WORLD SUPER HOLDINGS LIMITED 維亮控股有限公司 鑒於GEM上市公司普遍為中小型公司，在GEM買賣的證券可能會較於主板買賣之證券承受較大的市場波動風險，同時無法保證在 GEM買賣的證券會有高流通量的市場。 香港交易及結算所有限公司及聯交所對本報告的內容概不負責，對其準確性或完整性亦不發表任何聲明，並明確表示，概不就因 本報告全部或任何部分內容而產生或因依賴該等內容而引致的任何損失承擔任何責任。 本報告乃遵照聯交所GEM證券上市規則（「GEM上市規則」）之規定而提供有關維亮控股有限公司（「本公司」）的資料，本公司董事 （「董事」）願共同及個別對此負全責。各董事在作出一切合理查詢後，確認就彼等所深知及確信：(1)本報告所載資料在各重要方面 均屬準確完備，沒有誤導或欺詐成分；(2)並無遺漏任何其他事項，足以令致本報告或其所載任何陳述產生誤導；及(3)於本報告內 表達的一切意見，均經審慎周詳的考慮後始達致，並以公平合理的基準及假設為依據。 1 維亮控股有限公司 二零二四年年報 目錄 （於開曼群島註冊成立之有限公司） 股份代號：8612 2024 年報 香港聯合交易所有限公司（「聯交所」）GE ...

Stock Options - The company has a total of 100,000,000 stock options available for grant under the stock option plan as of April 1, 2023, March 31, 2024, and the date of the annual report[3] Compliance - The announcement is made in compliance with the GEM Listing Rules of the Hong Kong Stock Exchange, ensuring the accuracy and completeness of the information provided[4]

Share Option Plan - The company has adopted a new share option plan on September 29, 2023, allowing for the subscription of 108,056,289 shares, representing 10% of the existing issued share capital[3] - As of the date of the annual report (June 28, 2024), no share options have been granted under the new share option plan since its adoption[3] - The remaining duration of the share option plan is 9 years and 3 months as of the annual report date[6]

Financial Performance - The company's revenue for the year ended December 31, 2024, was approximately HKD 58.5 million, a decrease of 24.2% compared to HKD 77.2 million in 2023[11]. - Gross profit for the same period was approximately HKD 15.4 million, down 35.6% from HKD 23.9 million in 2023[11]. - The company recorded a pre-tax loss of approximately HKD 85.5 million, an increase of 122% from a loss of HKD 38.5 million in 2023[12]. - The group recorded a loss of approximately HKD 86.4 million for the year ended December 31, 2024, compared to a loss of HKD 40.4 million in 2023[19]. - The company recorded a net loss attributable to shareholders of approximately HKD 86.4 million for the year ended December 31, 2024, compared to a loss of HKD 40.4 million in 2023[22]. - Revenue from Hong Kong projects decreased by approximately HKD 16.1 million or 39% due to several large projects nearing completion and new large projects not yet commenced[40]. - Revenue from mainland China decreased from HKD 35.9 million in 2023 to HKD 33.1 million in 2024[42]. - Basic loss per share increased to approximately HKD 0.039 from HKD 0.0197 in 2023, reflecting the rise in annual losses[48]. Financial Position - The net debt increased to approximately HKD 54.1 million, compared to net assets of HKD 35.2 million in 2023[12]. - As of December 31, 2024, the total amount of bank loans, including principal and accrued interest, was approximately HKD 33.5 million, slightly up from HKD 33.2 million in 2023[19]. - The company has a net debt of HKD 54.1 million and current liabilities of HKD 40.6 million, indicating significant financial pressure[25]. - The current ratio as of December 31, 2024, is approximately 0.72, down from 1.47 as of December 31, 2023[51]. - The debt-to-equity ratio for 2024 is -479.6%, a significant decline from 62.7% in 2023[54]. - The net current liabilities as of December 31, 2024, are approximately HKD 40.6 million, a shift from net current assets of HKD 60.9 million in 2023[55]. - As of December 31, 2024, the company's capital structure includes a deficit of approximately HKD 54.1 million, compared to equity of HKD 35.2 million as of December 31, 2023[50]. Operational Challenges - The geopolitical tensions and international trade frictions continue to impact the construction industry and the company's business development[11]. - The construction materials and labor costs have risen, negatively impacting the group's profit margins[15]. - The overall economic recovery in Hong Kong is slow, with uncertainty in the property market affecting future bidding activities[15]. - The group is facing a human resources shortage due to increasing competition in the labor market[18]. - The potential time lag between receiving customer progress payments and paying subcontractors and suppliers may adversely affect cash flow[21]. - The group’s