Super Hi International Holding Ltd.(HDL) - 2024 Q4 - Annual Report

Corporate Information This section details the company's governance structure, including its Board, committees, key personnel, and principal business locations Corporate Information Details This section outlines the key corporate governance structure, including the Board of Directors, various committees, and principal business locations. It also identifies the company's secretaries, authorized representatives, auditor, and legal advisors - The Board of Directors is chaired by Ms. SHU Ping (Non-executive Director) and includes executive and independent non-executive directors[16] - The company has established an Audit Committee, Remuneration Committee, and Nomination Committee, with specific members assigned to each[16][17] - Key external partners include Deloitte & Touche LLP as the auditor and Kirkland & Ellis as the legal advisor[18] - The company's principal places of business are located in Singapore and Hong Kong, with its registered office in the Cayman Islands[18][21] Five-Year Performance Review This section highlights the company's five-year financial performance, including revenue growth, return to profitability, and equity recovery Financial Highlights (2020-2024) The company has demonstrated significant revenue growth over the past five years, increasing from US$221.4 million in 2020 to US$778.3 million in 2024. After experiencing losses from 2020 to 2022, the company achieved profitability in 2023 and maintained it in 2024. Total equity has recovered substantially from a deficit in 2020 and 2021 to a positive US$361.7 million in 2024 Five-Year Condensed Consolidated Statement of Profit or Loss (US$ '000) | Indicator | 2024 | 2023 | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | 778,308 | 686,362 | 558,225 | 312,373 | 221,411 | | Profit (Loss) before tax | 33,243 | 33,107 | (32,230) | (149,592) | (51,746) | | Profit (Loss) for the year | 21,399 | 25,257 | (41,263) | (150,752) | (53,760) | | EPS (Basic and diluted) (US$) | 0.04 | 0.05 | (0.07) | (0.27) | (0.10) | Five-Year Condensed Consolidated Statement of Financial Position (US$ '000) | Indicator | 2024 | 2023 | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Assets | 684,425 | 576,883 | 576,112 | 626,723 | 601,585 | | Total Liabilities | 322,764 | 304,762 | 334,075 | 813,905 | 668,555 | | Total Equity (Deficits) | 361,661 | 272,121 | 242,037 | (187,182) | (66,970) | Chairlady's Statement This statement reviews 2024 performance, strategic expansion, operational improvements, and future plans, including the "Pomegranate plan" Performance and Operations Overview In 2024, the company achieved stable growth with revenue reaching US$778.3 million, a 13.4% increase from 2023. The income from operation margin slightly improved to 6.8%. The company maintained a cautious expansion strategy, opening 10 new restaurant openings and 3 closures, bringing the total to 122 restaurants across 14 countries. Operational efficiency improved, with the average table turnover rate increasing to 3.8 times/day. The company also launched the "Pomegranate plan" to explore new business forms beyond its core Haidilao brand 2024 Key Financial and Operational Metrics | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | US$778.3M | US$686.4M | +13.4% | | Income from Operation Margin | 6.8% | 6.3% | +0.5 p.p. | | Net Profit | US$21.4M | US$25.3M | -15.4% | | Restaurant Level Operating Margin | 10.1% | 9.0% | +1.1 p.p. | | Average Table Turnover Rate | 3.8 times/day | 3.5 times/day | +0.3 times/day | - The decrease in net profit was primarily attributed to foreign exchange fluctuations[27][51] - Expansion strategy remained cautious with a "bottom-up approach", resulting in 10 new restaurant openings and 3 closures in 2024. As of year-end, the company operated 122 restaurants in 14 countries[28] - The company launched the "Pomegranate plan" to diversify its business into new forms such as barbecue, specialty hot pot, and fast food, aiming to become a global comprehensive catering group[30][45] - Digital operations were enhanced to improve member loyalty, resulting in the number of overseas members exceeding 6 million, a growth of over 40% from 2023[39] Future Prospect Looking ahead, the company plans to continue its localized development strategy to become a multi-brand chain catering enterprise. Key priorities include enhancing the dining experience, expanding the restaurant network cautiously, improving internal management and cost control, and actively developing secondary business forms through the "Pomegranate plan" - The company successfully listed on NASDAQ in May 2024 to enhance global recognition and brand image[52] - Future strategic priorities include: - Enhancing customer dining