颐海国际(01579) - 2022 - 年度业绩

Annual Results Announcement Financial Highlights Yihai International Holding Ltd.'s 2022 revenue increased by 3.4% year-on-year to RMB 6,147.0 million, while gross profit and net profit decreased by 3.6% and 4.8% respectively 2022 Key Financial Data | Metric | 2022 (RMB million) | 2021 (RMB million) | Year-on-Year Change (%) | | :------- | :-------------------- | :-------------------- | :----------- | | Revenue | 6,147.0 | 5,942.6 | +3.4 | | Gross Profit | 1,853.9 | 1,924.0 | -3.6 | | Net Profit | 816.0 | 857.6 | -4.8 | | Net Profit Attributable to Owners of the Company | 742.0 | 766.2 | -3.2 | | Earnings Per Share (Basic and Diluted) | 0.757 | 0.782 | -3.2 | Consolidated Financial Statements This section presents the group's consolidated balance sheet and income statement, detailing assets, liabilities, equity, revenue, and profitability for the reporting period Consolidated Balance Sheet As of December 31, 2022, the Group's total assets increased by 10.9% to RMB 5,551.3 million, driven by a significant rise in current assets, while total liabilities also increased Consolidated Balance Sheet Summary | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Total Non-current Assets | 2,439,808 | 2,610,121 | | Total Current Assets | 3,111,485 | 2,394,957 | | Total Assets | 5,551,293 | 5,005,078 | | Total Equity | 4,537,021 | 4,108,736 | | Total Non-current Liabilities | 154,439 | 163,040 | | Total Current Liabilities | 859,833 | 733,302 | | Total Liabilities | 1,014,272 | 896,342 | Consolidated Statement of Profit or Loss and Other Comprehensive Income Revenue increased by 3.4% in 2022, but rising cost of sales led to a 3.6% decrease in gross profit, with both operating and net profit declining Consolidated Statement of Profit or Loss and Other Comprehensive Income Summary | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Revenue | 6,147,011 | 5,942,617 | | Cost of Sales | (4,293,129) | (4,018,664) | | Gross Profit | 1,853,882 | 1,923,953 | | Operating Profit | 1,117,712 | 1,147,031 | | Profit Before Income Tax | 1,142,147 | 1,170,161 | | Income Tax Expense | (326,161) | (312,602) | | Profit for the Year | 815,986 | 857,559 | | Profit Attributable to Owners of the Company | 741,987 | 766,201 | | Basic Earnings Per Share (RMB cents) | 75.7 | 78.2 | Notes to Financial Statements This section provides detailed explanations and breakdowns of the figures presented in the consolidated financial statements, including accounting policies and specific financial items General Information Yihai International Holding Ltd. is primarily engaged in the production and sale of hotpot seasonings, Chinese compound seasonings, and convenient food products in the PRC - The company's principal activities are the production and sale of hotpot seasonings, Chinese compound seasonings, and convenient food products[11] - The company was incorporated in the Cayman Islands on October 18, 2013, and listed on the Main Board of the Hong Kong Stock Exchange on July 13, 2016[11] Summary of Significant Accounting Policies The Group's consolidated financial statements comply with IFRS and the Hong Kong Companies Ordinance, adopting the historical cost convention, with no significant impact from new standards in 2022 - The consolidated financial statements have been prepared in accordance with all applicable International Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance[13] - The Group first adopted amendments to IAS 16 and IAS 37, and annual improvements to IFRS 3 in 2022, but these had no significant impact on accounting policies or retrospective adjustments[14] Basis of Preparation The consolidated financial statements are prepared in accordance with IFRS and Hong Kong Companies Ordinance disclosure requirements, primarily on a historical cost basis - The consolidated financial statements have been prepared in accordance with all applicable International Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance[13] - The consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets at fair value through profit or loss which are measured at fair value[14] New and Revised Standards Adopted The Group adopted amendments to IAS 16, IAS 37, and annual improvements to IFRS 3 for the 2022 reporting period, with no significant changes to accounting policies - The Group has first adopted amendments to IAS 16, IAS 37, and annual improvements to IFRS 3 for the annual reporting period beginning January 1, 2022[14] - The Group has not made any changes to its accounting policies or retrospective adjustments as a result of applying the above revised standards or annual improvements[14] New Standards Not Yet Adopted Certain new and revised accounting standards and interpretations have been issued but are not yet mandatory for the reporting period ended December 31, 2022, and have not been early adopted - Certain new accounting standards, amendments to accounting standards, and interpretations have been issued but are not mandatory for the reporting period ended December 31, 2022, and have not been early adopted by the Group[15] - These standards, amendments, or interpretations are not expected to have a significant impact on the Group in the current or future reporting periods, or on foreseeable future