宝光实业(00084) - 2025 - 年度财报

Financial Summary The Group's financial performance for FY2025 saw a revenue decline and a shift to net loss, while shareholders' equity remained stable with no dividends distributed Five-Year Financial Summary The company recorded HK$615 million in revenue for FY2025, a 19.9% year-on-year decrease, and a net loss of HK$107 million compared to a profit of HK$473 million in the prior year, with shareholders' equity remaining stable at approximately HK$913 million and no dividends paid Five-Year Financial Summary (As at March 31) | Indicator | 2021 | 2022 | 2023 | 2024 | 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue (HK$ million) | 706.3 | 692.5 | 805.5 | 767.6 | 615.2 | | Net (Loss)/Profit for the Year (HK$ million) | (81.6) | (106.5) | 51.1 | 473.3 | (106.8) | | Total Assets (HK$ million) | 1,357.8 | 1,182.0 | 1,063.1 | 1,428.6 | 1,426.1 | | Shareholders' Equity (HK$ million) | 487.5 | 378.1 | 424.1 | 906.6 | 913.2 | | (Loss)/Earnings Per Share (HK$) | (0.0783) | (0.102) | 0.0485 | 0.4521 | (0.1028) | | Dividend (HK$) | – | – | – | – | – | Report of the Directors This section details the Group's business operations, financial performance, board changes, and compliance with governance standards for the fiscal year Business Review The Group's core business involves investment holding, watch retail under the "CITY CHAIN" brand, and watch wholesale across Hong Kong, Singapore, Malaysia, Macau, and Brunei, with a focus on cash flow, inventory management, stakeholder relationships, and regulatory compliance in a challenging market - The Group's core business is watch retail and wholesale, operating under the "CITY CHAIN" brand, with a network covering Hong Kong, Singapore, Malaysia, Macau, and Brunei[11][17] - To navigate the challenging business environment, the Group adopted a conservative inventory ordering strategy and enhanced cash flow management to improve liquidity[23][24] - The Group values its relationships with stakeholders, with some brand agency partnerships exceeding 20 years and many distributor collaborations averaging over 25 years[17][19] Results and Dividends The Group's results for the year ended March 31, 2025, are presented in the consolidated income statement, with no interim or final dividends proposed and distributable reserves remaining consistent with the prior year - No interim dividend was paid for FY2025, and the Board does not recommend a final dividend, consistent with FY2024[44][45][53] - As of March 31, 2025, the company's distributable reserves amounted to HK$32.737 million, remaining unchanged from the same period in 2024[49][57] Directors and Interests The reporting period saw changes in the Board of Directors, with Mr. Joseph C. C. Wong, Chairman and CEO, holding a significant stake, and no material interests of directors in major transactions beyond disclosed connected transactions - Board member changes: Jeff Ho Chi Kin and Honnus Cheung Ho Ling retired on August 20, 2024; Chan Cheuk Pan and Lai Chun Yu were appointed as independent non-executive directors on the same date[59][63] Major Directors' Shareholdings (As at March 31, 2025) | Director Name | Capacity | Total Shares Held | Approx. % of Issued Shares | | :--- | :--- | :--- | :--- | | Mr. Joseph C. C. Wong | Chairman and CEO | 549,436,714 | 52.59% | Purchase, Sale or Redemption of Listed Securities In FY2025, the company repurchased 9,555,000 shares on the SEHK for approximately HK$839,000, with a portion cancelled and the remainder held as treasury shares by year-end - The company repurchased 9,555,000 shares for approximately HK$839,000 from August to September 2024[101][106] - As of the fiscal year-end, 1,716,000 of the repurchased shares were cancelled, and 7,839,000 shares were held as treasury shares[102][107] Major Customers and Suppliers The Group's procurement is highly concentrated, with the largest supplier accounting for 64% and the top five for 79% of total purchases, while sales are more dispersed, and an executive director holds a minor beneficial interest in one of the top five suppliers Major Customer and Supplier Proportions | Category | Proportion | | :--- | :--- | | Procurement | | | Largest Supplier | 64% | | Top Five Suppliers | 79% | | Sales | | | Largest Customer | 3% | | Top Five Customers | 7% | Continuing Connected Transactions The Group engaged in various continuing connected transactions in FY2025, primarily involving property leases and management services with related parties, all conducted on normal commercial terms and confirmed as fair and reasonable by independent oversight Overview of Major Continuing Connected Transactions (FY2025) | Transaction Nature | Connected Party | Actual