STERLING GP(01825) - 2025 - 年度财报

Company Information Board Members and Committees The company's board comprises executive and independent non-executive directors, with audit, remuneration, and nomination committees; several directors and committee members changed during the reporting period. - Executive Director changes: Mr. Zhong Guowei, Mr. Liang Jiawei, and Mr. Ma Jian resigned, while Mr. Yang Lun was appointed[4] - Independent Non-Executive Director changes: Mr. Zeng Haoxian, Ms. Zhang Lingling, Mr. Zhao Chuan, and Mr. Zhou Runzhang resigned, while Ms. Chen Jie and Ms. Gao Yuanyuan were appointed[4] - Ms. Chen Jie chairs the Audit Committee, Ms. Gao Yuanyuan chairs the Remuneration Committee, and Ms. Wang Meihui chairs the Nomination Committee[4][5] Company Contact Information The company's registered office is in the Cayman Islands, with its headquarters and principal place of business in Hong Kong; its website is http://www.sterlingapparel.com.hk, and its auditor is BDO Limited. - Registered Office: 3rd Floor, Century Yard, Cricket Square, P.O. Box 902, Grand Cayman KY1-1103, Cayman Islands[6] - Headquarters and Principal Place of Business in Hong Kong: 18-19/F, Vanta Industrial Centre, 9 Tai Yau Street, San Po Kong, Kowloon, Hong Kong[6] - Company Website: http://www.sterlingapparel.com.hk[7](index=7&type=chunk) - Auditor: BDO Limited[7] Financial Highlights Overview of Operating Results For the year ended March 31, 2025, revenue decreased by 16.4% to HKD 477,728 thousand, with improved gross profit margin, resulting in an operating loss and a narrowed net loss. Operating Results (HKD '000) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Revenue | 477,728 | 571,391 | | Gross Profit | 87,531 | 91,377 | | Gross Profit Margin | 18.3% | 16.1% | | Selling and Distribution Costs | (20,668) | (24,315) | | General and Administrative Expenses | (53,294) | (52,657) | | Operating (Loss)/Profit | (1,309) | 7,442 | | Net Expected Credit Loss on Trade and Other Receivables | (4,834) | (25,802) | | Net Loss for the Year | (6,143) | (18,360) | | EBITDA excluding Expected Credit Loss | 22,330 | 5,034 | | EBITDA before Expected Credit Loss | 27,164 | 30,826 | - Revenue decreased by 16.4% year-on-year, from HKD 571,391 thousand in 2024 to HKD 477,728 thousand in 2025[8] - Gross profit margin increased from 16.1% in 2024 to 18.3% in 2025[8] - Operating results shifted from a profit of HKD 7,442 thousand in 2024 to a loss of HKD 1,309 thousand in 2025[8] - Net loss for the year narrowed from HKD 18,360 thousand in 2024 to HKD 6,143 thousand in 2025[8] Financial Position and Key Ratios As of March 31, 2025, cash and bank balances significantly decreased, total assets declined, but the debt-to-asset and debt-to-equity ratios improved, while current and quick ratios fell, indicating short-term solvency challenges. Financial Position (HKD '000) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Cash and Bank Balances | 14,710 | 26,965 | | Total Assets | 250,253 | 321,480 | | Net Assets Attributable to Owners | 30,505 | 27,329 | Key Ratios | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Loss Margin | (1.3%) | (3.2%) | | Loss Per Share (HK cents) | (2.17) | (7.65) | | Return on Total Assets | (2.5%) | (5.7%) | | Return on Average Total Equity | (21.2%) | (49.4%) | | Interest Coverage Ratio | -0.7 times | 0.6 times | | Current Ratio | 0.46 | 0.78 | | Quick Ratio | 0.36 | 0.69 | | Debt-to-Asset Ratio | 345.2% | 689.9% | | Debt-to-Equity Ratio | 297.0% | 591.3% | - Cash and bank balances decreased from HKD 26,965 thousand in 2024 to HKD 14,710 thousand in 2025[8] - Debt-to-asset ratio significantly decreased from 689.9% in 2024 to 345.2% in 2025, and the debt-to-equity ratio also fell from 591.3% to 297.0%[8] Chairman's Statement Annual Results and Challenges For the year ended March 31, 2025, sales revenue decreased by 16.4% due to tighter credit policies for smaller clients and reduced sales to the largest client, leading to an operating loss despite improved gross margin, while net loss narrowed significantly due to reduced expected credit loss provisions. - Sales revenue was approximately HKD 477,728,000, a 16.4% decrease from the previous year[10] - Sales decreased by approximately HKD 93,663,000, with 72.0% attributed to smaller clients due to tighter credit policies and changes in purchasing strategies, and the remaining decrease from the largest client, representing 88% of its revenue[10] - An operating loss of approximately HKD 1,309,000 was recorded, compared to an operating profit of