Financial Performance - The Group reported a consolidated financial statement for the year ended June 30, 2025, with a focus on sustainable business development and exploring new opportunities[11]. - For the year ended June 30, 2025, the Group's revenue decreased by 26.6% to approximately HK$60,749,000 compared to HK$82,817,000 in 2024[149]. - Gross profit for the same period decreased by 25.2% to approximately HK$13,252,000 from HK$17,724,000 in 2024[149]. - The loss for the year narrowed to approximately HK$42,940,000, down from a loss of approximately HK$72,084,000 in the previous year[149]. - Basic and diluted loss per share was HK8 cents, compared to HK16 cents in 2024[150]. - Total assets as of June 30, 2025, were approximately HK$607,732,000, down from HK$661,398,000 in 2024[154]. - Total borrowings decreased to approximately HK$68,099,000 from HK$84,841,000 in 2024, resulting in a gearing ratio of approximately 17.9%[155]. - Net assets amounted to approximately HK$380,585,000, down from HK$419,022,000 in 2024[158]. - Administrative expenses decreased to approximately HK$35,725,000 from HK$40,907,000 in 2024[151]. - Fair value loss on investment properties was approximately HK$15,680,000, compared to HK$17,294,000 in 2024[150]. - The Group held investments at fair value through profit or loss of approximately HK$140,000 as of June 30, 2025[159]. - No dividend was recommended or declared for the year ended June 30, 2025, consistent with 2024[170]. Business Operations - The Group is engaged in multiple business sectors, including metal recycling, motor accessories, car parking rental, money lending, and securities trading[12]. - The Group's principal activities include metal recycling, motor and motor accessories, car parking space rental, money lending, and securities trading and investment[198]. - The Group also engages in green technology markets, focusing on research, development, and application of solutions for environmental, agricultural, and organic markets in the PRC and overseas[198]. - The Group has a hotel leasing business in Nepal, contributing to its diversified portfolio[12]. - The Group's operations are primarily focused on chemical and agricultural product trading, with two business segments[167]. Investment Properties - The Group holds an 80% interest in an investment property in PRC, with a total gross floor area of approximately 2,598.80 sq.m (or about 27,973.48 sq.ft.)[14]. - A resolution was passed for the disposal of the 80% interest in the PRC investment property, with a deposit of HK$11,800,000 received and a balance of HK$47,200,000 to be received upon completion[15]. - The Completion Date for the property transaction has been extended to on or before August 11, 2025[20]. - The investment properties include two locations, one in PRC and one in Hong Kong, enhancing the Group's asset base[18]. - The Group holds a 100% interest in a Hong Kong investment property comprising 95 car parking spaces, leased under a government lease for a term of 999 years[25]. Biological Assets - The total volume of standing timbers on the plantation land is estimated at 460,461 m³ based on a forestry survey conducted by CNBM[36]. - The Company has rights to control and potentially produce economic benefits from biological assets classified under Hong Kong Accounting Standard 41 Agriculture[34]. - The fair value of biological assets is determined using a market-based approach, factoring in total volume, recovery rate, market price, cutting costs, and scrap sale income[35]. - The plantation land acquired by the Group spans approximately 30,000 mu and is under a 30-year timber cutting right agreement[27]. - The Group's rights concerning the biological assets are maintained despite the absence of certain forestry operation permits[34]. - The Company engaged independent professionals for forestry surveying to ensure accurate valuation of biological assets[33]. - The fair value of the Group's biological assets as of June 30, 2025, is approximately RMB172,756,000, a decrease from RMB177,731,000 in 2024, representing a non-cash change[47]. - The total volume of standing timbers increased by 1,064 cubic meters from 459,397 cubic meters at the end of the last financial year to 460,461 cubic meters, reflecting a growth of 0.23% due to natural growth of polar trees[46]. - The market price of polar tree timber decreased from RMB496 per cubic meter at the end of the last financial year to RMB481 per cubic meter, a decline of 3.02%[46]. - The recovery rate applied in the valuation is 80%, with cutting costs accounting for 6% of revenue and scrap sale income contributing 3.5% of revenue[44]. - The Group recorded net losses from major non-current assets of approximately HK$25,592,000 for the year ended June 30, 2025, compared to HK$60,445,000 in 2024[48]. - The Group has not appointed a Plantation Land maintenance operator since July 2018, impacting the optimization of biological assets[46]. - The Group is exploring opportunities to participate in the carbon market using carbon credits produced at the Plantation Land[56]. - The Group will evaluate the economic return from biological assets after assessing the harvest quota and analyzing associated risks[57]. Loan Portfolio - The Group recorded loan interest income of approximately