佳明集团控股(01271) - 2025 - 年度财报

Corporate Information This section provides an overview of the company's governance structure, including its Board of Directors and key administrative details Board of Directors and Committees The company's Board of Directors comprises executive and independent non-executive directors, supported by audit, remuneration, and nomination committees to ensure robust corporate governance - The Board members include Chairman Mr Chan Hung Ming, CEO Mr Lau Chi Wah, CFO Mr Kwan Wing Wo, Ms Tsang Ka Man, Ms Chan Pui Yin (Executive Directors), and Mr Tsui Ka Wah, Mr Kan Yau Wo, Mr Ho Chiu Yin, Mr Li Chung Yiu (Independent Non-executive Directors)[3][5] - The Board has established an Audit Committee, Remuneration Committee, and Nomination Committee, each chaired by an independent non-executive director[3][5] Key Administrative Details This section outlines key administrative information including authorized representatives, company secretary, registered office, Hong Kong headquarters, share registrar, legal advisors, auditor, principal bankers, stock code, and company website - The company's stock code is 1271, and its website is **www.grandming.com.hk**[6](index=6&type=chunk)[7] - The company's auditor is BDO Limited, and its principal bankers include Dah Sing Bank Limited and UOB Hong Kong Branch[6][7] Financial Highlights This section presents key financial metrics for the Group, showing a net loss in FY2025 despite revenue growth, alongside deteriorating liquidity and increased gearing Key Financial Metrics The Group recorded a net loss in FY2025, with significant revenue growth but a shift to operating loss, primarily due to fair value changes in investment properties and an expanded underlying loss; liquidity ratios declined, while gearing ratios increased, and return on equity turned negative Key Financial Data for FY2021-2025 (HK$ thousand) | Metric | 2025 | 2024 | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | | | | | | | a. Construction | 13,721 | 77,648 | (88,954) | 395,521 | 1,133,711 | | b. Property Leasing | 281,976 | 276,531 | 243,072 | 200,687 | 164,674 | | c. Property Development | 850,058 | 178,512 | 4,850,442 | 221,659 | 194,000 | | Total Revenue | 1,145,755 | 532,691 | 5,004,560 | 817,867 | 1,492,385 | | Operating (Loss)/Profit | (169,460) | 435,798 | 1,634,272 | 85,579 | 249,466 | | Operating (Loss)/Profit Excluding Fair Value Changes of Investment Properties | (48,763) | 51,635 | 1,658,144 | (7,135) | 248,077 | | Fair Value Changes of Investment Properties | (120,697) | 384,163 | (23,872) | 92,714 | 1,389 | | Underlying (Loss)/Profit | (171,358) | (85,713) | 1,299,332 | (75,167) | 147,646 | | Dividends | – | 56,809 | 653,105 | 397,472 | 113,564 | | Current Ratio | 0.32 | 1.18 | 2.12 | 0.63 | 0.84 | | Gearing Ratio | 213.6% | 199.0% | 155.3% | 230.9% | 161.6% | | Net Gearing Ratio | 206.9% | 179.8% | 134.8% | 198.1% | 116.4% | | Return on Equity | (10.7%) | 10.1% | 42.8% | 0.8% | 6.0% | - Total revenue for FY2025 was HK$1.1458 billion, a 115.1% increase from HK$532.7 million in FY2024, primarily driven by a significant increase in property development revenue[8] - Operating loss for FY2025 was HK$169.5 million, compared to an operating profit of HK$435.8 million in FY2024, mainly due to a shift from gain to loss in fair value changes of investment properties[8] Five-Year Financial Summary This section provides a consolidated overview of the Group's financial performance and position over five years, highlighting a shift to net loss and a decline in total assets and equity in FY2025 Consolidated Financial Performance and Position The Group's five-year financial summary indicates a net loss in FY2025, with decreases in total assets and total equity, while total liabilities remained relatively stable, reflecting financial pressure in the current market environment Consolidated Five-Year Financial Summary (HK$ thousand) | Metric | 2025 | 2024 | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Performance | | | | | | | Revenue | 1,145,755 | 532,691 | 5,004,560 | 817,867 | 1,492,385 | | (Loss)/Profit Before Tax | (266,271) | 313,131 | 1,529,180 | 26,733 | 187,904 | | (Loss)/Profit for the Year | (292,055) | 298,450 | 1,275,460 | 17,547 | 149,035 | | Assets and Liabilities | | | | | | | Total Assets | 9,096,335 | 9,386,245 | 8,150,242 | 10,673,730 | 9,840,259 | | Total Liabilities | 6,375,509 | 6,433,239 | 5,168,409 | 8,548,181 | 7,362,721 | | Total Equity | 2,720,826 | 2,953,006 | 2,981,833 | 2,125,549 | 2,477,538 | - A net loss of HK$292.1 million was recorded in FY2025, compared to a net profit of HK$298.5 million in FY2024[10] - As of March 31, 2025, total assets were HK$9.096 billion, a slight decrease from HK$9.386 billion in FY2024[10] Chairman's Statement This statement reviews the Group's overall performance, business operations, and future outlook, highlighting a shift to net loss, progress in property and data center businesses, and a cautious strategy for financial stability Overall Performance and Dividends The Group shifted from profit to a net loss of HK$292.1 million in FY2024/25, primarily due to property impairment losses and fair value losses on investment properties amid an unfavorable Hong Kong real estate market; no final dividend is recommended given market challenges - A net loss of HK$292.1 million was recorded in FY2024/25, compared to a net profit of HK$298.5 million in FY2023/24[14][18] - The loss was primarily attributable to impairment losses on properties under development, completed properties held for sale, and owner-occupied properties, as well as unrealized net fair value losses on investment properties and investment properties under development[14][18] - No dividends were paid for FY2024/25, and the Board does not recommend a final dividend[16][20] Review of Operations The Group's property development business progressed in both Hong Kong and mainland China, with several residential projects sold and delivered; data center leasing revenue grew by 2.0%, new data center construction advanced, and the construction business held contracts totaling approximately HK$2.05 billion - Approximately 6% of units at the Hong Kong property development project 'The Grand Summit' and 30% of residential units at 'The Aura' were delivered, with related revenue recognized in FY2024/25[21][22][25][26] - Superstructure works for the Fanling project are completed, interior fitting-out is underway, with completion expected in Q3 2025, and pre-sale consent has been applied for[23][27] - Revenue from data center property leasing business increased by 2.0% year-on-year to HK$274.3 million; iTech Tower 3.1 is scheduled for phased delivery starting Q3 2025, and iTech Tower 3.2 is planned for phased completion by mid-2026[31][32][36] - As