Company Overview and Structure - Helens International Holdings Company Limited is a company registered in the Cayman Islands with stock code 9869[1] - The company's registered office is located at 3-212 Governors Square, 23 Lime Tree Bay Avenue, P.O. Box 30746, Seven Mile Beach, Grand Cayman, KY1-1203, Cayman Islands[7] - The company's headquarters and primary business location in China is at No. 792, Gaoxin Avenue, East Lake High-tech Development Zone, Wuhan, Hubei Province[8] - The company's Hong Kong principal place of business is located at 3/F, H8, Hau Fook Street, Tsim Sha Tsui, Kowloon, Hong Kong[7] - The company's shares are listed under the stock code 9869[9] - The company's website is www.helensbar.com[9] - The company's controlling shareholders include HHL International, Helens Hill (BVI), HLSH Holding, and Mr. Xu[3] - NEWCE Holding Limited was registered in the British Virgin Islands on May 15, 2019, and is a shareholder of the company, wholly owned by former Senior Vice President of Finance, Mr. Wang Zhenpeng[5] - WTSJ Holding Limited, registered in the British Virgin Islands on May 15, 2019, is a major shareholder of the company[6] - The company's shares were listed on the Main Board of the Hong Kong Stock Exchange on September 10, 2021[4] - The company's global offering refers to the Hong Kong public offering and international offering of its shares[3] - The company granted an over-allotment option to international underwriters, allowing the issuance of up to 20,197,500 additional shares, representing 15% of the global offering[5] - The company's minimum public float is 19.4478% post-global offering, increasing to 20.7320% if the over-allotment option is fully exercised[115] Financial Performance and Key Metrics - Revenue for 2022 was RMB 1,559.3 million, a decrease of 15.1% compared to RMB 1,835.6 million in 2021[13] - Adjusted net loss for 2022 was RMB 244.9 million, compared to an adjusted net profit of RMB 111.2 million in 2021[13] - Non-current assets decreased to RMB 1,286.5 million in 2022 from RMB 2,572.6 million in 2021[11] - Total assets decreased to RMB 2,676.8 million in 2022 from RMB 4,286.8 million in 2021[11] - Total equity attributable to owners of the company decreased to RMB 1,822.9 million in 2022 from RMB 2,876.7 million in 2021[11] - Total liabilities decreased to RMB 853.9 million in 2022 from RMB 1,410.0 million in 2021[11] - The company incurred bar optimization and adjustment losses of RMB 853.1 million in 2022 due to the impact of COVID-19[12] - The average daily sales per tavern in 2022 decreased by 23.9% to RMB 7.0 thousand compared to RMB 9.2 thousand in 2021, due to the impact of COVID-19[17] - Same-store sales in 2022 decreased by 34.2% to RMB 844.6 million compared to RMB 1,282.8 million in 2021, with same-store daily sales per tavern decreasing by 24.6% to RMB 9.4 thousand[19][20] - The gross profit margin for Helen's own-brand alcoholic beverages decreased to 75.6% in 2022 from 80.2% in 2021, while the gross profit margin for third-party brand alcoholic beverages increased to 50.1% from 48.8%[21] - Total revenue in 2022 decreased by 15.1% to RMB 1,559.3 million compared to RMB 1,835.6 million in 2021, primarily due to the impact of COVID-19[23] - Helen's own-brand products accounted for 76.5% of total revenue in 2022, with beer contributing 18.0%, beverage-based alcoholic drinks contributing 37.2%, and snacks contributing 21.3%[24] - Government subsidies and incentives increased to RMB 38.2 million in 2022 from RMB 14.0 million in 2021, mainly due to investment incentives for foreign enterprises and increased benefits from COVID-19 rent concessions[26] - Raw material and consumables costs decreased by 2.6% from RMB 576.8 million in 2021 to RMB 561.9 million in 2022, primarily due to a reduction in the number of taverns[27] - Employee benefits and human services expenses increased by 72.5% from RMB 581.6 million in 2021 to RMB 1,003.5 million in 2022, driven by equity-settled share-based payments of RMB 503.2 million[28] - Depreciation of right-of-use assets increased by 43.5% from RMB 220.2 million in 2021 to RMB 315.9 million in 2022, due to the expansion of taverns from late 2021 to mid-2022[29] - Depreciation of property, plant, and equipment surged by 142.1% from RMB 82.6 million in 2021 to RMB 200.0 million in 2022, reflecting the rapid growth of taverns and new building acquisitions[30] - Short-term lease and related expenses rose by 80.8% from RMB 46.9 million in 2021 to RMB 84.8 million in 2022, driven by increased tavern rents and staff accommodation costs[31] - Utility expenses increased by 12.8% from RMB 57.7 million in 2021 to RMB 65.1 million in 2022, due to the rapid expansion of the tavern network[32] - Impairment losses on property, plant, and equipment, and right-of-use assets skyrocketed from RMB 11.0 million in 2021 to RMB 712.9 million in 2022, primarily due to COVID-19 impacts and tavern closures[36] - Other net losses amounted to RMB 83.2 million in 2022, including RMB 140.2 million in net losses from asset disposals and lease terminations, offset by RMB 61.1 million in net foreign exchange gains[37] - Pre-tax loss increased from RMB 176.9 million in 2021 to RMB 1,616.5 million in 2022, with pre-tax loss ratios of 9.6% and 103.7%, respectively[40] - Income tax shifted from an expense of RMB 53.2 million in 2021 to a credit of RMB 15.3 million in 2022, reflecting the pre-tax loss incurred in 2022[41] - Adjusted net loss for 2022 was RMB 244.9 million, compared to an adjusted net profit of RMB 111.2 million in 2021[43] - Property, plant, and