Management Discussion and Analysis Business Review The Group's core dried cassava chip revenue decreased by 18.2% this year due to global high interest rates and a weaker China recovery, with hotel income also declining - The Group's core business involves sourcing dried cassava chips in Southeast Asia for sale in China, alongside operating hotel and serviced apartment businesses5 Revenue Performance by Business Segment | Business Segment | FY2025 Revenue (HKD) | FY2024 Revenue (HKD) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Sourcing and Sale of Dried Cassava Chips | Approx. 960.5 million | Approx. 1,173.6 million | -18.2% | | Hotel and Serviced Apartments | Approx. 13 million | Approx. 14.8 million | -12.2% | - The decline in dried cassava chip revenue was primarily due to the sluggish economic recovery in mainland China and weak alcohol demand influenced by electric vehicle penetration6 Financial Review of Audited Results Total revenue decreased by 18.2% to 978 million HKD, gross margin fell to 6.6% due to logistics changes, and the annual loss expanded to 131 million HKD, impacting net assets and capital gearing Key Financial Indicators for FY2025 | Indicator | FY2025 | FY2024 | Reason for Change | | :--- | :--- | :--- | :--- | | Total Revenue | 978 million HKD | 1,193 million HKD | Decrease in average selling price of dried cassava chips and reduced hotel revenue | | Dried Cassava Chip Gross Profit Margin | 6.6% | 11.3% | Change in customer logistics terms from C&F to FOB | | Selling and Distribution Costs | 36.7 million HKD | 113 million HKD | Change in customer contract terms, with customers bearing ocean freight costs | | Administrative Expenses | 128 million HKD | 99.7 million HKD | Increased impairment losses on right-of-use assets and hotel business | | Loss for the Year (Attributable to Owners) | 131 million HKD | 111 million HKD | Decreased revenue and increased asset impairment | | Capital Gearing Ratio | 51.8% | 39.0% | Increase in trade-related bank borrowings and asset impairment | | Inventory Turnover Days | 124.7 days | 117.1 days | Strategic inventory stocking to meet future demand | - As of March 31, 2025, the Group had approximately 220 employees, with total annual staff costs of approximately 19.4 million HKD18 Outlook The Group aims to consolidate its dried cassava chip leadership by expanding procurement in Southeast Asia, while diversifying into cassava starch manufacturing in Laos by late 2025 to reduce China market reliance - China's policy of encouraging non-grain based biofuel production remains unchanged, providing a continuous market foundation for the Group's dried cassava chip business22 - The Group is expanding its procurement network in Thailand, Laos, and Cambodia to achieve economies of scale, reduce unit costs, and improve gross profit margins22 - To expand into downstream industries and diversify markets, the Group has established a subsidiary in Laos for cassava starch manufacturing and processing, expected to commence production by the end of 2025, aiming to gradually reduce reliance on the Chinese market23 Directors and Senior Management Board of Directors The Board comprises three executive and three independent non-executive directors, with executive directors focusing on strategy and operations, and independent directors providing diverse professional expertise Board of Directors Composition | Name | Position | Key Responsibilities/Background | | :--- | :--- | :--- | | Executive Directors | | | | Mr. Chu Ming Chuen | Chairman | Formulating Group strategy and overall development | | Ms. Liu Yuk Ming | Executive Director | Formulating marketing strategies and daily operations | | Ms. Lam Ching Fun | Executive Director | Logistics systems, vessel chartering business management | | Independent Non-Executive Directors | | | | Ms. Amporn Lohathanulert | Independent Non-Executive Director | Bachelor of Mass Communication, with insurance industry experience | | Mr. Hung Sze Kit | Independent Non-Executive Director | Business administration professional, with government and corporate management experience | | Mr. Chui Chi Yan | Independent Non-Executive Director | Hong Kong practicing accountant, with over 35 years of accounting experience | Senior