of March 31, 2025, the construction business held contracts with a total value of approximately HK$2.05 billion[33][37] Outlook Facing economic uncertainties from US-China trade tensions and geopolitical instability, the Group will adopt a cautious approach, focusing on generating working capital, reducing liabilities, and actively evaluating balance sheet deleveraging strategies, including the potential sale of its entire interest in the holding companies of iTech Tower 3.1 and 3.2 - The Group will adopt a highly cautious approach to safeguard financial stability, focusing on generating sufficient working capital from its principal businesses and reducing overall liabilities[38][42] - All feasible strategies are being actively evaluated and implemented to reduce balance sheet leverage, increase working capital, and strengthen long-term financial stability[39][42] - On June 19, 2025, the Group received a non-binding letter of intent for the potential acquisition of the entire interest in the holding companies of iTech Tower 3.1 and 3.2; if completed, this transaction would help improve financial position and reduce liabilities[39][42] Management Discussion and Analysis This section provides a detailed financial review, discusses liquidity and financial resources challenges, and outlines risk management strategies and other disclosures for the Group Financial Review In FY2024/25, the Group's consolidated revenue surged by 115.1% to HK$1.1458 billion, with consolidated gross profit increasing by 97.4%; however, an impairment loss of HK$189.8 million on properties due to an unfavorable Hong Kong property market led to a decline in gross margin, resulting in a net loss of HK$292.1 million, primarily impacted by property impairment and fair value losses on investment properties Financial Performance for FY2024/25 (HK$ thousand) | Metric | 2025 FY | 2024 FY | YoY Change | | :--- | :--- | :--- | :--- | | Consolidated Revenue | 1,145,800 | 532,700 | +115.1% | | Consolidated Gross Profit | 332,700 | 168,600 | +97.4% | | Gross Margin | 29.0% | 31.6% | -2.6% | | Operating Expenses | 347,600 | 123,100 | +182.5% | | Fair Value Changes of Investment Properties | (120,700) | 384,200 | Shift from gain to loss | | Finance Costs | 96,800 | 122,700 | -21.1% | | Net (Loss)/Profit | (292,100) | 298,500 | Shift from profit to loss | | Underlying (Loss)/Profit | (171,400) | (85,700) | Loss widened | | Impairment Loss on Properties Under Development and Completed Properties Held for Sale | 189,800 | - | - | | Impairment Loss on Owner-Occupied Properties | 45,400 | - | - | - Gross margin decreased to 29.0% (FY2023/24: 31.6%), primarily due to the recognition of an HK$189.8 million impairment loss on properties under development and completed properties held for sale[47][52] - Operating expenses for the year increased by 182.5% to HK$347.6 million, mainly from real estate agency commissions generated by the sales of 'The Grand Summit' and 'The Aura'[48][53] Liquidity and Financial Resources The Group's liquidity position faces challenges, with a decrease in total bank loans but a significant drop in current ratio to 0.32 times, and increases in both gearing and net gearing ratios; nevertheless, the Board believes the Group has sufficient working capital through operating cash flow, bank credit facilities, and controlling shareholder loans Liquidity and Financial Resources for FY2024/25 (HK$ thousand) | Metric | 2025 FY | 2024 FY | YoY Change | | :--- | :--- | :--- | :--- | | Outstanding Bank Loans | 5,229,000 | 5,841,000 | -10.5% | | Gearing Ratio | 213.6% | 199.0% | +14.6% | | Current Ratio | 0.32 | 1.18 | -72.9% | | Cash and Bank Balances | 180,200 | 567,400 | -68.2% | | Controlling Shareholder Loans | 607,500 | - | New | | Ultimate Holding Company Loans | 36,800 | 36,800 | - | - The current ratio decreased from 1.18 times in FY2023/24 to 0.32 times in FY2024/25, indicating increased liquidity pressure[59][62] - The Group obtained an unsecured loan of approximately HK$607.5 million from controlling shareholder Mr Chan Hung Ming, bearing an annual interest rate of 3% and maturing between April and May 2028, to supplement working capital[57][58][61][62] Risk Management and Other Disclosures The Group manages interest rate risk through interest rate swap contracts and considers foreign exchange risk immaterial; as of March 31, 2025, approximately HK$8.106 billion in assets were pledged to secure about HK$5.177 billion in bank loans; there were no significant acquisitions or disposals of subsidiaries during the year, with a total of 157 employees and total staff costs of approximately HK$117.8 million - The Group mitigates floating interest rate risk through interest rate swap contracts, holding approximately HK$1.52 billion in such contracts as of March 31, 2025[63][68] - As of March 31, 2025, approximately HK$8.106 billion in assets were pledged to secure bank loans totaling about HK$5.177 billion[65][70] - As of March 31, 2025, the Group had 157 employees, with total staff costs of approximately HK$117.8 million for FY2024/25[75][80] Report of the Directors This report details the Group's principal activities, financial results, key relationships, environmental policies, directors' and shareholders' interests, remuneration schemes, and corporate governance compliance Principal Activities and Results The Company primarily engages in investment holding, with its subsidiaries focused on building construction, property leasing, and property development; FY2024/25 results are presented in the consolidated statement of profit or loss, and the Board does not recommend a final dividend - The Company's principal business is investment holding, with subsidiaries primarily engaged in building construction, property leasing, and property development businesses; there were no significant changes in the nature of business in FY2024/25[84][89] - The Board does not recommend the payment of a final dividend for FY2024/25[85][91] Business Review and Key Relationships The Group's business review and outlook are detailed in the Chairman's Statement, emphasizing the importance of fostering strong relationships with employees, customers, suppliers, and banks; the Group is committed to protecting employee rights, enhancing customer service, maintaining long-term subcontractor collaborations, and sustaining good financing relationships with banks - The Group regards employees as its most valuable asset, ensuring fair remuneration and providing safety training[98][103] - The Group maintains contact with customers through various channels to gather feedback and suggestions, and establishes long-term business relationships with subcontractors to uphold quality standards[99][103] - The Group's business is capital-intensive, and