ANXIANYUAN CH (ASX: 00922) has released a market announcement indicating a significant shift in its financial performance for the current fiscal year.

The company's indirect wholly-owned subsidiary in China, Zhejiang Anxian Cemetery Co., Ltd., recently received a tax notice from the Hangzhou Municipal Tax Bureau following a routine tax audit.

Based on a preliminary assessment, the estimated additional tax payable by the subsidiary is approximately HK$89 million.

Due to the financial impact of this additional tax liability, the board of directors wishes to inform shareholders and potential investors that the group expects to report a net loss of between HK$113 million and HK$120 million for the current year.

This represents a substantial reversal from the net profit of about HK$52.3 million recorded for the year ended March 31, 2025, and marks a year-on-year decrease of approximately HK$165 million to HK$172 million.

The primary factors contributing to this anticipated loss are the recognition of the HK$89 million additional tax charge, the back payment of approximately HK$13 million in Value-Added Tax by certain Chinese subsidiaries for the period from June 1, 2020, to March 31, 2025, and a reduction in gross profit of about HK$47 million, largely attributed to a roughly 20% decline in the average selling price of burial plots during the year.

Furthermore, the company has recognized impairment losses on goodwill and non-financial assets amounting to approximately HK$16 million for the current fiscal year.