CL Workshop : Annual Report for Fiscal Year Ending December 31, 2025 (Form 20-F)
NWGL
Published on 04/27/2026 at 06:20 am EDT
You should read the following discussion and analysis of the Group's financial condition and results of operations in conjunction with the Group's consolidated financial statements and the related notes included elsewhere in this annual report. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. The Group's actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Item 3. Key Information - 3.D. Risk Factors" or in other parts of this annual report.
5.A. Operating Results
Business Overview
We are a holding company incorporated as an exempted company under the laws of the BVI. As a holding company with no material operations of our own, we conduct our substantial operations mainly in Peru, France, Hong Kong and Macau, through our Operating Subsidiaries.
We are a forestry company. We trade a range of products, including logs, decking and flooring. We are committed to provide high-quality products to our customers consistently. Our goal is to become a leading player in the wood industry and provide sustainable and high-quality wood products at an affordable price to our customers.
Our products and services provide significant value for consumers, through our "NATU" brand. We also seek to maximize consumers' access to our products and services through competitive pricing and regular evaluations of our pricing arrangements and contracts with our distributors.
Our customers include importers, retailers and processors located in China, Peru, France, Hong Kong, Belgium, the United States and South Asia.
Macroeconomic Environment
Coronavirus (COVID-19) Update
The outbreak of COVID-19, which was declared a pandemic by the World Health Organization in March 2020, has created significant volatility, uncertainty and disruption in the global economy.
In January 2020, the Chinese government issued a series of policies to prevent the spread of COVID-19. The Chinese government has shown signs of relaxing its COVID-19 policies. For instance, the Chinese government has eased the border restrictions by reopening certain border crossing points between mainland China and Hong Kong to travelers since January 8, 2023. On March 15, 2020, Peru announced a nationwide lockdown due to the pandemic, which was lifted in June of the same year. After that, various pandemic prevention measures have been introduced in various countries and regions around the world.
With regard to our production base in Peru, during the lockdown period, production in all of our factories was suspended for around three months, many businesses ceased to operate and shops were closed, and all government departments (including, among others, the forestry bureau and tax bureau) did not work normally, which hindered our business operations in terms of production, delivery as well as raw materials procurement. The pandemic and lockdown measures also raised concerns over health and safety among the workers and led to changes in their mentality, which resulted in instability in personnel and high turnover rate, in turn affecting the normal work progress in our production base. Furthermore, the resulting inflation, which significantly raised diesel prices, electricity fees as well as employee base salary, had an impact on our costs of operation. To mitigate the inflationary pressures, we have adjusted prices to our customers to reflect changes in our operating costs. Other control measures imposed as a response to the pandemic also led to delay in the development of various parts of the forests, resulting in a period of supply shortage and rising costs of raw materials for our business operations.
With regard to our sales, COVID-19 related lockdown and other control measures imposed in other countries which form part of the overseas market for our products had and may continue to have an impact on our international exports. For instance, the Chinese market will not be able to receive delivery of our products during the period of lockdown, and consumers' demand for wooden floors will decline, which will significantly affect the quantity and price of flooring materials we sell in China. In addition, as the price of sea freight has increased by 300% as compared with that before the pandemic, this has led to higher overall costs for our customers. The shortage in supply of cargo containers, reduction in shipping frequency and longer shipping period have also affected the shipment and delivery of our products to a certain extent. Additionally, the pandemic has resulted in the shutdown of factory production, rising costs, delays in transportation and delivery, and shortage in supply of raw materials, which raised the price of wood products in the whole market. At the same time, due to the impact of the pandemic on the global economy, market consumption was weak, resulting in a backlog of goods, which in turn affected the number of orders placed by our customers.
In the second half of 2022, COVID-19 has subsided and many countries lifted entirely its epidemic prevention measures in the first quarter of 2023. Now, this far-reaching epidemic can be regarded as over. During the years ended December 31, 2025, 2024 and 2023, COVID-19 has had a limited impact on the Company's operations.
Russia-Ukraine Conflict
Due to the Russian-Ukrainian war, the conflicts in the Middle East and the weakening global economic growth momentum, there has been a decline in consumer demand for wood. In light of the changing market conditions, we have downsized the operations in Peru and underwent a cost control and reduction exercise to make its operations competitively efficient and cost effective whilst seeking new profitable growth opportunities.
US-Iran War
The escalation of armed conflict between the United States and Iran has further exacerbated geopolitical instability in global markets. The resulting disruptions to international shipping routes, increased energy prices, and heightened uncertainty have adversely affected supply chains and input costs across various industries. These factors have contributed to a more cautious investment climate and reduced consumer confidence, particularly in regions dependent on stable energy supplies. In response, we have implemented additional risk mitigation measures, including adjusting our procurement strategies to manage potential cost escalations and ensure business continuity.
