Fu Yu Corporation Limited: Board’s Responses to Shareholder Questions (April 2026)

Key Points & Investor-Relevant Insights

• Consecutive Losses Explained: The company experienced consecutive loss-making years despite earlier strong profitability. This was attributed to ongoing operational challenges such as margin pressures, foreign exchange volatility (due to net USD asset position), weak demand in certain markets, and several one-off costs including professional fees related to corporate investigations, closure costs of the Zhuhai facility, and provisions for doubtful debts and obsolete inventories.
• Recovery Signs: Despite losses, the core manufacturing business showed improvement. Manufacturing gross profit increased 14.8% year-on-year, and gross profit margins improved from 13.5% in FY2024 to 14.5% in FY2025. The Group returned to profitability in 2H25 (S\$1.4 million net profit) after a net loss of S\$4.6 million in 2H24, suggesting a positive operational turnaround under new management.
• Exceptional Costs Expected to Decline: The Board has committed to reducing or eliminating the exceptional one-off costs from FY2026 onwards, which could positively impact future profitability.
• Management Oversight Under Review: The Board and management are conducting an internal review to improve operational efficiency, governance oversight, competitiveness, and have implemented measures like reducing material waste, optimizing processes, lowering operating costs, and streamlining manufacturing footprint.
• GCEO Remuneration & Equity Incentives: The prior Remuneration Committee (RC) approved substantial equity incentives for the former GCEO, Mr. Seow, despite the company’s loss-making position. These arrangements are under internal review and investigation, and further details are pending.
• Restricted Share Plan Details:
  • Annex A: Awarded Mr. Seow 5 million shares and S\$1,012,500 in cash for past contributions (in addition to salary and bonuses).
  • Annex B: Intended as a performance-based incentive, with shares vesting upon meeting revenue and profit-before-tax targets.

  However, 4 million shares under Annex B were vested “guaranteed” even as the company was loss-making, due to lack of a claw-back provision in the Letter of Award.

• Employment Contract Guarantees: Former GCEO and two other senior executives had contractual guarantees for five years, entitling them to salary for the remaining period if terminated early. This was justified by Mr. Seow as being approved by the RC, and is part of ongoing investigations.
• Disclosure Issues: Previous annual reports stated there were no post-employment benefits, which appears inconsistent with the employment guarantees actually in place. This is under investigation and could have regulatory or shareholder implications.
• Legal Disputes Post-Termination: After Mr. Seow’s termination, he issued two letters of demand:
  • For S\$1,853,548.39 in alleged wrongful termination compensation.
  • For S\$200,000 in damages for alleged defamation, plus demands for retraction and public apology.

  The company is seeking legal advice; these matters are ongoing but reportedly do not affect business operations.

• Maxwellisation and Settlement: The previous Board announced claims against certain individuals (including Victor Lim) related to FYSCS. The current Board, after review and legal advice, decided not to pursue these further, closing the matter prior to settlements announced on 29 January 2026.
• Settlement Agreements: The Board decided to settle following legal advice to avoid future disputes. These settlements are not expected to materially impact net tangible assets or EPS for FY2026. The terms of settlement are confidential, but the Board assures shareholders of transparency and best interests.

Potential Price-Sensitive Issues

• Return to Profitability: The Group returned to profitability in the second half of FY2025, indicating operational recovery. If sustained, this may positively influence share price.
• Reduction of One-Off Costs: The Board’s commitment to reduce exceptional costs from FY2026 onwards could improve future earnings and valuation.
• Ongoing Investigations: Findings from the internal review of remuneration, employment guarantees, and disclosure practices could lead to further changes or actions. Regulatory scrutiny or shareholder activism is possible.
• Legal Proceedings: The outcome of disputes with the former GCEO, including demands for compensation and damages, may affect the company financially or reputationally, depending on resolution.
• Settlements: Closure of past claims and settlements may reduce uncertainty and risk for shareholders.

Full Details for Investors

Investors should note that Fu Yu Corporation Limited has undergone a period of operational and governance upheaval. The new Board has taken steps to review past management decisions, especially those around remuneration and employment guarantees, which may not have been fully disclosed previously. While the company has returned to profitability in recent months and aims to further improve operational efficiency, ongoing legal disputes and investigations could affect sentiment, depending on their outcomes.

The settlements announced recently are not expected to materially impact financials for FY2026, but their confidential nature means the full extent of resolution is unknown. The Board emphasizes its commitment to transparency, sound corporate governance, and shareholder value.

Disclaimer

This article is for informational purposes only. It does not constitute investment advice. Investors should conduct their own due diligence and consult financial professionals before making investment decisions. The outcomes of ongoing investigations and legal proceedings remain uncertain and could materially affect the company’s share price.

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