应力控股(02663) - 2025 - 年度财报

Chairman's Statement Chairman's Statement The Group's revenue remained stable year-over-year due to existing contracts and major project completions like the Kai Tak Sports Park, despite challenges from global uncertainties and intense competition in the Hong Kong construction industry - The Hong Kong economy remains under pressure, with reduced demand for new construction projects leading to intense market competition and squeezed profit margins[11][16] - Despite the economic slowdown, the Group's revenue remained stable year-over-year, supported by contracts secured in previous years and the successful completion of several major projects in 2024, such as the Kai Tak Sports Park roof renovation[12][13][16] - The Board recommends a final dividend of 0.3 HK cents per share[15][17] Management Discussion and Analysis BUSINESS REVIEW The Group's core business in structural engineering and building materials remained unchanged, with revenue slightly increasing by 0.3% to HK$667.7 million, driven by progress on key projects | Indicator | FY2025 (HK$ million) | FY2024 (HK$ million) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 667.7 | 666.0 | +0.3% | Major Contributing Projects in FY2025 | Project Name | Revenue Recognized (HK$ million) | Status (as of 2025/3/31) | | :--- | :--- | :--- | | Façade for office redevelopment in Central | 151.0 | In progress | | Roof renovation for sports facility in Kowloon City | 97.6 | In progress | | Structural steelwork for infrastructure in Kowloon City | 65.6 | In progress | FUTURE PROSPECTS The Group will adjust its bidding strategy to focus on smaller projects and operational efficiency amidst fierce competition, while managing a significant provision for receivables from a customer in liquidation - To cope with intense competition, the Group is adjusting its bidding strategy to prioritize smaller-scale projects and focus on optimizing resource allocation and operational efficiency[26][27] - As of March 31, 2025, the Group had contracts on hand of approximately HK$369 million, including several noise barrier and façade projects[26][27][28] - A provision of approximately HK$16.5 million for trade receivables, retention money, and contract assets was recognized, primarily related to a major customer group undergoing liquidation proceedings[28][29] FINANCIAL REVIEW FY2025 revenue was stable at HK$667.7 million, but profit for the year fell 22.0% to HK$36.2 million due to compressed gross margins, a large provision for credit losses, and increased discretionary director bonuses Key Financial Indicators for FY2025 | Indicator | FY2025 | FY2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | HK$667.7 million | HK$666.0 million | +0.3% | | Gross Profit | HK$107.1 million | HK$115.2 million | -7.1% | | Net Profit | HK$36.16 million | HK$46.38 million | -22.0% | | Earnings Per Share | 6.49 HK cents | 8.33 HK cents | -22.1% | | Gross Profit Margin | 16.0% | 17.3% | -1.3pp | | Net Profit Margin | 5.4% | 7.0% | -1.6pp | - The decline in gross profit margin was primarily due to intense competition in the construction market, which compressed profit margins[35][40] - Administrative and other operating expenses increased by HK$4.2 million, mainly due to a HK$4.0 million increase in discretionary director bonuses, which was calculated without considering the HK$16.5 million provision for the customer's liquidation as it was deemed an isolated event[37][42] - The 22.0% decrease in profit for the year was mainly attributable to the increased provision for credit losses on receivables and the rise in discretionary director bonuses[45][49] LIQUIDITY, FINANCIAL RESOURCES AND CAPITAL STRUCTURE The Group maintains sufficient liquidity through operating cash flows and short-term borrowings, improving its current ratio to 2.4 and reducing its gearing ratio to 5.0% after repaying all bank loans Liquidity Indicators (as of March 31) | Indicator | 2025 | 2024 | | :--- | :--- | :--- | | Current Assets | HK$413.3 million | HK$506.7 million | | Current Liabilities | HK$169.9 million | HK$230.1 million | | Current Ratio | 2.4 times | 2.2 times | - As of March 31, 2025, the Group had total cash and bank balances of approximately HK$120 million and unutilized banking facilities