transactions[15] Revenue and Segment Information The Group's main operating segments are hotpot seasonings, Chinese compound seasonings, convenient food products, and other products, with mainland China as the primary market - The Group's principal operating segments are the production and sale of hotpot seasonings, Chinese compound seasonings, convenient food products, and other products[16] - Mainland China is the primary market, with sales to overseas customers accounting for less than 10% of total revenue[16] 2022 Revenue Breakdown by Product Category | Product Category | 2022 Revenue (RMB thousand) | 2021 Revenue (RMB thousand) | | :--------------- | :---------------------- | :---------------------- | | Hotpot Seasonings | 3,664,696 | 3,606,836 | | Chinese Compound Seasonings | 568,863 | 530,448 | | Convenient Food Products | 1,870,069 | 1,703,060 | | Others | 43,383 | 102,273 | | Total | 6,147,011 | 5,942,617 | - Related party sales revenue decreased from 32.6% of total revenue in 2021 to 24.2% in 2022[17] Other Assets As of December 31, 2022, total other assets decreased to RMB 175.7 million, primarily comprising prepayments for property, plant, and equipment and recoverable VAT Other Assets Breakdown | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--------------------- | :------------------ | :------------------ | | Prepayments for Property, Plant and Equipment | 121,492 | 205,373 | | Recoverable VAT | 26,660 | 46,346 | | Prepayments for Marketing and Consulting Expenses | 12,861 | 20,889 | | Prepayments for Raw Material Purchases | 7,383 | 90,579 | | Prepayments for Short-term Leases of Warehouses and Staff Dormitories | 1,215 | 3,283 | | Others | 6,105 | 5,587 | | Total | 175,716 | 372,057 | Trade Receivables Net trade receivables significantly decreased to RMB 155.6 million as of December 31, 2022, primarily due to reduced related party revenue, with credit terms typically ranging from 30 to 90 days - Net trade receivables decreased from RMB 236.5 million in 2021 to RMB 155.6 million in 2022, primarily due to a decrease in related party revenue[20][64] - Most third-party sales require prepayment, with a few customers having credit terms of 30 to 90 days; related party customers are granted 30-day credit terms[18] Trade Receivables Aging Analysis | Aging | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--------- | :------------------ | :------------------ | | Within 3 Months | 155,815 | 236,732 | | Over 3 Months | – | – | | Total | 155,815 | 236,732 | Share Capital As of December 31, 2022, the authorized share capital was USD 50 million, with 1,046,900,000 issued and fully paid ordinary shares, equivalent to RMB 68 thousand, unchanged from 2021 Share Capital Structure | Item | Number of Shares | Amount (USD) | Equivalent Par Value (RMB thousand) | | :--------------- | :-------------- | :---------- | :-------------------- | | Authorized Ordinary Shares | 5,000,000,000 | 50 | N/A | | Issued and Fully Paid Ordinary Shares | 1,046,900,000 | 10,469 | 68 | Trade Payables Total trade payables increased to RMB 396.3 million as of December 31, 2022, primarily due to raw material purchases, with credit terms typically ranging from 30 to 90 days - Trade payables increased from RMB 294.3 million in 2021 to RMB 396.3 million in 2022, primarily due to raw material purchases[24][65] - Credit terms granted by suppliers for trade payables are typically 30 to 90 days[24] Trade Payables Aging Analysis | Aging | 2022 (RMB thousand) | 2021 (RMB thousand) | | :----------- | :------------------ | :------------------ | | Within 3 Months | 394,221 | 292,197 | | 3 to 6 Months | 1,599 | 1,737 | | 6 Months to 1 Year | 434 | 326 | | Total | 396,254 | 294,260 | Expenses by Nature Total expenses increased to RMB 5,167.5 million in 2022, with raw materials and consumables used, and employee benefit expenses being the largest components Analysis of Expenses by Nature | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--------------------------- | :------------------ | :------------------ | | Raw Materials and Consumables Used | 3,801,383 | 3,570,057 | | Employee Benefit Expenses | 545,352 | 521,595 | | Transportation and Related Expenses | 211,013 | 199,568 | | Advertising and Other Marketing Expenses | 135,783 | 224,145 | | Depreciation of Property, Plant and Equipment | 118,073 | 82,098 | | Utilities | 71,424 | 52,473 | | Warehousing Fees | 54,636 | 60,088 | | Taxes and Surcharges | 40,786 | 38,095 | | Depreciation of Right-of-Use Assets | 40,777 | 34,881 | | Travel and Entertainment Expenses | 29,464 | 32,190 | | Technical Support Fees, Professional Fees and Other Service Fees | 24,350 | 25,169 | | Expenses Related to Short-term Leases | 13,735 | 16,486 | | Amortization of Intangible Assets | 6,735 | 6,221 | | Auditor's Remuneration | 3,330 | 3,260 | | Inventory Write-off | 2,533 | 8,180 | | Other Expenses | 74,573 | 64,193 | | Total | 5,167,513 | 4,963,253 | Other Income and Gains, Net Other income and gains, net, decreased by 17.6% to RMB 138.2 million in 2022, primarily due to lower government grants and fair value changes of financial assets - Other income and gains, net, decreased by 17.6% year-on-year to RMB 138.2 million, primarily due to lower government grants and fair value changes of financial