it strives to build and maintain good relationships with multiple commercial banks to secure continuous financing[100][103] Environmental Policies and Compliance The Group's construction and data center property leasing segments have established an environmental management system compliant with ISO14001:2015, with no significant environmental non-compliance in FY2024/25; the company also promotes green office practices and has published an Environmental, Social and Governance Report - The construction and data center property leasing segments have established an environmental management system and obtained ISO14001:2015 certification[101][104] - During FY2024/25, there were no significant non-compliance issues regarding air pollution, noise control, construction waste disposal, or emissions[102][104] - An Environmental, Social and Governance Report, compliant with Appendix C2 of the Listing Rules, has been published, and green office practices are encouraged[105][114] Directors and Shareholder Interests This section discloses changes in Board members, including Ms Chan Pui Yin's appointment, details directors' and chief executives' share interests and short positions in the Company and its associated corporations, and outlines major shareholders' interests; it also confirms directors have no interests in competing businesses and discloses exempted connected transactions - Ms Chan Pui Yin was appointed as an Executive Director on September 16, 2024, and will stand for re-election at the upcoming Annual General Meeting[127][131] Interests of Directors and Chief Executives in the Company's Shares (as of March 31, 2025) | Director Name | Capacity/Nature of Interest | Number of Ordinary Shares Held (thousand shares) | Number of Relevant Ordinary Shares Held (thousand shares) | Total (thousand shares) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr Chan Hung Ming | Controlled Corporation Interest | 921,642,940 | – | 921,642,940 | 64.89% | | Mr Lau Chi Wah | Controlled Corporation Interest | 106,293,660 | – | 106,293,660 | 7.48% | | Mr Kwan Wing Wo | Beneficial Owner | – | 1,000,000 | 1,000,000 | 0.07% | | Ms Tsang Ka Man | Beneficial Owner | 1,586,000 | 1,000,000 | 2,586,000 | 0.18% | | Mr Tsui Ka Wah | Beneficial Owner | – | 200,000 | 200,000 | 0.01% | | Mr Kan Yau Wo | Beneficial Owner | – | 200,000 | 200,000 | 0.01% | | Mr Ho Chiu Yin | Beneficial Owner | – | 200,000 | 200,000 | 0.01% | | Mr Li Chung Yiu | Beneficial Owner | – | 200,000 | 200,000 | 0.01% | Interests of Substantial Shareholders in the Company's Shares (as of March 31, 2025) | Shareholder Name | Capacity/Nature of Interest | Number of Ordinary Shares Held (thousand shares) | Number of Relevant Ordinary Shares Held (thousand shares) | Total (thousand shares) | Approximate Percentage of Shareholding | | :--- | :--- | :--- | :--- | :--- | :--- | | Chan HM Company Limited | Beneficial Owner | 921,642,940 | – | 921,642,940 | 64.89% | | Lau CW Company Limited | Beneficial Owner | 106,293,660 | – | 106,293,660 | 7.48% | | Ms Cheung Suk Fong | Family | 106,293,660 | 1,000,000 | 107,293,660 | 7.55% | | Bridge Bank Co Limited | Security Interest | 1,027,936,600 | – | 1,027,936,600 | 72.37% | - In FY2024/25, Mr Chan Hung Ming advanced a loan of HK$607.5 million to the Company, and parking spaces were sold to associates of Mr Chan Hung Ming and Mr Lau Chi Wah, all constituting exempted connected transactions[166] Remuneration and Incentive Schemes The remuneration policy for directors and senior management aims to incentivize performance and is reviewed by the Remuneration Committee; the Group operates MPF and PRC pension schemes; the old share option scheme has expired, and while new share option and share award schemes were adopted, no new entitlements were granted in FY2024/25 - The directors' remuneration policy includes fixed and variable components, reviewed by the Remuneration Committee, and considers experience, responsibilities, individual performance, and Group profit performance[177][178][183] - In FY2024/25, the Group's total employer contributions were approximately HK$2.6 million for the Hong Kong Mandatory Provident Fund Scheme and PRC pension schemes[182][186] - The old share option scheme expired on July 23, 2023, with 15,280,000 share options remaining unexercised as of March 31, 2025[188][190][193] - Both the new share option scheme and share award scheme were adopted on August 4, 2023, with a ten-year validity, but no share options or award shares have been granted under either scheme as of the report date[194][195][198][199][203][206][208][210][220] Corporate Governance and Auditor The Company complied with all code provisions of the Corporate Governance Code in FY2024/25; BDO Limited, the auditor, will be proposed for re-appointment at the Annual General Meeting; the Company maintains the minimum public float required by the Listing Rules - The Company complied with all code provisions set out in Part 2 of the Corporate Governance Code in Appendix C1 of the Listing Rules during FY2024/25[223][227] - The consolidated financial statements for FY2024/25 have been audited by BDO Limited, which will be proposed for re-appointment[230][233] - As of the date of this annual report, the Company maintains the minimum public float required by the Listing Rules[229][232] Biographies of the Directors and Senior Management This section provides detailed biographies of the Group's executive directors, independent non-executive directors, and company secretary, highlighting their extensive professional experience and roles Executive Directors and Senior Management This section introduces the backgrounds of executive directors and senior management, including Chairman Mr Chan Hung Ming's extensive experience in construction and property development, CEO Mr Lau Chi Wah's expertise in audit, accounting, and finance, CFO Mr Kwan Wing Wo's financial management experience, and Ms Tsang Ka Man and newly appointed Executive Director Ms Chan Pui Yin's responsibilities in property development and corporate strategy - Mr Chan Hung Ming (Chairman), 71 years old, co-founder of the Group, possesses over 51 years of experience in construction and property development, and 17 years in data center leasing business[235][240] - Mr Lau Chi Wah (Chief Executive Officer), 60 years old, co-founder of the Group, has over 36 years of experience in audit, accounting, and finance, and is a fellow member of the Hong Kong Institute of Certified Public Accountants[237][238][241] - Ms Chan Pui Yin, 35 years old, was appointed as an Executive Director on September 16, 2024, responsible for overseeing property development business and assisting in formulating the Group's overall strategy; she is the daughter of Mr Chan Hung