剑虹集团控股(01557) - 2025 - 年度财报

Corporate Information The report details core company information including board members, committee compositions, and key appointments, noting significant changes in board and committee members during the year - The report details core company information including board members, committee compositions, company secretary, auditors, principal bankers, and share registrars During the year, there were significant changes in the board and committee members, including resignations and new appointments of the Chairman, executive directors, and independent non-executive directors[9][10][11] Chairman's Statement Amidst a challenging Hong Kong construction market, the company experienced a 26.0% revenue decline and expanded losses, prompting a conservative strategy, potential divestment of its Hong Kong piling business, and a strategic pivot to mainland China through the acquisition of Changzhou Yonghong Group for diversification FY2024/25 Performance Overview | Metric | FY2025 (Current Year) (HKD) | FY2024 (Comparative Year) (HKD) | YoY Change | | :--- | :--- | :--- | :--- | | Total Revenue | Approx. 129,580,000 | 175,174,000 | -26.0% | | Loss Attributable to Owners of the Company | Approx. 57,592,000 | 51,560,000 | +11.7% | - Due to significant and ongoing losses and uncertain prospects in the Hong Kong piling business, the Board is actively evaluating the possibility of divesting this segment and exploring new opportunities in other areas to streamline operations and reduce risk exposure[18][20] - The company's strategic focus has shifted to mainland China, completing the acquisition of a mainland construction company and, on March 21, 2025, acquiring Changzhou Yonghong Group, entering the NMP (N-Methyl-2-pyrrolidone) recycling sector with an annual capacity of 60,000 tonnes, positioning itself in the chemical and environmental industries for anticipated new performance growth in the next fiscal year[21][22][26] Management Discussion and Analysis This section reviews the company's financial performance, liquidity, capital structure, and human resources, highlighting a significant revenue decline, expanded losses, and strategic shifts in operations and employee focus Business and Financial Review Overall revenue declined by 26.0% to HKD 129.6 million due to project terminations in Hong Kong, partially offset by mainland China growth; gross loss expanded by 40.9% to HKD 43.7 million with a 33.8% margin, and net loss widened to HKD 57.6 million due to reduced other income and increased construction costs FY2024/25 Key Financial Indicators | Financial Metric | FY2025 (HKD) | FY2024 (HKD) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 129,580,000 | 175,174,000 | -26.0% | | Gross Loss | (43,738,000) | (31,039,000) | +40.9% | | Gross Loss Margin | 33.8% | 17.7% | +16.1 percentage points | | Other Income | 5,383,000 | 90,925,000 | -94.1% | | Finance Costs | 946,000 | 9,179,000 | -89.7% | | Net Loss | (57,592,000) | (51,560,000) | +11.7% | - The decline in revenue was primarily due to: 1) the termination of two large projects during the year, leading to reduced revenue recognition; and 2) the company adopting a more cautious and selective bidding strategy for Hong Kong construction projects However, revenue from the China segment significantly increased from approximately HKD 3.3 million to approximately HKD 34.2 million, partially offsetting the decline in Hong Kong operations[33] - Other income significantly decreased, mainly because the comparative year recognized HKD 90 million in project performance guarantee compensation from the former ultimate controlling company, New Grace Gain, whereas only HKD 5 million was recognized in the current year[35] Liquidity, Financial Resources and Capital Structure As of March 31, 2025, total debt increased to HKD 54.1 million while cash balances decreased to HKD 48.5 million, with the current ratio falling from 0.8 to 0.4; proceeds from a HKD 29.6 million share placement were reallocated to prioritize bank loan repayment due to a winding-up petition, and foreign exchange exposure is limited to RMB balances Liquidity and Capital Structure Key Indicators (As of March 31) | Metric | FY2025 (HKD) | FY2024 (HKD) | | :--- | :--- | :--- | | Total Debt | Approx. 