experience through service, products, and environment - Continuing to expand the restaurant network with a "bottom-up approach" - Improving internal management to control cost control and enhance customer satisfaction - Actively developing secondary business formats via the "Pomegranate plan" through incubation, exploration, and strategic acquisitions[54] Management Discussion and Analysis This section analyzes the company's business performance, financial results, and liquidity, detailing revenue drivers, cost structure, and capital resources Business Performance Analysis The Group's revenue grew by 13.4% to US$778.3 million in 2024, driven primarily by a 13.0% increase in Haidilao restaurant operations. This growth was supported by an increased average table turnover rate of 3.8 times/day and strategic network expansion to 122 restaurants. All geographic regions saw revenue growth, with North America showing the highest average revenue per restaurant. Same-store sales increased by 7.1% overall. Delivery and other business segments also saw strong growth of 15.3% and 27.9% respectively Revenue Breakdown by Source (US$ '000) | Revenue Source | 2024 | 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Haidilao Restaurant Operation | 747,296 | 661,162 | +13.0% | | Delivery Business | 11,300 | 9,800 | +15.3% | | Others | 19,719 | 15,393 | +27.9% | | Total Revenue | 778,308 | 686,362 | +13.4% | Haidilao Restaurant Network and Revenue by Region (2024) | Region | Number of Restaurants | Revenue (US$ '000) | Average Revenue per Restaurant (US$ '000) | | :--- | :--- | :--- | :--- | | Southeast Asia | 73 | 405,429 | 5,554 | | East Asia | 19 | 93,900 | 4,942 | | North America | 20 | 158,131 | 7,907 | | Others | 10 | 89,836 | 8,884 | | Total | 122 | 747,296 | 6,125 | Key Performance Indicators by Region (2024 vs 2023) | Metric (Overall) | 2024 | 2023 | | :--- | :--- | :--- | | Total Guest Visits (million) | 29.9 | 26.7 | | Average Table Turnover Rate (times/day) | 3.8 | 3.5 | | Average Spending per Guest (US$) | 25.0 | 24.8 | | Restaurant Level Operating Margin (%) | 10.1% | 9.0% | - Overall same-store sales grew from US$610.7 million in 2023 to US$654.0 million in 2024, a 7.1% increase. The average same-store table turnover rate increased from 3.6 to 3.9 times/day[74] Financial Review In 2024, the cost of raw materials and consumables decreased as a percentage of revenue to 33.1% due to economies of scale and procurement optimization. Staff costs slightly increased to 33.3% of revenue, driven by network expansion and wage increases. Depreciation and amortization decreased to 10.4% of revenue. The company recorded a net other loss of US$17.9 million, primarily due to a US$14.7 million increase in net foreign exchange losses. Consequently, net profit for the year decreased by 15.4% to US$21.4 million - Raw materials and consumables used increased by 9.8% to US$257.7 million, but decreased as a percentage of revenue from 34.2% in 2023 to 33.1% in 2024, attributed to business scale enlargement and procurement cost optimization[86] - Staff costs rose 14.7% to US$259.3 million, representing 33.3% of revenue (up from 32.9% in 2023), due to an increased number of employees and higher minimum wages in certain countries[88] - Depreciation and amortization decreased as a percentage of revenue from 11.5% in 2023 to 10.4% in 2024, mainly due to revenue growth[96] - The company recorded net other losses of US$17.9 million, a significant shift from net other gains of US$1.2 million in 2023. This was mainly driven by a US$14.7 million increase in net foreign exchange losses and a US$6.0 million net increase in impairment loss on property, plant and equipment[108] - Net profit for the year was US$21.4 million, a 15.4% decrease from US$25.3 million in 2023, primarily due to the increase in net foreign exchange loss[114] Liquidity and Capital Resources The Group's financial position strengthened in 2024, with cash and cash equivalents increasing by 66.6% to US$254.7 million, boosted by business growth and proceeds from its NASDAQ IPO in May 2024. The company had no bank borrowings as of year-end. Capital expenditure was US$37.4 million, mainly for new restaurants. The current ratio improved significantly from 1.7 in 2023 to 2.5 in 2024, indicating enhanced liquidity - Inventory turnover days remained stable at 42.8 days, while trade payable turnover days decreased from 51.1 days in 2023 to 45.5 days in 2024 due to enhanced payment cycle management[117][126] - In May 2024, the company completed an IPO on NASDAQ, issuing 3,096,600 ADSs and receiving gross proceeds of US$60.57 million to fund operations, expansion, and capital expenditures[131] - Cash and cash equivalents increased by 66.6% to US$254.7 million as of December 31, 2024, from