approximately HKD 7,442,000 in the prior year, primarily due to reduced sales revenue, partially offset by an increase in gross profit margin from 16.1% to 18.3%[12] - Net loss of approximately HKD 6,143,000 narrowed from approximately HKD 18,360,000 in the prior year, mainly due to a significant reduction in expected credit loss provisions following the early repayment of HKD 27,300,000 in advances from San Tai[12] Market Environment and Future Outlook The new US government's tariff policies and the trend of manufacturing reshoring severely impact the company's exports to the US, increasing market uncertainty and suppressing consumer confidence, leading to anticipated significant sales decline next year. - The new US government's tariff policies and the trend of manufacturing reshoring severely impact exports to the US, affecting inflation, GDP growth, employment, personal income, and discretionary purchasing preferences[11] - The company anticipates a significant decline in sales next year and will monitor sales recovery after tariff issues are resolved[11] - Despite current cost-cutting measures, the company will continue to seek other cost reduction opportunities in the coming year[12] Management Discussion and Analysis Company Background Sterling Apparel Group Holdings Limited is a Hong Kong-based apparel manufacturer offering one-stop solutions, primarily serving US international brands with production facilities in China and Sri Lanka, and listed on the HKEX since October 2018. - Sterling Apparel Group Holdings Limited is a Hong Kong-based apparel manufacturer providing one-stop apparel manufacturing solutions[14] - Key clients are US-based international apparel brands, with a long-standing relationship with the largest client since the 1990s[14] - The company operates three production facilities (one in China, two in Sri Lanka) and outsources some production to the Philippines[14] - The company's shares have been listed on the Main Board of the Hong Kong Stock Exchange since October 19, 2018[14] Business Review For the year ended March 31, 2025, group revenue decreased by 16.4% due to lower sales to the largest client and deteriorating credit conditions for new clients; gross margin improved, but gross profit still declined, while selling and distribution expenses decreased, and finance costs significantly increased. - Revenue was approximately HKD 477,728,000, a 16.4% decrease compared to the same period last year[15] - The decrease in sales revenue was primarily due to a HKD 26,191,000 (5.9%) reduction in sales to the largest client and a HKD 67,471,000 reduction in sales to new clients, mainly related to deteriorating credit conditions and lost sales[15] - Gross profit margin improved from 16.1% to 18.3%, but gross profit still decreased by approximately HKD 4,450,000[15] - Selling and distribution expenses decreased by 15.0% to approximately HKD 20,668,000, primarily achieved through human resource cost savings[15][24] - Finance costs significantly increased by 31.4% to approximately HKD 21,323,000, mainly due to rising interest rates and guarantee fees for bank borrowing arrangements[16][26] - Expected credit loss provisions decreased to approximately HKD 4,834,000 (compared to HKD 25,802,000 in the prior year), primarily due to early repayment of approximately HKD 27,300,000 from San Tai[16] - A loss of approximately HKD 6,143,000 was recorded, narrowing from a loss of approximately HKD 18,360,000 in the prior year[17] Revenue Analysis Group revenue primarily derives from outerwear, bottoms, tops, and other apparel products, with outerwear and bottoms being key contributors; most product categories experienced sales declines due to reduced orders from major US clients, with the US market remaining dominant at 99.6% of total revenue. - Apparel products are categorized into outerwear, bottoms, tops, and others, primarily made from wool, cotton, and polyester[18] Revenue Contribution by Product Category (HKD '000) | Product Category | 2025 Revenue | 2025 Quantity (Thousand Pieces) | 2025 Unit Price (HKD) | 2024 Revenue | 2024 Quantity (Thousand Pieces) | 2024 Unit Price (HKD) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Outerwear | 219,198 | 616 | 355.8 | 243,226 | 708 | 343.5 | | Bottoms | 208,488 | 1,384 | 150.6 | 208,864 | 1,411 | 148.0 | | Tops | 17,050 | 165 | 103.3 | 29,153 | 193 | 151.1 | | Others | 32,337 | 133 | 243.1 | 89,493 | 474 | 188.8 | | Total | 477,073 | 2,298 | | 570,736 | 2,786 | | - Revenue decreased across most product categories, primarily due