Management The senior management team, composed of experienced professionals in administration, finance, and China operations, is responsible for the Group's daily management and business execution, leveraging their extensive industry expertise Senior Management Members | Name | Position | Key Responsibilities | | :--- | :--- | :--- | | Ms. Wu Ni Na | Head of Administration and Human Resources | Responsible for Group administration and human resources | | Mr. Shum Sing Kee | Chief Financial Officer and Company Secretary | Responsible for the company's financial functions and financial management | | Ms. Zhu Ling Ling | Deputy Financial Controller | Responsible for overall oversight of the accounting department | | Mr. Wang Dong Dai | General Manager of Rizhao Yushun | Overseeing Rizhao Yushun's daily management and mainland China operations | | Ms. Jiang Ting | Deputy General Manager of Rizhao Yushun | Responsible for analysis of China's cassava market information and customer relations | Report of the Directors Principal Activities and Results The Group's main activities include dried cassava chip trade, hotel operations, and property investment; it recorded a loss for the year ended March 31, 2025, with no final dividend recommended - The Group's principal activities include sourcing dried cassava chips in Southeast Asia for sale in China, and operating hotels, serviced apartments, and property investments in China and Hong Kong34 - No interim dividend was distributed for the current year, and the Board recommends no final dividend be paid36 Major Customers and Suppliers The Group experienced high customer concentration this year, with the top five customers accounting for 68% of sales, while its supplier base was more diversified, with the top five suppliers accounting for less than 29% of purchases Customer and Supplier Concentration | Category | Percentage (FY2025) | Percentage (FY2024) | | :--- | :--- | :--- | | Sales to Top Five Customers | 68% | 79% | | Sales to Largest Customer | 31% | 33% | | Purchases from Top Five Suppliers | <29% | 43% | | Purchases from Largest Supplier | 19% | 27% | Directors' and Major Shareholders' Interests in Shares As of March 31, 2025, Chairman Mr. Chu Ming Chuen held approximately 61.66% of the Company's issued share capital directly and through controlled corporations, with Fortune Art Management Limited directly holding 38.48% Major Shareholder Holdings (as of March 31, 2025) | Shareholder Name | Capacity and Nature of Interest | Number of Ordinary Shares Held | Percentage of Issued Share Capital | | :--- | :--- | :--- | :--- | | Fortune Art Management | Directly Beneficially Owned | 225,000,000 | 38.48% | | Mr. Chu Ming Chuen | Directly Beneficially Owned | 135,520,715 | 23.18% | | | Through Controlled Corporations | 225,000,000 | 38.48% | | | Total | 360,520,715 | 61.66% | Continuing Connected Transactions The Group engaged in continuing connected transactions this year, mainly leasing office and staff quarters from entities controlled by Chairman Mr. Chu and his spouse, which independent non-executive directors confirmed were on normal commercial terms - The Group leased office premises from Ya Fat Property Limited, controlled by Chairman Mr. Chu, with an annual rent of 0.574 million HKD63 - The Group leased staff quarters from Wealthy Yield Property Limited, controlled by Chairman's spouse Ms. Chu, with a monthly rent of 0.058 million HKD64 Corporate Governance Report Corporate Governance Practices The Company generally complied with the Corporate Governance Code, but deviated by having the Chairman concurrently perform CEO functions, with the executive director team collectively overseeing management - During the reporting period, the Company deviated from the Corporate Governance Code as the roles of Chairman and Chief Executive Officer were assumed by the same individual (Chairman Mr. Chu Ming Chuen), and no separate CEO position was established73 Board and Board Committees The Board, responsible for strategy and oversight, held four meetings and established Audit, Remuneration, and Nomination Committees, all composed of independent non-executive directors, to ensure independent oversight of financial reporting, remuneration, and nominations - The Board of Directors comprises three executive directors and three independent non-executive directors, complying with Listing Rules requirements7980 - The Board has established an Audit Committee, a Remuneration Committee, and a Nomination Committee, all composed of independent non-executive directors87888991 - The Company has adopted a Board Diversity Policy, aiming to enhance Board performance by considering multiple factors such as skills, experience, background, age, and gender9394 Accountability and Audit The Board is responsible for fair financial statements, with the Audit Committee assisting in oversight; 1.83 million HKD was paid to Ernst & Young for audit services this year Auditor's Fees | Service Type | Fees (HKD '000) | | :--- | :--- | | Annual Audit Services | 1,830 | Shareholders' Rights The Company facilitates shareholder-Board communication via general meetings, allowing shareholders holding at least 10% of paid-up capital to request an extraordinary general meeting in writing - Shareholders holding not less than one-tenth of the Company's paid-up share capital have the right to request the Board to convene an extraordinary general meeting in writing105 Independent Auditor's Report Auditor's Opinion Auditor Ernst & Young issued an unmodified opinion, confirming the consolidated financial statements fairly present the Group's financial position, performance, and cash flows as of March 31, 2025, in compliance with Hong Kong Companies Ordinance - Auditor Ernst & Young issued an unmodified opinion on the consolidated financial statements110 Key Audit Matters The key audit matter was the fair value estimation of a Hong Kong commercial building, involving significant management judgment, which the auditor addressed by reviewing external valuations and assessing methodologies and assumptions - The key audit matter is the estimation of the fair value of a commercial building located in Hong Kong. This building is partly classified as investment property and partly as property, plant and equipment, collectively accounting for approximately 73% of total non-current assets112114 - The auditor's responses included reviewing external valuation reports, utilizing internal valuation experts to assess valuation methodologies and assumptions, evaluating the independence and competence of external valuers, and assessing related disclosures118 Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income For FY2025, revenue decreased to 978 million HKD, and the annual loss expanded to 168 million HKD due to reduced income and fair value losses, resulting in a 131 million HKD loss attributable to owners and 22.36 HK cents basic loss per share Key Consolidated Income Statement Data (HKD '000) | Indicator | FY2025 (HKD '000) | FY2024 (HKD '000) | | :--- | :--- | :--- | | Revenue | 977,903 | 1,193,032 | | Gross Profit | 81,150 | 152,041 | | Loss Before Tax | (162,045) | (139,790) | | Loss for the Year | (168,021) | (149,019) | | Loss Attributable to Owners of the Company | (130,721) | (111,360) | | Basic and Diluted Loss Per Share | (22.36 HK cents) | (19.04 HK cents) | Consolidated Statement of Financial Position As of March 31, 2025, net assets decreased to 349 million HKD, with total assets at 1,697 million HKD and liabilities at 1,347 million HKD, leading to a 332 million HKD net current liability due to increased current borrowings Key Consolidated Statement of Financial Position Data (HKD '000) | Indicator | March 31, 2025 (HKD '000) | March 31, 2024 (HKD '000) | | :--- | :--- | :--- | | Non-current Assets | 984,372 | 1,050,248 | | Current Assets | 712,354 | 417,291 | | Total Assets | 1,696,726 | 1,467,539 | | Current Liabilities | 1,044,633 | 285,432 | | Non-current Liabilities | 302,611 | 698,156 | | Total Liabilities | 1,347,244 | 983,588 | | Net Assets | 349,482 | 483,951 | | Total Equity | 349,482 | 483,951 | Consolidated Statement of Cash Flows The Group experienced a 204 million HKD net cash outflow from operations, a 79.31 million HKD outflow from investing, and a 290 million HKD inflow from financing, resulting in a 6.25 million HKD net increase in cash and equivalents to 57.8 million HKD at year-end Key Consolidated Cash Flow Statement Data (HKD '000) | Indicator | FY2025 (HKD '000) | FY2024 (HKD '000) | | :--- | :--- | :--- | | Net Cash Flows From/(Used in) Operating Activities | (204,292) | 251,040 | | Net Cash Flows Used in Investing Activities | (79,309) | (55,522) | | Net Cash Flows From/(Used in) Financing Activities | 289,852 | (408,193) | | Net Increase/(Decrease) in Cash and Cash Equivalents | 6,251 | (212,675) | | Cash and Cash Equivalents at End of Year | 57,804 | 49,424 | Notes to the Financial Statements (Summary) The notes detail accounting policies and estimates, highlighting a 332 million HKD net current liability due to reclassified bank loans, though management deems going concern appropriate; segment data shows declining dried cassava chip performance and losses in property and hotel segments - The Group had net current liabilities of 332 million HKD at the end of the reporting period, primarily due to 879 million HKD in interest-bearing bank loans reclassified as current liabilities due to covenant breaches. Management has taken measures (such as obtaining waivers, repaying part of the loans, and securing new loans from the controlling shareholder) to alleviate liquidity pressure and believes the company can continue as a going concern143144146 Segment Results Summary (HKD '000) | Segment | FY2025 Revenue (HKD '000) | FY2025 Results (HKD '000) | FY2024 Revenue (HKD '000) | FY2024 Results (HKD '000) | | :--- | :--- | :--- | :--- | :--- | | Sourcing and Sale of Dried Cassava Chips | 960,498 | 5,955 | 1,173,577 | 16,915 | | Property Investment | 4,361 | (49,402) | 4,650 | (57,796) | | Hotel and Serviced Apartment Operations | 13,044 | (26,945) | 14,805 | (26,604) | - Due to deteriorating hotel operations and a subdued Hong Kong property market, the Group recognized impairment losses of 26.17 million HKD on property, plant and equipment, and fair value change losses of 53.76 million HKD on investment properties127263 - Subsequent to the reporting period, in June 2025, the Group drew down an interest-bearing loan of 220 million HKD from its controlling shareholder to support working capital337 Details of Properties Held by the Company Property Portfolio Overview The Group holds a diversified property portfolio across Hong Kong, mainland China, Thailand, and Laos, including office, industrial, warehouse, and residential properties, supporting both core operations and investment - The Group holds multiple office properties and parking spaces in Hong Kong, including locations at Houston Centre and Connaught Place in Tsim Sha Tsui339 - In mainland China, the Group holds industrial buildings in Shenzhen and staff quarters in Shandong340 - In Thailand and Laos, the Group holds properties such as warehouses, office buildings, residential units, and industrial buildings to support its Southeast Asian sourcing and production operations340 Financial Summary Five-Year Financial Data Five-year data shows revenue declining for two years post-2023 peak, with losses expanding for three consecutive years since 2022 profitability, and net assets continuously decreasing since 2022 Five-Year Performance Summary (HKD '000) | Year Ended March 31 | 2025 (HKD '000) | 2024 (HKD '000) | 2023 (HKD '000) | 2022 (HKD '000) | 2021 (HKD '000) | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 977,903 | 1,193,032 | 3,969,276 | 3,585,019 | 2,715,508 | | Profit/(Loss) Before Tax | (162,045) | (139,790) | (115,003) | 58,346 | (52,796) | | Profit/(Loss) for the Year | (168,021) | (149,019) | (144,586) | 34,490 | (48,496) | Five-Year Assets and Liabilities Summary (HKD '000) | As of March 31 | 2025 (HKD '000) | 2024 (HKD '000) | 2023 (HKD '000) | 2022 (HKD '000) | 2021 (HKD '000) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 1,696,726 | 1,467,539 | 2,041,779 | 2,920,781 | 2,670,395 | | Total Liabilities | (1,347,244) | (983,588) | (1,379,229) | (2,087,871) | (1,869,610) | | Net Assets | 349,482 | 483,951 | 662,550 | 832,910 | 800,785 | Company Information - The Company's stock code is 841, listed on the Stock Exchange of Hong Kong Limited346 - The Company's auditor is Ernst & Young346 - The Company's registered office is in the Cayman Islands, with its head office and principal place of business located at Houston Centre, Tsim Sha Tsui, Hong Kong346
木薯资源(00841) - 2025 - 年度财报