Ming[249][250][255] Independent Non-Executive Directors This section introduces the professional backgrounds and experiences of the four independent non-executive directors, who possess extensive expertise in banking, technology, and accounting, providing independent advice to the Board and serving in key roles on various Board committees - Mr Tsui Ka Wah, 72 years old, has 37 years of banking experience, currently serves as CEO of SME Finance Limited, and is an independent non-executive director for several listed companies[252][253][257] - Mr Kan Yau Wo, 72 years old, worked for over 30 years at Fujitsu Group companies, previously serving as President of Fujitsu Hong Kong Limited and CEO for South China and Hong Kong[259][260][265] - Mr Ho Chiu Yin, 64 years old, has over 30 years of audit, accounting, and finance experience, previously served as a partner at PricewaterhouseCoopers, and is a member of the Hong Kong Institute of Certified Public Accountants[261][262][263][265][266] Company Secretary Mr Leung Wai Chuen serves as Company Secretary, possessing over 34 years of experience in audit, accounting, financial management, and company secretarial duties, holding membership with the Hong Kong Institute of Certified Public Accountants, ensuring adherence to Board policies and procedures - Mr Leung Wai Chuen, 59 years old, has served as Company Secretary since July 2013, with over 34 years of experience in audit, accounting, financial management, and company secretarial duties[270][274] - Mr Leung is a member of the Hong Kong Institute of Certified Public Accountants, a fellow member of the Association of Chartered Certified Accountants, and has received no less than 15 hours of relevant professional training[271][274][275] Corporate Governance Report This report details the Company's commitment to corporate governance, board structure, roles of Chairman and CEO, functions of board committees, financial reporting, risk management, internal controls, and policies for shareholder communication Commitment and Board Structure The Company is committed to good corporate governance, fully complying with the Corporate Governance Code in FY2024/25; the Board is responsible for strategy and oversight, delegating daily operations to management; the Board features diverse members, with independent non-executive directors ensuring independent judgment, and maintains directors' and officers' liability insurance - The Company complied with all code provisions set out in Part 2 of the Corporate Governance Code in Appendix C1 of the Listing Rules during FY2024/25[277][281] - The Board currently comprises nine members, including five executive directors and four independent non-executive directors, with two female directors, and has adopted a Board Diversity Policy[280][283][285][288][290] - All independent non-executive directors have confirmed their independence and meet Listing Rules requirements, ensuring the Board's independence[291][292][296] - The Chairman of the Board and the independent non-executive directors held one meeting during FY2024/25 without the presence of other executive directors[303][304] Chairman and Chief Executive Officer The Company strictly separates the roles of Chairman and Chief Executive Officer, with Mr Chan Hung Ming as Chairman leading the Board and strategy formulation, and Mr Lau Chi Wah as CEO responsible for daily Group operations and policy execution, ensuring clear division of responsibilities - The roles of Chairman and Chief Executive Officer are separate, held by Mr Chan Hung Ming and Mr Lau Chi Wah respectively, with clearly defined responsibilities[312][316] - Chairman Mr Chan Hung Ming is responsible for managing and leading the Board in formulating the Group's overall strategy and business development direction[313][316] - Chief Executive Officer Mr Lau Chi Wah is responsible for the Group's daily operations and implementing business policies, objectives, and plans set by the Board[314][317] Board Committees and Functions The Board has established Remuneration, Audit, and Nomination Committees, each with clear terms of reference and responsibilities to oversee specific Group matters; these committees held meetings in FY2024/25, reviewing remuneration policies, financial statements, risk management, internal controls, and Board composition - The Remuneration Committee comprises four independent non-executive directors, responsible for reviewing and recommending remuneration policies and structures for directors and senior management[321][322][325] - The Audit Committee comprises four independent non-executive directors, responsible for reviewing financial statements, risk management, and internal control systems, and overseeing financial reporting[328][329][331] - The Nomination Committee comprises four independent non-executive directors and one executive director, responsible for regularly reviewing Board structure, identifying suitable director candidates, and assessing the independence of independent non-executive directors[334][335][337] Financial Reporting and Auditor's Remuneration The Board is responsible for preparing true and fair financial statements and ensuring appropriate application of accounting policies; external auditor BDO Limited provided audit and non-audit services in FY2024/25, with remuneration of approximately HK$1.453 million and HK$25 thousand respectively - The Board is responsible for preparing true and fair financial statements in accordance with Hong Kong Financial Reporting Standards[340][345] Auditor's Remuneration for FY2024/25 (HK$ thousand) | Service Type | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Audit Services | 1,453 | 1,425 | | Other Services | 25 | 25 | Risk Management and Internal Controls The Board bears overall responsibility for maintaining sound and effective internal control and risk management systems, reviewed through the Audit Committee; the Group adopts a 'three lines of defense' model and has established an ESG working group; the Board considers the internal control and risk management systems for FY2024/25 to be effective and adequate - The Board assumes overall responsibility for maintaining sound and effective internal control and risk management systems, and reviews their operational adequacy and effectiveness through the Audit Committee[343][348] - The Group's risk management framework aligns with the 'three lines of defense' model, where business units are the first line, middle and back-office departments are the second, and internal auditors are the third[344][348] - The Board has established an 'ESG Working Group', managed by senior management, responsible for formulating environmental, social, and governance-related strategies and indicators[350][356] - The Board considers the Group's