Financial Information
Financials
Interim Financial Statements And Dividend Announcement For The Six Months And Full Year Ended 30 June 2025 (Unaudited)
Financials Archive
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CONDENSED INTERIM CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the six months and full year ended 30 June 2025
CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the six months and full year ended 30 June 2025
REVIEW OF PERFORMANCE
PROFIT AND LOSS
Consolidated revenue of the Group decreased by approximately HK$272.5 million or 12.4% to HK$1,929.5 million for the year ended 30 June 2025 (“FY2025”), compared to HK$2,202.0 million for the year ended 30 June 2024 (“FY2024”).
Revenue from our Components Distribution (“CD”) segment declined by HK$42.8 million, or 11.1%, to HK$344.3 million for the year under review, down from HK$387.1 million for FY2024. The decrease was mainly due to the weakened economic sentiment in the PRC.
Revenue from our Information Technology Infrastructure (“IT Infrastructure”) segment decreased by HK$194.7 million or 11.9% to HK$1,439.7 million for the current year, from HK$1,634.4 million for the year ended 30 June 2024. Although revenue from our IT segment declined for the year under review, its profitability had improved due to higher margins on some deals.
Revenue from our Consumer Electronics Products (“CEP”) segment fell by HK$35.0 million, or 19.4%, to HK$145.5 million for the current year, compared to HK$180.5 million for FY2024. This downturn was primarily due to subdued consumer spending in Hong Kong. Nevertheless, effective cost and inventory management measures implemented during the year improved the overall performance of the segment.
Gross profit decreased by HK$10.4 million, or 5.6%, to HK$176.6 million for the year ended 30 June 2025, compared to HK$187.0 million for the year ended 30 June 2024. The decrease in gross profit was due mainly to lower sales across all three of the Group’s business segments. However, the gross profit margin improved from 8.5% in FY2024 to 9.2% for FY2025, driven by the Group’s success in securing higher-margin on some deals.
Other income and gains (net), increased by HK$1.2 million or 13.2% to HK$10.3 million for FY2025 from HK$9.1 million for FY2024. The increase was mainly driven by higher bank interest income as a result of increased interest rates on US dollars bank deposits during the year under review.
Selling and distribution costs decreased by HK$2.2 million or 2.8% to HK$76.2 million for the year ended 30 June 2025 from HK$78.4 million for the year ended 30 June 2024 due to decrease in staff cost.
Administrative expenses decreased by HK$5.9 million or 7.4% to HK$72.9 million FY2025 from HK$78.8 million for FY2024. The decrease was mainly due to decrease in depreciation of property, plant and equipment of HK$5.3 million as a result of depreciation for renovation costs for the Hong Kong office was fully depreciated by August 2024.
Other expenses (net) increased by HK$1.8 million, or 29.7%, to HK$7.9 million in FY2025, compared to HK$6.1 million for FY2024. The increase was mainly due to the impairment of amount due from associate of HK$6.1 million during the year under review, and partially offset by the absence of non-recurring expenses reported in FY2024, including a fair value loss on investment property of HK$3.3 million and an impairment of goodwill of HK$1.0 million.
Finance costs decreased by HK$6.1 million or 51.4% to HK$5.7 million for the year ended 30 June 2025 from HK$11.8 million for the year ended 30 June 2024. The decrease was mainly due to (1) decrease in bank borrowings interest rate during the current year; and (2) decrease in bank borrowings during the year of financing the purchase of goods in the IT Infrastructure segment.
Net profit attributable to owners of the Company increased by HK$0.2 million or 1.0% to HK$19.2 million for the year ended 30 June 2025 from HK$19.0 million for the year ended 30 June 2024. The increase was mainly due to (1) HK$1.2 million increase in other income and gains, net; (2) HK$2.2 million decrease in selling and distribution costs; (3) HK$5.9 million decrease in administrative expenses and (4) HK$6.1 million decrease in finance costs; partially offset by (a) HK$10.4 million decrease in gross profit; (b) HK$2.9 million decrease in share of profit of an associate and (c) HK$1.8 million increase in other expenses, net.
Non-controlling interests represented the non-controlling shareholders’ share of losses of our partially owned subsidiaries.
