Details and Factors Contributing to the Loss

1. Decline in Gross Profit Margin:
   • The Group invested heavily in the preliminary stages of new property management projects to increase market share.
   • Public building projects introduced during this period carried lower gross profit margins, further impacting profitability.
2. Increase in Provision for Credit Impairment:
   • There was a notable rise in the provision for credit impairment of trade and other receivables, indicating potential issues in collecting payments or deteriorating asset quality.
3. One-off Losses from Disposals:
   • The Group incurred one-off losses from the disposal of a 51% equity interest in Jiangsu Shenhua Times Property Group Co., Ltd.
   • A similar disposal led to a one-off loss in Zhongshan Zhongzheng Property Management Co., Ltd.

What Shareholders and Investors Need to Know

• This announcement is highly price sensitive as it signals a dramatic swing from profitability to significant losses.
• The losses are attributed to both operational and non-operational factors, including strategic investment, credit risk, and asset disposals.
• The figures are based on unaudited management accounts and may be subject to change upon formal auditing.
• The Group’s official audited results for FY2025 will be released by end of March 2026.
• Shareholders and potential investors are advised to exercise caution and closely monitor the upcoming annual results announcement.

Board Composition

• Executive Directors: Ms. Hu Hongfang and Mr. Wang Wenhao
• Non-Executive Directors: Mr. Liu Jiang and Mr. Zhou Wei
• Independent Non-Executive Directors: Dr. Chen Lei, Mr. Fan Chi Chiu, and Mr. Qian Hongji

Conclusion

The profit warning issued by Hevol Services Group represents a major change in the company’s financial outlook, with significant losses forecasted for FY2025 compared to the previous year’s profits. The combination of lower margins, credit impairment provisions, and one-off disposal losses presents both operational and financial risks that shareholders must consider. Given the size of the expected loss and its contrast to the previous year’s profitability, this announcement is likely to have a material impact on the Group’s share price and investor sentiment.

Disclaimer

This article is intended for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Investors should perform their own due diligence and consult their financial advisors before making any investment decisions, especially in light of the unaudited nature of the disclosed figures and the caution advised by the Group in its official announcement.

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