading US retailers to reduce inventory purchases[76] - The Group's order book received from customers by early June 2025 decreased by approximately 30% compared to the prior year, reflecting reduced or delayed customer purchases, leading to a cautious outlook for the coming year[77] - The Group has commenced providing digital marketing services through its subsidiary in China as a new business, including performance advertising, display advertising, and short video exposure services, expected to increase revenue streams and enhance existing businesses[77] Liquidity, Capital Resources and Capital Structure As of March 31, 2025, cash and bank balances were HK$14,710 thousand, with net current liabilities of HK$112,143 thousand; bank borrowings decreased, but covenants for HK$67,517 thousand were breached, while the gearing ratio fell to 345.2% due to reduced secured borrowings Liquidity Position (HK$ thousand) | Indicator | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Cash and Bank Balances | 14,710 | 26,965 | | Current Assets | 96,198 | 218,952 | | Current Liabilities | 208,341 | 280,584 | | Bank Borrowings | 105,305 | 188,550 | - As of March 31, 2025, the Group breached covenants for its bank borrowings of HK$67,517 thousand[80] - The gearing ratio (total interest-bearing liabilities divided by total equity) was approximately 345.2% (March 31, 2024: approximately 689.9%), with the decrease being a direct result of reduced bank borrowings[81] - The Group's bank borrowings are secured by certain assets of the Group, properties beneficially owned by a director of the Company, and personal guarantees from the same director and a former director of the Company[81] Issue of Shares Under General Mandate The Group completed two share placings in 2024, raising net proceeds of HK$5.12 million and HK$3.95 million for working capital; the first placing's proceeds are fully utilized, and the second's remaining funds are expected to be used by July 31, 2025 - July 30, 2024 Placing: * Placing of up to 48,000,000 placing shares at HK$0.11 per share * Net proceeds of approximately HK$5.12 million were fully utilized for general working capital purposes[82][83][84] - December 17, 2024 Placing: * Placing of up to 57,600,000 placing shares at HK$0.070 per share * Net proceeds of approximately HK$3.95 million, of which approximately HK$1 million has been used for the intended purposes, with the remaining amount expected to be fully utilized by July 31, 2025[84][85] Employees and Remuneration Policy As of March 31, 2025, the Group employed 1,281 full-time staff across Hong Kong, China, and Sri Lanka; remuneration is performance-based, and no major labor disputes occurred, reflecting a focus on employee relations and talent retention - As of March 31, 2025, the Group employed approximately 1,281 full-time employees in Hong Kong, China, and Sri Lanka (2024: approximately 1,290 full-time employees)[86] - Remuneration packages are determined based on market conditions and each employee's qualifications, relevant experience, position, and seniority, with salary increments, bonuses, and promotions reviewed based on performance[86] Financial Policies and Foreign Currency Risk The Group's operations in Hong Kong, China, Philippines, and Sri Lanka involve foreign currency transactions, exposing it to exchange rate risk; it maintains a conservative, unhedged approach, monitoring trends for future policy considerations - The Group's foreign currency transactions are denominated in USD, EUR, RMB, and LKR, exposing it to foreign currency risk[87] - The Group currently has no foreign currency hedging policy but adopts a conservative approach to foreign currency management to minimize exposure to exchange rate fluctuations[87] Capital Commitments and Contingent Liabilities As of March 31, 2025, the Group had no significant capital commitments; the Group provides corporate guarantees as part of general banking facilities granted to certain wholly-owned subsidiaries - As of March 31, 2025, the Group had no significant capital commitments[88] - The Group provides corporate guarantees as part of general banking facilities granted to certain wholly-owned subsidiaries[88] Significant Acquisitions and Disposals and Future Plans for Material Investments The Group had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures during the review year; furthermore, as of the report date, the Group has no specific plans for significant investments or acquisitions of major capital assets or other businesses - The Group had no significant acquisitions or disposals of subsidiaries, associates, or joint ventures during the review year[89] - As of the report date, the Group has no specific plans for significant investments or acquisitions of major capital assets or other businesses[89] Purchase, Sale or Redemption of the Company's Listed Securities For the year ended March 31, 2025, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities - For the year ended March 31, 2025, neither the Company nor its subsidiaries purchased, sold, or redeemed any of the Company's listed securities (including sales of treasury shares)[90] Pledge of Assets As of March 31, 2025, the Group had no bank deposits pledged for its bank facilities, compared to approximately HK$10.0 million in the prior year - As of March 31, 2025, the Group had no bank deposits pledged for its bank facilities (March 31, 2024: approximately HK$10.0 million)[91] Other Information Continuing Connected Transactions and Connected Transactions The Group entered new lease agreements with related parties and, with independent shareholder approval, signed loan and financial assistance agreements with Suntai Group, and a guarantee fee agreement with directors for bank financing - New Lease Agreements: * SAL (a wholly-owned subsidiary) entered into two new lease agreements with Win 18 and Win 19 (both wholly owned by Ms. Wang Mei Wai, an executive director) * Lease term of one year, commencing February 1, 2025, with monthly rent of HK$130,000 (HK$1,560,000 annually for each), for office use[92] - Loan Agreement: * SAL entered into a loan agreement with Suntai to amend the terms of an advance of approximately HK$32,859,926 to Suntai * Loan term of two years, with an annual interest rate of 7%, secured by a charge over JPO shares * This transaction constituted a major transaction and was approved by independent shareholders[94][97] - Financial Assistance Agreement: * SAL entered into an agreement with Suntai and JPO to terminate the first letter of support and set out terms for supplying inventories and providing financial assistance * The maximum applicable percentage ratio for the total financial assistance (sum of advances to Suntai and the second financial assistance) exceeded 25%, constituting a