INVESTECH HLDGS (01087) has announced an expected reduction in the group's net loss for the 2025 fiscal year to approximately RMB 47 million to RMB 52 million. This compares to a net loss of about RMB 63.5 million for the year ended December 31, 2024 (2024 fiscal year).

The anticipated decrease in the net loss is attributed to the combined effect of several factors. The gross profit for the 2025 fiscal year has increased compared to the approximately RMB 57.4 million recorded in the 2024 fiscal year. This improvement is due to enhanced sales performance in the group's information technology infrastructure system integration business.

Furthermore, the fair value loss on investment properties for the 2025 fiscal year has decreased relative to the approximately RMB 16.1 million loss in the 2024 fiscal year. The 2025 fiscal year also registered a fair value gain on equity investments designated at fair value through profit or loss, whereas a fair value loss of about RMB 2.9 million was recognized in the 2024 fiscal year.

Additionally, the net amount of income tax credit for the 2025 fiscal year saw an increase compared to the approximately RMB 3 million in the previous fiscal year. However, the goodwill impairment related to the group's network system integration cash-generating unit was higher in the 2025 fiscal year than the approximately RMB 8.5 million recorded in the 2024 fiscal year.

This increase in goodwill impairment is primarily due to a downward revision of the expected future cash flows and the recoverable amount of the cash-generating unit. The revision considers factors such as geopolitical risks and volatile market conditions, including intensified competition, evolving customer preferences with higher functional demands, rapid technological changes, and industry innovation. These factors are expected to lead to slower gross profit growth and increased operating costs for the group's smart office software solutions business, potentially adversely affecting its operational performance and competitive position.

The fair value loss on investment properties and the goodwill impairment are non-cash items and have no immediate impact on the group's cash flow or operations.