54,061,000 | 25,667,000 | | Bank and Cash Balances | 48,481,000 | 84,497,000 | | Current Ratio | 0.4 | 0.8 | - On November 30, 2023, the company entered into a placing agreement to place 80 million new shares at HKD 0.375 per share, raising net proceeds of approximately HKD 29.6 million for business development and working capital replenishment[65][67] - Following a winding-up petition filed by The Bank of East Asia in June 2024, the Board decided to adjust the use of placing proceeds, prioritizing repayment of bank borrowings; as of March 31, 2025, HKD 12.5 million was used for bank loan repayment, HKD 6.8 million for general working capital, with HKD 4.3 million remaining unutilized[68][71] - The HKD 100 million unsecured loan from former ultimate controlling company New Grace Gain had its carrying amount reduced to zero as of March 31, 2025, after offsetting HKD 5 million in losses through project performance guarantees and repaying the remaining balance during the year[57][58] Employees and Remuneration Policy As of March 31, 2025, the Group's total number of employees decreased from 81 to 63, with a shift in employee focus from Hong Kong to mainland China; total staff costs for the year were approximately HKD 32.9 million, down from HKD 39.6 million last year, and the company regularly reviews its remuneration policy, offering salary increments and discretionary bonuses based on individual performance Employee Data Changes | Metric | FY2025 | FY2024 | | :--- | :--- | :--- | | Total Employees | 63 people | 81 people | | Total Staff Costs (HKD) | Approx. 32,928,000 | 39,575,000 | Corporate Governance Report This report details the company's corporate governance practices, including compliance with the Corporate Governance Code, board composition, committee functions, risk management, internal controls, and shareholders' rights Corporate Governance Practices During the reporting period, the company largely complied with the Corporate Governance Code, with one deviation regarding the non-separation of Chairman and CEO roles, and a temporary non-compliance with Listing Rules on independent non-executive director numbers due to a resignation, which was resolved on April 17, 2025 - The company deviated from Code Provision C.2.1 of the Corporate Governance Code, which requires the roles of chairman and chief executive to be separate, as the company currently has no chief executive officer, with responsibilities undertaken by the Chairman and other Board members[83][84] - Due to Mr Wang Bo's resignation on January 21, 2025, the company temporarily failed to meet Listing Rules requirements for the number of independent non-executive directors (at least three), audit committee members (at least three), and the majority of independent non-executive directors on the nomination committee This issue was resolved with the appointment of Ms Szeto Dan Ni on April 17, 2025[86][87] The Board The Board, responsible for leading and overseeing the Group, currently comprises three executive and three independent non-executive directors with diverse professional backgrounds; the company has adopted a board diversity policy and held eight meetings during the reporting period with good attendance - The Board currently consists of six members, including three executive directors and three independent non-executive directors, with no association among members[95][111] - The company has adopted a board diversity policy, disclosing the age distribution (31-50 years old) and professional experience (information technology, banking and finance, accounting and law, investment consulting, etc) of its directors[97][102] Board Committees The company has established Audit, Nomination, and Remuneration Committees; the Audit Committee, comprising three independent non-executive directors, held two meetings to review financial information and oversee risk and internal control systems, while the Nomination and Remuneration Committees each held one meeting to review board structure, director independence, and remuneration schemes - The Audit Committee, composed of three independent non-executive directors with professional qualifications, held two meetings during the year to review annual and interim results, and to assess risk management, internal control, and corporate governance functions[128][129][130] - The Nomination Committee held one meeting during the year, reviewing board composition and the independence of independent non-executive directors, and adopting a board nomination policy that outlines selection criteria and procedures[137][141] - The Remuneration Committee held one meeting during the year, independently reviewing and approving the remuneration packages and structures for all directors and senior management[146][147] Risk Management and Internal Controls While the company lacks an independent internal audit department, it fulfills internal audit functions through close