东方企控集团(00018) - 2025 - 年度财报

Management Discussion and Analysis Results Overview The Group's total revenue decreased by 13% to HKD 545 million, and profit attributable to owners fell 30% to HKD 52.43 million, mainly due to print media and property valuation declines FY2025 Performance Summary | Metric | FY2025 (HKD) | FY2024 (HKD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 545,087,000 | 628,996,000 | -13% | | Profit Attributable to Owners | 52,434,000 | 75,096,000 | -30% | - Profit decline was primarily due to reduced publishing and advertising revenue from the print media business and a decrease in investment property valuations[7] Financial Resources and Liquidity The Group maintained ample liquidity with net current assets of approximately HKD 1.04 billion and cash and bank balances of HKD 526 million as of March 31, 2025, with a low capital gearing ratio of 0.4% Financial Position Summary (As of March 31, 2025) | Metric | 2025 (HKD) | 2024 (HKD) | | :--- | :--- | :--- | | Net Current Assets | 1,039,603,000 | 1,137,831,000 | | Time Deposits, Bank Balances & Cash | 526,248,000 | 560,937,000 | | Capital Gearing Ratio | 0.4% | 0.4% | Dividends The Board recommended a final dividend of HKD 0.01 per share, bringing the total annual dividend to HKD 0.02 per share, a significant reduction from HKD 0.06 last year Dividend Comparison | Dividend Type | FY2025 (HK cents/share) | FY2024 (HK cents/share) | | :--- | :--- | :--- | | Interim Dividend | 1 | 0 | | Final Dividend | 1 (Proposed) | 3 | | Special Dividend | 0 | 3 | | Total for the Year | 2 | 6 | Business Review All major business segments faced challenges, with media revenue declining due to changing consumption patterns, partially offset by cost controls, while Hong Kong investment property valuations fell, Australian hotel operations remained stable, and financing business scaled back due to high interest rates and falling property prices - Overall media business revenue decreased by 11% year-on-year, with Oriental Daily publishing and advertising revenue down 10% and digital media revenue down 18%, mitigated by strict control over raw material costs (-25%) and staff costs (-6%)[14] - Hong Kong investment property valuations decreased by 10%, partially offset by an approximate 1% increase in Australian hotel property valuations[15] - Loans and interest receivable in the financing business decreased by 11% year-on-year to approximately HKD 469 million, with interest income plummeting by 43% year-on-year; the Group is pursuing legal action for three overdue loans totaling approximately HKD 353 million and has taken possession of one collateralized asset[17] Business Outlook Management anticipates a prolonged Hong Kong economic recovery, continued media business challenges, but expects stabilization through cost-saving measures and a new e-paper subscription, while commercial property rents and valuations face downward pressure, and the financing business will implement stringent risk controls - To address media business pressures, the Group increased the retail price of Oriental Daily in October 2024 and launched a paid e-paper version in March 2025[18] - The Group will continue to actively seek buyers for its Australian hotel properties to lock in profits and increase cash flow[20] Employees and Remuneration Policy As of March 31, 2025, the Group's employee count was 779, a decrease of 77 from the previous year, with remuneration determined by industry practice, individual performance, and market conditions Employee Count Change | Date | Employee Count | | :--- | :--- | | March 31, 2025 | 779 | | March 31, 2024 | 856 | Directors' Report Principal Activities The Company operates as an investment holding company and provides corporate management services, with details of its principal subsidiaries' businesses outlined in Note 37 to the financial statements - The Company is an investment holding company providing corporate management services[25] Environmental Policies and Performance The Group is committed to environmental protection through waste and pollution reduction and resource optimization, implementing measures such as solar power, energy-efficient lighting, water-saving systems, paperless operations, compliant waste disposal, and upgrading all factory vehicles to Euro V emission standards - The Group's environmental policy aims to reduce waste and pollution and optimize resource utilization, believing this contributes to environmental protection and lower production costs[37] - Specific environmental measures include installing solar photovoltaic systems, using energy-efficient fluorescent tubes, implementing water-saving systems, promoting paperless operations, recycling printer cartridges, and utilizing virtual server architecture[41] Compliance with Laws and Regulations The Group complies with relevant laws and regulations across business operations, human resource management, and corporate governance, with no significant violations identified during the reporting period, and has established insider information procedures ensuring compliance with intellectual property, privacy, labor laws, and listing rules - At the business level, the Group emphasizes copyright protection and advertising content review, complying with intellectual property laws and the Personal Data (Privacy) Ordinance[40] - At the corporate level, the Group complies with the Companies Ordinance, Listing Rules, and Securities and Futures Ordinance, and has established internal control procedures for handling and disclosing inside information[44] - During the reporting period, the Company found no violations of relevant laws and regulations that had a significant impact on the Company[45] Relationships with Stakeholders The Group values employees as key assets, providing training and incentives, resulting in a reduced staff turnover rate from 10.6% to 6.6%, and maintains long-term stable relationships with major customers and suppliers without significant disputes during the period - During the reporting period, the natural staff turnover rate was approximately 6.6%, a decrease from 10.6% last year[49] - The Group has established long-term stable business relationships with advertisers, readers, and suppliers, with no serious or significant disputes occurring during the period[49] Major Customers and Suppliers The Group exhibits high customer and supplier concentration, with the top five customers accounting for 62% of total turnover and the largest customer for 29%, while the top five suppliers represent 73% of total purchases and the largest supplier 21% Customer and Supplier Concentration | Category | Percentage | | :--- | :--- | | Top Five Customers | Approx. 