business risks are closely related to the property market and construction industry, with geopolitical tensions and rising interest rates adding uncertainty[19]. Funding and Liquidity - The company is actively seeking various funding sources to reduce overdue bank borrowings and financial pressure[8]. - The company is actively seeking new financing sources to improve liquidity and has been in discussions with banks to avoid immediate repayment of loans[30][36]. - The company is actively negotiating with banks to extend repayment dates for overdue borrowings and has received financial support from its major shareholder[26]. - The company has implemented measures to expedite project certification, customer billing, and collections to enhance future financial liquidity[26]. - Management believes that future liquidity and performance may improve, and they have reviewed cash flow forecasts covering at least twelve months from December 31, 2024[26]. Governance and Compliance - The company has established a robust governance framework for ESG matters, with the board taking ultimate responsibility for strategy, goals, policies, performance, and reporting[72]. - The board is responsible for ensuring the effectiveness of the risk management and internal control systems, with annual reviews covering all relevant factors[75]. - The company has adopted a nomination policy for the selection of directors, considering factors such as reputation, experience, and diversity[173]. - The board consists of 2 executive directors and 4 independent non-executive directors, with independent directors making up 66.7% of the board[145][147]. - The company has implemented a board diversity policy, aiming for gender balance, with 2 out of 6 board members being female[149]. Environmental, Social, and Governance (ESG) Initiatives - The company has identified 19 key environmental, social, and governance (ESG) issues relevant to stakeholders, covering areas such as "environment," "employment and labor practices," "operational practices," and "community"[82]. - Six critical issues have been prioritized, including "prevention of child and forced labor," "occupational health and safety," "anti-corruption," "product and service responsibility," "protection of intellectual property," and "protection of customer privacy"[82]. - The company has maintained consistency in reporting methods, allowing for meaningful comparisons of ESG performance over time[69]. - The company has established a quality control management system to monitor procurement and production processes, ensuring all products meet high-quality standards[87]. - The company has implemented measures to protect customer data and privacy, including installing firewalls and antivirus software in its IT systems[92]. Employee and Training - The company has 11 employees, with a turnover rate of 35%[100]. - 54% of employees participated in training programs during the reporting period, with an average training duration of approximately 10 hours per employee[106]. - The company emphasizes the importance of talent as a key driver for sustainable growth and has established employment and compensation policies to ensure a fair and inclusive work environment[97]. - The company conducts annual performance evaluations to provide promotion opportunities for outstanding employees, ensuring alignment with market trends and stakeholder needs[104]. Environmental Impact - The total greenhouse gas emissions amounted to 15.99 tons of CO2 equivalent, a decrease of approximately 35.68% compared to the previous year, with a density of 1.45 tons of CO2 equivalent per employee[114]. - Total energy consumption decreased from 83,837.76 kWh in 2023 to 52,844.08 kWh in 2024, representing a reduction of approximately 37.1%[126]. - Total waste generated decreased from 795.41 tons in 2023 to 456.40 tons in 2024, a reduction of about 42.7%[126]. - The company aims to support the Hong Kong government's goal of achieving carbon neutrality by 2050, incorporating climate-related risks and opportunities into business decisions[122]. - The company has committed to improving waste and wastewater management technologies to further reduce environmental impact[110].

