Financial Performance - Revenue increased by US$3,214,934 or 23.0%, from US$13,971,743 for the year ended March 31, 2024 to US$17,186,677 for the year ended March 31, 2025, reflecting stable growth and recovery in the global handbag market[253]. - Cost of sales increased by US$3,224,831 or 30.4%, from US$10,604,640 for the year ended March 31, 2024 to US$13,829,471 for the year ended March 31, 2025[254]. - Gross profit decreased by US$9,897 or 0.3%, with a gross profit margin decline of 4.6 percentage points from 24.1% to 19.5% due to shifts in product mix and increased production costs[255]. - Net income decreased by US$909,859 or 81.3%, from US$1,119,532 for the year ended March 31, 2024 to US$209,673 for the year ended March 31, 2025, primarily due to increased cost of goods sold and one-off IPO expenses[268]. Labor Costs - Direct labor cost increased to approximately US$4,102,000 for the year ended March 31, 2025, representing 29.7% of total cost of sales, up from US$2,314,000 and 21.8% in 2024[224]. - The minimum wage in Cambodia is set to increase from US$204 to US$208 in 2024, impacting direct labor costs and recruitment efforts[224]. - The average labor cost in Cambodia is projected to rise due to higher living costs and government-mandated wage increases, affecting overall profitability[224]. Accounts Receivable and Payable - The company reported gross accounts receivable of US$1,199,983 as of March 31, 2025, an increase from US$623,161 in 2024[242]. - The allowance for expected credit losses for accounts receivable was US$10,079 as of March 31, 2024, decreasing to US$10,079 in 2025, with a current allowance percentage of 0.8%[243]. - Trade receivables, net, increased by US$576,822 or 94.1%, from US$613,082 for the year ended March 31, 2024 to US$1,189,904 for the year ended March 31, 2025, attributed to higher sales in March 2025[273]. - Trade payables increased by US$914,612 or 55.3% from US$1,653,660 as of March 31, 2024 to US$2,568,272 as of March 31, 2025, mainly due to IPO preparation[283]. Cash Flow - Net cash generated from operating activities for the year ended March 31, 2025 was US$2,134,565, down from US$3,138,768 in 2024[290][292]. - Net cash used in investing activities increased to US$581,839 in 2025 from US$253,614 in 2024, mainly for IPO expenses[294]. - Net cash used in financing activities decreased from US$3,011,277 in 2024 to US$1,685,377 in 2025, reflecting a reduction in borrowings[295][296]. - As of March 31, 2025, current liabilities exceeded current assets by US$215,135, with cash and bank balances around US$103,000[492]. IPO and Capital Expenditures - The company completed an IPO on June 25, 2025, issuing 2,000,000 Class A ordinary shares at US$4.00 per share, raising gross proceeds of US$8,000,000[492]. - Capital expenditures were US$16,710 and US$22,972 for the years ended March 31, 2025 and 2024, respectively[298]. Economic and Market Conditions - Majority of revenue is derived from the US consumer market, with economic downturns potentially leading to lower than expected net sales, adversely affecting growth strategies[226]. - Supply chain disruptions during the COVID-19 pandemic have led to increased freight costs and delivery times, affecting overall business operations[228]. - The company is subject to U.S. tariff regimes, which create uncertainty in international trade flows and may impact pricing competitiveness in the U.S. market[229]. - Revenue recognition is based on the transfer of control of goods to customers, with typical payment terms ranging from 30 to 90 days[239]. - The company operates under favorable tax conditions in the Cayman Islands, with no taxes on profits or income, and a 20-year tax concession valid from January 30, 2024[244][245]. - The overall effective tax rate decreased by 5.3 percentage points from 13.7% for the year ended March 31, 2024 to 8.4% for the year ended March 31, 2025, mainly due to a reversal of overprovision of prior year tax[267]. Expenses - Interest expenses increased by US$178,290 or 44.2%, from US$403,723 for the year ended March 31, 2024 to US$582,013 for the year ended March 31, 2025, mainly due to additional revolving loans[265]. - Other income increased by US$216,741 or 98.8%, from US$219,309 for the year ended March 31, 2024 to US$436,050 for the year ended March 31, 2025, primarily driven by increased interest income from loans to related parties[266]. - Advance payments from customers decreased by US$291,260 or 62.8% due to fewer orders from a key customer[284]. - Accrued expenses rose by US$948,799 or 276.2% from US$343,491 to US$1,292,291, primarily due to increased professional fees related to the IPO[285]. - Other payables surged by US$386,309 or 7,516.8% from US$5,137 to US$391,446, also linked to IPO-related professional fees[286]. Inventory Management - Inventories decreased by US$156,390 or 8.7%, from US$1,802,723 as of March 31, 2024 to US$1,646,333 as of March 31, 2025, mainly due to product shipments before period end[280].
Kandal M Venture Ltd-A(FMFC) - 2025 Q4 - Annual Report