internal control and risk management systems for FY2024/25 to be effective and adequate, with no significant issues identified[353][357] Policies and Shareholder Communications The Company has adopted and implemented disclosure, whistleblowing, and anti-corruption policies to ensure information transparency and compliant operations; it values effective communication with shareholders, providing information through general meetings and its website, and has established shareholder inquiry procedures - The Company has adopted and implemented a disclosure policy aimed at timely dissemination of inside information to ensure information transparency[354][355][358] - Whistleblowing and anti-corruption policies have been adopted, providing reporting channels for employees and relevant third parties, and ensuring all reported matters are independently investigated and kept confidential[359][361][365][367] - The Company facilitates effective communication with shareholders through general meetings and its website (www.grandming.com.hk), and has established shareholder inquiry procedures[369][370][372][386] Independent Auditor's Report This report presents the auditor's unmodified opinion on the consolidated financial statements, highlights material uncertainties related to going concern, and details key audit matters concerning property valuations Auditor's Opinion and Going Concern BDO Limited issued an unmodified opinion on the Group's consolidated financial statements; however, the report highlights a material uncertainty related to going concern, as the Group recorded a net loss and significant net current liabilities in FY2025, which may cast significant doubt on its ability to continue as a going concern - The auditor issued an unmodified opinion on the Group's consolidated financial statements for the year ended March 31, 2025[389][391] - The report notes that the Group recorded a net loss of HK$292.1 million in FY2025 and had net current liabilities of HK$3.7711 billion as of March 31, 2025, which constitute a material uncertainty regarding its ability to continue as a going concern[393][398] Key Audit Matters Key audit matters include the valuation of investment properties and investment properties under development, and the assessment of net realizable value for properties under development and held for sale; both involve significant management judgment and estimates such as market rental growth rates, occupancy rates, completion costs, and discount rates - The valuation of investment properties and investment properties under development is a key audit matter, with a carrying fair value of HK$6.489 billion, representing 71% of the Group's total assets[395][400] - Valuation methods include discounted cash flow, market comparison, and residual approaches, involving significant assumptions and judgments such as expected market rental growth rates, occupancy rates, estimated completion costs, capitalization rates, and discount rates[396][400] - Assessing the net realizable value of properties under development and held for sale is another key audit matter, involving management judgments and estimates such as expected selling prices, estimated selling expenses, and estimated completion costs[402][403][404] Consolidated Statement of Profit or Loss This statement summarizes the Group's financial performance, showing a net loss in FY2025 driven by increased costs and fair value losses on investment properties, despite significant revenue growth Profit or Loss Summary The Group recorded a net loss of HK$292.1 million in FY2025, compared to a net profit of HK$298.5 million in FY2024, primarily due to increased revenue but significantly higher direct costs and selling expenses, as well as a shift from gain to loss in fair value changes of investment properties Key Data from Consolidated Statement of Profit or Loss for FY2025 (HK$ thousand) | Metric | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Revenue | 1,145,755 | 532,691 | | Direct Costs | (813,037) | (364,126) | | Gross Profit | 332,718 | 168,565 | | Other Income and Gains/(Losses), Net | (33,841) | 6,123 | | Selling Expenses | (299,583) | (50,387) | | General and Administrative Expenses | (48,057) | (72,666) | | Fair Value Changes of Investment Properties | (120,697) | 384,163 | | Operating (Loss)/Profit | (169,460) | 435,798 | | Finance Costs | (96,811) | (122,667) | | (Loss)/Profit Before Taxation | (266,271) | 313,131 | | Income Tax Expense | (25,784) | (14,681) | | (Loss)/Profit for the Year | (292,055) | 298,450 | | (Loss)/Earnings Per Share – Basic (HK cents) | (20.56) | 21.02 | - Revenue increased from HK$532.7 million in FY2024 to HK$1.1458 billion in FY2025, a 115.1% increase[433] - Fair value changes of investment properties shifted from a gain of HK$384.2 million in FY2024 to a loss of HK$120.7 million in FY2025[433] Consolidated Statement of Profit or Loss and Other Comprehensive Income This statement outlines the Group's total comprehensive loss for FY2025, reflecting the net loss and negative impacts from other comprehensive income items Comprehensive Income Summary The Group recorded a total comprehensive loss of HK$307.6 million in FY2025, compared to a total comprehensive income of HK$298.8 million in FY2024, primarily reflecting the net loss for the year and negative impacts from cash flow hedges and foreign currency translation differences for overseas operations Key Data from Consolidated Statement of Profit or Loss and Other Comprehensive Income for FY2025 (HK$ thousand) | Metric | 2025 FY | 2024 FY | | :--- | :--- | :--- | | (Loss)/Profit for the Year | (292,055) | 298,450 | | Other Comprehensive Income (after tax) | (15,573) | 306 | | Total Comprehensive Income for the Year | (307,628) | 298,756 | - Other comprehensive income (after tax) for FY2025 was a loss of HK$15.573 million, mainly due to net changes in cash flow hedges and exchange differences on translating overseas operations[435] Consolidated Statement of Financial Position This statement presents the Group's financial position, highlighting a significant increase in net current liabilities due to reclassified bank loans and a decrease in total equity Financial Position Summary As of March 31, 2025, the Group's total assets slightly decreased, but net current liabilities significantly increased to HK$3.7711 billion, primarily due to the reclassification of bank loans as current liabilities due to non-compliance with financial covenants; total equity also decreased, reflecting a deterioration in financial position Key Data from Consolidated Statement of Financial Position for FY2025 (HK$ thousand) | Metric | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Non-current Assets | | | | Investment Properties | 6,489,000 | 5,950,000 | | Property, Plant