Corporate Information This section provides fundamental corporate details and contact information - The chapter details the company's fundamental information, including its board and committee members, principal bankers, auditors, registered office, and main business locations4568 Chairman's Statement The Chairman's Statement reviews FY2025 performance, noting similar financial results to FY2024 despite typhoon impacts, and outlines future growth strategies focusing on innovation, digitalization, and capacity expansion amidst market uncertainties - Despite the impact of Typhoon Ma-on on the Hai Duong factory in Vietnam, FY2025 financial performance was comparable to FY2024, with results expected to be better without the incident1318 - Company strategic priorities include product innovation (developing high-elasticity functional fabrics and expanding into non-apparel markets), digital transformation (updating digital core, establishing integrated data platforms for AI, and providing digital product versions to shorten sales cycles), and capacity expansion (new Nam Dinh factory in Vietnam opened July 2024, aiming for full production of high-performance fabrics)141516 - Amidst market uncertainties from US tariffs, the company prioritizes strict cost control and inventory management, expecting significant medium-term growth through product line and production base expansion2124 Management Discussion and Analysis This section details the Group's business and financial performance, highlighting a 6.7% revenue increase driven by volume, stable net profit, decreased gross margin, increased net debt, and reduced capital expenditure, with an optimistic outlook for medium-term growth despite short-term challenges Business and Financial Review In FY2025, Group revenue grew 6.7% to HKD 5.058 billion driven by volume, while net profit attributable to shareholders remained stable at HKD 168 million, gross margin declined to 7.6%, net debt increased, and capital expenditure significantly decreased by 69.4% to HKD 310 million Key Financial Data for FY2025 (Million HKD) | Metric | FY2025 (Million HKD) | FY2024 (Million HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 5,057.6 | 4,739.0 | +6.7% | | Cost of Sales | 4,673.6 | 4,241.6 | +10.2% | | Gross Profit | 384.0 | 497.4 | -22.8% | | Profit Attributable to Shareholders | 167.6 | 167.1 | +0.3% | | Distribution and Selling Expenses | 55.4 | 43.2 | +28.2% | | Administrative Expenses | 165.3 | 194.3 | -14.9% | | Finance Costs | 61.6 | 60.5 | +1.8% | Key Financial Ratios | Metric | FY2025 | FY2024 | | :--- | :--- | :--- | | Gross Margin | 7.6% | 10.5% | | Return on Equity | 5.5% | 5.8% | | Interest Coverage Ratio | 4.4倍 | 4.0倍 | | Current Ratio | 1.2 | 1.2 | | Quick Ratio | 0.7 | 0.8 | | Capital Gearing Ratio | 47.1% | 50.2% | | Debt-to-Equity Ratio | 84.2% | 87.6% | - Total capital expenditure decreased by 69.4% year-on-year to HKD 310.1 million, primarily due to reduced investment in the Vietnam Nam Dinh factory5860 - The Group hedges a portion of its foreign exchange risk through forward foreign exchange contracts, primarily involving USD, RMB, and VND6567 Environmental and Social Reporting The Group received recognition for its environmental protection efforts, with subsidiaries in Nansha and Hong Kong awarded 'Guangdong-Hong Kong Cleaner Production Partners (Manufacturing)' - The Group's subsidiaries in Nansha and Hong Kong were awarded 'Guangdong-Hong Kong Cleaner Production Partners (Manufacturing)' in October 20247784 Product Research and Development The company is committed to product innovation, with its Nansha subsidiary receiving multiple industry awards for new products, including 'Top 30 Chinese Knitting Industry Enterprises of 2023' - The company's Nansha subsidiary received multiple awards for its innovative products, including 'Top 30 Chinese Knitting Industry Enterprises of 2023' and 'Excellence Award for China Popular Fabric Enterprises'79808185 Employees and Remuneration Policies As of March 31, 2025, the Group's full-time employee count increased from 4,874 to 5,115, with remuneration policies remaining largely unchanged, based on performance, skills, and knowledge, supplemented by additional benefits Full-time Employee Count | Fiscal Year | Full-time Employees | | :--- | :--- | | 2025 | 5,115 | | 2024 | 4,874 | Dividends The Board recommends a final dividend of HKD 5 cents per share, bringing the total FY2025 dividend to HKD 12 cents per share, consistent with the previous fiscal year FY2025 Dividend Details (HK Cents per Share) | Dividend Type | 2025 | 2024 | | :--- | :--- | :--- | | Interim Dividend | 7 | 7 | | Final Dividend (Proposed) | 5 | 5 | | Total Full-Year Dividend | 12 | 12 | Prospect and Outlook Management is optimistic about business prospects, anticipating medium-term growth in FY2026 driven by the full recovery of the Hai Duong factory, ramp-up of the Nam Dinh factory, focus on high-value functional synthetic fabrics, and expected interest rate reductions - FY2025 EBITDA increased by 12.5% to HKD 473.4 million, indicating