supervision by executive directors and senior management, supplemented by external professional firms; the Board, via the Audit Committee, conducted an annual review of risk management and internal control systems, deeming them effective and adequate - The company does not have an independent internal audit department but has engaged an external professional firm to assist in performing internal audit functions, conducting annual internal control reviews and reporting to the Audit Committee[160][161] - The Board, through the Audit Committee, conducted an annual review of the effectiveness of the risk management and internal control systems for the year ended March 31, 2025, concluding that the systems are effective and adequate, with no significant areas for improvement requiring the Audit Committee's attention[166][169] Shareholders' Rights This report clarifies the specific procedures for shareholders to convene an Extraordinary General Meeting (EGM) and nominate director candidates - Shareholders holding not less than one-tenth of the company's paid-up capital with voting rights may issue a written request to the Board or company secretary to convene an Extraordinary General Meeting[185] - Shareholders wishing to nominate director candidates must submit a written notice of their intention and the candidate's willingness to stand for election to the company secretary at least seven days before the General Meeting[189] Environmental, Social and Governance Report This report outlines the Group's commitment to minimizing environmental impact, complying with regulations, and fulfilling social responsibilities, including employee welfare, health and safety, supply chain management, and anti-corruption policies A. Environmental The Group is committed to minimizing the negative environmental impact of its business activities and complying with relevant environmental regulations; this year, total greenhouse gas emissions increased to 769.9 tonnes of CO2 equivalent, yet met reduction targets, while fuel consumption significantly rose and electricity consumption slightly decreased, with the Group implementing "green" initiatives and assessing climate change risks Greenhouse Gas Emissions (tonnes of CO2 equivalent) | Scope | FY2025 | FY2024 | YoY Change | | :--- | :--- | :--- | :--- | | Scope 1 – Direct Emissions | 728.4 | 467.6 | +55.8% | | Scope 2 – Indirect Emissions | 15.6 | 51.7 | -69.8% | | Scope 3 – Other Indirect Emissions | 25.9 | 43.2 | -40.0% | | Total | 769.9 | 562.5 | +36.9% | Energy Consumption Intensity (kWh/sqm) | Energy Type | FY2025 | FY2024 | YoY Change | | :--- | :--- | :--- | :--- | | Fuel | 131.4 | 29.1 | +351.5% | | Electricity | 1.2 | 1.3 | -7.7% | - This year, the total amount of construction waste disposed of in landfills was approximately 25,205 tonnes, a decrease from 31,961 tonnes last year[225] B. Social In terms of social responsibility, the Group complies with labor regulations, with total employees decreasing from 81 to 63 and a shift in focus to mainland China; the Group prioritizes health and safety, reporting zero recordable incidents this year, provides occupational safety training, and has established strict supply chain management and anti-corruption policies, with a significant shift in supplier geographical distribution to mainland China - As of March 31, 2025, the Group had 63 full-time employees (2024: 81), predominantly construction workers in mainland China, with a gender distribution of 83% male and 17% female[253][254] - The Group demonstrated strong health and safety performance, recording zero reportable incidents and zero work-related fatalities for the year ended March 31, 2025, consistent with the previous year[260][263] Supplier Distribution by Location | Location | FY2025 | FY2024 | | :--- | :--- | :--- | | Hong Kong | 28% | 99% | | Mainland China | 72% | 1% | | Other Countries | 0% | 0% | - The Group has established an anti-corruption policy and adopted a formal whistleblowing policy in 2017 As of the year ended March 31, 2025, the Group was not involved in any corruption-related legal cases[287][288] Profile of Directors and Senior Management This chapter details the personal biographies of the company's executive directors, independent non-executive directors, senior management, and company secretary, including their age, educational background, professional qualifications, and extensive work experience in relevant industries such as optoelectronics, new materials, finance, accounting, and construction - The new Chairman, Mr Zhang Zhijia, 51 years old, possesses many years of project, investment, and