Corporate Information This section details the company's core corporate information, including board members, committee structures, key senior management, legal advisors, auditors, share registrars, and principal bankers - The report provides detailed core corporate information, including the company's board members, committee structures, key senior management, legal advisors, auditors, share registrars, and principal bankers474851 Chairman's Statement The Group's total turnover increased by 5.8% to HK$135.5 million, with net loss attributable to owners narrowing to HK$73.7 million due to reduced fair value losses, while a new hotel was opened in Kaifeng amidst future geopolitical and economic uncertainties Key Financial Indicators for FY2025 | Indicator | 2025 FY (Approx.) | 2024 FY (Approx.) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Total Turnover | HK$135.5 million | HK$128.1 million | +5.8% | | Net Loss Attributable to Owners | HK$73.7 million | HK$75.7 million | -2.6% | | Loss Per Share | 5.03 HK cents | 5.16 HK cents | -2.5% | | Consolidated Net Assets | HK$1,242 million | HK$1,342 million | -7.5% | | Consolidated Net Assets Per Share | HK$0.85 | HK$0.91 | -6.6% | - The reduction in net loss was primarily driven by a decrease in fair value loss on investment properties from HK$32.36 million to HK$14.09 million, and a significant reduction in fair value loss on equity investments from HK$104.9 million to HK$13.68 million due to prior period disposals, partially offset by reduced dividend income (none this period, HK$74.87 million last period) and lower gains from investment property disposals63 - The Group expanded its hotel business by establishing a new hotel in Kaifeng, China, during the reporting period to capitalize on the local rich cultural heritage and tourism potential57 - Looking ahead, management anticipates potential economic volatility from geopolitical tensions, US Federal Reserve interest rate policies, and new tariff policies, while economic recovery in mainland China and the Hong Kong property market continue to face challenges68 Management Discussion and Analysis Revenue Performance by Business Segment | Business Segment | 2025 FY Revenue (Approx.) | 2024 FY Revenue (Approx.) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Property Development and Investment | HK$76.11 million | HK$86.28 million | -12% | | Trading Business | HK$40.26 million | HK$28.72 million | +40% | | Other Business (Hotel Operations) | HK$19.10 million | HK$13.08 million | +46% | | Total | HK$135.47 million | HK$128.07 million | +6% | Business Review The Group's total revenue increased by 6% to HK$135.5 million, primarily driven by 40% growth in trading and 46% in hotel operations, while property development and investment revenue declined by 12%, with trading business turning profitable due to a major order and hotel business benefiting from a new opening and higher occupancy Property Development and Investment Business This segment's revenue decreased by 12% to HK$76.11 million, with property sales down 19% due to a sale-and-leaseback transaction not recognized as revenue, while rental income grew 15% to HK$20.82 million, and operating loss narrowed significantly from HK$53.17 million to HK$27.19 million due to reduced fair value losses on investment properties Property Development and Investment Business Revenue Breakdown | Revenue Source | 2025 FY (Approx.) | 2024 FY (Approx.) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Property Sales | HK$55.29 million | HK$68.11 million | -19% | | Investment Property Rental Income | HK$20.82 million | HK$18.17 million | +15% | - The decline in property sales was primarily due to a sales transaction involving eight properties with a contract value of approximately HK$39.63 million, which was accounted for as a 'sale and leaseback transaction' and thus not recognized as sales revenue due to a subsequent leaseback agreement82 - Segment operating loss decreased from HK$53.17 million to HK$27.19 million, primarily benefiting from a reduction in fair value loss on investment properties from HK$32.36 million in the prior period to HK$14.09 million in the current period86 Trading Business Trading business revenue grew 40% to HK$40.26 million, turning profitable with an operating profit of HK$2.35 million (compared to a HK$2.78 million loss last year), primarily driven by a 51% increase in medical equipment sales due to a HK$9.5 million order from the Hong Kong Hospital Authority, while home security and automation product revenue decreased by 30% due to business termination in China and reduced Hong Kong demand Trading Business Revenue Breakdown | Revenue Source | 2025 FY (Approx.) | 2024 FY (Approx.) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Medical Equipment, Health and Epidemic Prevention Products | HK$37.47 million | HK$24.75 million | +51% | | Home Security and Automation Products | HK$2.79 million | HK$3.97 million | -30% | - The significant growth in medical equipment sales is primarily attributed to a large order recognized during the reporting period from the Hong Kong Hospital Authority for the sale and installation of a hydrotherapy pool at United Christian Hospital, with a contract value of approximately HK$9.5 million94 - This segment turned from a loss of HK$2.78 million last year to a profit of HK$2.35 million, primarily due to improved sales performance97 Other Business (Principally Hotel Operations) Hotel business revenue increased by 46% to HK$19.10 million, primarily due to the addition of a new Orange Hotel which achieved an 86% average occupancy rate since October 2024, while Holiday Inn Express also saw occupancy rise from 37% to 44%, leading to a narrowed operating loss from HK$10.12 million to HK$6.26 million Hotel Performance | Hotel Name | Opening Date | 2025 Average Occupancy Rate | 2024 Average Occupancy Rate | 2025 Average Room Rate (RMB) | 2025 Average RevPAR (RMB) | | :--- | :--- | :--- | :--- | :--- | :--- | | Holiday Inn Express | January 2020 | 44% | 37% | 221 | 115 | | Orange Hotel | October 2024 | 86% | Not Applicable | 315 | 270 | - The 46% revenue growth is primarily due to the Group increasing its number of operating hotels from one to two during the reporting period98 - The newly opened Orange Hotel recorded a total turnover of approximately HK$4.74 million from October 2024 to March 31, 2025, with an average occupancy rate as high as 86%110 Financial Review The Group's revenue grew 6% this year, with gross profit margin improving from 33% to 42% due to higher-margin residential sales and rental income, while other income and gains significantly decreased by 74% to HK$24 million due to prior year's substantial dividend income, and liquidity remained healthy with current ratio increasing to 2.28 and net gearing ratio decreasing to 17%, with capital expenditure primarily for new hotel leases and renovations Key Financial Ratios | Indicator | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Gross Profit Margin | 42% | 33% | | Current Ratio | 2.28 | 1.80 | | Net Gearing Ratio | 17% | 24% | - Gross profit margin increased by 9 percentage points, primarily due to higher gross margins from residential apartment sales in the current period and an increase in the proportion of high-margin rental income within the property segment's total revenue from 21% to 27%122123 - Other income and gains significantly decreased from HK$93 million to HK$24 million, mainly because the prior year included HK$74.87 million in dividend income from a disposed equity investment, which was absent in the current period126 - Total capital expenditure for the year was approximately HK$52.78 million, primarily for the acquisition of right-of-use assets for property leases and leasehold improvements for the newly opened Orange Hotel135 Prospects Looking ahead, the Group anticipates global economic uncertainties from geopolitics, high interest rates, and trade conflicts, while mainland China's property market recovery remains challenging despite government support, with the Group continuing sales and leasing of Kaifeng projects, expanding medical equipment and AI video analysis through associates, and leveraging Kaifeng's tourism potential in hotel operations while implementing strict cost controls - Property Development and Investment: Despite various government policies to stabilize the real estate market in mainland China, market recovery remains challenging. The Group will continue to sell and lease the remaining areas of its 'Century Mansion' and 'Expo Plaza' projects in Kaifeng149154161 - Medical Equipment: Demand for medical equipment is expected to continue growing with rising living standards and health awareness. The Group, through its associate Hope4Care Limited, is developing a smart rehabilitation training platform and has obtained ISO13485 medical software certification166168169 - Home Security and Automation Products: The Group, through its associate Axxonsoft Hong Kong Limited, continues to promote AI video analysis technology for applications such as crowd analysis and security surveillance, having successfully secured major airport projects in mainland China170175176 - Hotel Operations: The Group is optimistic about Kaifeng's potential as a tourist city and will continue to enhance hotel service quality. Concurrently, the industry faces challenges such as staff shortages and rising operating costs, prompting the Group to implement strict cost control measures to maintain competitiveness178179180 Report of the Directors Principal Activities The company's principal activity is investment holding, with its subsidiaries primarily engaged in (a) property development and investment; (b) trading of medical equipment and home security and automation products; and (c) hotel operations - The Group's core business segments encompass property, trading, and hotel operations195 Results and Appropriations The Group recorded a loss for the