US$152.9 million in 2023[138] - Capital expenditure for 2024 amounted to US$37.4 million, primarily for new restaurant openings and renovations[139] Key Financial Ratios | Ratio | As of Dec 31, 2024 | As of Dec 31, 2023 | | :--- | :--- | :--- | | Current Ratio | 2.5 | 1.7 | | Gearing Ratio | 0.3 | 0.4 | - The non-IFRS measure, restaurant level operating margin, improved to 10.1% in 2024 from 9.0% in 2023[175] Directors and Senior Management This section provides biographical details of the company's Board and senior management, outlining their roles and responsibilities Board and Management Team This section provides biographical details of the company's directors and senior management. Key leadership includes Ms. SHU Ping as Chairlady and Non-executive Director. A significant change occurred on July 1, 2024, with Ms. June YANG Lijuan appointed as Executive Director and CEO. The board is supported by three independent non-executive directors with extensive experience in public and private sectors. The senior management team includes the CEO, CFO, and a Vice President - Ms. SHU Ping serves as the Chairlady of the Board and Non-executive Director, responsible for strategic planning for internationalization[182] - Ms. June YANG Lijuan was appointed as Executive Director and Chief Executive Officer on July 1, 2024, responsible for overall management and strategic development[187] - Mr. LI Yu, an Executive Director, served as CEO until June 30, 2024, and became the Chief Operating Officer from March 17, 2025[190] - The senior management team also includes Ms. QU Cong as Chief Financial Officer and Mr. ZHOU Shaohua as Vice President and Senior Regional Manager[226][228] Corporate Governance Report This report details the company's corporate governance, board structure, committee functions, risk management, and shareholder communication Governance Practices and Board Structure The company is committed to high standards of corporate governance, adhering to the principles of the Corporate Governance Code. The Board, comprising seven directors (three executive, one non-executive, three independent), is responsible for overall leadership and strategy. The roles of Chairlady (Ms. SHU Ping) and CEO (Ms. June YANG Lijuan) are separate. The Board met six times during the reporting period with full attendance from all serving members - The company's corporate culture is based on the management philosophy of "aligned interests and disciplined management"[239] - The company has complied with all applicable principles and code provisions of the Corporate Governance Code during the year ended December 31, 2024[246] - As of the report date, the Board consists of seven directors, including three independent non-executive directors, meeting the requirements of the Hong Kong Listing Rules[258][266] - The roles of Chairman and Chief Executive Officer are held separately by Ms. SHU Ping and Ms. June YANG Lijuan, respectively, ensuring a clear division of responsibilities[297] Board Committees The Board has established three committees: Audit, Nomination, and Remuneration. The Audit Committee, chaired by Mr. TEO Ser Luck, consists of three independent non-executive directors and met four times. The Nomination Committee, chaired by Ms. SHU Ping, met three times to review board composition and diversity. The Remuneration Committee, chaired by Mr. LIEN Jown Jing Vincent, met three times to review remuneration policies for directors and senior management - The Audit Committee consists of three independent non-executive directors and met four times in 2024 to review financial reporting, internal controls, and risk management[303][304][305] - The Nomination Committee reviewed the Board's structure and composition, noting an increase in female representation from 28.6% to 42.9% in 2024[318] - The Remuneration Committee reviewed and made recommendations on the remuneration packages for all directors and senior management[327] Risk Management and Shareholder Communication The company has adopted a Board Diversity Policy and ensures director independence. It adheres to the Model Code for securities transactions. The Board is responsible for maintaining a sound risk management and internal control system based on the COSO framework, which is reviewed at least annually. Effective communication with shareholders is maintained through a dedicated policy, general meetings, and the company website. The company's constitutional documents were amended in June 2024 to align with new listing rules on electronic communication - The Board has adopted a Board Diversity Policy, and as of December 31, 2024, the Board consists of three female and four male directors[334][335] - The company has adopted the Model Code for securities transactions, and all