STATEMENT OF FINANCIAL POSITION
At 30 June 2025, non-current assets amounted to HK$53.1 million, representing approximately 5.0% of the total assets. Non-current assets decreased by HK$16.8 million or 24.0% to HK53.1 million as at 30 June 2025 from HK$69.9 million as at 30 June 2024.
The decrease was mainly due to (1) the decrease on prepayments and other assets of HK$15.2 million mainly due to the classification of such assets into their current portion (and presented as current assets); (2) disposal of an associate of HK$7.4 million; (3) decrease of amount due from an associate of HK$4.9 million; and offset by the increase of right-of-use assets of HK$13.4 million due to the renewal of the Hong Kong office tenancy agreement for a three year during the year under review.
As at 30 June 2025, current assets amounted to HK$1,003.7 million, a decrease of HK$95.3 million compared to the preceding financial year end as at 30 June 2024. The decrease was mainly due to (1) decrease in trade and bills receivables of HK$84.2 million which was in line with the decrease in revenue; (2) decrease in prepayments and other receivables of HK$30.4 million due to a substantial amount of current portion of long-term contracts being completed during FY2025; and (3) increase in cash and cash equivalents of HK$16.8 million.
As at 30 June 2025, current liabilities amounted to approximately HK$624.6 million, an decrease of HK$97.7 million, compared to those as at 30 June 2024. The decrease was mainly due to (1) decrease in trade and bills payables by HK$82.0 million as a result of settlement of a major trade payable during the year under review; (2) decrease in interest-bearing bank and other borrowings by HK$48.1 million due to bank loans repayment and (3) increase in other payables and accruals of HK$24.4 million.
Non-current liabilities amounted to HK$31.9 million, representing 4.9% of the total liabilities as at 30 June 2025. The amount comprised deferred tax liabilities, long term contract liabilities and long-term lease liabilities. Deferred tax liabilities were recognised as a result of temporary differences between the carrying amounts and tax bases of property, plant and equipment due to depreciation and withholding tax on retained profits on PRC subsidiaries.
As at 30 June 2025, cash and cash equivalents amounted to HK$144.0 million. Total interest-bearing loans and borrowings as at 30 June 2025 were HK$57.5 million (30 June 2024: HK$105.6 million). The gearing ratio (total interest-bearing borrowings to total equity) is 0.14 times (2024: 0.26 times).
COMMENTARY
The Group enters the new fiscal year with a pragmatic outlook shaped by the macroeconomic headwinds and structural shifts observed over the past 12 months. Geopolitical tensions and uncertainty surrounding global tariff regimes continue to dampen business sentiment, particularly in our key operating regions. Although lower interest rates have eased financial costs, recessionary pressures persist in Hong Kong. Business demand remains subdued.
Notwithstanding the above challenges, Karin believes its IT infrastructure segment will drive its future growth as the Group expands its strategic focus on AI. With a strengthened senior management team, Karin is strongly positioned to capture more AI-related growth opportunities as the Group actively acquires new distributorships and develops an ecosystem to enlarge its AI solutions portfolio.
The economic landscape remains subdued in mainland China, with manufacturing clients adopting a conservative approach to procurement and forecasting. This cautious stance is especially pronounced among exporters, who face heightened vulnerability to trade disruptions and policy shifts. These factors have placed sustained pressure on our components distribution (CD) business. Nevertheless, demand for high-quality, innovative electronics remains robust. The continued digitization of vehicles is fuelling growth in electronic components, helping to offset margin pressures in the highly competitive consumer electronics market.
The Consumer Electronic Products (CEP) segment maybe further dampened, driven by declining consumer spending, a lack of compelling new product launches, and market saturation in categories such as earphones, speakers, and gaming peripherals. Retail performance is further dampened by reduced foot traffic and spending from mainland tourists, as well as ongoing store closures. To address this, we will prioritize profitability through disciplined inventory management, strategic purchasing, and rigorous cost controls.
In light of these challenges, our management team is recalibrating its focus on higher-margin solutions while maintaining strict oversight of lower-margin segments. This strategic pivot aims to preserve profitability, and continue to build its resilience through maintaining financial prudence and a healthy cash position. We believe the Group can leverage its deep experience in navigating economic cycles and fast-changing technologies.