US Tariffs
In addition, the imposition of new tariffs by the United States government on a range of imported goods has significantly impacted global trade flows and increased the cost of sourcing materials for our operations. These tariffs have resulted in higher raw material costs and have placed additional pressure on profit margins, especially for products exported to or imported from the United States. To address these challenges, we have undertaken a comprehensive review of our supply chain and are actively seeking alternative sourcing arrangements, renegotiating supplier contracts, and optimizing our product mix to mitigate the adverse financial effects of these tariff measures.
Key Factors that Affect Operating Results
We believe the following key factors may affect our financial condition and results of operations:
Results of Operations
The following provides a summary of our consolidated results of operations for the years ended December 31, 2025, 2024 and 2023:
For the year ended
December 31, 2025
For the year ended
December 31, 2024
For the year ended
December 31, 2023
For the year ended
December 31, 2025
For the year ended
December 31, 2024
For the year ended
December 31, 2023
Revenue
We generate our revenues from sales of logs, decking, flooring and sawn timbers.
Set forth below are the revenues generated from our business and the percentage of total revenues for the years indicated:
For the year ended
December 31, 2025
For the year ended
December 31, 2024
For the year ended
December 31, 2023
The following table sets forth disaggregation of revenue by customer location:
Revenue was approximately $14.6 million and $16.3 million for the years ended December 31, 2025 and 2024, respectively. The decrease in revenue was due to drop of both market demand and market prices of our logs and decking following the global economic downturn that has continuously impacted the home building and home renovation sectors. The outbreak of Chinese property sector crisis, Russia-Ukraine Wand, Iran-Israel War and US-China tariffs have further worsened the revenue.
Revenue was approximately $16.3 million and $17.7 million for the years ended December 31, 2024 and 2023, respectively. The decrease in revenue was primarily attributable to the drop of market prices of our solid wood flooring and decking products following the global economic downturn, ongoing wars and armed conflicts around the world that has continuously impacted the home building and home renovation sectors. The revenue was further dampened by the outbreak of Chinese property sector crisis in China.
Cost of revenue
The cost of revenue for the years ended December 31, 2025, 2024 and 2023 was $13.2 million, $10.9 million and $10.5 million, respectively. The increase in cost of revenue was primarily due to the drop of the average gross profit and increase in material cost following the ongoing wars and armed conflicts around the world that has continuously impacted the home building and home renovation sectors.
Gross profit
Set forth below table are the gross profit and gross profit margin generated from our business for the years indicated:
Gross profit for the years ended December 31, 2025 and 2024 were $1.4 million and $5.4 million, respectively. The decrease in gross profit was due to drop of both market demand and market prices of our products following the global economic downturn, and the Israel-Palestine conflict and tariff.
Gross profit for the years ended December 31, 2024 and 2023 were $5.4 million and $7.2 million, respectively. The significant decrease in gross profit was primarily due to the unfavorable market conditions arising in the construction and home improvement sector attributable to the Russian-Ukrainian war.
Net Foreign Exchange Gains (Losses)
Net foreign exchange losses were approximately $0.03 million for the year ended December 31, 2025 and losses were approximately $0.25 million for the year ended December 31, 2024. Net foreign exchange gains of approximately $0.01 million for the year ended December 31, 2023. No material fluctuation during the report periods.
Operating Expenses
Operating expenses for the years ended December 31, 2025 and 2024 were $4.3 million and $5.6 million, respectively. The decrease in operating expenses was primarily attributable to the decrease in shipping costs and sales-related expenses, which aligned with the drop in revenue. The Company will continue to review its workforce and may implement further staff reductions in response to business conditions. Management remains focused on increasing cost efficiency and aligning operating expenses with revenue trends.
Operating expenses for the years ended December 31, 2024 and 2023 were $5.6 million and $6.4 million, respectively. The decrease in operating expenses was primarily attributable to decrease in staff costs following layoffs and in line with decrease in revenue.
Other Income, Net
For the years ended December 31, 2025, 2024 and 2023, our other income, net amounting to approximately $0.07 million, -$0.01 million and $0.02 million, respectively was primarily consisted of VAT tax concessions and sales of side products and spare parts.
Finance Costs
The finance cost amounted to approximately $0.5 million and $0.7 million for the years ended December 31, 2025 and 2024, respectively. The decrease in interest expense was primarily due to reduced overall bank borrowing balance.
The finance cost for the years ended December 31, 2024 and 2023 remained stable and amounted to approximately $0.7 million and $1.4 million, respectively. The decrease in interest expense was primarily due to the conversion of convertible bond into share capital upon listing in 2023.