year, and the Board does not recommend the payment of any final dividend, with no interim dividend paid during the year - The Board decided not to declare any final dividend for the current year, consistent with the previous year196 Principal Risks and Uncertainties The Group faces key risks including economic and policy risks related to the mainland China property market, increased financial costs from interest rate fluctuations, impact of fair value changes on investment properties, uncertainties in complex land appreciation tax calculations in mainland China, and high volatility in hotel operations influenced by seasonality, economic conditions, and pandemics - Property Market Risk: The Group's property development and investment business is highly concentrated in mainland China, making it susceptible to changes in local economic, political, and real estate regulatory policies223 - Financial Risk: Rising interest rates will increase the Group's financing costs and customers' mortgage costs, while fair value revaluation of investment properties may cause non-cash fluctuations in the profit or loss statement224229 - Taxation Risk: The calculation of land appreciation tax in mainland China is complex and varies by region, leading to uncertainty in the final tax amount, which could impact the Group's cash flow and financial position230 - Hotel Operations Risk: Hotel performance is highly volatile and susceptible to various factors including seasonality, economic conditions, social stability, and pandemics231 Major Customers and Suppliers This year, sales to the top five customers accounted for 53% of total sales, with the largest customer representing 27%, while purchases from the top five suppliers constituted 44% of total purchases, with the largest supplier at 18%, indicating an increase in both customer and supplier concentration Customer and Supplier Concentration | Concentration | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Top Five Customers Sales Percentage | 53% | 46% | | Largest Customer Sales Percentage | 27% | 29% | | Top Five Suppliers Purchase Percentage | 44% | 42% | | Largest Supplier Purchase Percentage | 18% | 11% | Directors' and Chief Executive's Interests in Shares, Underlying Shares and Debentures As of March 31, 2025, Mr. Tse Man Shing, Managing Director and Chairman, held approximately 44.58% of the company's shares directly and indirectly, making him the controlling shareholder, with other directors also holding varying amounts of company shares Directors' Shareholdings (As of March 31, 2025) | Director Name | Total Shares Held | Percentage of Issued Share Capital | | :--- | :--- | :--- | | Mr. Tse Man Shing | 653,904,900 | 44.58% | | Mr. Wong King Ning | 39,644,100 | 2.70% | | Mr. Tse Wai Yip | 3,600,000 | 0.25% | | Dr. Ho Chung Tai | 727,500 | 0.05% | | Ir. Siu Man Po | 1,580,000 | 0.11% | Substantial Shareholders' Interests in Shares and Underlying Shares As of March 31, 2025, substantial shareholders, excluding directors, include Sparta Assets Limited (wholly owned by Chairman Mr. Tse Man Shing) and Granda Overseas Holding Co., Ltd (wholly owned by Mr. Chan For Fat), holding 35.79% and 17.76% of the company's shares respectively Substantial Shareholders' Shareholdings (As of March 31, 2025) | Shareholder Name | Number of Shares Held | Percentage of Issued Share Capital | | :--- | :--- | :--- | | Sparta Assets Limited | 524,902,500 | 35.79% | | Granda Overseas Holding Co., Ltd | 260,548,110 | 17.76% | Biographical Details of Directors and Senior Management This section provides detailed backgrounds, qualifications, and responsibilities of the company's executive directors, independent non-executive directors, and senior management team, highlighting the leadership of co-founder Mr. Tse Man Shing and the diverse professional expertise of the independent board members - Executive Directors: The core figure is Mr. Tse Man Shing, 81, co-founder, Managing Director, and Chairman, with over 40 years of experience in the construction industry; his son, Mr. Tse Wai Yip, and daughter, Ms. Tse Hoi Ying, also serve as Executive Directors, responsible for AI business/property investment and medical equipment trading respectively317323324 - Independent Non-Executive Directors: The team includes Dr. Ho Chung Tai (civil engineering expert), Ir. Siu Man Po (extensive experience in construction), Mr. Siu Kam Chau (practicing accountant), and Mr. Song Xiao Zhuang (structural engineering and legal background), providing professional oversight and independent judgment for corporate governance329337340 - Senior Management Team: Includes Mr. Lam Wing Wai, Company Secretary and Financial Controller, along with project managers and senior product managers with extensive experience in mainland construction projects, intelligent security systems, and business development348349350 Corporate Governance Report The company maintains high corporate governance standards, largely complying with the Corporate