major transaction approved by independent shareholders[98][100] - Guarantee Fee Agreement: * SAL, Mr. Choi, and Ms. Wang (executive directors) entered into a guarantee fee agreement to set out terms for compensating and paying guarantee fees to the guarantors * This agreement is conditional upon the loan agreement and financial assistance agreement and was approved by independent shareholders at an extraordinary general meeting[103][104] Compliance with the Model Code for Securities Transactions by Directors of Listed Issuers The Company adopted the Model Code for Directors' Securities Transactions, with all directors confirming compliance for the year ended March 31, 2025, and no senior management non-compliance noted - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix C3 of the Listing Rules[105] - For the year ended March 31, 2025, all directors confirmed compliance with the required standards of the Model Code, and the Company was not aware of any instances of non-compliance by senior management employees[105] Code of Conduct and Corporate Governance The Company complied with the Corporate Governance Code for 2025, except for the combined Chairman/CEO role held by Ms. Wang Mei Wai, which the Board believes benefits the Group's business and management - The Company confirms compliance with the Corporate Governance Code as set out in Appendix C1 of the Listing Rules for the entire year ended March 31, 2025, except for Code Provision C.2.1 (separation of roles of Chairman and Chief Executive)[106] - Ms. Wang Mei Wai serves as both the Chairman and Chief Executive of the Group, and the Board believes that vesting both roles in the same person is beneficial to the Group's business prospects and management[107] Directors' and Chief Executive's Interests As of this announcement, no director or chief executive held disclosable interests or short positions in the Company's or associated corporations' shares, underlying shares, or debentures under SFO or Model Code - As of the date of this announcement, no director or chief executive of the Company held any interests or short positions in the shares, underlying shares, or debentures of the Company or any associated corporation that are required to be notified to the Company and the Hong Kong Stock Exchange under the Securities and Futures Ordinance or the Model Code[108] Major Shareholders' Interests As of this announcement, Directors are unaware of any other persons holding disclosable beneficial interests or short positions in shares under SFO Sections 336 or Part XV - As of the date of this announcement, the Directors are not aware of any other persons who have beneficial interests or short positions in the shares that are required to be registered under Section 336 of the Securities and Futures Ordinance, or disclosed under Part XV of the Securities and Futures Ordinance[109] Non-Compliance with Listing Rules Due to a director's resignation, the Company's independent non-executive directors fell below Listing Rules 3.10(1) and 3.10A minimums, also causing non-compliance with Rule 3.21 for audit committee composition - Due to the resignation of Mr. Chow Yun Cheung, the Company has only two independent non-executive directors, thus falling below the minimum number required by Listing Rules 3.10(1) and 3.10A[110] - Due to the insufficient number of independent non-executive directors, the Company also failed to comply with Listing Rule 3.21 regarding the minimum number and composition of the audit committee members[111] Events After Reporting Period Subsequent to the end of the reporting period, Suntai has early repaid approximately HK$27.3 million of the Group's loans receivable - Subsequent to the end of the reporting period, Suntai has early repaid approximately HK$27.3 million of the Group's loans receivable[112] Audit Committee Review The Audit Committee reviewed the Group's 2025 audited consolidated financial statements, internal controls, and financial reporting, and currently comprises two independent non-executive directors, Ms. Chan Kit (Chairperson) and Ms. Ko Yuen Yuen - The Audit Committee has reviewed the Group's audited consolidated financial statements for the year ended March 31, 2025 (including the accounting principles and policies adopted by the Group), and discussed internal controls and financial reporting matters[113] - The Audit Committee currently comprises two independent non-executive directors, Ms. Chan Kit and Ms. Ko Yuen Yuen, with Ms. Chan Kit serving as the Chairperson of the Audit Committee[113] Auditor's Scope of Work and Opinion The auditor confirmed consistency of preliminary results with audited statements, believing the HKFRS-compliant financial statements fairly present the Group's position; however, the report highlights significant going concern uncertainties due to net loss, net current liabilities, and bank covenant breaches - The Group's auditor, BDO Limited, has confirmed that the financial figures for the consolidated statement of financial position, consolidated statement of profit or loss and other comprehensive income, and their related notes for the year ended March 31, 2025, as contained in the preliminary results announcement, are consistent with the amounts in the Group's audited consolidated financial statements for the current year[114] - The auditor believes that the consolidated financial statements fairly present, in all material respects, the Group's consolidated financial position as of March 31, 2025, and its consolidated financial performance and consolidated cash flows for the year then ended, in accordance with Hong Kong Financial Reporting Standards issued by the HKICPA, and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance[115] - The auditor's report notes that the Group incurred a net loss of HK$6,143,000 for the year ended March 31, 2025, with net current liabilities exceeding current assets by HK$112,143,000, and a breach of bank loan covenants totaling HK$67,517,000, indicating significant uncertainties that may cast doubt on the Group's ability to continue as a going concern[116] Publication of Annual Results Announcement and Annual Report This announcement has been published on the websites of The Stock Exchange of Hong Kong Limited and the Company; the Company's annual report for the year ended March 31, 2025, will be posted on the aforementioned websites and dispatched to the Company's shareholders in due course - This announcement is published on the website of The Stock Exchange of Hong Kong Limited (www.hkexnews.hk) and the Company's website (www.sterlingapparel.com.hk)[117](index=117&type=chunk) - The Company's annual report for the year ended March 31, 2025, will be posted on the aforementioned websites and dispatched to the Company's shareholders in due course[117]