of approximately HK$207 million[55][63] - The gearing ratio decreased from 6.4% to 5.0%, primarily due to improved liquidity and the repayment of all bank borrowings by year-end[58][64] Biography of Directors and Senior Management EXECUTIVE DIRECTORS The executive team comprises Chairman Mr Yip Pak Hung and CEO Mr Wai Yat Kin, both co-founders with over 30 years of industry experience, responsible for overall management and strategic planning - Mr Yip Pak Hung, Chairman, is primarily responsible for the Group's overall management and corporate policy formulation, with over 30 years of experience in structural engineering and construction[77][78] - Mr Wai Yat Kin, CEO and co-founder, is primarily responsible for overall strategic planning, management, and administration, with over 35 years of experience in structural engineering and construction[79][80] INDEPENDENT NON-EXECUTIVE DIRECTORS The independent non-executive director team provides independent judgment on strategy and performance, bringing diverse expertise from accounting, business, academia, and structural engineering - Ms Lai Pik Chi, Peggy, Chairlady of the Audit Committee, has over 30 years of experience in auditing, accounting, and financial management and is a fellow member of the ACCA[83][84] - Dr Kwan Chi Ming, appointed as an Independent Non-executive Director on January 1, 2025, has over 40 years of experience in structural engineering and consultancy, having previously worked for the Buildings Department of the HKSAR Government[91][92] SENIOR MANAGEMENT The senior management team, consisting of the General Manager and Commercial Director, leverages over 30 years of individual industry experience to oversee the building materials and construction project divisions - Mr Liu Yuen Wai, General Manager, is primarily responsible for overseeing the management and operations of the building materials trading business division, with over 30 years of experience[95][96] - Mr Chan Chi Ming, Commercial Director, is primarily responsible for the overall management, quality control, and safety supervision of design and build projects, with over 30 years of experience[97][98] Corporate Governance Report COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE The company has maintained high corporate governance standards, complying with all code provisions of the Corporate Governance Code and separating the roles of Chairman and CEO - The Company has complied with all code provisions of the Corporate Governance Code during the year[103][107] - The roles of Chairman (Mr Yip Pak Hung) and CEO (Mr Wai Yat Kin) are held by different individuals, in compliance with the code, which the Board believes enables effective decision-making[104][105][108] BOARD OF DIRECTORS The Board, comprising two executive and four independent non-executive directors, oversees group strategy and has enhanced its independence by appointing a new member as founding INEDs reached their nine-year tenure Board Meeting Attendance Record (FY2025) | Director Name | Position | Board Meeting Attendance | General Meeting Attendance | | :--- | :--- | :--- | :--- | | Mr Yip Pak Hung | Chairman, Executive Director | 4/4 | 1/1 | | Mr Wai Yat Kin | CEO, Executive Director | 4/4 | 1/1 | | Ms Lai Pik Chi, Peggy | Independent Non-executive Director | 4/4 | 1/1 | | Mr Lam Chi Wai | Independent Non-executive Director | 4/4 | 1/1 | | Dr Yeung Kit Ming | Independent Non-executive Director | 4/4 | 1/1 | | Dr Kwan Chi Ming | Independent Non-executive Director | 3/3 | N/A | - The Board, recognizing that the founding Independent Non-executive Directors have served for nine years, has invited Dr Kwan Chi Ming to join the Board to maintain sufficient independence[118][120] BOARD COMMITTEES The company's Audit, Remuneration, and Nomination committees, led by experienced directors, fulfilled their respective duties in financial oversight, compensation review, and board composition planning during the year Committee Meeting Attendance Record (FY2025) | Director Name | Audit Committee | Nomination Committee | Remuneration Committee | | :--- | :--- | :--- | :--- | | Ms Lai Pik Chi, Peggy | 4/4 (Chairlady) | 2/2 | 2/2 | | Mr Lam Chi Wai | 4/4 | 2/2 | 2/2 (Chairman) | | Dr Yeung Kit Ming | 4/4 | 2/2 (Chairman) | 2/2 | | Dr Kwan Chi Ming | 2/2 | N/A | N/A | - The Audit Committee reviewed the Group's financial reports, results announcements, and risk management and internal control systems[131][132][138] - The Remuneration Committee reviewed employee salary adjustments and discretionary bonuses, and assessed the performance and remuneration of directors[133][134][140] INTERNAL CONTROL AND RISK MANAGEMENT The Board oversees risk management and, in the absence of an internal audit department, engages external consultants to annually review its systems, which were deemed effective for the year - The Company does not have an independent internal audit department but engages external consultants to review the Group's internal control and risk management systems[155][161] - Based on the review, the Company considers its risk management and internal control functions to have remained effective and adequate during the year[156][162] Directors' Report PRINCIPAL RISKS AND UNCERTAINTIES The Group's primary risks include potential damage to its reputation, exposure to legal claims, and a high dependency on the cyclical Hong Kong structural engineering and construction market - Reputation Risk: Failure to maintain its reputation and brand could adversely affect the business, financial performance, and operating results[180][186] - Legal Risk: The Group may face claims or legal proceedings related to personal injury, property damage, or contractual disputes, which could materially impact business operations[181][187] - Market Dependency Risk: The Group's performance relies on the supply of design and construction projects in Hong Kong, and the cyclical nature of the construction industry and economic fluctuations could have a significant adverse impact[188][191] DIVIDEND POLICY AND DIVIDENDS The Board proposed a final dividend of 3.0 HK cents per share for FY2025, a decrease from the prior year, and did not recommend a special dividend, though a special interim dividend was paid during the year Dividend Distribution (HK cents per share) | Dividend Type | FY2025 | FY2024 | | :--- | :--- | :--- | | Special Interim Dividend | 4.0 | 0 | | Proposed Final Dividend | 3.0 | 4.0 | | Proposed Special Dividend | 0 | 4.0 | MAJOR CUSTOMERS AND SUPPLIERS Customer and supplier concentration remains high, with the top five customers accounting for 64.4% of total revenue and the top five subcontractors representing 61.6% of total subcontracting fees - Customer Concentration: The five largest customers accounted for approximately 64.4% of total revenue (2024: 84.3%), with the largest customer contributing 37.27% (2024: 56.6%)[261][266] - Supplier Concentration: The five largest suppliers accounted for approximately 44.3% of total purchases (2024: 51.5%), with the largest supplier representing 25.2%[262][267] - Subcontractor Concentration: The five largest subcontractors accounted for approximately 61.6% of total subcontracting fees (2024: 73.3%), with the largest subcontractor representing 29.8%[263][268] Independent Auditor's Report OPINION AND KEY AUDIT MATTERS The auditor issued an unqualified opinion on the financial statements, identifying the recognition of revenue and related balances from construction contracts as a key audit matter due to significant management judgment - The auditor issued an unqualified opinion on the consolidated financial statements, concluding that they give a true and fair view of the Group's financial position and performance[290][292] - The Key Audit Matter was identified as the recognition of revenue, contract assets, and contract liabilities from construction contracts, due to the significant management judgment and estimation uncertainty involved in estimating contract costs and variable consideration[295][296][298] Consolidated Financial Statements Consolidated Statement of Comprehensive Income For the year ended March 31, 2025, revenue grew slightly to HK$667.7 million, but profit for the year declined 22.0% to HK$36.2 million, impacted by a HK$15.6 million provision for trade receivables Consolidated Statement of Comprehensive Income Summary (For the year ended March 31) | Item (HK$'000) | 2025 | 2024 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Revenue | 667,711 | 666,037 | +0.3% | | Gross Profit | 107,095 | 115,231 | -7.1% | | Profit before income tax | 41,264 | 55,750 | -26.0% | | Profit for the year | 36,157 | 46,378 | -22.0% | | Basic earnings per share (HK cents) | 6.49 | 8.33 | -22.1% | Consolidated Statement of Financial Position As of March 31, 2025, the Group's total assets decreased by 16.9% to HK$437.8 million, while total liabilities fell 26.1% primarily due to the repayment of bank borrowings Consolidated Statement of Financial Position Summary (As of March 31) | Item (HK$'000) | 2025 | 2024 | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Total Assets | 437,817 | 526,633 | -16.9% | | Total Liabilities | 176,419 | 234,279 | -24.7% | | Total Equity | 261,398 | 292,354 | -10.6% | | Net Current Assets | 243,399 | 276,600 | -12.0% | | Cash and bank balances | 119,966 | 170,231 | -29.5% | | Bank borrowings | 0 | 9,276 | -100% | Consolidated Statement of Cash Flows Net cash from operating activities decreased significantly to HK$33.1 million, and after cash outflows for financing activities like dividend payments and loan repayments, cash reserves fell by HK$50.3 million Consolidated Statement of Cash Flows Summary (For the year ended March 31) | Item (HK$'000) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash from operating activities | 33,069 | 109,482 | | Net cash (used in)/from investing activities | (381) | 7,548 | | Net cash used in financing activities | (83,016) | (61,231) | | Net (decrease)/increase in cash and cash equivalents | (50,328) | 55,799 | | Cash and cash equivalents at end of year | 119,966 | 170,231 | Notes to the Consolidated Financial Statements The notes detail accounting policies, key estimates, segment information, and risk management, highlighting the Group's two main business segments and its management of credit, interest rate, and foreign exchange risks 5. SEGMENT INFORMATION The Group operates in two segments, with the "Structural engineering work" segment being the core business, contributing the vast majority of revenue (HK$597.0 million) and profit (HK$60.8 million) in FY2025 Segment Results for FY2025 (HK$'000) | Segment | External Revenue | Segment Profit | | :--- | :--- | :--- | | Structural engineering work | 596,969 | 60,835 | | Supply, installation and trading of building material products | 70,742 | 21,677 | | Total | 667,711 | 82,512 | 19. TRADE AND OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS The loss allowance for trade receivables increased by 150% to HK$26.0 million, reflecting a significant rise in credit risk, bringing the net trade receivables balance to HK$126.0 million Movement in Loss Allowance for Trade Receivables (HK$'000) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Balance at beginning of year | 10,435 | 1,641 | | Provision for the year | 15,603 | 8,794 | | Balance at end of year | 26,038 | 10,435 | 35. FINANCIAL RISK MANAGEMENT The Group manages credit risk from concentrated trade receivables using an expected credit loss model, while interest rate risk is minimal after repaying all bank borrowings by year-end - Credit Risk Concentration: As of March 31, 2025, the Group's largest trade debtor and five largest trade debtors accounted for 36% and 64% of total trade receivables, respectively[700][703] - The Group applies the simplified approach (lifetime expected credit losses) to measure the loss allowance for trade receivables, retention receivables, and contract assets[704][707] Financial Summary Financial Summary Over the past five years, the Group's revenue has grown steadily, while profit has fluctuated, and net assets have remained stable in the HK$260-290 million range for the last three years Five-Year Results Summary (HK$'000) | Fiscal Year | 2025 | 2024 | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 667,711 | 666,037 | 568,490 | 494,170 | 458,493 | | Gross Profit | 107,095 | 115,231 | 100,767 | 60,713 | 100,653 | | Profit for the year | 36,157 | 46,378 | 37,147 | 11,505 | 50,171 | Five-Year Assets and Liabilities Summary (HK$'000) | Fiscal Year | 2025 | 2024 | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 437,817 | 526,633 | 497,976 | 402,126 | 431,393 | | Total Liabilities | (176,419) | (234,279) | (234,184) | (154,761) | (163,168) | | Net Assets | 261,398 | 292,354 | 263,792 | 247,365 | 268,225 |