Financial Performance - For the fiscal year ending March 31, 2025, the company reported revenue of approximately HKD 395.9 million, a decrease of about HKD 62.9 million or 13.7% compared to HKD 458.7 million for the fiscal year 2024[6]. - Gross profit for the fiscal year 2025 was approximately HKD 65.7 million, slightly down by HKD 0.8 million or 1.3% from HKD 66.6 million in fiscal year 2024, with a gross margin improvement from 14.5% to 16.6%[6]. - The net profit for fiscal year 2025 was approximately HKD 41.7 million, a slight increase from HKD 40.8 million in fiscal year 2024, attributed to improved gross margin despite decreased revenue[6]. - Revenue decreased by approximately 13.7% from about HKD 458.7 million for the year ending March 31, 2024, to about HKD 395.9 million for the year ending March 31, 2025, primarily due to reduced sales of various products[18]. - The group recorded a net profit of approximately HKD 41.7 million for the year ending March 31, 2025, compared to HKD 40.8 million for the previous year, reflecting a slight increase despite a decrease in revenue[16]. - The cost of goods sold for the year ending March 31, 2025, was approximately HKD 330.2 million, a decrease of about 15.8% from HKD 392.2 million for the previous year[19]. - Selling and distribution costs for the year ending March 31, 2025, were approximately HKD 11.9 million, an increase of about 2.9% from HKD 11.6 million for the previous year, representing about 3.0% of total revenue[21]. - Administrative expenses decreased from HKD 8.7 million for the year ending March 31, 2024, to approximately HKD 8.4 million for the year ending March 31, 2025, mainly due to reduced overseas travel and entertainment expenses[22]. - Financial costs decreased from approximately HKD 72,000 for the year ending March 31, 2024, to about HKD 57,000 for the year ending March 31, 2025[23]. - The total equity attributable to the owners of the company was approximately HKD 291.9 million as of March 31, 2025, compared to HKD 261.4 million a year earlier[29]. - The group’s debt-to-equity ratio was approximately 0.8% as of March 31, 2025, compared to 0.4% a year earlier[31]. - The board proposed a final dividend of HKD 0.042 per share, totaling HKD 11.76 million for the fiscal year ending March 31, 2025, compared to HKD 11.2 million for the previous year[45]. Market Position and Strategy - The company serves over 370 customers, primarily frozen seafood resellers and food service providers, offering a variety of over 100 types of frozen seafood products[7]. - The company anticipates continued pressure on the local food service industry due to changing consumer trends and uncertainties from U.S. trade policies, particularly potential protectionist measures[7]. - The company aims to closely monitor market conditions and adapt its strategies to respond to unforeseen changes, striving for better business performance[7]. - The company plans to leverage its listing to secure financial resources to capitalize on business opportunities and strengthen its market position in the frozen seafood import and wholesale sector in Hong Kong[7]. - The group plans to closely monitor market conditions, especially in the local retail market, and will enhance cost-saving measures in response to ongoing challenges[17]. - The group aims to strengthen its market position in the frozen seafood import and wholesale industry through financial resources from share issuance and by establishing new sales agency arrangements with overseas suppliers[17]. - The board maintains a cautiously optimistic outlook for the group's business prospects despite pressures from changing consumer trends and uncertainties in international trade[17]. Corporate Governance - The company has received independence confirmations from all independent non-executive directors, affirming their status as independent individuals[53]. - The company has no management or administrative contracts related to the entire or a substantial part of its business as of March 31, 2025[57]. - The executive directors have service agreements with an initial term of three years, subject to re-election at the annual general meeting[54]. - The remuneration of directors is determined by the remuneration committee based on the group's operating performance and market statistics[55]. - The company has no significant transactions or arrangements involving major interests held by directors or related entities during the year[58]. - The board of directors has confirmed that there are no competing interests with the group’s business from its directors or controlling shareholders[71]. - The company has adopted the GEM Listing Rules as the code for directors' securities transactions and confirms compliance since the listing date[99]. - The board recognizes the importance of good corporate governance practices to achieve effective accountability and has adhered to the corporate governance code since the listing date[95]. - The company has appointed two executive directors and three independent non-executive directors as of the report