and Equipment | 749,884 | 816,284 | | Current Assets | | | | Inventories of Properties | 1,482,569 | 1,773,757 | | Cash and Bank Balances | 33,624 | 62,562 | | Current Liabilities | | | | Bank Loans | 5,066,492 | 1,657,064 | | Non-current Liabilities | | | | Bank Loans | 162,969 | 4,183,866 | | Loans from Controlling Shareholder | 544,665 | – | | Total Equity | 2,720,826 | 2,953,006 | | Net Current (Liabilities)/Assets | (3,771,071) | 381,870 | - Net current assets of HK$381.9 million in FY2024 turned into net current liabilities of HK$3.7711 billion in FY2025, primarily due to the reclassification of HK$4.3139 billion in bank loans as current liabilities due to non-compliance with financial covenants[437][438] - Investment property value increased to HK$6.489 billion, while inventories of properties decreased to HK$1.4826 billion[437][438] Consolidated Statement of Changes in Equity This statement details the changes in the Group's total equity for FY2025, primarily reflecting the net loss and other comprehensive income, partially offset by a deemed capital contribution Equity Changes Summary The Group's total equity decreased to HK$2.7208 billion in FY2025, primarily impacted by the loss for the year and negative total comprehensive income, partially offset by a deemed capital contribution from the controlling shareholder Key Data from Consolidated Statement of Changes in Equity for FY2025 (HK$ thousand) | Metric | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Total Equity at Beginning of Year | 2,953,006 | 2,981,833 | | (Loss)/Profit for the Year | (292,055) | 298,450 | | Total Comprehensive Income for the Year | (307,628) | 298,756 | | Deemed Capital Contribution from Controlling Shareholder | 75,448 | – | | Total Equity at End of Year | 2,720,826 | 2,953,006 | - Total equity decreased by HK$232.2 million in FY2025, primarily due to the net loss of HK$292.1 million for the year[440] - A deemed capital contribution of HK$75.448 million from the controlling shareholder partially offset the decrease in equity[440] Consolidated Cash Flow Statement This statement summarizes the Group's cash flows, showing increased operating cash generation but net outflows from investing and financing activities, resulting in a net decrease in cash and cash equivalents Cash Flow Summary The Group saw a significant increase in net cash generated from operating activities in FY2025, but both investing and financing activities resulted in net cash outflows, leading to a net decrease in cash and cash equivalents; financing outflows were primarily due to bank loan repayments and interest payments Key Data from Consolidated Cash Flow Statement for FY2025 (HK$ thousand) | Metric | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 461,376 | 238,403 | | Net Cash Used in Investing Activities | (118,154) | (948,911) | | Net Cash (Used in)/Generated from Financing Activities | (372,128) | 548,454 | | Net Decrease in Cash and Cash Equivalents | (28,906) | (162,054) | | Cash and Cash Equivalents at End of Year | 33,624 | 62,562 | - Net cash generated from operating activities increased significantly to HK$461.4 million, a notable increase from HK$238.4 million in FY2024[442] - Financing activities shifted from a net cash inflow of HK$548.5 million in FY2024 to a net cash outflow of HK$372.1 million in FY2025, primarily due to bank loan repayments and interest payments[443] Notes to the Consolidated Financial Statements This section provides detailed notes on the Group's financial statements, covering general information, basis of preparation, critical accounting judgments, segment reporting, revenue, expenses, tax, directors' remuneration, EPS, fixed assets, inventories, liabilities, loans, capital management, financial risk, capital commitments, share option scheme, related party transactions, and post-reporting period events 1. General Information This note outlines Grand Ming Group Holdings Limited's incorporation background, principal business scope, and listing status on the Hong Kong Stock Exchange, confirming its primary engagement in building construction, property leasing, and property development - The Company was incorporated in the Cayman Islands on August 14, 2012, and listed on the Main Board of the Hong Kong Stock Exchange on August 9, 2013[444][447] - The Group is principally engaged in building construction, property leasing, and property development businesses[444][449] 3. Basis of Preparation The consolidated financial statements are prepared on a historical cost basis, but a material uncertainty related to going concern exists; the Group recorded a net loss in FY2025 and net current liabilities of HK$3.7711 billion, with some bank loans reclassified as current due to non-compliance with financial covenants; management is actively seeking waivers, considering asset disposals, and accelerating property sales to address liquidity challenges - For the year ended March 31, 2025, the Group recorded a net loss of HK$292.1 million and had net current liabilities of HK$3.7711 billion[464][465] - Bank loans totaling HK$4.3139 billion were reclassified as current liabilities due to non-compliance with certain financial covenants of bank facilities[466][468] - Management has successfully obtained waivers for financial covenants on HK$2.5216 billion of bank loans and is considering the disposal of interests in the holding companies of iTech Tower 3.1 and 3.2 to enhance liquidity[466][471] 5. Critical Accounting Judgements and Key Sources of Estimation Uncertainty This note highlights critical accounting judgments and key sources of estimation uncertainty in financial statement preparation, primarily focusing on fair value valuation of investment properties and investment properties under development, net realizable value assessment of properties under development and held for sale, and impairment assessment of property, plant and equipment; these estimates significantly impact financial statements and are influenced by market conditions and management judgment - Fair value valuation of investment properties and investment properties under development relies on independent professional valuers' judgments, involving key estimates such as discount rates, capitalization rates, and expected market rental growth rates[591][592][596] - The net realizable value assessment for properties under development and held for sale considers property use, estimated completion costs, selling costs, and market conditions; as of March 31, 2025, the carrying amount was HK$1.4826 billion (net of accumulated impairment of HK$256.2 million)[593][594][597] - The applicability of going concern depends on the successful implementation of management's liquidity plans, but their future outcomes are subject to