Financial Performance - Revenue for the six months ended September 30, 2025, was HKD 20,642,000, a decrease of 14.5% compared to HKD 24,232,000 for the same period in 2024[10] - Gross profit for the same period was HKD 14,501,000, down 16.5% from HKD 17,363,000 year-on-year[10] - Operating loss increased to HKD 6,341,000, compared to an operating loss of HKD 3,201,000 in the previous year, reflecting a 98.8% increase in losses[10] - Loss before tax for the period was HKD 6,706,000, compared to HKD 3,398,000 in the prior year, marking a 97.5% increase in losses[10] - Basic and diluted loss per share was HKD 0.34, compared to HKD 0.17 for the same period last year, indicating a 100% increase in loss per share[12] - The company reported a loss attributable to shareholders of HKD 6,706,000 for the six months ended September 30, 2025, compared to a loss of HKD 3,398,000 for the same period in 2024, indicating an increase in losses of approximately 97%[39] - The net loss for the period was approximately HKD 6,700,000, an increase of about HKD 3,300,000 from a net loss of approximately HKD 3,400,000 in the previous year[59] Assets and Liabilities - Total assets as of September 30, 2025, were HKD 49,283,000, a decrease from HKD 52,847,000 as of March 31, 2025[14] - Current liabilities increased to HKD 46,090,000 from HKD 43,473,000, reflecting a 3.6% rise[14] - The company's total equity as of September 30, 2025, was negative HKD 5,366,000, compared to positive HKD 1,225,000 as of March 31, 2025[15] - Cash and cash equivalents increased to HKD 30,072,000 from HKD 21,023,000, representing a 42.9% increase[14] - The total cash and cash equivalents at the end of the period increased to HKD 30,072,000 from HKD 41,745,000 in the previous year, representing a decrease of approximately 28.1%[20] Cash Flow - The net cash used in operating activities for the six months ended September 30, 2025, was (HKD 5,534,000), compared to (HKD 2,933,000) for the same period in 2024, indicating a significant increase in cash outflow[20] - The net cash generated from investing activities for the six months ended September 30, 2025, was HKD 13,905,000, compared to HKD 26,340,000 in 2024, showing a decline of about 47.3%[20] - The company’s cash inflow from financing activities for the six months ended September 30, 2025, was HKD 678,000, down from HKD 2,490,000 in 2024, reflecting a decrease of approximately 72.8%[20] Operational Highlights - Revenue from the operation of Chinese restaurants for the six months ended September 30, 2025, was HKD 20,642,000, down from HKD 24,232,000 in 2024, reflecting a decrease of approximately 14.5%[33] - The group faced a significant decline in revenue at its Tsim Sha Tsui branch, attributed to weak local consumer sentiment and increased competition from new brands in the area[66] - The group has terminated the lease for its Kwun Tong branch due to unfavorable operating conditions and low customer traffic, effective October 8, 2025[67] - The group plans to enhance the performance of its Tsim Sha Tsui branch by extending operating hours, launching attractive dining packages, and improving digital marketing efforts[74] - The company plans to extend operating hours and improve service capacity at the Tsim Sha Tsui branch by reallocating staff from the Kwun Tong branch[78] - Promotional activities, including attractive meal packages, will be considered to increase customer traffic and per capita spending during upcoming holidays[78] Management and Governance - The company did not recommend the payment of an interim dividend for the six months ended September 30, 2025, consistent with the previous year[39] - The company has adopted the corporate governance code as per the listing rules and has complied with most provisions, except for the formal appointment letters for some directors[89] - An audit committee has been established, consisting of three independent non-executive directors, to review accounting standards and internal controls[90] - A remuneration committee has been formed to recommend policies regarding the remuneration of directors and senior management[91] - A nomination committee has been set up to review the board's structure and diversity at least annually, aligning with the company's business needs and future development[92] Future Plans and Strategy - The company is optimistic about finding suitable new store locations by Q2 2026, with plans to sign contracts and begin renovations during that period[77] - The group is actively seeking new locations for expansion, focusing on high-traffic areas in Kowloon West and East, while retaining skilled staff from the closed Kwun Tong branch for future operations[76] - New stores will focus on Chaozhou cuisine while exploring related or emerging cooking styles to align with market trends and consumer preferences[78] - The primary goal before opening new stores is to enhance revenue, improve cash flow, and support short-term liquidity, with strategies implemented at the Tsim Sha Tsui branch[78] Shareholder Information - Major shareholders, including Zheng Bai Ming, Zheng Bai Min, and Zheng Bai Li, collectively hold 1,450,037,841 shares, representing 74.50% of the issued share capital[82] - As of September 30, 2025, the company has a major shareholder, Alpadis Trust (HK) Limited, holding 1,450,037,841 shares, representing 74.50% of the issued share capital[84] - Golden Toy and Kong Fai hold 172,869,780 shares (8.88%) and 1,277,168,061 shares (65.62%) respectively, both fully owned by two discretionary trusts[88] - The company did not purchase, sell, or redeem any of its shares during the six months ending September 30, 2025[86] Employee and Management Costs - Employee costs totaled approximately HKD 11,200,000, down from approximately HKD 11,600,000 in the previous year, primarily due to a reduction in part-time staff[62] - The total remuneration for key management personnel decreased to HKD 807,000 for the six months ended September 30, 2025, down from HKD 1,307,000 for the same period in 2024, reflecting a reduction of approximately 38%[55] Financial Instruments and Assets - The fair value of equity instruments measured at fair value through other comprehensive income increased to HKD 1,436,000 as of September 30, 2025, up from HKD 1,321,000 as of March 31, 2025[43] - Accounts receivable from the restaurant business showed an increase in the 0-30 days category, rising to HKD 221,000 as of September 30, 2025, from HKD 101,000 as of March 31, 2025[42] - Accounts payable aged analysis showed a decrease in the 0-60 days category, falling to HKD 2,109,000 as of September 30, 2025, from HKD 2,321,000 as of March 31, 2025[46] - The company has no non-current assets located outside of Hong Kong, indicating a focused operational strategy within the region[35]
环科国际(00657) - 2026 - 中期财报