Missfresh(US:MF)2022-11-14 11:10Financial Performance - Total net revenues increased from RMB6,001.4 million in 2019 to RMB6,951.5 million (US$1,090.8 million) in 2021, with a net loss of RMB3,849.8 million (US$604.1 million) in the same year[448]. - Total net revenues increased by 13.4% from RMB 6,130.4 million in 2020 to RMB 6,951.5 million (US$1,090.8 million) in 2021, driven by higher product sales[478]. - Sales of products rose by 13.1% from RMB 5,999.7 million in 2020 to RMB 6,786.1 million (US$1,064.9 million) in 2021, attributed to an increase in fulfilled orders and supply chain revenue[478]. - Other revenues grew by 26.5% from RMB 130.8 million in 2020 to RMB 165.5 million (US$26.0 million) in 2021, mainly due to the vending machine business and membership program[478]. - The company incurred a net loss of RMB3,849.8 million (US$604.1 million) for the year ended December 31, 2021, compared to RMB1,649.2 million in 2020[533]. - Net loss expanded from RMB 1,649.2 million in 2020 to RMB 3,849.8 million (US$604.1 million) in 2021, reflecting the overall increase in expenses[486]. Revenue Sources - The on-demand DMW retail business contributed approximately 90% of total net revenue for the year ended December 31, 2021, but was temporarily shut down in July 2022, leading to a significant adverse impact on financial performance[448]. - The intelligent fresh market business and retail cloud services are key strategic initiatives aimed at improving operational efficiency and expanding the customer base[450][452]. Expenses - Technology and content expenses were RMB745.9 million (US$117.0 million) in 2021, reflecting a focus on developing technology platforms and AI capabilities[455]. - Sales and marketing expenses increased to RMB903.3 million (US$141.8 million) in 2021, accounting for 13.0% of total net revenues[456]. - Fulfillment expenses rose to RMB2,121.4 million (US$332.9 million) in 2021, primarily due to product delivery and warehouse operation costs[464]. - Total cost and operating expenses surged by 39.1% from RMB 7,774.4 million in 2020 to RMB 10,812.8 million (US$1,696.8 million) in 2021[479]. - Cost of revenues increased by 24.1% from RMB 4,940.0 million in 2020 to RMB 6,131.0 million (US$962.1 million) in 2021, reflecting the rise in total net revenues[479]. - Fulfillment expenses rose by 34.5% from RMB 1,576.9 million in 2020 to RMB 2,121.4 million (US$332.9 million) in 2021, due to increased order fulfillment and staffing[480]. - Sales and marketing expenses increased by 53.3% from RMB 589.2 million in 2020 to RMB 903.3 million (US$141.8 million) in 2021, driven by higher advertising costs[481]. - General and administrative expenses jumped by 205.0% from RMB 298.8 million in 2020 to RMB 911.2 million (US$143.0 million) in 2021, primarily due to increased share-based compensation[481]. Cash Flow and Liquidity - As of December 31, 2021, the company reported cash and cash equivalents of RMB1,061.0 million (US$166.5 million), an increase from RMB866.1 million in 2020[529]. - The company has been incurring losses from operations since inception, with net cash used in operating activities of approximately RMB2,589.0 million for the year ended December 31, 2021[533]. - The net cash used in operating activities increased from RMB 1,966.9 million in 2019 to RMB 2,589.0 million in 2021, indicating a growing operational loss[540][542]. - The company plans to fund future cash requirements through existing cash balances and potential investments[548]. - The company is in the process of negotiating with potential investors and seeking external financing to improve its liquidity position[534]. Shareholder Information - The company has not paid dividends historically and will not be able to do so until it generates accumulated profits[551]. - The company allows shareholders holding at least one-third of the voting shares to requisition an extraordinary general meeting[638]. - The board of directors has the discretion to decline the registration of any transfer of ordinary shares that are not fully paid up[639]. - The company may issue shares subject to redemption at the option of either the company or the shareholders, as determined by the board of directors[644]. - The company can issue additional ordinary shares without requiring approval from shareholders, as per its memorandum and articles of association[646]. Corporate Governance - The company has established three committees under the board of directors: audit, compensation, and nominating and corporate governance[581]. - The audit committee is responsible for overseeing the accounting and financial reporting processes, including appointing independent auditors[581]. - The compensation committee reviews and approves the compensation structure for directors and executive officers[582]. - The nominating and corporate governance committee assists in selecting qualified individuals for the board and ensuring compliance with corporate governance laws[583]. - The board of directors has the authority to declare dividends and appoint officers, among other powers[585]. Legal and Regulatory Matters - The company is involved in approximately 765 labor disputes in China, with an aggregate claim amount of approximately RMB 40.6 million[593]. - The company has been named as a defendant in approximately 616 lawsuits in China, with claims totaling approximately RMB812.7 million[615]. - The independent review identified questionable transactions in the Next-Day Delivery BU, which may have resulted in inaccurately recorded revenue in financial statements[618]. - The company has begun implementing a remediation plan to enhance internal controls and risk management policies following the review findings[620]. - The company has terminated relationships with suppliers and customers involved in high-risk questionable transactions identified during the review[620].