HK$368,000 for the year, an increase from approximately HK$307,000 in 2024, reflecting a growth of about 19.9%[73]. - As of June 30, 2025, the outstanding principal amount of loan receivables was approximately HK$5,315,000, a decrease from approximately HK$5,517,000 in 2024, representing a decline of about 3.7%[73]. - The Group's loan portfolio as of June 30, 2025, totaled approximately HK$15,810,000, with the largest borrower accounting for approximately HK$7,177,000, or 45.4% of the total[86]. - The Group's money lending services primarily target corporate or personal loans not exceeding HK$5 million, focusing on small to medium-sized corporations and professionals referred by senior management[74]. - No provision for impairment loss of loan receivables was deemed necessary during the year, consistent with the previous year[73]. - The internal control procedures for loan assessment include reviewing financial statements and conducting due diligence on potential borrowers[79]. - The finance department is responsible for ongoing monitoring of loan recoverability and debt collection, ensuring timely follow-up on any irregularities[80]. - The Group maintains a loan register to track repayment schedules and statuses, with follow-up actions for delinquent loans including demand letters and potential legal actions[81]. - The major terms of loans are determined based on factors such as borrower credibility, security value, and assessed risks, with listed corporate borrowers generally considered lower risk[82]. - The Group's funding for the money lending business is sourced from its internal resources, ensuring financial stability and control over lending operations[74]. - As of June 30, 2025, the total outstanding loans before expected credit loss allowance amounted to approximately HK$15,810,000[87]. - The largest borrower accounts for approximately HK$7,177,000, representing 45.4% of the total outstanding loans[88]. - The second and third largest borrowers account for approximately HK$4,091,000 (25.9%) and HK$4,033,000 (25.5%) respectively[88]. - The interest rate for the largest borrower is 6.5% per annum, with a bullet repayment due in December 2025[88]. - The second largest borrower has a guaranteed loan with an interest rate of 30% per annum, maturing in December 2023[88]. - The third borrower has an installment loan with a 12% interest rate, repayable in 36 payments over three years, due in November 2025[88]. - The fourth borrower has an outstanding loan of approximately HK$4,091,000 with no interest rate applicable, due in November 2023[88]. - The fifth borrower has an installment loan with a 20% interest rate, repayable in 24 payments over two years, due in September 2023[88]. - The loan portfolio is primarily secured by collateral, including luxury watches for one borrower[88]. - The company has a diversified borrower base, with loans granted to both listed and private entities[88]. - As of June 30, 2025, the outstanding loan receivables before loss allowance amounted to approximately HK$15.8 million, with net receivables after impairment loss provisions totaling approximately HK$7.5 million[90]. - Loan 1's interest rate was revised from 9% to 2% (December 2020 to December 2023), and further to 6.5% (December 2023 to December 2025) after extending the repayment date to December 10, 2025[90]. - Loan 2's interest rate increased from 20% to 30% for the period from September 2020 to December 2023, with the repayment date extended to December 31, 2023[90]. - Loan 3's maturity date was extended to November 25, 2025, with repayment terms changed to instalment repayments from November 2022 to November 2025[90]. - Loan 4's repayment date was extended to November 3, 2023, with the interest rate revised from 12% to 2% and then to nil for the period from November 2022 to November 2023[90]. - Loan 5's maturity date was extended to September 13, 2023, with repayment terms changed from bullet repayment to instalment repayment from October 2021 to September 2023[91]. - The Group conducted due diligence and credit risk assessments for each loan at the time of initial grant and subsequent extensions, considering the financial strength and repayment ability of borrowers[93]. - The adverse market sentiment in 2020 due to the COVID-19 pandemic impacted the financial performance and repayment ability of Borrower 1[94]. - The Group agreed to extend Loan 1 from December 2023 to December 2025, increasing the interest rate to 6.5% due to improved financial positions of Borrower 1 since 2019 and its turnaround performance since 2023[97]. - Borrower 1 had a market capitalization of up to HK$13 billion in 2018, providing potential business opportunities for the Group, including strategic collaborations and investment prospects[97]. - The Group revised the interest rate for Loan 2 from 20% to 30% per annum starting from September 1, 2020, in response to Borrower 2's request for an extension of the repayment date[101]. - Following Borrower 2's default in 2019, the Group engaged an external legal adviser to initiate legal actions, including serving a statutory demand, and reached a settlement arrangement to recover part of the loan receivables[102]. - As of the date of the annual report, the recovery process for outstanding loan receivables from Borrower 