Expense/(Income) (HK$ thousand) | Annual Cap (HK$ thousand) | | :--- | :--- | :--- | :--- | | Lease of properties and license for use | Mengiwa Property Investment Limited (MPIL) & Active Lights Company Limited (ALCL) | (7,882) | (8,100) | | Provision of management and property agency services | MPIL | 2,580 | 3,121.8 | | Lease of properties to Optical 88 Entities | Optical 88 Entities | 3,396 | 5,000 | - All continuing connected transactions were reviewed by independent non-executive directors and received an unqualified opinion from the company's auditor, confirming their fairness and compliance[118][119] Management Discussion and Analysis This section provides an in-depth analysis of the Group's financial performance, business segment results, future outlook, financial position, and human resources for the fiscal year Overall Performance In FY2025, the Group's turnover decreased by 19.9% to HK$615 million, shifting from a profit of HK$473 million to a loss of HK$107 million, primarily due to the absence of prior year's one-off gains, with gross margin declining and inventory balance improving Key Financial Indicators for FY2025 | Indicator | 2025 Fiscal Year | 2024 Fiscal Year | | :--- | :--- | :--- | | Group Turnover | HK$615.2 million | HK$767.6 million | | (Loss)/Profit Attributable to Owners of the Company | (HK$107.0) million | HK$473.2 million | | (Loss) Excluding Special Items | (HK$82.3) million | (HK$69.8) million | | Gross Margin | 45.7% | 50.2% | | Period-end Inventory Balance | HK$207.7 million | HK$226.3 million | - The shift from profit to loss was primarily due to a HK$544.2 million gain from the disposal of a subsidiary and a batch of watches in FY2024[165][168] Business Segment Analysis The core retail business, "CITY CHAIN" Group, experienced a decline in turnover and recorded a loss before interest and tax, driven by weak retail markets in Greater China and the termination of mainland retail operations, while Southeast Asia's loss narrowed and the supply chain management segment saw reduced turnover and profit CITY CHAIN Group The "CITY CHAIN" Group's turnover in FY2025 decreased by 24.0% to HK$413 million, resulting in a loss before interest and tax of HK$65.7 million, primarily due to the weak retail environment in Greater China CITY CHAIN Group Performance | Indicator | 2025 Fiscal Year | 2024 Fiscal Year | | :--- | :--- | :--- | | Turnover | HK$413.0 million | HK$543.0 million | | Loss Before Interest and Tax (LBIT) | (HK$65.7) million | (HK$2.6) million | - The Group operates approximately 80 "CITY CHAIN" and "Solvil et Titus" brand stores and online shops across Hong Kong, Macau, Singapore, Thailand, and Malaysia[173] Greater China Greater China's turnover declined by 29.7% to HK$226 million, resulting in a loss before interest and tax of HK$57.5 million due to a weak retail climate, changing tourist spending, and a strong HKD, leading to the termination of mainland retail operations, though Hong Kong's online business achieved profitability - Greater China turnover decreased by 29.7% to HK$225.9 million, recording an LBIT of HK$57.5 million (compared to a profit of HK$8 million last year)[179][180] - As a strategic move, the Group decided to terminate its retail operations in mainland China, which accounted for 2.7% of the Group's FY2025 revenue[179] - Hong Kong's online business achieved profitability through successful IP product launches, and the Group will continue to invest in e-commerce[181][183] Southeast Asia Southeast Asia's turnover decreased by 15.5% to HK$187 million, but its loss before interest and tax narrowed from HK$10.6 million to HK$8.2 million due to the closure of unprofitable stores, while its e-commerce business remained profitable - Southeast Asia turnover decreased by 15.5% to HK$187.1 million, but LBIT reduced from HK$10.6 million to HK$8.2 million, primarily due to closing unprofitable stores[185] - The e-commerce business in Southeast Asia remained profitable, benefiting from continuous investment in e-commerce platforms[186] Supply Chain Management and Wholesale Trading This segment's turnover decreased by 9.9% to HK$202 million, and its earnings before interest and tax (EBIT) fell by 18.0% to HK$22.3 million, with plans to enhance sales to retailers through marketing and service support Supply Chain and Wholesale Trading Segment Performance | Indicator | 2025 Fiscal Year | 2024 Fiscal Year | | :--- | :--- | :--- | | Turnover | HK$202.2 million | HK$224.5 million | | Earnings Before Interest and Tax (EBIT) | HK$22.3 million | HK$27.2 million | Group Outlook Facing a challenging retail market with evolving customer behavior, the Group plans to enrich its product portfolio, optimize marketing