improved operational efficiency8993 - Due to typhoon impact, the Vietnam Hai Duong factory shifted from a profit of HKD 21.1 million to a loss of HKD 25.8 million, with management expecting a recovery to 2024 profitability levels in FY20269093 - The newly established Vietnam Nam Dinh factory recorded a first-year loss of HKD 103.7 million, but management believes it has strong prospects and will contribute to the Group's growth9194 - Excluding special events like the typhoon and new factory start-up losses, the Group's FY2025 profit could have reached approximately HKD 304.2 million95101 - The Group faces a complex external environment including trade tariffs, weak consumer sentiment, and high inflation; short-term financial performance will be affected by tariff negotiations, but the company is focused on developing high-value fabric business for medium to long-term growth9697101 Profiles of Directors and Senior Management This section provides detailed biographies of the company's executive directors, independent non-executive directors, and senior management, including their ages, positions, responsibilities, professional qualifications, and extensive experience in the textile and related industries Executive Directors This section introduces the backgrounds of three executive directors: Chairman and CEO Mr. Okutomi Masaru, CFO and Company Secretary Mr. To Kit Wai, and Mr. Fukumoto Kyuichi, responsible for budget control and Vietnam business expansion, all possessing extensive experience in textiles, finance, and management Independent Non-Executive Directors This section introduces the backgrounds of four independent non-executive directors: Dr. Chan Yu Kwong, Mr. Ng Ching Wah, Mr. Sze Kwok Wing, and Ms. Ling Chi Wo, who bring broad expertise and experience in corporate management, telecommunications, investment banking, and the apparel industry Senior Management This section introduces the company's senior management team, covering COOs, CMO, CIO, and general managers/deputy general managers for HR, R&D, engineering, finance, and sales across Vietnam and China, all with over 20 years of senior experience in their respective fields Directors' Report This report outlines the Group's principal activities, business review, risk factors, financial performance, dividend policy, share repurchases, major customers and suppliers, and continuing connected transactions for FY2025, confirming compliance with regulations and providing future outlook Principal Risks and Uncertainties The Group faces principal risks including business risks from macroeconomic and political factors like US-China tensions and tariffs, strategic risks in achieving objectives, legal and compliance risks from contracts or regulations, and policy risks from changes in operating country policies - The Group's principal risks include business risks (US-China tensions, tariffs, global economic slowdown, inflation, and exchange rate fluctuations), strategic risks (achieving strategic objectives like acquisitions and joint ventures), legal and compliance risks (unenforceable contracts, litigation, or regulatory sanctions), and policy risks (changes in government policies, such as environmental regulations, in operating countries potentially leading to increased costs)140141142150 Purchase, Sale or Redemption of Shares In FY2025, the company repurchased 7.167 million shares on the Stock Exchange for approximately HKD 11.14 million, all of which were cancelled to enhance net asset value and earnings per share for overall shareholder benefit FY2025 Share Repurchase Details | Month of Repurchase | Number of Shares Repurchased | Highest Price per Share (HKD) | Lowest Price per Share (HKD) | Total Consideration (HKD) | | :--- | :--- | :--- | :--- | :--- | | 2024年7月 | 3,027,000 | 1.75 | 1.63 | 5,101,260 | | 2024年12月 | 4,140,000 | 1.48 | 1.42 | 6,036,710 | | Total | 7,167,000 | - | - | 11,137,970 | Major Customers and Suppliers In FY2025, the Group experienced high customer and supplier concentration, with the top five customers accounting for 74.4% of total sales and the largest customer for 45.0%, while the top five suppliers accounted for 64.4% of total purchases, with the largest supplier for 39.0% - Sales to the top five customers accounted for 74.4% of total sales, with the largest customer accounting for 45.0%185 - Purchases from the top five suppliers accounted for 64.4% of total purchases, with the largest supplier accounting for 39.0%185 - Major shareholder Toray accounted for approximately 0.8% of the Group's total purchases and 0.3% of total sales, constituting continuing connected transactions186187 Continuing Connected Transactions The Group engaged in several continuing connected transactions in FY2025, primarily involving sales of knitted fabrics to Crystal Group and procurement of yarn and sales of fabrics with major shareholder Toray Group, all conducted within annual caps and deemed fair and reasonable Transactions with Crystal Group | Transaction Type | FY2025 Annual Cap (Million HKD) | FY2025 Actual Transaction Value (Million HKD) | | :--- | :--- | :--- | | Sales of Knitted Fabric | 1,500 | 961.4 | Transactions with Toray Group | Transaction Type | FY2025 Annual Cap (Million HKD) | FY2025 Actual Transaction Value (Million HKD) | | :--- | :--- | :--- | | Procurement of Yarn | 100 | 24.8 | | Sales of Fabric | 70 | 13.1 | Corporate Governance Report This report details the company's corporate governance practices for FY2025, highlighting adherence to most Code provisions with two deviations: the Chairman and CEO roles held by the same individual, and one independent non-executive director's absence from the AGM Corporate Governance Practice of the Company The company complied with most applicable Code provisions in FY2025, with two deviations: the Chairman and CEO roles are combined, and an independent non-executive director was absent from the 2024 AGM - Deviation noted: The roles of Chairman and Chief Executive Officer are held by Mr. Okutomi Masaru; the company believes this arrangement provides strong leadership, with sufficient checks and balances through Board and senior management consultation on all major decisions265268 - Deviation noted: Independent Non-Executive Director Dr. Chan Yu Kwong was unable to attend the Annual General Meeting on August 15, 2024, due to other commitments266268 Board Committees The Board has three main committees—Audit, Nomination, and Remuneration—all chaired by independent non-executive directors, overseeing financial reporting, internal controls, director nominations, and executive compensation, reporting regularly to the Board - Audit Committee: Composed of four independent non-executive directors, chaired by Mr. Sze Kwok Wing; held 4 meetings during the year, reviewed financial reports and internal control system effectiveness, and recommended re-appointment of PricewaterhouseCoopers as auditor324325330 - Nomination Committee: Majority members are independent non-executive directors, chaired by Mr. Ng Ching Wah; held 1 meeting during the year, reviewed the implementation of the Board diversity policy, and made recommendations on director rotation and re-election336337338 - Remuneration Committee: Majority members are independent non-executive directors, chaired by Dr. Chan Yu Kwong; held 1 meeting during the year, reviewed the remuneration of directors and senior management351352353 Risk Management and Internal Control The Board is responsible for establishing and maintaining effective risk management and internal control systems, which were reviewed and deemed effective and adequate in FY2025, with no significant deficiencies identified - The Group has established a comprehensive risk management framework covering risk identification, assessment, management, and reporting, with a Risk Management Committee for oversight369370 - The internal audit department independently assesses risk management, internal control, and governance systems, reporting to the Audit Committee376377 - The company has a whistleblowing policy and channels for employees and business partners to raise concerns about potential misconduct385389 - The Board conducted an annual review of the systems in FY2025 and deemed the risk management and internal control systems effective and adequate386387 Independent Auditor's Report The Independent Auditor's Report by PricewaterhouseCoopers provides an unmodified opinion on the Group's consolidated financial statements for the year ended March 31, 2025, confirming a true and fair view of the financial position, performance, and cash flows, with 'Revenue Recognition' identified as a key audit matter Opinion Auditor PricewaterhouseCoopers issued an unmodified opinion, stating that the consolidated financial statements present a true and fair view of the Group's financial position as of March 31, 2025, and its financial performance and cash flows for the year then ended, in compliance with Hong Kong Financial Reporting Standards and the Hong Kong Companies Ordinance - The auditor issued an unmodified opinion (clean opinion) on the financial statements410413 Key Audit Matters The key audit matter for the year was 'Revenue Recognition' due to the high volume of transactions across multiple regions and customers, with audit procedures focusing on internal control testing, sample testing of sales transactions, and cut-off testing - The key audit matter was revenue recognition, primarily due to the high volume of transactions involving multiple regions and customers419424 - Auditor procedures included evaluating and testing internal controls over sales processes, sampling sales transaction invoices and shipping documents, testing transactions around year-end to ensure correct accounting period recognition, and testing related journal entries425426 Financial Information This section contains the Group's complete consolidated financial statements for the year ended March 31, 2025, including the consolidated statement of profit or loss, balance sheet, cash flows, and detailed notes, showing annual revenue of HKD 5.058 billion and total equity of HKD 2.883 billion