2 is ongoing, with legal actions initiated in 2024[103]. - The Group conducted due diligence for Loan 3, assessing credit risk through various documents and determined that the likelihood of recoverability is high due to satisfactory loan-to-security ratios[106]. - The Group agreed to revise repayment terms for certain loans from monthly interest payments to instalment payments, further reducing credit risk[108]. - The Group provided a lower interest rate for Loan 4 starting November 2020, considering the adverse market sentiment and financial difficulties faced by Borrower 4 due to the COVID-19 pandemic[110]. - Borrower 4 committed to repaying approximately HK$4.7 million in outstanding principal and interest through post-dated cheques after a demand letter was issued in 2019[111]. - The Group conducted due diligence for Loan 4, finding Borrower 4 to be creditworthy based on public searches and his reputable background[113]. - The Group has benefited from a long-term relationship with Borrower 4, gaining access to various business and investment opportunities since 2016, particularly in the metal recycling sector[115]. - Following Borrower 4's default in late 2019, the Group issued a demand letter in March 2020, but repayment attempts were hindered by the COVID-19 pandemic[116]. - The Group engaged an external legal adviser to recover outstanding loan receivables from Borrower 4, with ongoing legal proceedings initiated in 2024[118]. - The Group revised the repayment terms for Loan 5 in September 2021 from bullet repayment to instalment repayment, extending the repayment date to September 13, 2023[123]. - The Group issued demand letters for immediate repayment following Borrower 5's default on a loan since July 2022, and collected part of the loan receivables in May 2023[124]. - The outstanding loan receivables associated with five loans represented approximately 2.6% of the total assets of the Group as of June 30, 2025[129]. - The Group's internal control policies for monitoring loan recoverability are deemed effective, despite defaults primarily attributed to global economic downturns and poor investment market sentiments[125]. - Loan 5 was granted for an amount of HK$200,000 after conducting due diligence, which found no negative factors affecting Borrower 5's repayment ability[127]. - The Group performed impairment assessments on loan receivables under the expected credit loss (ECL) model, indicating the money lending business is relatively inactive compared to other principal businesses[129]. - The Group will continue to evaluate the likelihood of recovering outstanding loan receivables and the costs of potential legal actions against defaulting borrowers[125]. - The identification of bad debts involves assessing various factors, including significant changes in borrowers' creditworthiness and financial conditions[130]. - The Group has maintained ongoing communication with Borrower 5 to pursue recovery of outstanding loan receivables, with the recovery process still ongoing as of the report date[124]. - No loan transactions during the year ended June 30, 2025, constituted a notifiable transaction under the Listing Rules[128]. - The Group's internal control procedures are effective in identifying significant changes in borrowers' creditworthiness, ensuring a robust impairment assessment process[130]. Market Conditions - The decline in sales is attributed to weakened consumer purchasing power and sentiment across Greater China, particularly in the PRC, where consumer confidence remains at historical lows[67]. - The PRC's economy is expected to see moderate growth of around 4.8% in 2025, despite challenges such as the property sector downturn and high public debt[144]. - The USA's real GDP growth is projected to decelerate further in 2025 and 2026, with forecasts suggesting growth could be as low as 1.1% to 1.4% for 2026[139]. - The outlook for Hong Kong's economy is projected to maintain solid growth for the rest of 2025, with government forecasting 2-3% GDP growth for the full year[146]. Management and Governance - Mr. Chung Siu Wah has over 8 years of experience in the hotel, gaming, and entertainment industry, contributing to the company's strategic direction[185]. - Mr. Chik To Pan has extensive experience in licensing karaoke music products and operating entertainment businesses, enhancing the company's market presence[186]. - Mr. Liu Yafei brings over 15 years of experience in international trading and mining, which may support future expansion strategies[187]. - Mr. Heung Chee Hang has over 23 years of legal experience, providing governance and compliance oversight as a member of various committees[190]. - Mr. Lee Chi Ho has over 20 years of experience in finance and auditing, currently serving as the chief financial officer for two listed companies, which strengthens financial management[191]. - Ms. Lai Pik Chi has over 30 years of experience in auditing and financial management, contributing to the company's financial oversight[194]. Legal and Compliance - The Group is pursuing legal proceedings to recover a refundable secured deposit of HK$11,000,000 from two independent third parties[173]. - The Group has not identified any material contingent liabilities as of June 30, 2025[172].
中国环境资源(01130) - 2025 - 年度财报