date[102]. - The audit committee consists of three independent non-executive directors who review the accounting standards and internal control systems, including the audited consolidated financial statements for the year ending March 31, 2025[93]. - The board retains decision-making authority over all significant matters, including policies, strategies, and financial reporting[104]. - The company has implemented appropriate insurance coverage for directors and senior officers to mitigate business-related risks[108]. - The company has established a clear organizational structure with defined responsibilities and authority for internal controls and procedures[131]. Environmental, Social, and Governance (ESG) - The environmental, social, and governance (ESG) report covers the group's performance in these areas for the fiscal year ending March 31, 2025[138]. - The ESG report adheres to principles of materiality, quantification, balance, and consistency to ensure meaningful comparisons[139]. - The board is responsible for assessing and determining the group's ESG-related risks and ensuring effective risk management systems are in place[140]. - The company has a commitment to environmental sustainability, balancing effective operations with environmental protection policies[145]. - The company has established communication channels with stakeholders, including shareholders, employees, customers, suppliers, and the community, to address their concerns[142]. - The company has implemented measures to reduce emissions, including limiting air conditioning usage and encouraging the use of electronic documents to minimize paper waste[154]. - The company has identified acute physical risks from extreme weather events, such as typhoons and floods, which pose a medium risk level in the short term[170]. - The company is monitoring existing and emerging trends related to climate change to avoid incremental costs and reputational risks[171]. - The company aims to enter new markets focused on sustainable and environmentally friendly products, enhancing market share and revenue growth[174]. - The company plans to utilize public sector incentives and adopt low-carbon equipment to potentially reduce operating costs in the long term[174]. Employee and Training - As of March 31, 2025, the company has a total of 17 employees, including 15 full-time and 2 part-time staff[176]. - Employee turnover rate is 11.8%, with a breakdown of 18.2% for males and 0% for females[179]. - 47.1% of employees participated in training during the reporting period, with 75.0% being male and 25.0% female[184]. - Average training hours per employee is 2.8 hours, with males averaging 2.3 hours and females averaging 3.7 hours[185]. - The company has implemented extensive internal training programs to ensure employee health and safety, especially during the COVID-19 pandemic[180]. - The company has a comprehensive recruitment process and strictly prohibits child labor and forced labor[186]. - The company has not encountered any major suppliers with significant adverse impacts on business ethics, environmental protection, or labor practices[189]. Safety and Compliance - The company received no formal customer complaints related to food safety during the fiscal year ending March 31, 2025[192]. - The company has implemented data protection policies to safeguard customer privacy, ensuring compliance with relevant laws and regulations[194]. - The company has established internal control policies to protect intellectual property and prevent infringement, emphasizing the importance of compliance among employees[193]. - The company has established a food safety committee to maintain and improve quality control policies and procedures[190]. - The company has implemented emergency plans for extreme weather and special work arrangements to ensure employee safety and asset protection[170].

Share Option Plan - The new share option plan allows for a maximum of 80,149,981 shares to be granted, representing 30% of the company's issued share capital as of March 31, 2024, which totals 267,166,606 shares[6] - No share options were issued under the new share option plan during the fiscal year ending March 31, 2024, with a remaining term of 7.42 years[9] - The maximum number of share options that can be granted to any participant within a twelve-month period is capped at 1% of the company's issued share capital[6]