management experience in the optoelectronics, display materials, and industrial manufacturing sectors[292][294] - Executive Directors Dr Wang Lei and Mr Yang Xuefeng have extensive experience in R&D management and project investment in synthetic new materials, and in supply chain, trade finance, new energy, and new materials project investment and management, respectively[297][302] - The independent non-executive director team brings diverse professional backgrounds, including Mr Feng Zhidong's experience in financial management and capital operations, Ms Liu Yixing's certified public accountant qualification, and Ms Szeto Dan Ni's expertise in auditing and M&A consulting[306][310][312] Directors' Report The Directors' Report outlines the company's principal activities as investment holding, with subsidiaries primarily engaged in piling and construction services and chemical product sales; the company complied with relevant laws, did not purchase or redeem listed securities, and the Board does not recommend a final dividend for the year ended March 31, 2025, also disclosing high customer and supplier concentration - The Board does not recommend the payment of a final dividend for the year ended March 31, 2025 (2024: nil)[337] Major Customer and Supplier Concentration (FY2025) | Category | Percentage | | :--- | :--- | | Revenue from Top Five Customers | Approx. 95.3% of total revenue | | Revenue from Largest Customer | Approx. 42.9% of total revenue | | Purchases from Top Five Suppliers | Approx. 90.2% of total purchases | | Purchases from Largest Supplier | Approx. 28.1% of total purchases | - As of March 31, 2025, Blessing Well, a major shareholder, held 62.5% of the company's shares, with its ultimate controlling party being Mr Chan Yung Sing[384] - No share options have been granted by the company since the adoption of the share option scheme in 2016[350] Independent Auditor's Report The independent auditor, Evergreen (Hong Kong) CPA Limited, issued an unmodified opinion on the company's FY2024/25 consolidated financial statements, affirming their true and fair view, but highlighted a "material uncertainty related to going concern" due to the Group's annual loss, net current liabilities, and net liabilities, along with a subsidiary facing a winding-up petition, and identified three key audit matters: revenue recognition for construction contracts, expected credit loss provisions for trade receivables and contract assets, and purchase price allocation for subsidiary acquisitions - The auditor issued an unmodified opinion but drew attention to a "material uncertainty related to going concern"[406][410] - The material uncertainty related to going concern primarily stems from: - A loss of approximately HKD 57.6 million for the year ended March 31, 2025 - Net current liabilities of approximately HKD 191.6 million and net liabilities of approximately HKD 84.2 million as of March 31, 2025 - A winding-up petition faced by a subsidiary of the Group[410] - Key audit matters include: 1. Revenue recognition for construction contracts: Involves significant management judgments regarding total contract costs, stage of completion, and variations in work 2. Expected credit loss provision for trade receivables and contract assets: Involves significant amounts and requires substantial management judgment and estimation in determining the provision 3. Purchase price allocation for acquisition of a subsidiary: Involves significant management judgment and estimation in determining the fair values of acquired assets and liabilities[417][425][430] Consolidated Financial Statements This section presents the Group's consolidated financial statements, including the statement of profit or loss and other comprehensive income, statement of financial position, and detailed notes, providing a comprehensive overview of its financial performance, position, and significant accounting policies, judgments, and legal proceedings Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended March 31, 2025, the Group recorded revenue of HKD 129.6 million, a 26.0% year-on-year decrease; a gross loss of HKD 43.74 million resulted from sales costs exceeding revenue, and despite a HKD 40.95 million bargain purchase gain, the annual loss expanded to HKD 57.59 million with a total comprehensive loss of HKD 58.44 million due to significantly reduced other income and contract asset write-offs Consolidated Statement of Profit or Loss Summary (For the year ended March 31) | Item (HKD Thousands) | FY2025 | FY2024 | | :--- | :--- | :--- | | Revenue | 129,580 | 175,174 | | Gross