uncertainty[599][602] 6. Segment Reporting The Group is divided into three reportable segments: construction, property leasing, and property development; all external customer revenue and the vast majority of non-current assets are located in Hong Kong; in FY2025, property development revenue significantly increased but this segment recorded a loss, while construction and property leasing segments recorded profits - The Group has three reportable segments: construction, property leasing, and property development[604][608] Segment Revenue and Results for FY2025 (HK$ thousand) | Segment | External Customer Revenue | Segment Results | | :--- | :--- | :--- | | Construction | 13,721 | 18,803 | | Property Leasing | 281,976 | 35,951 | | Property Development | 850,058 | (145,158) | | Total | 1,145,755 | (126,862) | - All revenue from external customers and the vast majority of non-current assets are derived from Hong Kong[615] 7. Revenue and Other Income and Gains/(Losses), Net Total revenue for FY2025 significantly increased to HK$1.1458 billion, primarily driven by property sales; however, other income and gains/(losses), net recorded a loss, mainly due to impairment losses on property, plant and equipment and net foreign exchange losses Revenue Breakdown for FY2025 (HK$ thousand) | Revenue Source | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Property Sales | 850,058 | 178,512 | | Building Construction Revenue | 13,721 | 77,648 | | Rental Related Income | 65,521 | 59,157 | | Rental Income | 216,455 | 217,374 | | Total Revenue | 1,145,755 | 532,691 | Other Income and Gains/(Losses), Net for FY2025 (HK$ thousand) | Item | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Bank Interest Income | 8,127 | 9,919 | | Net Foreign Exchange Losses | (3,674) | (13,053) | | Impairment Loss on Property, Plant and Equipment | (45,430) | – | | Total | (33,841) | 6,123 | - As of March 31, 2025, the transaction price allocated to remaining performance obligations was HK$283.5 million, expected to be recognized as revenue within one year[625] 8. (Loss)/Profit Before Taxation Loss before taxation for FY2025 was HK$266.3 million, primarily impacted by finance costs, significant write-downs of property inventories, and a substantial increase in selling commissions Components of (Loss)/Profit Before Taxation for FY2025 (HK$ thousand) | Item | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Finance Costs (after capitalization) | 96,811 | 122,667 | | Staff Costs (after capitalization) | 50,177 | 69,878 | | Cost of Inventories Recognized | 489,599 | 168,153 | | Selling Commissions | 272,102 | 17,580 | | Write-down of Property Inventories | 189,817 | 20,296 | | Depreciation | 21,258 | 21,913 | | Auditor's Remuneration (Audit Services) | 1,453 | 1,425 | - Write-down of property inventories significantly increased from HK$20.3 million in FY2024 to HK$189.8 million in FY2025[634] - Selling commissions substantially increased from HK$17.58 million in FY2024 to HK$272.1 million in FY2025[634] 9. Income Tax Expenses Income tax expense for FY2025 was HK$25.784 million, primarily Hong Kong profits tax; the Group has HK$763.5 million in unutilized tax losses for which no deferred tax asset was recognized due to insufficient probable future taxable profits Income Tax Expense for FY2025 (HK$ thousand) | Item | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Current Tax | 20,132 | 10,494 | | Deferred Tax | 5,652 | 4,187 | | Total | 25,784 | 14,681 | - As of March 31, 2025, the Group had HK$763.5 million in unutilized tax losses for which no deferred tax asset was recognized, as it is not probable that future taxable profits will be available to offset them[643][645] 11. Directors' Remuneration Total directors' remuneration for FY2025 was HK$14.265 million, slightly higher than FY2024; remuneration included salaries, allowances, benefits in kind, discretionary bonuses, and retirement scheme contributions, with no directors receiving compensation for joining or leaving during the year Directors' Remuneration for FY2025 (HK$ thousand) | Director Name | Fees | Salaries, Allowances and Benefits in Kind | Discretionary Bonuses | Retirement Scheme Contributions | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Mr Chan Hung Ming | – | 2,921 | 243 | – | 3,164 | | Mr Lau Chi Wah | – | 2,921 | 243 | 18 | 3,182 | | Mr Kwan Wing Wo | – | 2,965 | 243 | 18 | 3,226 | | Ms Tsang Ka Man | – | 1,699 | 140 | 18 | 1,857 | | Ms Chan Pui Yin | – | 985 | 44 | 11 | 1,040 | | Mr Tsui Ka Wah | 414 | – | 35 | – | 449 | | Mr Kan Yau Wo | 414 | – | 35 | – | 449 | | Mr Ho Chiu Yin | 414 | – | 35 | – | 449 | | Mr Li Chung Yiu | 414 | – | 35 | – | 449 | | Total | 1,656 | 11,491 | 1,053 | 65 | 14,265 | - Total directors' remuneration for FY2025 was HK$14.265 million, an increase from HK$13.589 million in FY2024[651][653] 14. (Loss)/Earnings Per Share Basic loss per share for FY2025 was 20.56 HK cents, compared to basic earnings per share of 21.02 HK cents in FY2024; excluding the impact of fair value changes in investment properties, underlying loss per share widened to 12.07 HK cents (Loss)/Earnings Per Share for FY2025 (HK cents) | Metric | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Basic (Loss)/Earnings Per Share | (20.56) | 21.02 | | Diluted (Loss)/Earnings Per Share | (20.56) | 21.00 | | Underlying Loss Per Share – Basic | (12.07) | (6.04) | | Underlying Loss Per Share – Diluted | (12.07) | (6.04) | - Basic loss per share for FY2025 was 20.56 HK cents, compared to basic earnings per share of 21.02 HK cents in FY2024, representing a shift from profit to loss[670] - For the year ended March 31, 2025, share options had an anti-dilutive effect on basic loss per share and were therefore not included in the calculation of diluted loss per share[672][674] 15. Fixed Assets As of March 31, 2025, the Group's total fixed assets amounted to HK$7.2389 billion; fair value adjustments for investment properties and investment properties under development resulted in a revaluation loss of HK$120.7 million, while owner-occupied properties recognized an impairment loss of HK$45.43 million Net Book Value of Fixed Assets for FY2025 (HK$ thousand) | Asset Class | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Investment Properties | 3,639,000 | 3,760,000 | | Investment Properties Under Development | 2,850,000 | 2,190,000 | | Owner-Occupied Properties | 741,691 | 805,750 | | Other Fixed Assets | 8,193 | 10,534 | | Total | 7,238,884 | 6,766,284 | - Fair value adjustments for investment properties and investment properties under development resulted in a loss of HK$120.7 million in FY2025[681] - Owner-occupied properties recognized an impairment loss of HK$45.43 million, reflecting unfavorable conditions in the commercial property market[702][703] - Investment