Financial Performance - The company reported a significant increase in revenue for the fiscal year 2024/25, with a total revenue of HKD 1.2 billion, representing a 15% year-over-year growth[2]. - Total revenue for the fiscal year 2025 was HKD 17,249,385, a decrease of 8.2% from HKD 18,798,633 in fiscal year 2024[20]. - Profit attributable to equity holders was HKD 2,062,617, a decrease of 10.4% compared to HKD 2,302,366 in fiscal year 2024[20]. - Basic earnings per share for fiscal year 2025 was HKD 53.19, down from HKD 59.09 in fiscal year 2024[20]. - The company reported a net profit margin of 12%, up from 10% in the previous year, indicating improved operational efficiency[2]. - Profit attributable to equity holders decreased by approximately 10.4% from about HKD 2,302,366 thousand in FY2024 to about HKD 2,062,617 thousand in FY2025, with a net profit margin of approximately 12.2% (FY2024: 12.5%) in FY2025[52]. Revenue Breakdown - The domestic sales revenue in China was HKD 9,927,490 thousand, a decrease of 17.2% year-on-year, accounting for 58.7% of total revenue[33]. - Revenue from bedding and related products fell by 19.4% to approximately HKD 2,408,061, primarily due to weak market demand in China[40]. - Revenue from other products decreased by 8.4% to approximately HKD 1,665,873, attributed to declining sales in the Chinese home furnishings market[41]. - Revenue from the North American market was approximately HKD 4,420,102, a year-on-year increase of 3.2%, contributing 26.2% to the total revenue[34]. - Revenue from Europe and other overseas markets increased by 22.9% to approximately HKD 1,468,854, accounting for 8.7% of total revenue[34]. Cost and Expenses - The cost of goods sold decreased by 9.9% to approximately HKD 10,058,472, with raw material costs declining by 11.2%[45]. - Sales and distribution expenses decreased by 7.2% to approximately HKD 3,075,090, with advertising and marketing expenses dropping by 30.3%[48]. - Administrative and other expenses decreased by approximately 21.5% from about HKD 956,000 thousand in FY2024 to about HKD 750,373 thousand in FY2025, representing about 4.4% of revenue (FY2024: 5.2%) due to a settlement with a former supplier[50]. Cash Flow and Liquidity - Cash flow from operations increased by 25%, totaling HKD 300 million, providing a strong liquidity position for future investments[2]. - Cash and bank balances increased to HKD 4,006,314 in fiscal year 2025, compared to HKD 3,273,830 in fiscal year 2024[20]. - Short-term borrowings were approximately HKD 4,213,483 thousand and long-term borrowings were about HKD 1,066 thousand as of March 31, 2025, with a current ratio of approximately 1.4 (FY2024: 1.3) and a debt-to-equity ratio of approximately 33.2% (FY2024: 34.0%) as of the same date[56]. Strategic Initiatives - The company provided an optimistic outlook for the next fiscal year, projecting a revenue growth of 10% to 12%[2]. - New product launches are expected to contribute to revenue, with three new furniture lines set to be introduced in Q2 2025[2]. - Market expansion plans include entering two new international markets, targeting a 5% market share within the first year[2]. - The company is considering strategic acquisitions to enhance its market position, with a budget of HKD 200 million earmarked for potential mergers[2]. - The company plans to enhance brand awareness and product sales by focusing on core cities and key regions through refined market operations and precise marketing strategies[67]. Sustainability and Innovation - The management emphasized a focus on sustainability, aiming for a 30% reduction in carbon emissions by 2026[2]. - The company is investing in technology development, allocating HKD 50 million for R&D in smart furniture solutions[2]. - The group will increase R&D investment to launch more intelligent and environmentally friendly home products to meet consumer demand for high-quality living[67]. Corporate Governance - The board consists of five executive directors and four independent non-executive directors as of March 31, 2025[80]. - The audit committee includes four independent non-executive directors, responsible for reviewing the external auditor's audit plan and reports[93]. - The company ensures compliance with listing rules by appointing a sufficient number of independent non-executive directors, enhancing independent viewpoints[87]. - The board has established specific committees to oversee certain areas and assist in executing its responsibilities, with all resolutions reported at the next board meeting[92]. Shareholder Engagement - The company emphasizes open communication and fair disclosure to ensure all shareholders receive significant corporate development information[110]. - Senior executives will arrange roadshows or presentations after performance announcements to engage with institutional investors and analysts[110]. - The company is committed to addressing shareholder inquiries through its investor relations manager[116]. Employee and Diversity Initiatives - The total employee cost for FY2025 was approximately HKD 3,055,078 thousand, down from about HKD 3,193,022 thousand in FY2024, with 26,134 employees as of March 31, 2025 (FY2024: 29,837 employees)[66]. - As of March 31, 2025, 36% of the company's employees are women, reflecting the company's commitment to gender diversity[100]. - The company is committed to further enhancing gender diversity in its board composition and senior management team[98]. Risk Management - The company identified significant business risks, including macroeconomic changes that could adversely affect sales growth or gross margins[134]. - The company has implemented effective communication policies with shareholders during the review period[117].

