Hong Kong-listed Kafelaku Coffee reported a sharp narrowing of its full-year net loss to HK$4.69 million for 2025, compared with a HK$48.68 million deficit in 2024, driven by one-off gains and aggressive cost cutting amid a challenging dining environment in Hong Kong and mainland China.

Revenue fell 24.00% year on year to HK$106.14 million, reflecting the closure of loss-making outlets and weaker consumer sentiment. Food catering remained the core contributor, generating HK$103.67 million (-25.2%). Beverage operations—mainly the “Kafelaku Coffee” brand—delivered HK$2.47 million, up 150.0% on store additions and rebranding efforts but still a minor 2.3% of group sales.

Gross profit slipped 25.9% to HK$61.95 million, with margin easing to 58.4% (2024: 59.9%) as higher promotional discounts offset savings in material costs. Operating expenses were significantly lower: employee benefits fell 29.0% to HK$44.30 million following outlet closures and workforce optimisation; depreciation dropped 22.0% to HK$17.87 million; and other operating expenses contracted 21.9% to HK$26.41 million.

Non-recurring items underpinned the earnings improvement. The company booked a HK$14.37 million gain on the disposal of subsidiary Keen Nation Limited and a HK$10.47 million net gain from early lease terminations. Impairment charges on right-of-use assets fell to HK$2.06 million (2024: HK$5.59 million).

Despite profit improvement, the balance sheet remains strained. Total assets stood at HK$62.27 million against total liabilities of HK$128.19 million, leaving net liabilities of HK$65.93 million and net current liabilities of HK$87.46 million at year-end. Cash and cash equivalents were HK$3.95 million versus current obligations of HK$111.49 million.

Management outlined measures to address liquidity, including a HK$91.00 million related-party loan facility, cost controls, potential fund-raising exercises and planned expansion of its premium coffee operations—including a memorandum of understanding signed in February 2026 with Coffeenergy Co., Ltd. for joint brand development.

The auditor, Rongcheng (Hong Kong) CPA Limited, issued a disclaimer of opinion, citing material uncertainties surrounding the company’s ability to continue as a going concern given its net liabilities and funding needs.

Basic loss per share improved to HK0.33 cent from HK3.94 cents a year earlier. The Board did not recommend a final dividend for 2025.