Governance Code, with the only deviation being the combined roles of Chairman and Managing Director held by Mr. Tse Man Shing, which the Board believes aids strategic execution, while the report details board structure, committee operations, risk management, internal controls, and shareholder communication policies The Board The Board comprises eight members, including four executive and four independent non-executive directors, responsible for leading and approving company strategy, holding four meetings during the reporting period with full attendance, and has adopted and regularly reviews a board diversity policy - The Board comprises eight members, with independent non-executive directors constituting half, meeting listing rule requirements366 Board and General Meeting Attendance | Director Name | Board Meetings | Annual General Meeting | Extraordinary General Meeting | | :--- | :--- | :--- | :--- | | Mr. Tse Man Shing | 4/4 | 1/1 | 1/1 | | Mr. Wong King Ning | 4/4 | 1/1 | 1/1 | | Mr. Tse Wai Yip | 4/4 | 1/1 | 1/1 | | Ms. Tse Hoi Ying | 4/4 | 1/1 | 1/1 | | Dr. Ho Chung Tai | 4/4 | 1/1 | 1/1 | | Ir. Siu Man Po | 4/4 | 1/1 | 1/1 | | Mr. Siu Kam Chau | 4/4 | 1/1 | 1/1 | | Mr. Song Xiao Zhuang | 4/4 | 1/1 | 1/1 | Board Committees The Board has three committees—Remuneration, Nomination, and Audit—all chaired by independent non-executive directors, responsible for reviewing remuneration policies, board composition and nominations, and overseeing financial reporting, risk management, and internal control systems, respectively, with each committee holding meetings and fulfilling its duties during the reporting period - Remuneration Committee: Composed of three independent non-executive directors and two executive directors, chaired by Mr. Siu Kam Chau, it held one meeting during the year to review remuneration policies and executive compensation packages420 - Nomination Committee: Composed of three independent non-executive directors and two executive directors, chaired by Mr. Song Xiao Zhuang, it held one meeting during the year to review the Board's structure, size, and composition422 - Audit Committee: Composed of three independent non-executive directors, chaired by Mr. Siu Kam Chau, it held two meetings during the year to review financial reporting, internal control systems, and the appointment of external auditors458459 Risk Management and Internal Monitoring The Group has established effective risk management and internal control systems, with the risk management system covering identification, assessment, and management phases, and internal controls compatible with the COSO 2013 framework, encompassing five key components, which the Board, through internal audit and Audit Committee review, deemed effective and adequate for the year - The Group's risk management system includes three stages: risk identification, assessment, and management, with no significant risks identified based on this year's risk assessment505506 - The internal control system complies with the COSO 2013 framework and features an independent internal audit function, conducting reviews semi-annually and reporting to the Audit Committee and the Board507514 - The Board conducted an annual review of the effectiveness of the risk management and internal control systems, concluding that the systems are effective and adequate, with sufficient resources and qualified personnel518519 Independent Auditor's Report Tannick Hong Kong Certified Public Accountants Limited issued an unmodified opinion on the Group's consolidated financial statements as of March 31, 2025, affirming they present a true and fair view of the Group's financial position, performance, and cash flows, while identifying and detailing audit procedures for two key audit matters: valuation of investment properties and assessment of net realizable value of completed properties held for sale - The auditor issued an unmodified opinion, stating that the financial statements present a true and fair view of the Group's financial position542 - Key Audit Matter One: Valuation of Investment Properties. Given the significant amount of investment properties (HK$642 million) and the substantial judgment and assumptions involved in valuation (e.g., rental values, capitalization rates), the auditor assessed the competence of the external valuer and evaluated the reasonableness of the valuation methodologies and key assumptions549553 - Key Audit Matter Two: Assessment of Net Realizable Value of Completed Properties Held for Sale. As properties held for sale are material (HK$459 million) and the assessment of net realizable value is subjective, the auditor evaluated the external valuer's report and examined the input data used in the valuation, such as market selling prices of comparable properties558564 Audited Financial Statements Consolidated Statement of Profit or Loss For the year ended March 31, 2025, the Group's revenue was HK$135.5 million, a 6% increase year-on-year, with gross