Consolidated Statement of Profit or Loss For the year ended March 31, 2025, the Group's revenue increased by 6.7% to HKD 5.058 billion, though gross profit decreased to HKD 384 million due to higher cost of sales, with profit for the year at HKD 159 million and basic earnings per share at HKD 0.12 Consolidated Statement of Profit or Loss Summary (Thousand HKD) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | 5,057,570 | 4,739,010 | | Gross Profit | 383,985 | 497,437 | | Operating Profit | 200,314 | 275,526 | | Profit Before Income Tax | 194,257 | 202,862 | | Profit for the Year | 159,417 | 172,458 | | Profit Attributable to Equity Holders of the Company | 167,597 | 167,118 | | Basic Earnings Per Share (HKD) | 0.12 | 0.12 | Consolidated Balance Sheet As of March 31, 2025, the Group's total assets were HKD 5.310 billion, a slight decrease from the previous year, with total liabilities at HKD 2.427 billion and total equity at HKD 2.883 billion Consolidated Balance Sheet Summary (Thousand HKD) | Item | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Non-current Assets | 2,840,658 | 2,816,635 | | Current Assets | 2,469,708 | 2,749,336 | | Total Assets | 5,310,366 | 5,565,971 | | Current Liabilities | 2,087,294 | 2,248,121 | | Non-current Liabilities | 340,178 | 351,396 | | Total Liabilities | 2,427,472 | 2,599,517 | | Equity Attributable to Equity Holders of the Company | 2,882,690 | 2,954,272 | | Total Equity | 2,882,894 | 2,966,454 | Consolidated Statement of Cash Flows For the year ended March 31, 2025, the Group generated HKD 384 million in net cash from operating activities, used HKD 255 million in investing activities, and HKD 364 million in financing activities, resulting in a net decrease in cash and cash equivalents of HKD 234 million Consolidated Statement of Cash Flows Summary (Thousand HKD) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 384,051 | 540,854 | | Net Cash Used in Investing Activities | (254,567) | (666,510) | | Net Cash Used in Financing Activities | (363,502) | (162,022) | | Net Decrease in Cash and Cash Equivalents | (234,018) | (287,678) | | Cash and Cash Equivalents at Beginning of Year | 893,889 | 1,187,110 | | Cash and Cash Equivalents at End of Year | 666,507 | 893,889 | Notes to the Consolidated Financial Statements The notes to the financial statements provide detailed explanations and supplementary information on financial statement items, including accounting policies, segment information, balance sheet and profit or loss details, related party transactions, commitments, and contingent liabilities Revenue by Region (Thousand HKD) | Region | 2025 | 2024 | | :--- | :--- | :--- | | Vietnam | 2,568,849 | 2,329,801 | | China | 1,372,531 | 1,224,907 | | Indonesia | 234,020 | 151,641 | | Bangladesh | 211,605 | 278,172 | | Cambodia | 190,000 | 178,175 | | Other | 580,565 | 576,114 | | Total | 5,057,570 | 4,739,010 | - High customer concentration: Customer A and Customer B accounted for approximately 45% and 19% of the Group's revenue, respectively592 - As of March 31, 2025, the Group's total bank borrowings were HKD 1.221 billion, with an additional HKD 125 million loan from non-controlling interests; the Group has total bank financing facilities of approximately HKD 3.669 billion, of which HKD 2.448 billion remains unutilized762766 Financial Summary This section provides a summary of the Group's key financial data for the past five fiscal years (2021-2025), including consolidated results and major items from the consolidated balance sheet, illustrating trends in the Group's financial performance and position Five-Year Consolidated Results Summary (Million HKD) | Year Ended March 31 | 2025 | 2024 | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 5,058 | 4,739 | 5,019 | 6,066 | 5,385 | | Gross Profit | 384 | 497 | 490 | 776 | 862 | | Profit Attributable to Equity Holders of the Company | 168 | 167 | 269 | 573 | 721 | Five-Year Consolidated Balance Sheet Summary (Million HKD) | As of March 31 | 2025 | 2024 | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Non-current Assets | 2,841 | 2,817 | 2,296 | 2,124 | 2,069 | | Current Assets | 2,470 | 2,749 | 3,233 | 3,820 | 3,143 | | Total Assets | 5,310 | 5,566 | 5,529 | 5,944 | 5,211 | | Current Liabilities | 2,087 | 2,248 | 2,191 | 2,262 | 1,625 | | Non-current Liabilities | 340 | 351 | 250 | 252 | 233 | | Total Equity | 2,883 | 2,966 | 3,089 | 3,431 | 3,354 | Schedule of Group's Properties This section lists the Group's principal properties held for own use as of March 31, 2025, including industrial and office properties in Hong Kong, Guangzhou Nansha (China), and Hai Duong and Nam Dinh provinces (Vietnam), detailing their overview, lot numbers, and lease terms - The Group holds industrial and office properties in Hong Kong, Guangzhou Nansha (China), and Hai Duong and Nam Dinh provinces (Vietnam) for its own operations104310441047 Glossary This section defines and explains specific terms and abbreviations used in the annual report to assist readers in understanding the report's content
互太纺织(01382) - 2025 - 年度财报