62% of Turnover | | Largest Customer | Approx. 29% of Turnover | | Top Five Suppliers | Approx. 73% of Total Purchases | | Largest Supplier | Approx. 21% of Total Purchases | Corporate Governance Report Board of Directors The Board comprises three executive, one non-executive, and three independent non-executive directors with diverse expertise, holding four meetings during the reporting period with full attendance, effectively fulfilling its guidance and oversight responsibilities for Group affairs - The Board consists of 7 members, including 3 executive directors, 1 non-executive director, and 3 independent non-executive directors, meeting the Listing Rules' requirement for independent non-executive directors to comprise at least one-third of the Board[99] - Four Board meetings were held during the reporting period, with all directors attending all meetings[106] Board Committees The Board has six committees—Executive, Audit, Remuneration, Nomination, Investment, and Corporate Social Responsibility—each fulfilling its duties according to its terms of reference, ensuring proper company oversight and high corporate governance standards - The Audit Committee, comprising two independent non-executive directors and one non-executive director, is responsible for overseeing financial reporting, risk management, and internal control systems[112] - The Remuneration Committee, composed of two independent non-executive directors, is responsible for reviewing and recommending remuneration for directors and senior management[114] - The Nomination Committee, consisting of one executive director and two independent non-executive directors, is responsible for reviewing Board structure and diversity, and recommending director appointments[115] Risk Management and Internal Control The Group has established a comprehensive risk management and internal control system, maintained and annually reviewed by the Board, with independent professional consultants "Grand Ascent International" conducting internal audits that found no material deficiencies, deeming the system effective and adequate - The Board is responsible for maintaining the risk management and internal control system and reviewing its effectiveness at least once annually[131] - The Group engaged independent professional consultant "Grand Ascent International Appraisal Limited" for internal audits, which reviewed areas such as loan financing, corporate governance, sales revenue, and cash management during the reporting period, concluding that the Group's risk management and internal control system is effective and adequate[136][137] - The Group has not yet established an internal audit function, but the Audit Committee and the Board will continue to review this need annually[137] Auditor's Remuneration During the reporting period, total remuneration paid to auditors for audit and non-audit services was approximately HKD 1.429 million Auditor's Remuneration Details | Auditor | Remuneration (HKD thousand) | | :--- | :--- | | Forvis Mazars CPA Limited | 1,180 | | Local Australian Auditor | 249 | | Total | 1,429 | Independent Auditor's Report Auditor's Opinion Forvis Mazars CPA Limited, the auditor, believes the consolidated financial statements fairly and accurately reflect the Group's financial position as of March 31, 2025, and its financial performance and cash flows for the year then ended, having been properly prepared in compliance with the Companies Ordinance - The auditor issued an unmodified opinion on the Group's consolidated financial statements[163] Key Audit Matters The auditor identified two key audit matters: impairment assessment of property, plant, and equipment due to its materiality and significant management judgments on future cash flows and discount rates, and valuation of investment properties due to their materiality and fair value measurement involving significant judgments - Key Audit Matter One: Impairment assessment of property, plant, and equipment (PP&E); due to challenges in the traditional newspaper industry, management identified impairment indicators and engaged independent valuers, with the auditor focusing on the reasonableness of valuation methodologies and key assumptions such as discount rates and cash flow forecasts[167][168] - Key Audit Matter Two: Investment property valuation; investment properties are measured at fair value, representing approximately 19.1% of total assets, and their valuation relies on independent professional valuers' assessments involving significant judgment, with the auditor focusing on the reasonableness of valuation models, significant assumptions, and input data[170][171] Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income This year, the Group's revenue was HKD 545 million, a 13% year-on-year decrease; profit before tax was HKD 64.11 million, down 31%; profit for the year was HKD 53.11 million, down 31%; and basic earnings per share were HKD 0.0219, lower than last year's HKD 0.0313 FY2025 Key Performance Indicators (HKD thousand) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | 545,087 | 628,996 | | Profit Before Tax | 64,106 | 93,422 | | Profit for the Year | 53,107 | 