directors confirmed compliance for the year[342] - The Board is responsible for the risk management and internal control systems, which are based on the COSO framework and reviewed at least annually[356][363] - The company maintains a Shareholders' Communication Policy to ensure effective communication through various channels, including general meetings and its company website[372] Directors' Report This report summarizes the Group's principal activities, dividend policy, public float, key risks, and statutory disclosures including directors' interests Business and Financial Summary This section confirms the Group's principal activities in restaurant operation and delivery services, with no significant changes during the year. The Board does not recommend a final dividend for 2024. The company has maintained a sufficient public float as required by Hong Kong Listing Rules - The principal activities of the Group are restaurant operation and related delivery businesses in the international market[396] - The Board does not recommend the payment of a final dividend for the year ended December 31, 2024[398] - The company maintained a sufficient public float throughout the reporting period[416] Principal Risks and Uncertainties The Group faces several principal risks, including those associated with multi-jurisdiction operations such as regulatory compliance, geopolitical issues, and management challenges. Other key risks include food safety incidents, maintaining service quality and brand reputation, fluctuations in foreign exchange rates, and potential challenges from new business initiatives under the "Pomegranate plan" - Risks of multi-jurisdiction operations include adapting to different consumer preferences, supply chain difficulties, geopolitical risks, and compliance with complex local laws[447][449] - Food safety incidents and food-borne illnesses are critical risks, dependent on the effectiveness of quality control systems across a geographically diverse network[459] - Maintaining and enhancing brand recognition is crucial and can be affected by negative publicity (including that related to Haidilao International), customer disputes, and the ability to maintain service quality[469] - The Group is exposed to foreign exchange rate fluctuations, which resulted in a net foreign exchange loss of US$19.7 million during the reporting period[474] - The new "Pomegranate plan" to explore innovative business forms faces challenges such as intense competition, potential dispersion of management focus, and long return cycles[482] Statutory Disclosures This section covers statutory disclosures, including directors' interests, connected transactions, and the share award scheme. Ms. SHU Ping is a controlling shareholder with a 51.92% interest. The company has ongoing connected transactions with YIZHIHUA and Yihai Group, all of which were within their annual caps for 2024. The company completed an offering of ADSs on NASDAQ in May 2024, raising net proceeds of US$51.91 million, which are being utilized for brand strengthening, network expansion, and other corporate purposes - As of December 31, 2024, Ms. SHU Ping, Chairlady and a controlling shareholder, held an interest in 337,667,125 shares, representing approximately 51.92% of the total issued share capital[505] - Continuing connected transactions with YIZHIHUA for decoration services had a total actual transaction amount of US$3.1 million, well within the combined annual cap of US$8.69 million for 2024[540][543] - Purchases from Yihai Group under a master purchase agreement amounted to US$16.6 million in 2024, below the annual cap of US$32.56 million[550] - The company has a Share Award Scheme adopted in June 2022, with 61,933,000 awards outstanding as of December 31, 2024, representing 9.52% of issued shares[570][595] Use of Net Proceeds from NASDAQ Offering (as of Dec 31, 2024) | Description | Allocation of Net Proceeds (US$M) | Utilized Amount (%) | Unutilized Amount (%) | | :--- | :--- | :--- | :--- | | Strengthening brand and expanding network | 36.34 | 33% | 37% | | Investing in supply chain capabilities | 5.19 | 1% | 9% | | R&D for digitalization and technology | 5.19 | 3% | 7% | | Working capital and general purposes | 5.19 | 4% | 6% | | Total | 51.91 | 41% | 59% | Environmental, Social and Governance Report This report outlines the company's ESG governance, product responsibility, customer experience, employee welfare, and environmental management ESG Governance and Strategy The company has established a robust ESG governance structure, with the Board overseeing ESG strategies and an ESG Working Group responsible for implementation. A materiality assessment identified key issues for stakeholders, with food safety, food quality, anti-corruption, and