Financial Performance - Total revenue for the fiscal year ending March 31, 2025, was ¥28,316 million, an increase from ¥26,955 million in 2024, representing a growth of 5%[7] - The net profit attributable to the company for the fiscal year 2025 was ¥607 million, compared to ¥694 million in 2024, indicating a decrease of approximately 12.5%[7] - The overall revenue margin for 2025 was 17.0%, slightly down from 18.2% in 2024[7] - Total revenue increased by 10.1% year-on-year to ¥145,091 million, reaching the highest level since the company's establishment[13] - Dream Games' revenue decreased by 2.3% year-on-year to ¥1,648 million, with 12 operational stores as of March 31, 2025[18] - Revenue from Japanese pachinko and pachislot operations increased by ¥781 million or 3.3% from ¥23,944 million in 2024 to ¥24,725 million in 2025, driven by the recovery of the Japanese economy and improved customer flow due to machine replacements[24] - The revenue yield decreased from 18.2% in 2024 to 17.0% in 2025, attributed to increased payout rates aimed at stimulating customer traffic[27] - Revenue from amusement park operations decreased by ¥39 million or 2.3% to ¥1,648 million in 2025, impacted by the closure of a non-profitable park in Vietnam and typhoon disruptions[28] - Restaurant revenue increased by ¥332 million or 46.9% to ¥1,040 million, driven by the popularity of the "KOMEDA" café and the opening of new restaurant brands[29] - The company reported a net profit of ¥607 million for the year ending March 31, 2025, compared to ¥118 million in the previous year, representing a significant increase of 414%[190] Assets and Liabilities - The total assets as of March 31, 2025, were ¥63,653 million, a decrease from ¥65,760 million in 2024[8] - The current ratio (current assets to current liabilities) for 2025 was 0.90, indicating a decline from 0.99 in 2024[8] - The total borrowings and lease liabilities as of March 31, 2025, were ¥35,807 million, down from ¥38,357 million in the previous year[39] - The asset-liability ratio as of March 31, 2025, was 1.3, down from 1.4 as of March 31, 2024[42] - As of March 31, 2025, the total cash and cash equivalents amounted to ¥10,574 million, a decrease from ¥12,350 million as of March 31, 2024[37] - The company's total assets decreased to ¥63,653 million from ¥65,760 million, reflecting a decline of approximately 3.2%[192] - Non-current assets decreased from ¥51,888 million to ¥50,847 million, a reduction of about 2%[192] - Current liabilities decreased slightly from ¥14,215 million to ¥14,017 million, indicating a decrease of approximately 1.5%[193] Investments and Expenditures - The company plans to invest in new gaming halls and acquisitions to ensure stable profitability, focusing on increasing the number of installed gaming machines[18] - Capital expenditures for the year ended March 31, 2025, totaled ¥4,223 million, an increase from ¥3,551 million in the previous year[43] - The company completed the acquisition of a 10-story hot spring hotel for ¥358.4 million on April 30, 2025, and another hot spring hotel for ¥798.4 million on May 1, 2025, as part of its expansion strategy[48] - The investment in machine replacement reached ¥7,751 million, aimed at enhancing revenue and increasing customer traffic[112] Governance and Compliance - The company has adopted and complied with all applicable principles and code provisions of the Corporate Governance Code as per the Hong Kong Stock Exchange Listing Rules, except for the separation of roles between the Chairman and the CEO[53] - The board consists of eight directors, including two executive directors and five independent non-executive directors, ensuring a diverse and experienced leadership team[55] - The company’s governance responsibilities include reviewing compliance with laws and regulations, and monitoring the training and development of directors and senior management[59] - The company has established a formal written whistleblowing policy for employees to express concerns regarding risks and internal operations[89] - The company has mechanisms in place to ensure independent viewpoints are obtained for board decisions[73] - The company has maintained and purchased directors' liability insurance to provide adequate protection for its directors[141] Employee and Community Engagement - The company had a total of 1,270 employees as of March 31, 2025, with compensation policies determined by the remuneration committee[51] - The company is committed to providing equal opportunities in recruitment, hiring, compensation, training, and promotion based on knowledge and performance, regardless of gender[77] - The company made charitable donations totaling approximately 2 million yen during the fiscal year[153] Future Outlook - The company plans to continue focusing on new product development and market expansion strategies to drive future growth[195] - Economic growth in Vietnam and Cambodia is projected to exceed 5% in 2025, indicating potential for market expansion[18] - The company is open to market expansion opportunities, including acquisitions and establishing new branches, despite anticipated economic fluctuations[115]