equipment decreased from RMB 871.3 million in 2021 to RMB 693.3 million in 2022 due to optimization and adjustment measures[44] - Intangible assets remained stable at RMB 75,000 in 2022, compared to RMB 92,000 in 2021[46] - Right-of-use assets decreased significantly from RMB 1,348.3 million in 2021 to RMB 457.0 million in 2022 due to optimization and impairment losses[47] - Inventory decreased from RMB 61.5 million in 2021 to RMB 36.0 million in 2022, primarily due to reduced sales caused by pandemic-related operational suspensions[48] - Cash and cash equivalents decreased from RMB 1,626.7 million in 2021 to RMB 1,298.6 million in 2022, mainly due to capital expenditures for network expansion and daily operational costs[50] - Lease liabilities decreased from RMB 1,246.1 million in 2021 to RMB 741.0 million in 2022 due to the termination of lease contracts as part of network optimization[51] - Trade payables decreased from RMB 75.1 million in 2021 to RMB 62.7 million in 2022, reflecting reduced procurement due to fewer outlets[52] - Other payables and accrued expenses decreased from RMB 63.2 million in 2021 to RMB 37.8 million in 2022, primarily due to reduced procurement and operational expenses[53] - The company had no bank borrowings as of December 31, 2022[55] - Lease liabilities amounted to RMB 741.0 million as of December 31, 2022[55] - Total capital expenditures decreased from RMB 771.4 million in 2021 to RMB 607.7 million in 2022, primarily due to slower expansion and new bar openings[56] - The company had 1,637 in-house employees and 4,029 outsourced personnel as of December 31, 2022[60] - Total employee benefits and labor costs for the year ended December 31, 2022 were RMB 1,003.5 million[60] - The company faces foreign exchange risk due to its global offering proceeds denominated in HKD and USD-denominated bank deposits, but did not engage in any hedging activities during the reporting period[58] - No major investments, acquisitions, or disposals of subsidiaries, associates, or joint ventures were made during the year[59] - The company's business is significantly impacted by macroeconomic conditions in China and globally, with China's GDP growth slowing in recent years[62] - The company faces risks related to foodborne illnesses, epidemics, and other disease outbreaks, which could significantly impact operations and financial performance[63] - The COVID-19 pandemic has had a significant adverse impact on the company's financial position and operating results, and future recurrences could continue to negatively affect the business[63] - The company's business, financial condition, and operating performance are significantly influenced by China's economic, political, and legal developments, with all business assets and sales located in China[64] - The Chinese government has implemented stricter regulations on the alcohol industry, which may increase compliance costs and negatively impact profitability[64] - The company's ability to expand depends on overall economic conditions, capital market conditions, and the availability of credit, with stricter lending policies potentially hindering growth[64] - The company operates 749 bars, including 126 franchised bars, as of March 19, 2023, under the leadership of founder and CEO Xu Bingzhong[69] - The company's stock price and trading volume may experience significant fluctuations due to factors such as operating performance, customer churn, and market conditions[66] - The company is unaware of any significant post-reporting period events between December 31, 2022, and the latest practicable date[67] - The company's executive team includes Xu Bingzhong (CEO), Lei Xing (Support Center General Manager), Cai Wenjun (Operations Deputy Director), and Yu Zhen (CFO), each with extensive industry experience[69][70] - The Chinese government's economic, political, and social policies, including those related to the alcohol industry, may have a significant adverse impact on the company's business and financial performance[65] - Li Dong, an independent non-executive director, has over 22 years of management experience in public accounting, investment banking, and corporate finance, currently serving as CFO of TH International Limited (NASDAQ: THCH)[71] - Li Dong previously held CFO positions at Ximalaya, Inc., ONE Smart Education Group (NYSE: ONE), Pegasus Media Group Limited, and Ecovacs Robotics (SSE: 603486)[71] - Li Dong served as an investment banker at Bank of America Merrill Lynch and ICBC International Securities in Hong Kong from 2008 to 2015[71] - Wang Renrong, an independent non-executive director, has nearly 19 years of experience in the beer industry, previously serving as Chairman of Budweiser China and executive roles at Budweiser APAC (SEHK: 1876)[72] - Wang Renrong holds a PhD in Law from Fudan University and a Master's in Law from KU Leuven, Belgium[73] - Huang Xiangming, an independent non-executive director, has over 29 years of experience in finance, accounting, internal control, and corporate governance across Singapore, Mainland China, and Hong Kong[73] - Huang Xiangming has assisted multiple companies in overseas listings in the US and Hong Kong, and previously served as CFO of Meten Holding Group (NASDAQ: METX)[73] - Huang Xiangming holds a Bachelor's degree in Accounting from City University of Hong Kong and a Master's in E-commerce from Hong Kong Metropolitan University[74] - Huang Xiangming is a fellow member of the Association of Chartered Certified Accountants (ACCA) and the Hong Kong Institute of Certified Public Accountants (HKICPA)[74] - The company operates 749 self-owned taverns in China, covering 27 provincial administrative regions and 168 cities, including 126 franchised taverns as of March 19, 2023[76] - The company plans to expand its tavern network, focusing on broader lower-tier markets and transitioning from a linear chain model to a platform-based company[77] - The company aims to enhance customer experience, improve operational efficiency, and strengthen brand awareness by investing in digital platforms and brand building[77] - The company will optimize its product portfolio, upgrade decoration styles, and integrate supply chain and market resources to achieve differentiated and diversified operations[77] - The company reported a consolidated loss for the reporting period, with no dividends declared or paid during the period[78] - The company has established detailed internal rules for environmental protection and implemented measures for efficient resource utilization, waste reduction, and energy conservation[79] - The company's board of directors includes executive and independent non-executive directors, with changes in executive directors during the reporting period[80][81] - The company has received annual written confirmations from independent non-executive directors regarding their independence, confirming their independence throughout the reporting period[82] - Executive directors have service agreements with the company for an initial term of three years, while independent non-executive directors have appointment letters with similar terms and conditions[83] - The total number of issued shares as of December 31, 2022, is 1,266,901,524 shares[90] - Mr. Xu Bingzhong holds 861,000,000 shares, representing approximately 67.96% of the company's issued share capital[90][94] - Ms. Cai Wenjun holds 1,253,476 shares, representing approximately 0.10% of the company's issued share capital[90] - Ms. Lei Xing holds 16,054,976 shares, representing approximately 1.27% of the company's issued share capital[90] - Ms. Yu Zhen holds 1,166,667 shares, representing approximately 0.09% of the company's issued share capital[90] - HHL International holds 861,000,000 shares, with 1% owned by Helens Hill (BVI) and 99% owned by HLSH Holding[91] - Mr. Xu Bingzhong is deemed to have an interest in all shares registered under HHL International[91] - No significant transactions or contracts involving the company's directors or their connected entities were reported during the period[86] - No management contracts involving the company or its subsidiaries were reported during the period[87] - No directors or their close associates were reported to have interests in businesses competing with the company[88] - HHL International holds 861,000,000 shares, with 1% owned by Helens Hill (BVI) and 99% by HLSH Holding, both linked to Mr. Xu Bingzhong[95] - No significant contracts were entered into between the company and its controlling shareholders during the reporting period[96] - The company issued 3,100,389 shares to TLTQ Holding Limited, 9,999,611 shares to SHXM Holding Limited, and 13,700,000 shares to NLNQ Holding Limited under the pre-IPO restricted share unit plan[97] - The post-IPO restricted share unit plan was revised, increasing the maximum number of shares from 47,652,017 to 57,651,628, representing approximately 4.55% of the company's issued share capital[100] - The post-IPO restricted share unit plan has a duration of ten years, with approximately seven years and eleven months remaining as of the report date[103] - The board of directors has the authority to manage and interpret the post-IPO restricted share unit plan, with decisions being final and binding[104] - The company issued 47,652,017 shares to TSLZ Holding Limited under the post-IPO restricted share unit plan[100] - The number of awards available for grant decreased from 47,652,017 at the beginning of the reporting period to 4,661,257 at the end[100] - The post-IPO restricted share unit plan aims to incentivize employees and business associates to contribute to the company's success[99] - The plan allows for the inclusion of consultants and advisors as eligible participants, in addition to employees and directors[102] - The company's available distributable reserves as of December 31, 2022, amounted to approximately RMB 2,860 million[111] - The net proceeds from the global offering amounted to approximately HKD 2,980.1 million, with an unused balance of HKD 1,453.7 million as of the end of the reporting period[112] - 70% of the net proceeds (HKD 2,086.1 million) are allocated for opening new taverns and expansion plans, with HKD 1,074.6 million already utilized[113] - 10% of the net proceeds (HKD 298.0 million) are allocated for talent team building, with HKD 206.0 million already utilized[113] - 5% of the net proceeds (HKD 149.0 million) are allocated for infrastructure and technology R&D, with HKD 8.2 million already utilized[113] - 5% of the net proceeds (HKD 149.0 million) are allocated for brand awareness enhancement, with HKD 76.7 million already utilized[113] - 10% of the net proceeds (HKD 298.0 million) are allocated for working capital and general corporate purposes, with HKD 160.9 million already utilized[113] - No bank borrowings or significant debt as of December 31, 2022, with no secured, unsecured, mortgaged, or unsecured liabilities[116] - Revenue from the largest customer and top five customers each accounted for less than 1.0% of total revenue for the year ended December 31, 2022[117] - Top five suppliers accounted for
海伦司(09869) - 2022 - 年度财报