Loss | (43,738) | (31,039) | | Bargain Purchase Gain | 40,947 | – | | Loss from Operations | (56,101) | (42,381) | | Loss Before Tax | (57,047) | (51,560) | | Loss for the Year | (57,592) | (51,560) | | Total Comprehensive Loss for the Year | (58,440) | (56,490) | Consolidated Statement of Financial Position As of March 31, 2025, the Group's total assets were HKD 273.9 million and total liabilities were HKD 358.1 million; non-current assets significantly increased to HKD 157.5 million due to acquisitions, but net current liabilities expanded from HKD 38.3 million to HKD 191.6 million, leading to net liabilities increasing from HKD 25.8 million to HKD 84.2 million, reflecting a deeper negative equity position Consolidated Statement of Financial Position Summary (As of March 31) | Item (HKD Thousands) | FY2025 | FY2024 | | :--- | :--- | :--- | | Non-current Assets | 157,468 | 12,667 | | Current Assets | 116,479 | 189,322 | | Total Assets | 273,947 | 201,989 | | Current Liabilities | 308,111 | 227,597 | | Non-current Liabilities | 50,040 | 156 | | Total Liabilities | 358,151 | 227,753 | | Net Current Liabilities | (191,632) | (38,275) | | Net Liabilities / Deficit in Equity | (84,204) | (25,764) | Notes to the Consolidated Financial Statements The financial statement notes provide detailed explanations of accounting policies, key judgments, and estimates; Note 2 highlights a material uncertainty regarding "going concern" and outlines management's liquidity measures, Note 35 details the acquisition of Changzhou Yonghong Group and its bargain purchase gain, and Notes 40 and 41 disclose multiple winding-up petitions and their latest developments - Material Uncertainty Related to Going Concern: Note 2 indicates a material uncertainty regarding the Group's ability to continue as a going concern, given the annual loss, net current liabilities, and winding-up petitions faced by subsidiaries Management has implemented measures including seeking financial support from the ultimate controlling party, considering fundraising activities, expanding China operations, and implementing cost-saving plans[473][475][480] - Acquisition of a Subsidiary: Note 35(a) discloses that on March 21, 2025, the company completed the acquisition of Changzhou Yonghong Group for a total consideration of approximately HKD 68.61 million (including cash and shareholder loan transfer) This acquisition resulted in a bargain purchase gain of approximately HKD 40.95 million and significantly increased the Group's property, plant, and equipment and right-of-use assets[961][966] - Litigation: Notes 40 and 41 disclose that the company and its subsidiary KHF received multiple winding-up petitions from banks and creditors during and after the reporting period, involving outstanding credit facilities, subcontracting fees, and legal costs Some petitions were dismissed by the court through settlement and payment, but new substitute petitioners have applied as of the report date, with related hearings adjourned[1008][1011][1017] - Segment Information: Note 9 shows that the piling and building services segment generated HKD 125.9 million in revenue and recorded a loss of HKD 94.31 million; the chemical product sales segment generated HKD 3.7 million in revenue and recorded a profit of HKD 0.173 million Geographically, Hong Kong contributed HKD 95.42 million in revenue, and mainland China contributed HKD 34.16 million[770][778] Financial Summary The financial summary presents the Group's key performance and financial position over the past five fiscal years, indicating a continuous decline in revenue since FY2021, consecutive gross and net losses in the last three fiscal years with expanding deficits, and a significant reduction in total assets in recent years, with net assets turning negative and net liabilities continuously widening, reflecting severe financial challenges Five-Year Performance Summary (For the year ended March 31) | Item (HKD Thousands) | 2025 | 2024 | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 129,580 | 175,174 | 245,349 | 751,767 | 933,797 | | (Gross Loss)/Gross Profit | (43,738) | (31,039) | (28,983) | 29,748 | 41,653 | | (Loss)/Profit for the Year | (57,592) | (51,560) | (74,115) | (18,346) | 1,071 | Five-Year Assets and Liabilities Summary (As of March 31) | Item (HKD Thousands) | 2025 | 2024 | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 273,947 | 201,989 | 440,035 | 658,020 | 682,892 | | Total Liabilities | (358,151) | (227,753) | (439,009) | (582,879) | (589,405) | | Net (Liabilities)/Assets | (84,204) | (25,764) | 1,026 | 75,141 | 93,487 |