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Yatsen Holding(YSG) - 2023 Q4 - Annual Report
YSGYatsen Holding(YSG)2024-04-26 10:09

Financial Position - As of December 31, 2023, the company's cash, cash equivalents, and restricted cash totaled RMB858.1 million (US120.9million),downfromRMB1.55billionin2022andRMB3.14billionin2021[586][588].−ThecompanyreportedasignificantdecreaseincashandcashequivalentsfromRMB3.14billionin2021toRMB858.1millionin2023,indicatingliquiditychallenges[586][588].−Thecompanyanticipatesthatitscurrentcashandcashequivalentswillbesufficienttomeetworkingcapitalrequirementsforatleastthenext12months[588].−AsofDecember31,2023,thecompany′scapitalcommitmentstotaledRMB346.7million,withRMB184.7millionduewithinoneyear[599].−Thecompanyhadshort−terminvestmentsamountingtoRMB1.22billion(US120.9 million), down from RMB1.55 billion in 2022 and RMB3.14 billion in 2021[586][588]. - The company reported a significant decrease in cash and cash equivalents from RMB3.14 billion in 2021 to RMB858.1 million in 2023, indicating liquidity challenges[586][588]. - The company anticipates that its current cash and cash equivalents will be sufficient to meet working capital requirements for at least the next 12 months[588]. - As of December 31, 2023, the company's capital commitments totaled RMB346.7 million, with RMB184.7 million due within one year[599]. - The company had short-term investments amounting to RMB1.22 billion (US171.6 million) as of December 31, 2023[586]. Cash Flow Activities - Net cash used in operating activities in 2023 was RMB107.4 million (US15.1million),withanetlossofRMB750.2million(US15.1 million), with a net loss of RMB750.2 million (US105.7 million) primarily due to non-cash items including goodwill impairment of RMB354.0 million (US49.9million)[590].−Netcashusedininvestingactivitiesin2023wasRMB260.5million(US49.9 million)[590]. - Net cash used in investing activities in 2023 was RMB260.5 million (US36.7 million), mainly due to the purchase of short-term investments totaling RMB2.34 billion (US329.8million)[593].−Netcashusedbyfinancingactivitiesin2023wasRMB342.5million(US329.8 million)[593]. - Net cash used by financing activities in 2023 was RMB342.5 million (US48.2 million), primarily for the repurchase of ordinary shares amounting to RMB212.7 million (US30.0million)[596].GoodwillandImpairment−YatsenHoldingLimited′sgoodwillasofDecember31,2023,wasRMB556.6million(US30.0 million)[596]. Goodwill and Impairment - Yatsen Holding Limited's goodwill as of December 31, 2023, was RMB 556.6 million (US 78.4 million), primarily related to the Eve Lom and DR.WU reporting units[615]. - An impairment charge of RMB 354.0 million (US49.9million)wasrecognizedfortheEveLomreportingunitduetolowerthanexpectedrevenuegrowthandashiftinstrategy[615].−ThefairvalueoftheEveLomreportingunitwasestimatedusingadiscountedcashflowmodelandmarketcomparableanalysis[615].−Thecompanyconductsannualimpairmentreviewsofgoodwillandindefinite−livedintangibleassets,withqualitativeandquantitativeassessmentsdeterminingfairvalue[613].AccountingandFinancialReporting−Thecompany’sfinancialstatementsarepreparedinaccordancewithU.S.GAAP,requiringestimatesandjudgmentsthataffectreportedamounts[608].−Thecompanyevaluatesitsaccountingestimatesbasedonhistoricalexperienceandvariousassumptions,whichcouldleadtoactualresultsdifferingfromexpectations[609].−Inventoryiscarriedattheestimatedlowerofcostormarket,withobsoleteandexcessinventoryassessedfornetrealizablevalue[611].LegalandRegulatoryCompliance−ThecompanyisrequiredunderPRClawtosetasideatleast10 49.9 million) was recognized for the Eve Lom reporting unit due to lower than expected revenue growth and a shift in strategy[615]. - The fair value of the Eve Lom reporting unit was estimated using a discounted cash flow model and market comparable analysis[615]. - The company conducts annual impairment reviews of goodwill and indefinite-lived intangible assets, with qualitative and quantitative assessments determining fair value[613]. Accounting and Financial Reporting - The company’s financial statements are prepared in accordance with U.S. GAAP, requiring estimates and judgments that affect reported amounts[608]. - The company evaluates its accounting estimates based on historical experience and various assumptions, which could lead to actual results differing from expectations[609]. - Inventory is carried at the estimated lower of cost or market, with obsolete and excess inventory assessed for net realizable value[611]. Legal and Regulatory Compliance - The company is required under PRC law to set aside at least 10% of after-tax profits for statutory reserve funds until these reach 50% of registered capital[605]. - PRC subsidiaries have not paid dividends and will not be able to until they generate accumulated profits and meet statutory reserve fund requirements[605]. Future Outlook - The company expects to moderate capital expenditures, which were RMB44.0 million (US6.2 million) in 2023, to reserve resources for strategic transformation[597]. - There are no known trends or uncertainties that are likely to materially affect revenues or profitability from January 1, 2024[607].