strategies, invest more in its own watch brands for long-term gross margin growth, and explore new market opportunities in regions like the "Belt and Road" countries - The Group will increase resource allocation to its own brands (Solvil et Titus, CYMA, Pronto, Delvina, Ellesse) to enhance long-term gross margin and market competitiveness[192][195] - To adapt to evolving global markets, the Group is exploring new business opportunities, particularly in "Belt and Road" countries, to expand the influence of its own brands[192][195] Finance As of March 31, 2025, the Group maintained a sound financial position with stable shareholders' equity, a slight decrease in net debt and gearing ratio, and a current ratio of 1.04, with properties pledged for bank financing and a revaluation loss on investment properties Financial Position Summary (As at March 31) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Group Gearing Ratio | 17.4% | 18.3% | | Shareholders' Equity | HK$913.2 million | HK$906.6 million | | Net Debt | HK$158.6 million | HK$166.3 million | | Bank Loans | HK$241.9 million | HK$234.0 million | | Bank Balances and Cash | HK$83.3 million | HK$67.7 million | | Current Ratio | 1.04 | 1.06 | - Properties, plant and equipment, and investment properties valued at HK$516.4 million are pledged to secure bank facilities[200] - Investment properties were revalued by independent valuers, resulting in a revaluation loss of HK$24.7 million for the year[200][204] Human Resources As of March 31, 2025, the Group's workforce decreased to approximately 645 employees, with total staff costs slightly lower than the previous year, and the Group continues to review remuneration policies and provide KPI-linked bonuses Employee Data | Indicator | As at March 31, 2025 | As at March 31, 2024 | | :--- | :--- | :--- | | Total Employees | Approx. 645 | Approx. 825 | | Total Annual Staff Costs | HK$181.9 million | HK$183.9 million | Independent Auditor's Report This section presents the auditor's opinion on the Group's financial statements and highlights key audit matters that required significant judgment and estimation Opinion RSM Hong Kong believes the consolidated financial statements fairly present the Group's financial position as of March 31, 2025, and its financial performance and cash flows for the year, prepared in compliance with the Hong Kong Companies Ordinance - The auditor issued a standard unqualified opinion on the company's consolidated financial statements for FY2025[212] Key Audit Matters The auditor identified three key audit matters that required significant management judgment and estimates: the net realizable value of inventories, the impairment assessment of property, plant and equipment and right-of-use assets, and the assessment of the Group's going concern ability - Net Realizable Value of Inventories: This is a key audit matter due to the significant inventory amount and judgment involved in determining provisions; the auditor assessed the Group's inventory provisioning policy, tested the accuracy of inventory aging reports, and evaluated the reasonableness of management's assumptions[217] - Impairment Assessment of Assets: Impairment assessment of property, plant and equipment and right-of-use assets involves significant judgment; the auditor evaluated management's process for identifying impairment indicators and challenged key assumptions (e.g., growth rates, budgeted sales) in management's cash flow forecasts[218][219] - Going Concern Assessment: Significant doubt exists regarding going concern due to substantial bank loans repayable on demand and relatively low cash levels; the auditor assessed management's cash flow forecasts, the availability of unutilized bank facilities, and identified potential mitigating measures[219][220] Consolidated Financial Statements This section provides an overview of the Group's consolidated income statement, balance sheet, and cash flow statement, reflecting its financial performance and position for the fiscal year Consolidated Income Statement For the year ended March 31, 2025, the Group's revenue decreased by 19.9% to HK$615 million, resulting in a net loss of HK$107 million compared to a net profit of HK$473 million in the prior year, primarily due to the absence of a significant disposal gain, leading to a basic loss per share of 10.28 HK cents Consolidated Income Statement Summary (For the year ended March 31) | Item (HK$ thousand) | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | 615,215 | 767,561 | | Gross Profit | 280,856 | 385,673 | | (Loss)/Profit Before Tax | (103,149) | 481,706 | | (Loss)/Profit for the Year | (106,788) | 473,325 | | (Loss)/Profit Attributable to Owners of the Company | (106,999) | 