profit growing 34% to HK$57.52 million; however, due to a significant decrease in other income and increased administrative expenses, the loss for the year was HK$75.89 million, largely consistent with the prior year's HK$76.77 million, with loss attributable to owners at HK$73.72 million Consolidated Statement of Profit or Loss Summary | Item (HK$ thousand) | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Income | 135,468 | 128,074 | | Gross Profit | 57,517 | 42,902 | | Other Income and Gains | 24,200 | 92,864 | | Loss Before Tax | (76,014) | (61,641) | | Loss for the Year | (75,889) | (76,774) | | Loss Attributable to Owners of the Company | (73,724) | (75,691) | | Basic and Diluted Loss Per Share | (5.03 HK cents) | (5.16 HK cents) | Consolidated Statement of Financial Position As of March 31, 2025, the Group's total assets decreased to HK$1,742 million from HK$1,979 million, primarily due to reduced properties held for sale and certain receivables, while total liabilities decreased from HK$637 million to HK$500 million, resulting in net assets of HK$1,242 million and an improved net current assets position from HK$379 million to HK$397 million, indicating enhanced short-term solvency Consolidated Statement of Financial Position Summary | Item (HK$ thousand) | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Non-current Assets | 1,036,760 | 1,125,138 | | Of which: Investment Properties | 641,576 | 661,908 | | Current Assets | 705,328 | 853,646 | | Of which: Properties Held for Sale | 459,313 | 580,992 | | Total Assets | 1,742,088 | 1,978,784 | | Current Liabilities | 308,766 | 475,128 | | Non-current Liabilities | 191,412 | 162,066 | | Total Liabilities | 500,178 | 637,194 | | Net Assets | 1,241,910 | 1,341,590 | Consolidated Statement of Cash Flows This year, net cash flow from operating activities significantly improved to HK$37.32 million from a net outflow of HK$32.44 million in the prior year, while net cash inflow from investing activities was HK$115 million, primarily from prior year's disposal of subsidiaries and investment properties, and net cash outflow from financing activities was HK$154 million, mainly for repayment of bank and other borrowings, with cash and cash equivalents at year-end totaling HK$18.34 million Consolidated Statement of Cash Flows Summary | Item (HK$ thousand) | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Net Cash Flows from/(used in) Operating Activities | 37,321 | (32,442) | | Net Cash Flows from Investing Activities | 115,193 | 148,254 | | Net Cash Flows used in Financing Activities | (154,358) | (102,869) | | Net (Decrease)/Increase in Cash and Cash Equivalents | (1,844) | 12,943 | | Cash and Cash Equivalents at Beginning of Year | 20,399 | 8,660 | | Cash and Cash Equivalents at End of Year | 18,341 | 20,399 | Notes to the Consolidated Financial Statements The notes to the financial statements provide detailed explanations and supplementary information for key financial statement items, including significant accounting policies, segment operating information, valuation details for investment properties and properties held for sale, financial instrument risk management, related party transactions, and detailed breakdowns of various assets and liabilities - Segment Information (Note 4): The report provides detailed disclosure of revenue, results, assets, and liabilities for the three segments: property development and investment, trading business, and hotel operations851 - Investment Properties (Note 15): As of March 31, 2025, investment properties had a carrying amount of HK$642 million, revalued by independent professional valuers, with a net fair value adjustment loss of HK$14.09 million recorded for the current year955 - Interest-bearing Bank and Other Borrowings (Note 26): As of March 31, 2025, the Group's total interest-bearing borrowings amounted to HK$194 million, of which HK$151 million were current liabilities, with some borrowings secured by the Group's properties and deposits10541062 Summary of Financial Information This section provides a summary of the Group's key financial data for the past five fiscal years (2021-2025), including results, assets, liabilities, and non-controlling interests, showing relatively stable revenue but continuous annual losses, with total assets and liabilities trending downwards in the last two years Five-Year Financial Performance Summary (HK$ million) | Fiscal Year | 2025 | 2024 | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 135.5 | 128.1 | 97.6 | 110.0 | 103.8 | | Loss for the Year | (75.9) | (76.8) | (93.9) | (31.0) | (38.9) | | Loss Attributable to Owners of the Company | (73.7) | (75.7) | (91.0) | (27.3) | (36.7) | Five-Year Assets and Liabilities Summary (HK$ million) | Fiscal Year | 2025 | 2024 | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 1,742.1 | 1,978.8 | 2,262.8 | 2,469.8 | 2,391.0 | | Total Liabilities | (500.2) | (637.2) | (795.5) | (797.7) | (804.6) |
迪臣发展国际(00262) - 2025 - 年度财报