employee welfare ranked as highly material. The company engages with stakeholders through various channels to understand their expectations and priorities - The Board is responsible for formulating, approving, and reviewing the company's ESG vision, policies, and goals, with an ESG Working Group handling implementation[648][649] - A materiality assessment identified 8 highly material ESG issues, including Food Safety, Food Quality, Anti-corruption Training, Occupational Health and Safety, and Protection of Employees' Rights and Interests[670][674] Product Responsibility The company prioritizes food safety and quality, implementing a multi-level control system from restaurant to CEO. In 2024, 1,500 on-site inspections were conducted, and no products were recalled for safety reasons. The company also focuses on menu innovation, launching over 1,000 new items globally in 2024, and protects its intellectual property through established management measures - A comprehensive food safety framework is in place, with designated food safety officers in restaurants and a multi-level control system. 9 restaurants and 1 central kitchen have obtained HACCP certification[679][692] - In 2024, the company conducted 1,500 on-site food safety inspections and had no product recalls due to safety or health concerns[695] - The company launched over 1,000 new products in 2024, focusing on localization and innovation, including new BBQ options and a "Tomato Hot Pot Upgrade Project"[713][718] Customer and Operations Super Hi is committed to safeguarding customer rights, including data privacy and information security, through standardized systems. The company focuses on creating a comfortable and innovative dining environment, introducing technologies like immersive lighting and smart kitchen systems (IKMS) in select locations to enhance efficiency and customer experience - The company has established comprehensive data protection systems, including a Data Storage System and Information Data Classification and Grading Protection Management System, to protect customer privacy[742] - The company is experimenting with smart restaurant concepts, including the implementation of an Integrated Kitchen Management System (IKMS), automatic pot-mixing machines, and pass-food robots in some Singapore locations[774][784] Employees and Labor Practices As of year-end 2024, the company employed 13,057 people. It upholds equal and compliant employment, with zero tolerance for forced or child labor. The company provides extensive training, with 100% of employees trained during the year, and focuses on occupational health and safety, conducting numerous safety drills and training sessions. Employee welfare is a priority, with benefits including family subsidies and a humanitarian relief fund - As of December 31, 2024, the Group had 13,057 employees, with 52.45% male and 47.55% female[341] - The company maintains a zero-tolerance policy for child labor and forced labor, with no cases identified in 2024[848] - In 2024, 100% of employees received training, with over 37 courses organized by the head office's Learning and Development Center[878] - The company allocated approximately US$0.29 million to its humanitarian relief fund for employees in 2024[862] - There were zero work-related fatalities in the past three years. The rate of work days lost due to work-related injuries was 22.32 in 2024[889] Environmental Management The company is committed to environmentally friendly operations, with goals to reduce waste, energy consumption, and emissions. Due to business expansion, total consumption and emissions increased in 2024. However, initiatives like waste sorting, reducing food waste, and using energy-saving equipment are in place. The company has also identified and is mitigating climate-change-related risks - The company has set environmental targets, including reducing average single-restaurant kitchen waste by 10% by 2025 (vs. 2018) and reducing average single-restaurant electricity consumption by 3% by 2025 (vs. 2018)[938][955] - Due to expansion (10 new restaurants), total water consumption, electricity usage, and waste generation increased in 2024[935] - Energy-saving projects like intelligent energy-control and heat recovery systems have been applied in 117 restaurants, saving an estimated 30.08 million kWh of electricity annually[956] - The company has identified and developed mitigation measures for climate-related risks, including acute physical risks (e.g., extreme weather affecting power), chronic physical risks (e.g., high temperatures), and policy/market risks[966][967] Independent Auditor's Report This report presents the independent auditor's unqualified opinion on the consolidated financial statements and highlights the key audit matter