473,151 | | Basic (Loss)/Earnings Per Share (HK cents) | (10.28) | 45.21 | Consolidated Balance Sheet As of March 31, 2025, the Group's total assets remained largely stable at HK$1.426 billion, with a slight decrease in total liabilities to HK$507 million and a modest increase in shareholders' equity to HK$913 million, driven by an increase in non-current assets and a decrease in current assets Consolidated Balance Sheet Summary (As at March 31) | Item (HK$ thousand) | 2025 | 2024 | | :--- | :--- | :--- | | Total Assets | 1,426,127 | 1,428,625 | | Non-current Assets | 980,270 | 965,846 | | Current Assets | 445,857 | 462,779 | | Total Liabilities | 506,696 | 516,340 | | Non-current Liabilities | 76,387 | 78,641 | | Current Liabilities | 430,309 | 437,699 | | Total Equity | 919,431 | 912,285 | | Shareholders' Equity | 913,229 | 906,580 | Consolidated Statement of Cash Flows In FY2025, the Group generated HK$24.79 million in net cash from operating activities, a significant improvement from the prior year's outflow, with net cash from investing activities of HK$54.57 million and net cash used in financing activities of HK$61.75 million, resulting in an increase in year-end cash and cash equivalents to HK$83.34 million Consolidated Statement of Cash Flows Summary (For the year ended March 31) | Item (HK$ thousand) | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash From Operating Activities | 24,793 | (593) | | Net Cash From Investing Activities | 54,570 | 147,249 | | Net Cash Used In Financing Activities | (61,754) | (174,104) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 17,609 | (27,448) | | Cash and Cash Equivalents at Beginning of Year | 67,711 | 85,426 | | Cash and Cash Equivalents at End of Year | 83,339 | 67,711 | Notes to the Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the consolidated financial statements, including the basis of preparation, revenue and segment information, and inventory details Note 2. Basis of Preparation (Going Concern) The financial statements are prepared on a going concern basis, despite significant doubt arising from HK$242 million in bank loans repayable on demand versus HK$83.34 million in cash, as the Board believes the Group has sufficient working capital due to good bank relationships, unutilized facilities, and cost controls - As of March 31, 2025, the Group had approximately HK$242 million in bank loans repayable on demand, while cash and cash equivalents were only HK$83.34 million, which could raise significant doubt about its ability to continue as a going concern[263][267] - Management believes the Group can continue as a going concern based on good relationships with banks, unutilized bank facilities (approximately HK$89.02 million), and cost control measures[265][268] Note 8. Revenue and Segment Information In FY2025, the Group's total revenue was HK$615 million, with watch retail contributing HK$413 million (Greater China HK$226 million, other Asia HK$187 million) and watch wholesale contributing HK$202 million, showing Greater China as the largest market but with a segment loss, while other Asia remained profitable External Sales Revenue by Business Segment (FY2025) | Business Segment | Revenue (HK$ thousand) | | :--- | :--- | | Watch Retail - Greater China | 225,887 | | Watch Retail - Other Asia | 187,119 | | Watch Wholesale Business | 202,209 | | Total | 615,215 | Revenue and Segment Results by Geographical Region | Region | Revenue (HK$ thousand) - 2025 | Segment Results (HK$ thousand) - 2025 | Revenue (HK$ thousand) - 2024 | Segment Results (HK$ thousand) - 2024 | | :--- | :--- | :--- | :--- | :--- | | Hong Kong, Macau and Mainland China | 309,403 | (46,199) | 423,092 | 21,992 | | Other Asia | 303,857 | 7,333 | 343,670 | 1,877 | | Europe | 1,955 | (4,574) | 799 | 786 | Note 23. Inventories As of March 31, 2025, the Group's net inventory decreased by 8.2% to HK$208 million, with a gross value of HK$428 million and a provision of HK$220 million, and a HK$25.64 million provision reversal due to increased consumption of previously provided inventory Inventory Composition (As at March 31) | Item (HK$ thousand) | 2025 | 2024 | | :--- | :--- | :--- | | Raw Materials | 138,335 | 169,350 | | Work-in-progress | 20,560 | 8,655 | | Finished Goods | 269,033 | 307,596 | | Total | 427,928 | 485,601 | | Less: Inventory provision | (220,274) | (259,350) | | Net Value | 207,654 | 226,251 | Environmental, Social and Governance Report This report outlines the Group's commitment to sustainability, covering its climate resilience strategies, employment practices, and responsible supply chain management Climate Resilience and Adaptation The Group is dedicated to addressing climate change, enhancing