Income tax (credits) expenses
Income tax (credits) expenses of approximately ($52,000) and $74,000 were recorded for the years ended December 31, 2025 and 2024 while income tax expenses of approximately $49,000 was recorded for the year ended December 31, 2023. The turnaround from income tax expense to income tax credit was mainly due to decrease in taxable profits of the Group and over-provision in respect of prior years.
Total loss for the years
For the years ended December 31, 2025 and 2024, our total loss was approximately $5.9 million and $8.7 million, respectively. The decrease in loss was primarily due to an gain from disposal on discontinued operation and decrease in selling and distribution expenses resulting from decrease in sales-related expenses which aligned with the drop in revenue and benefited from our effective cost control measures.
For the years ended December 31, 2024 and 2023, our total loss was approximately $8.7 million and total loss was approximately $11.9 million respectively. The decrease in loss was primarily due to operating expenses resulting from the decrease in operating expenses as a result in staff costs and sales-related expenses.
Commitments and Contingencies
Capital Expenditures
We have contractual obligations for ongoing capital expenditures at the end of the reporting period.
Lease liabilities
The Group entered into short-term and long-term lease agreements for offices. The Group's lease obligations under the operating leases are as follows:
As of
December 31, 2025
As of
December 31, 2024
Contingencies
The Group is currently not a defendant in any material legal proceedings, investigation, or claims.
Cash Flows
The following table reflects the major categories of cash flows (in thousands). For additional details, please see the Consolidated Statement of Cash Flows.
Cash (used in) generated from operating activities
Net cash used in operating activities was approximately $0.9 million for the year ended December 31, 2025 and net cash generated from operating activities was approximately $2.3 million for the year ended December 31, 2024, respectively. The decrease in cash generated from operations was mainly due to decrease in gross profit.
Net cash generated from operating activities was approximately $2.3 million for the year ended December 31, 2024 and net cash used in operating activities was approximately $0.2 million for the year ended December 31, 2023, respectively. The increase in cash generated from operations was mainly due to increase in gross profit of the Group.
Cash generated from (used in) investing activities
Net cash generated from investing activities was approximately $0.1 million for the year 2025 and net cash used was approximately $0.7 million and $1.2 million for the years ended December 31, 2024 and 2023, respectively. The cash generated from investing activities was primarily contributed by the proceed from disposal of property, plant and equipment for the year ended December 31, 2025 and the net cash used was for acquisition of property, plant and equipment and acquisition of intangible assets for the year ended December 31, 2024 and 2023, respectively.
Cash used in financing activities
Net cash used in financing activities was $2.2 million, $2 million and $0.3 million for the years ended December 31, 2025 2024 and 2023, respectively. The cash used in financing activities was primarily attributable to interest paid and repayment of borrowings for the years.
5.B. Liquidity and Capital Resources
Liquidity to fund working capital is a significant priority for the Group's bunker business. Our views concerning liquidity are based on currently available information and if circumstances change significantly, the future availability of trade credit or other sources of financing may be reduced, and our liquidity would be adversely affected accordingly.
To date, the Group has financed its operations primarily through internally-generated cash flows, proceed from IPO and financing.
Our financial statements for the year ended December 31, 2025 contain an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern.
The Company is confident that it will be able to raise additional funds as required to meet its obligations as and when they fall due and are of the opinion that the use of the going concern basis remains appropriate. The Company will improve liquidity through cost control measures, revenue growth initiatives, obtaining financing from banks, controlling shareholders or investors, and enhancing operational efficiency through cost reduction and process standardization. The Group's ability to continue as a going concern is dependent upon the successful execution of these plans, particularly obtaining the necessary financing.
The Company reviews the capital structure on an ongoing basis. As a part of this review, the directors consider the cost of capital and the risks associated with each class of capital. The Company will balance its overall capital structure through the payment of dividends, new share issues and the issue of new debt or the repayment of existing debt.
Based on the information currently available, we believe that our cash and cash equivalents as of December 31, 2025 and available funds from our credit facility, as described below, together with cash flows generated by operations and financing, are sufficient to fund our working capital and capital expenditure requirements for at least the next twelve months.
5.C. Research and Development, Patent and Licenses, etc.
Not applicable. The Company has not undertaken any Research and Development activities in the past three years.
5.D. Trend Information
Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2025 that are reasonably likely to have a material effect on our total net revenues, income, profitability, liquidity or capital reserves, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
5.E. Critical Accounting Estimates
Our consolidated financial statements are prepared in accordance with International Financial Reporting Standards (or "IFRSs") as issued by the International Accounting Standards Board (the "IASB"). The preparation of consolidated financial statements in conformity with IFRS requires the Company to make certain estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and related notes. Our material accounting policies are set forth in note 2 to our audited consolidated financial statements included in this annual report.
Disclaimer
CL Workshop Group Ltd. published this content on April 27, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 27, 2026 at 10:19 UTC.