to reduced sales orders from major US clients[19] Revenue Contribution by Geography (HKD '000) | Location | 2025 Revenue | 2025 Share | 2024 Revenue | 2024 Share | | :--- | :--- | :--- | :--- | :--- | | United States | 475,971 | 99.6% | 567,791 | 99.4% | | Hong Kong | 302 | 0.1% | 519 | 0.1% | | Others | 1,455 | 0.3% | 3,081 | 0.5% | | Total | 477,728 | 100.0% | 571,391 | 100.0% | Gross Profit and Other Income/Expenses Gross profit margin improved to 18.3% due to manufacturing efficiency and optimized supplier procurement, while other income decreased due to lower sample and claims revenue, partially offset by new loan interest income, and net other gains and losses significantly declined due to exchange losses. - Gross profit margin was approximately 18.3% (2024: 16.1%), an increase primarily due to improved manufacturing efficiency and diversified product sourcing from various suppliers[21] Other Income (HKD '000) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Sample Income | 2,474 | 4,219 | | Claims Income | 96 | 1,340 | | Interest Income from Loans and Other Receivables | 2,707 | – | | Total | 6,479 | 7,757 | - Net other gains were approximately HKD 50,000 (2024: HKD 1,608,000), with the decrease primarily attributable to net exchange losses[23] Financial Position and Dividend Policy As of March 31, 2025, the group's cash and bank balances decreased mainly due to bank loan repayments, inventory declined by 27.5%, and no final dividend is recommended; the group faces going concern uncertainty due to current liabilities exceeding current assets and financial covenant breaches, but management is addressing liquidity issues. - Cash and bank balances were approximately HKD 14,710,000 (2024: HKD 36,949,000), a decrease primarily due to bank loan repayments, with bank borrowings reducing from HKD 188,550,000 to HKD 105,305,000[28] - Inventory decreased by 27.5% to approximately HKD 20,502,000[28] - No final dividend is recommended for the year ended March 31, 2025[29] - As of March 31, 2025, the group's current liabilities exceeded current assets by HKD 112,143,000, and it breached financial covenants on bank borrowings of HKD 67,517,000, indicating significant uncertainty regarding its ability to continue as a going concern[192][222] - The company is negotiating with banks for waivers of financial covenants and believes such waivers are likely to be granted[222] Prospects and New Business Development The group maintains a cautious outlook for the coming year due to new US tariff policies and economic uncertainty, expecting reduced client purchasing volumes, and has initiated digital marketing services through its Chinese subsidiary to diversify revenue streams. - The new US government's "reciprocal tariffs" policy and economic uncertainty have suppressed consumer confidence, potentially leading US retailers to reduce inventory purchases[30] - As of early June 2025, client orders on hand decreased by approximately 30% compared to last year, reflecting reduced purchasing volumes or delayed client purchases[31] - The group has commenced digital marketing services through its Chinese subsidiary, including performance advertising, display advertising, and short video exposure services, to diversify revenue streams[31] - The group will continue to adjust expenses and explore new business opportunities[31] Liquidity, Capital Resources, and Capital Structure As of March 31, 2025, the group had HKD 14,710 thousand in cash and bank balances, HKD 96,198 thousand in current assets, and HKD 208,341 thousand in current liabilities; bank borrowings decreased to HKD 105,305 thousand, and the debt-to-asset ratio significantly improved to 345.2%, with funds raised from new share placements used for general working capital. - Cash and bank balances were approximately HKD 14,710,000 (2024: HKD 26,965,000)[32] - Current assets were approximately HKD 96,198,000, and current liabilities were approximately HKD 208,341,000[32] - Bank borrowings were approximately HKD 105,305,000 (2024: HKD 188,550,000), primarily bearing interest at annual rates ranging from 5.48% to 5.74%[32] - The debt-to-asset ratio was approximately 345.2% (2024: 689.9%), with the decrease directly resulting from reduced bank borrowings[33] - Two placements of new shares raised net proceeds of approximately HKD 5.12 million and HKD 3.95 million, respectively, for general working capital[34][36] Employees and Remuneration Policy As of March 31, 2025, the group employed 1,281 full-time staff globally, with remuneration based on market