Impairment and Financial Losses - The company recognized goodwill and intangible asset impairments of approximately RMB 9.9 million and RMB 8.5 million related to the acquisition of Dun Nan Group and Mei Kang Mao respectively[4]. - The estimated recoverable amount of Dun Nan's cash-generating unit was determined to be zero, resulting in a full impairment of RMB 9,885,000 in goodwill and RMB 8,500,000 in trademarks[8]. - Meikangmao's cash-generating unit has been written down to a recoverable amount of RMB 17,600,000, with a goodwill impairment loss of RMB 7,067,000 recognized[19]. - The impairment of finance lease receivables for the year ending December 31, 2024, is approximately RMB 35.6 million, accounting for about 5.9% of total assets[25]. Operational Challenges - The decision to cease operations of Dun Nan Group was made due to continuous operational losses since 2023, with a challenging macroeconomic environment leading to reduced consumer spending and increased competition[7]. - The overall economic environment in China remains challenging, impacting consumer spending and leading to ongoing losses for Meikangmao since its opening[17]. - The industry faces specific pressures, including reduced patient flow and increased competition, leading to cash flow difficulties for many clients[27]. - The macroeconomic environment in China is recovering slower than expected, impacting consumer confidence and increasing credit risk[28]. Future Projections and Strategies - Revenue and net loss forecasts for Dun Nan for the two months ending February 2025 are projected to be RMB 2,292,000 and RMB (3,920,000) respectively[11]. - The company plans to reallocate resources from Dun Nan Group to more sustainable and profitable business segments[7]. - The number of maternity centers is projected to increase by approximately 27% from 2021 to 2024, driven by China's three-child policy[15]. - The market for maternity services is highly competitive, with a compound annual growth rate of about 18% from 2016 to 2023, leading to an estimated 5,800 centers by 2024[17]. - The company believes that the healthcare industry will present growth opportunities post-pandemic, despite the challenges faced by Dun Nan Group[6]. Valuation and Financial Assessment - The company applied a 20.4% liquidity discount based on a study covering 779 private transactions from July 1980 to March 2024, reflecting the average discount rate for illiquid private equity[10]. - The weighted average cost of capital was calculated to be approximately 15%, based on comparable companies' average debt and equity ratios[12]. - The recoverable amount of cash-generating units is calculated based on the net present value of expected future cash flows over a 7-year period[23]. - The after-tax discount rate is approximately 15%, derived from the weighted average cost of capital based on comparable companies[23]. - The only applicable valuation multiple is the price-to-sales ratio, which is adopted as the basis for Meikangmao's equity value[22]. Operational Adjustments and Partnerships - The operational plan for Meikangmao was revised to include a partnership with an experienced operator, resulting in a fundamental change in the original business model[18]. - The company has actively engaged with two well-known maternity service providers to mitigate operational risks and costs[18]. Debt Recovery Efforts - The company has implemented a bad debt recovery policy, utilizing phone collections and legal actions as necessary[29]. - As of March 31, 2025, approximately 43% of overdue financing lease receivables cases have entered litigation or arbitration procedures[30]. - About 50% of these cases (by amount) have received court judgments in favor of the company, while the rest are still pending judgment[30]. - The company has successfully obtained court freezing orders on approximately 20.3% of the relevant financing lease receivables[30]. - The company has successfully recovered about 2.7% of the impairment amount of financing lease receivables as of March 31, 2025[30].