of asset impairment Auditor's Opinion and Key Matters The independent auditor, Deloitte & Touche LLP, issued an unqualified opinion, stating that the consolidated financial statements give a true and fair view of the Group's financial position as of December 31, 2024, and its financial performance for the year then ended. The Key Audit Matter identified was the impairment of property, plant and equipment (PPE) and right-of-use (ROU) assets in restaurants, due to the significant management estimation and judgment involved in determining their recoverable amounts - The auditor, Deloitte & Touche LLP, provided an unqualified (clean) opinion on the consolidated financial statements[1020] - The Key Audit Matter highlighted was the impairment of property, plant and equipment and right-of-use assets in restaurants. This was significant due to the material balances and the high degree of management judgment required for value-in-use calculations[1026][1028] - Audit procedures for the Key Audit Matter included reviewing impairment assessments, testing key assumptions (revenue growth, EBITDA margin, discount rates), checking calculation accuracy, and performing retrospective and prospective reviews of forecasts[1034] Consolidated Financial Statements This section presents the Group's complete financial statements, including profit or loss, financial position, changes in equity, cash flows, and detailed notes Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended December 31, 2024, the Group reported revenue of US$778.3 million, an increase from US$686.4 million in 2023. Profit before tax was US$33.2 million, and profit for the year was US$21.4 million, resulting in a basic and diluted EPS of US$0.04 Key Profit or Loss Items (US$ '000) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Revenue | 778,308 | 686,362 | | Profit before tax | 33,243 | 33,107 | | Income tax expense | (11,844) | (7,850) | | Profit for the year | 21,399 | 25,257 | | Total comprehensive income for the year | 33,427 | 29,884 | Consolidated Statement of Financial Position As of December 31, 2024, the Group's total assets were US$684.4 million, and total liabilities were US$322.8 million, resulting in total equity of US$361.7 million. This represents a significant improvement in the equity position from US$272.1 million in the prior year Key Financial Position Items (US$ '000) | Item | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Non-Current Assets | 361,198 | 357,921 | | Property, plant and equipment | 151,901 | 168,724 | | Right-of-use assets | 185,514 | 167,641 | | Current Assets | 323,227 | 218,962 | | Bank balances and cash | 254,719 | 152,908 | | Total Assets | 684,425 | 576,883 | | Current Liabilities | 128,568 | 128,571 | | Non-Current Liabilities | 194,196 | 176,191 | | Lease liabilities (Non-Current) | 171,219 | 163,947 | | Total Liabilities | 322,764 | 304,762 | | Total Equity | 361,661 | 272,121 | Consolidated Statement of Changes in Equity The Group's total equity increased from US$272.1 million at the beginning of the year to US$361.7 million at the end of 2024. The increase was driven by the total comprehensive income of US$33.4 million and net proceeds from the issuance of shares amounting to US$56.1 million - Total equity increased by US$89.5 million during 2024[1068] - Key changes in equity include: Profit for the year (US$21.8M attributable to owners), Other comprehensive income (US$12.0M), and proceeds from share issuance (US$56.1M)[1068] Consolidated Statement of Cash Flows The Group generated net cash from operating activities of US$119.7 million in 2024. Net cash used in investing activities was US$27.6 million, primarily for the purchase of property, plant and equipment. Net cash from financing activities was US$12.6 million, mainly due to proceeds from the share issuance offsetting lease liability repayments. This resulted in a net increase in cash and cash equivalents of US$104.7 million Summary of Cash Flows (US$ '000) | Item | 2024 | 2023 | | :--- | :--- | :--- | | Net cash from operating activities | 119,696 | 114,045 | | Net cash used in investing activities | (27,616) | (11,775) | | Net cash from (used in) financing activities | 12,577 | (43,787) | | Net increase in cash and cash equivalents | 104,657 | 58,483 | | Cash and cash equivalents at end of the year | 254,719 | 152,908 | Notes to the Consolidated Financial Statements This section provides detailed explanations of the accounting policies and breakdowns of the figures presented in the primary financial statements. It covers significant areas such as revenue recognition, impairment assessments, lease liabilities, share capital, and related party transactions, offering crucial context for understanding the Group's financial performance and position