conditions, qualifications, experience, position, and seniority, reviewed for performance-based increments, bonuses, and promotions, and no significant labor disputes occurred during the reporting period. - As of March 31, 2025, the group employed approximately 1,281 full-time employees in Hong Kong, mainland China, and Sri Lanka (2024: 1,290 employees)[37] - Remuneration is determined based on market conditions, employee qualifications, experience, position, and seniority, with salary increments, bonuses, and promotions reviewed based on performance[37] - No serious strikes, significant labor disputes, or difficulties in recruiting skilled employees occurred during the reporting period[37] Financial Policies and Foreign Currency Risk The group's operations in Hong Kong, mainland China, the Philippines, and Sri Lanka expose it to foreign currency risks from USD, EUR, RMB, and LKR; currently, there is no foreign currency hedging policy, but a conservative approach is maintained, with continuous monitoring of exchange rate trends for future hedging needs. - The group's business activities and operations are primarily conducted in Hong Kong, mainland China, the Philippines, and Sri Lanka[38] - The group is exposed to foreign currency risks from USD, EUR, RMB, and LKR[38] - There is currently no foreign currency hedging policy, but a conservative approach is adopted, with exchange rate trends monitored periodically[38] Capital Commitments and Contingent Liabilities As of March 31, 2025, the group had no significant capital commitments and provided corporate guarantees as partial collateral for general banking facilities granted to certain wholly-owned subsidiaries. - As of March 31, 2025, the group had no significant capital commitments[39] - The group executed corporate guarantees as partial collateral for general banking facilities granted to certain wholly-owned subsidiaries[40] Significant Acquisitions and Disposals and Future Plans for Major Investments During the reporting period, the group did not undertake any significant acquisitions or disposals of subsidiaries, associates, or joint ventures, nor did it have any major investment or acquisition plans for capital assets or other businesses as of the reporting date. - No significant acquisitions or disposals of subsidiaries, associates, or joint ventures occurred during the reporting period[41] - As of the reporting date, there were no specific plans for major investments or acquisitions of capital assets or other businesses[41] Purchase, Sale or Redemption of the Company's Listed Securities For the year ended March 31, 2025, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities. - For the year ended March 31, 2025, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities[42] Pledge of Assets As of March 31, 2025, the group had no bank deposits pledged for banking facilities, compared to approximately HKD 10.0 million in the prior year. - As of March 31, 2025, the group had no bank deposits pledged for banking facilities (2024: approximately HKD 10.0 million)[43] Directors and Senior Management Executive Directors Executive directors include Ms. Wang Meihui, Chairman and CEO, with over thirty years of apparel industry experience, Mr. Xiao Yiming, responsible for manufacturing facilities and brand development, and Mr. Yang Lun, appointed in May 2025, with extensive sales management experience. - Ms. Wang Meihui (aged 69) has served as the company's Chairman since March 23, 2022, responsible for corporate strategy, business development, product development, key client relationships, and overall corporate performance[44] - Mr. Xiao Yiming (aged 39) is responsible for managing manufacturing facilities in Sri Lanka and China, and led the development of the JP by J. Peterman brand in June 2021[45] - Mr. Yang Lun (aged 42) was appointed as an Executive Director on May 27, 2025, bringing extensive experience in sales management[47] Independent Non-Executive Directors Ms. Chen Jie and Ms. Gao Yuanyuan were appointed as independent non-executive directors on May 27, 2025; Ms. Chen is a Fellow of the Association of Chartered Certified Accountants, and Ms. Gao holds a PRC lawyer's certificate with legal experience. - Ms. Chen Jie (aged 40) was appointed on May 27, 2025, is a Fellow of the Association of Chartered Certified Accountants, and has experience in accounting[48] - Ms. Gao Yuanyuan (aged 34) was appointed on May 27, 2025, holds a People's Republic of China lawyer's certificate, and has experience in legal matters[49] Senior Management