Impairment and Financial Losses - The company recognized goodwill and intangible asset impairments of approximately RMB 9.9 million and RMB 8.5 million related to the acquisition of Dun Nan Group and Mei Kang Mao respectively[4]. - The estimated recoverable amount of Dun Nan's cash-generating unit was determined to be zero, resulting in a full impairment of RMB 9,885,000 in goodwill and RMB 8,500,000 in trademarks[8]. - Meikangmao's cash-generating unit has been written down to a recoverable amount of RMB 17,600,000, with a goodwill impairment loss recognized at RMB 7,067,000[19]. - The impairment of finance lease receivables for the year ending December 31, 2024, is approximately RMB 35.6 million, accounting for about 5.9% of total assets[25]. Operational Challenges - The decision to cease operations of Dun Nan Group was made due to continuous operational losses since 2023, with a challenging macroeconomic environment leading to reduced consumer spending and increased competition[7]. - The market environment remains challenging, with external pressures and intense price competition affecting profitability since the opening of Meikangmao[17]. - New clinics and hospitals established before and after the pandemic are struggling to generate stable revenue, leading to increased defaults on lease payments[27]. - Macroeconomic headwinds in 2024, including weakened consumer confidence and tightened credit conditions, have raised overdue rates and credit risk expectations[28]. Financial Forecasts and Projections - Revenue and net loss forecasts for Dun Nan for the two months ending February 2025 are projected to be RMB 2,292,000 and RMB (3,920,000) respectively[11]. - The company anticipates that the economic benefits of the acquired business will significantly decline under the new operational structure[18]. - Meikangmao recorded a net loss and negative EBITDA for 2024, making it impossible to use P/E and EV multiples for fair value assessment[22]. Resource Allocation and Strategic Plans - The company plans to reallocate resources from Dun Nan Group to more sustainable and profitable business segments[7]. - The operational plan for Meikangmao was revised after the acquisition, leading to a partnership with a third-party operator to mitigate operational risks[18]. Valuation and Financial Assessment - The company applied a 20.4% liquidity discount based on a study covering 779 private transactions from 1980 to 2024, reflecting the average discount rate for illiquid private equity[10]. - The weighted average cost of capital was calculated to be approximately 15%, based on comparable companies' average debt and equity ratios[12]. - The valuation of Meikangmao relies on market approach methods, specifically using comparable listed companies for fair value assessment[21]. - The recoverable amount of cash-generating units is based on the net present value of expected future cash flows over a 7-year period, with a post-tax discount rate of approximately 15%[23]. - The estimated terminal growth rate for cash flows beyond 5 years is 2%, aligned with IMF's inflation forecast for China[23]. Debt Recovery Efforts - The company has implemented a bad debt recovery policy, utilizing phone collections and legal actions for unrecovered debts[29]. - Approximately 43% of overdue financing lease receivables cases have entered litigation or arbitration as of March 31, 2025[30]. - About 50% of these cases (by amount) have received court judgments in favor of the company, while the rest are pending judgment[30]. - The company has successfully obtained court freezing orders on approximately 20.3% of the relevant financing lease receivables[30]. - As of March 31, 2025, the company has successfully recovered about 2.7% of the impaired financing lease receivables[30]. Industry Trends - The acquisition of Dun Nan Group was completed in February 2021, following due diligence on its assets, liabilities, and operations[5]. - The acquisition of Meikangmao is expected to complete in April 2024, with goodwill impairment due to significant changes post-acquisition[15]. - The number of maternity centers is projected to increase by approximately 27% from 2021 to 2024, driven by China's three-child policy[15]. - The compound annual growth rate of maternity centers from 2016 to 2023 is about 18%, with an estimated 5,800 centers nationwide by 2024[17]. - The company believes that the healthcare industry will present growth opportunities post-pandemic, despite the challenges faced by Dun Nan Group[6].