property valuations utilize discounted cash flow, market comparison, and residual methods, involving key unobservable inputs such as risk-adjusted discount rates, expected market rental growth rates, occupancy rates, and capitalization rates[687][688][690][691][694] 16. Inventories of Properties As of March 31, 2025, the Group's total inventories of properties amounted to HK$1.4826 billion, comprising HK$926.1 million in properties under development and HK$556.5 million in properties held for sale; most properties under development are expected to be recovered after one year Inventories of Properties for FY2025 (HK$ thousand) | Item | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Properties Under Development | 926,076 | 703,658 | | Completed Properties Held for Sale | 556,493 | 1,070,099 | | Total | 1,482,569 | 1,773,757 | - As of March 31, 2025, HK$569.1 million of properties under development are expected to be recovered after one year, with the remainder expected within one year[707] 17. Contract Liabilities As of March 31, 2025, the Group's contract liabilities increased to HK$37.8 million, primarily from deposits and installments for property sales, recognized as liabilities before control of the property is transferred to customers Contract Liabilities for FY2025 (HK$ thousand) | Item | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Contract Liabilities in respect of Property Sales | 37,797 | 24,937 | - The increase in contract liabilities was mainly due to deposits and installments received for property sales during the year[712] 18. Trade and Other Receivables As of March 31, 2025, the Group's total trade and other receivables amounted to HK$93.25 million, a decrease from FY2024; the Group made a loss allowance of HK$81 thousand for trade receivables and typically grants trade customers 30 days of credit Trade and Other Receivables for FY2025 (HK$ thousand) | Item | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Trade Receivables (net of loss allowance) | 30,274 | 36,532 | | Prepaid Sales Commissions | 405 | 8,071 | | Prepaid Loan Arrangement Fees | 19,871 | 29,958 | | Other Prepayments | 4,178 | 56,855 | | Total | 93,249 | 161,196 | - Loss allowance for trade receivables decreased from HK$131 thousand in FY2024 to HK$81 thousand in FY2025[717] - The Group generally grants trade customers 30 days of credit and typically does not require collateral from customers[719] 19. Restricted and Pledged Deposits and Cash and Bank Balances As of March 31, 2025, the Group's cash and bank balances amounted to HK$33.624 million, a decrease from FY2024; most deposits remain pledged or restricted, primarily to secure bank loans and hold proceeds from property sales Restricted and Pledged Deposits and Cash and Bank Balances for FY2025 (HK$ thousand) | Item | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Cash and Bank Balances | 180,231 | 213,469 | | Time Deposits | – | 353,952 | | Less: Pledged Deposits | (133,155) | (478,542) | | Less: Restricted Deposits | (13,452) | (26,317) | | Cash and Bank Balances in Consolidated Statement of Financial Position | 33,624 | 62,562 | - Pledged deposits are primarily used to secure the Group's bank loans[722] - Restricted deposits refer to proceeds from property sales placed in designated bank accounts[721][722] 20. Trade and Other Payables As of March 31, 2025, the Group's total trade and other payables significantly increased to HK$412.6 million, primarily due to increases in trade payables and rental deposits received in advance Trade and Other Payables for FY2025 (HK$ thousand) | Item | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Trade Payables | 157,164 | 60,865 | | Payables for Acquisition of Investment Properties | 74,750 | 2,813 | | Rental Deposits Received in Advance | 86,980 | 8,159 | | Retention Payables | 52,583 | 38,664 | | Total | 412,613 | 167,223 | - Trade payables increased from HK$60.87 million in FY2024 to HK$157.2 million in FY2025[724] - Rental deposits received in advance significantly increased from HK$8.16 million in FY2024 to HK$86.98 million in FY2025[724] 21. Bank Loans As of March 31, 2025, the Group's total bank loans amounted to HK$5.2295 billion; due to non-compliance with certain financial covenants, HK$4.3139 billion of long-term bank loans were reclassified as current liabilities, leading to a significant increase in current liabilities; these loans are secured by various Group assets Bank Loans for FY2025 (HK$ thousand) | Item | 2025 FY | 2024 FY | | :--- | :--- | :--- | | Secured Bank Loans | 5,176,894 | 5,754,284 | | Unsecured Bank Loans | 52,567 | 86,646 | | Total | 5,229,461 | 5,840,930 | | Repayable within one year or on demand (classified as current liabilities) | 5,066,492 | 1,657,064 | | Repayable after one year (classified as non-current liabilities) | 162,969 | 4,183,866 | - Bank loans totaling HK$4.3139 billion were reclassified as current liabilities due to non-compliance with financial ratios stipulated in certain bank loan agreements[728][729][127] - Bank loans are secured by investment properties, property, plant and equipment, inventories of properties, pledged deposits, and equity interests in certain subsidiaries[731][733] 24. Loans from Controlling Shareholder In FY2025, the Group obtained unsecured loans totaling HK$607.5 million from the controlling shareholder, bearing an annual interest rate of 3% and repayable between April and May 2028; the difference of HK$75.448 million between the loan principal and initial fair value was treated as a capital contribution - The Group obtained unsecured loans totaling approximately HK$607.5 million from the controlling shareholder, bearing an annual interest rate of 3% and repayable between April and May 2028[743][744] - The difference of HK$75.448 million between the loan principal and its initial recognized fair value was treated as a deemed capital contribution from the controlling shareholder, recognized within equity in the consolidated financial statements[743][744] 29. Capital Risk Management The Group aims to maintain an optimal capital structure to safeguard its going concern ability and provide returns to shareholders; as of March 31, 2025, the current ratio was 0.32 times, net gearing ratio was approximately 186.6%, and it is subject to various financial covenants for bank facilities - As of March 31, 2025, the Group's current ratio was 0.32 times (FY2024: 1.18 times), and net gearing ratio was approximately 186.6% (FY2024: 179.8%)[771][772] - The Group is subject to various financial covenants, including consolidated tangible net worth, consolidated net borrowings to consolidated tangible net worth ratio, consolidated profit before tax, interest, depreciation and amortization to consolidated finance c