and Company Secretary Mr. Liu Guanghui serves as Senior Purchasing Director with over 27 years of experience, and Mr. Zhou Runzhang is the Company Secretary, possessing over 20 years of experience in accounting, corporate finance, and compliance. - Mr. Liu Guanghui (aged 50) was promoted to Senior Purchasing Director on February 1, 2020, with over 27 years of experience in purchasing and merchandising[50] - Mr. Zhou Runzhang is a member of the Hong Kong Institute of Certified Public Accountants, with over 20 years of experience in accounting, corporate finance, and compliance-related fields[51] Corporate Governance Report Corporate Governance Overview The Board is committed to developing robust corporate governance and internal control systems to enhance value, accountability, transparency, and shareholder interests, adhering to the HKEX Listing Rules' Corporate Governance Code, except for the combined roles of Chairman and CEO. - The Board is committed to developing and maintaining sound corporate governance and effective internal control systems to enhance corporate value and accountability, formulate business strategies, manage sustainable operations, improve transparency, and protect shareholders' interests[52] - The company has adopted and complied with all code provisions of the Corporate Governance Code set out in Appendix C1 of the HKEX Listing Rules effective during the period, except for code provision C.2.1 (separation of Chairman and Chief Executive Officer roles), which is deemed reasonable[54] - The company has adopted the Model Code set out in Appendix C3 of the Listing Rules to regulate directors' dealings in the company's listed securities, and all directors have confirmed compliance[56] Board Composition and Operation The Board is responsible for strategy, business development, governance, and risk management, holding at least four regular meetings annually; board composition saw multiple changes, leading to temporary non-compliance with independent non-executive director requirements, which were subsequently rectified, and the combined roles of Chairman and CEO are deemed beneficial for business. - The Board holds at least four regular meetings annually, with nine Board meetings held during the financial year ended March 31, 2025[58] - The Board is primarily responsible for strategic direction, business development, corporate governance, risk management, compliance, internal control systems, dividend policy, board diversity policy, shareholder relations, accounting policies, and financial statement matters[61] - Following Mr. Zeng Haoxian's resignation, the number of independent non-executive directors temporarily fell below the minimum required by Listing Rules 3.10(1) and 3.10A, affecting the composition of the Audit and Remuneration Committees[62] - After Mr. Zhao Chuan's appointment, the company regained compliance with relevant Listing Rules, but a shortfall in independent non-executive directors reoccurred after Mr. Zhou Runzhang's resignation[63][64] - Ms. Wang Meihui holds both Chairman and Chief Executive Officer roles, which the Board believes benefits the group's business prospects and management[68] Board Committees The Board has established Audit, Remuneration, and Nomination Committees; the Audit Committee oversees financial reporting and risk, the Remuneration Committee sets executive compensation, and the Nomination Committee reviews board structure and identifies candidates, having adopted a diversity policy resulting in 50% gender diversity at both board and employee levels as of March 31, 2025. - The Audit Committee comprises two independent non-executive directors, with Ms. Chen Jie as Chairman, responsible for advising on and overseeing external auditors, financial information, risk management, and internal controls[70][71] - The Remuneration Committee consists of one executive director and two independent non-executive directors, with Ms. Gao Yuanyuan as Chairman, responsible for recommending remuneration policies and structures for directors and senior management, and determining specific remuneration packages[74][78] - The Nomination Committee comprises one executive director and two independent non-executive directors, with Ms. Wang Meihui as Chairman, responsible for reviewing board structure, identifying suitable candidates, assessing independence, and recommending director succession plans[79][80] - The Board has adopted a board diversity policy considering skills, experience, background, gender, age, and other factors; as of March 31,