Fountain Set (Holdings) Limited Announces 2025 Final Results: Profitability Surges Despite Revenue Dip

Key Financial Highlights for FY2025

• Profit before income tax jumped 33.5% to HK\$102.89 million (2024: HK\$77.06 million).
• Profit for the year soared 143.5% to HK\$84.21 million (2024: HK\$34.58 million).
• Profit attributable to owners grew sharply to HK\$71.30 million (2024: HK\$14.26 million).
• Revenue declined by 6.5% to HK\$4.137 billion (2024: HK\$4.427 billion), mainly due to a 7.6% drop in fabric sales volume.
• Gross profit margin improved to 13.5% (2024: 12.0%), reflecting strong cost controls and efficiency gains.
• Earnings per share (basic/diluted) rose to 5.8 HK cents (2024: 1.2 HK cents).
• Final cash dividend proposed at 5.70 HK cents per share (payout ratio: 97.93%), a substantial increase from 1.16 HK cents in 2024. No special dividend for 2025 (2024: 4.34 HK cents).
• Net assets stood at HK\$3.48 billion (2024: HK\$3.46 billion).
• Cash & short-term deposits at year-end were HK\$1.55 billion (2024: HK\$1.30 billion).

Strategic and Operational Developments

• Cost Efficiency & Lean Operations: The company achieved a significant reduction in unit production costs through deep synergy across production, supply, sales, and R&D. Lean manufacturing, cost control, and technological upgrades were central to this improvement. EBITDA margin increased to 8.8% (2024: 6.2%).
• Market & Customer Strategy: Despite global headwinds, the Group secured more high-quality orders from strategic customers, especially in the US and Japan where sales stabilized and rebounded. Proactive restocking from major clients boosted order volumes. Domestic market remained weak due to slow economic recovery and cautious consumer spending.
• Procurement & Supply Chain: The Group pushed forward a diversified supply strategy, reducing dependence on single sources and mitigating geopolitical risks. Inventory structure was optimized to closely match demand, reducing working capital risk.
• R&D & Digital Transformation: Efforts were made to enhance product innovation by collaborating with universities and industry partners. Smart factory initiatives and new digital systems were deployed, with one system winning a national technology award.
• Environmental, Social & Governance (ESG): The Group maintained rigorous safety and environmental standards, with ongoing investment in energy-saving and emission-reduction projects.
• Governance Update: Leadership change: Mr. LIU Xianfu ceased to be both Chairman and CEO in November 2025. The roles are now separated, aligning with corporate governance best practices.

Items of Potential Price Sensitivity & Shareholder Attention

• Dramatic profit improvement (over 2x growth in profit for the year; over 4x in profit attributable to owners) despite a sales decline, could signal a turnaround and is likely to be positively received by the market.
• Dividend payout nearly matches earnings (97.93%) and is significantly higher than 2024, signaling management’s confidence in cash flow sustainability.
• No special dividend for 2025, in contrast to a substantial special dividend in 2024, which may impact shareholder expectations.
• Cost of sales fell faster than revenue, leading to margin expansion—a sign of strong operational discipline.
• Significant reduction in finance costs (to 0.2% of sales) and zero bank borrowings at year-end could further de-risk the balance sheet.
• Capital expenditure dropped sharply (HK\$106.8 million vs. HK\$174.7 million in 2024), suggesting a more conservative investment approach or completion of major projects.
• Global supply chain strategy and digital transformation initiatives are being ramped up, likely to yield future efficiency and resilience benefits.
• Leadership change (separation of Chairman and CEO roles) may be viewed positively for governance, but could also create short-term uncertainty.
• Risks remain: Global demand is weak, tariff/trade policy volatility continues, and domestic consumption recovery is slow. Management highlights these as persistent headwinds.

Detailed Financials (FY2025 vs FY2024)

Other Noteworthy Data

• Inventory turnover improved to 72 days (2024: 74 days).
• Trade receivables turnover shortened to 62 days (2024: 66 days).
• Trade payables turnover shortened to 45 days (2024: 53 days).
• Bank borrowings were repaid by year-end; finance costs reduced substantially.
• Workforce size stable at 5,600 (2024: 5,500); focus remains on cost control and productivity.
• No significant post-reporting-period events or major acquisitions/disposals in 2025.

Outlook & Risks

• Management remains cautious, citing ongoing global trade and economic uncertainties, continued restructuring of the textile/apparel supply chain, and persistent tariff/trade policy volatility.
• Growth prospects exist in emerging markets and from continued digital transformation and process improvement.
• Dividend payout expected to remain high, subject to the stated policy and profitability.
• Strategic focus: further global expansion, supply chain diversification, and cost efficiency.

Key Dates for Shareholders

• Annual General Meeting: 4 June 2026 (Register closes 1–4 June 2026)
• Final Dividend Record Date: 17 June 2026 (Register closes 15–17 June 2026)
• Dividend Payment Date: Expected on or about 29 June 2026

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