disclosures in line with IFRS S2, identifying physical and transition risks, and setting 2029 ESG targets for reducing greenhouse gas emissions, waste, and energy consumption, despite increases in GHG and energy density this fiscal year due to business operations 2029 ESG Targets and FY2024/2025 Progress | Focus Area | 2029 Target (vs. FY2023/2024 baseline) | FY2024/2025 Progress | | :--- | :--- | :--- | | Greenhouse Gas Emissions | Reduce GHG emission density by 2% | Emission density increased by 12% due to business operations | | Waste | Reduce non-hazardous waste density by 2% | Waste density decreased by 3% through enhanced recycling and sustainable packaging | | Energy | Reduce energy consumption density by 2% | Energy consumption density increased by 14% due to increased production to meet market demand | Employment and Labour Practices The Group values its employees, fostering a fair, diverse, and inclusive work environment, with 645 employees (61% female) as of March 31, 2025, a total turnover rate of 39%, a strong focus on health and safety, and continuous training and development opportunities - As of March 31, 2025, total employees were 645, with 393 females (61%) and 252 males (39%)[941][942] - During the reporting period, the Group's total employee turnover rate was 39%; by region, Greater China's turnover rate was 40%, and Southeast Asia's was 38%[951][954] - During the reporting period, 65% of employees received training, with an average of 4.3 hours per person[966] Supply Chain Management The Group is committed to partnering with suppliers who uphold fair, honest, and responsible values, conducting rigorous evaluations covering compliance, factory conditions, environmental practices, and employee welfare, with 58 suppliers (32 in Greater China), prioritizing local and eco-friendly options, and enforcing ethical standards against child or forced labor Number of Suppliers by Region (FY2025) | Region | Number of Suppliers | | :--- | :--- | | Greater China | 32 | | Other Asia | 18 | | Other | 8 | | Total | 58 | Corporate Governance Report This report details the Group's corporate governance framework, including the composition and responsibilities of the Board of Directors and its committees, as well as the risk management and internal control systems Board of Directors The Board, comprising three executive and three independent non-executive directors, is responsible for leading and monitoring the Group, with the Chairman and CEO roles combined in Mr. Joseph C. C. Wong to ensure leadership consistency and strategic planning, and held five meetings this fiscal year to review key matters - The company deviates from the Corporate Governance Code's requirement for separation of Chairman and CEO roles, with Mr. Joseph C. C. Wong holding both positions; the Board believes this promotes leadership continuity and strategic planning[1022][1025] - The company's articles of association stipulate that one-third of the longest-serving directors (excluding Chairman/CEO and Vice Chairman) must retire by rotation at the AGM, which differs from the Corporate Governance Code's recommendation for all directors to retire by rotation every three years[1028][1030] Board Committees The Board has established four committees—Audit, Remuneration, Nomination, and Corporate Governance—to assist in fulfilling its responsibilities, overseeing external auditors, financial reporting, internal controls, executive remuneration, board structure, and governance practices - The Audit Committee held three meetings this fiscal year, reviewing financial statements, the effectiveness of internal control systems, and continuing connected transactions[1074] - The Remuneration Committee's terms of reference do not include reviewing and determining the remuneration of senior management, as the company believes this responsibility is more appropriately handled by the executive directors[1080] Risk Management and Internal Control The Board holds overall responsibility for the Group's risk management and internal control systems, which are designed to manage and minimize operational failure risks through a four-step process and a clear governance framework, and were deemed adequate and effective after an annual review for the year ended March 31, 2025 - The Group has established a multi-layered risk management framework, including the Board, Audit Committee, Risk Steering Committee, business units, and internal audit, to ensure effective risk identification, assessment, and response[1106][1108][1111] - The Board conducted an annual review of the risk management and internal control systems for FY2025 on April 24, 2025, concluding that the systems are adequate and effective[1130][1135]