76,538 | | Profit Attributable to Owners of the Company | 52,434 | 75,096 | | Basic Earnings Per Share | 2.19 cents | 3.13 cents | Consolidated Statement of Financial Position As of March 31, 2025, the Group's total assets were HKD 1.809 billion, total liabilities HKD 149 million, and net assets HKD 1.660 billion, with both total assets and net assets decreasing compared to the previous year Financial Position Summary (HKD thousand) | Metric | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Non-current Assets | 699,535 | 739,925 | | Current Assets | 1,109,557 | 1,216,846 | | Total Assets | 1,809,092 | 1,956,771 | | Current Liabilities | 69,954 | 79,015 | | Non-current Liabilities | 79,458 | 83,316 | | Total Liabilities | 149,412 | 162,331 | | Net Assets | 1,659,680 | 1,794,440 | Consolidated Statement of Cash Flows This year, operating activities generated a net cash inflow of approximately HKD 126 million, compared to a net outflow of HKD 113 million last year, primarily due to improved working capital; investing activities generated a net inflow of HKD 20.89 million; financing activities resulted in a net cash outflow of HKD 170 million due to dividend payments; ultimately, cash and cash equivalents decreased by HKD 22.92 million Cash Flow Summary (HKD thousand) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash From/(Used In) Operating Activities | 125,782 | (113,193) | | Net Cash From Investing Activities | 20,886 | 17,680 | | Net Cash Used In Financing Activities | (169,589) | (1,300) | | Net Decrease in Cash and Cash Equivalents | (22,921) | (96,813) | Notes to the Consolidated Financial Statements The notes to the financial statements provide detailed explanations on key accounting policies, critical accounting estimates, segment information, asset and liability breakdowns, related party transactions, and risk management Note 7 Segment Information The Group's business is divided into three segments: newspaper publishing, loan business, and other operations; newspaper publishing is the largest revenue source, contributing HKD 500 million in revenue and HKD 64.61 million in profit, while the loan business contributed HKD 25.84 million in revenue and HKD 15.16 million in profit; geographically, most revenue (98%) and non-current assets (70%) are from Hong Kong FY2025 Segment Performance (HKD thousand) | Segment | Revenue | Performance (Profit/Loss) | | :--- | :--- | :--- | | Newspaper Publishing | 500,434 | 64,611 | | Loan Business | 25,843 | 15,159 | | All Other Operating Segments | 18,810 | (7,187) | FY2025 Revenue and Non-current Assets by Geographical Area (HKD thousand) | Region | Revenue from External Customers | Non-current Assets | | :--- | :--- | :--- | | Hong Kong | 533,699 | 473,332 | | Australia | 11,388 | 205,538 | Note 23 Loans and Interest Receivable As of the reporting period end, total loans and interest receivable amounted to HKD 476 million, fully collateralized by Hong Kong properties, with a weighted average effective annual interest rate of 10.69%; the Directors believe no impairment provision is needed for overdue loans due to sufficient collateral value - Total loans and interest receivable amounted to HKD 476 million, a 9.6% year-on-year decrease; all loans are collateralized by Hong Kong properties, with a weighted average effective annual interest rate of 10.69%[376] - Three loans from three borrowers, totaling approximately HKD 353 million, are overdue, and the Group has initiated legal proceedings for recovery; considering the collateral market value of approximately HKD 388 million, the Directors believe no loss allowance is required[17][420] Note 36 Financial Risk Management The Group's primary financial risks include foreign currency risk (mainly AUD), credit risk, and interest rate risk; there is no formal foreign currency hedging policy; credit risk from receivables and loans involves customer concentration but is managed through collateral and continuous monitoring; interest rate risk is primarily related to bank deposits - Credit risk concentration is high, with the largest customer and top five customers in the newspaper publishing segment accounting for 17% and 32% of trade receivables, respectively; and the largest customer and top five customers in the loan business segment accounting for 32% and 99% of total loans receivable, respectively[414][417] - Interest rate sensitivity analysis indicates that a 0.5% overall increase/decrease in interest rates would increase/decrease the Group's profit before tax by approximately HKD 1.73 million[426] Note 40 Directors' Remuneration During the reporting period, total remuneration paid to directors was approximately HKD 40.36 million, an increase from HKD 38.55 million last year, with Executive Directors Mr. Ma Ching Fat and Mr. Ma King Ho receiving the highest remuneration at HKD 20.82 million and HKD 16.27 million, respectively FY2025 Total Directors' Remuneration | Category | Total Remuneration (HKD thousand) | | :--- | :--- | | Executive Directors | 39,796 | | Non-executive Directors | 150 | | Independent Non-executive Directors | 515 | | Total | 40,361 | Five-Year Financial Summary Five-Year Financial Summary Over the past five years, the Group's revenue and profit have shown a continuous downward trend, with revenue decreasing from approximately HKD 700 million in FY2021 to HKD 545 million in FY2025, and profit attributable to owners significantly declining from HKD 211 million in FY2021 to HKD 52.43 million in FY2025 Five-Year Financial Data Summary (HKD thousand) | Fiscal Year | 2021 | 2022 | 2023 | 2024 | 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 699,619 | 735,782 | 677,165 | 628,996 | 545,087 | | Profit Attributable to Owners | 211,238 | 166,744 | 166,564 | 75,096 | 52,434 | | Total Assets | 2,082,411 | 2,057,888 | 1,892,177 | 1,956,771 | 1,809,092 | | Total Liabilities | (143,956) | (193,833) | (162,322) | (162,331) | (149,412) |