assets[26][55] Other Income and Gains, Net Breakdown | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :------------------------------- | :------------------ | :------------------ | | Government Grants | 83,704 | 113,939 | | Fair Value Changes of Financial Assets at Fair Value Through Profit or Loss | 9,794 | 64,050 | | Scrap Sales | 9,896 | 10,228 | | Net Foreign Exchange Gains/(Losses) | 36,462 | (18,810) | | Loss on Disposal of Property, Plant and Equipment | (6,679) | (3,069) | | Loss on Disposal of Intangible Assets | (100) | – | | Donations | (532) | (6,140) | | Others | 5,669 | 7,469 | | Total | 138,214 | 167,667 | Finance Income, Net Net finance income increased by 5.6% to RMB 24.4 million in 2022, primarily driven by higher interest income from fixed deposits - Net finance income increased by 5.6% year-on-year to RMB 24.4 million, primarily due to increased interest income from fixed deposits[27][56] Finance Income, Net Breakdown | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :--------------- | :------------------ | :------------------ | | Interest Income | 30,291 | 28,605 | | Interest on Lease Liabilities | (5,856) | (5,475) | | Net Finance Income | 24,435 | 23,130 | Income Tax Expense Income tax expense increased by 4.3% to RMB 326.2 million in 2022, with the effective tax rate rising to 28.6% due to increased withholding tax on profit distributions - Income tax expense increased by 4.3% year-on-year to RMB 326.2 million, with the effective tax rate rising from 26.7% to 28.6%[28][58] - The increase in the effective tax rate was primarily due to increased withholding tax on profit distributions from the Group's PRC subsidiaries to overseas subsidiaries[58] - The PRC corporate income tax rate is 25%, Hong Kong profits tax rate is 16.5%, and overseas income tax rates range from 10% to 30%[29][30][31] Income Tax Expense Breakdown | Item | 2022 (RMB thousand) | 2021 (RMB thousand) | | :------------------- | :------------------ | :------------------ | | Current Income Tax | 321,366 | 328,972 | | Deferred Income Tax Expense/(Credit) | 4,795 | (16,370) | | Income Tax Expense | 326,161 | 312,602 | Earnings Per Share Basic earnings per share decreased to RMB 75.7 cents in 2022 from RMB 78.2 cents in 2021, with diluted EPS being the same due to no potential dilutive ordinary shares Basic Earnings Per Share | Metric | 2022 (RMB thousand/cents) | 2021 (RMB thousand/cents) | | :------------------- | :--------------------- | :--------------------- | | Profit Attributable to Owners of the Company | 741,987 | 766,201 | | Weighted Average Number of Ordinary Shares Issued | 980,332 | 980,332 | | Basic Earnings Per Share | 75.7 cents | 78.2 cents | - Diluted earnings per share for 2022 and 2021 were the same as basic earnings per share, as there were no potential dilutive ordinary shares[35] Dividends Total dividends paid in 2022 amounted to RMB 224.6 million (21.9563 cents per share), with a proposed final dividend of RMB 17.72 cents per share for 2022 Dividends Paid | Year | Total Amount (RMB) | Per Share (RMB cents) | | :--- | :-------------- | :-------------- | | 2022 | 224,563,000 | 21.9563 | | 2021 | 243,529,000 | 25.003 | - The Board recommends a final dividend of RMB 17.72 cents per share for 2022, totaling approximately RMB 185,511,000, to be proposed for approval at the Annual General Meeting on May 18, 2023[37][76] Performance Review and Analysis This section reviews the Group's operational and financial performance in 2022, analyzing revenue by channel and product, and key financial metrics 2022 Annual Performance Review Despite the significant impact of the pandemic, the consumer market showed signs of recovery in 2022, prompting the Group to strengthen channel expansion, product R&D, multi-brand strategy, and production capacity - The consumer market generally showed a trend of recovery in 2022, though the pandemic still had a significant impact on economic operations[38] - The Group's key business focuses include strengthening channel expansion and management, optimizing product R&D mechanisms, continuing to implement a multi-brand strategy, and adding proprietary production capacity to optimize supply capabilities[38] - In channel development, the Group strengthened refined and standardized management, optimized the "partner" assessment system, and increased coverage in lower-tier markets[38] - In product R&D, the Group optimized the "product project system," combined with "methodology" guidance, focused on long-term category and product planning, and strengthened listing standards[38] - The multi-brand strategy continued, enhancing brand awareness through combined promotion of "Kuaishou Xiaochu" and "Haidilao" brands[38] - Production capacity was expanded, with rice, vermicelli, dipping sauce, and meal kit production lines successively commencing operations, increasing self-production ratio and intelligent manufacturing levels[38] Business Review In 2022, the Group's revenue grew by 3.4% to RMB 6,147.0 million, while net profit decreased by 4.8% to RMB 816.0 million, with third-party sales increasing and related party sales declining - 2022 revenue increased by 3.4% year-on-year to RMB 6,147.0 million, while net profit decreased by 4.8% year-on-year to RMB 816.0 million[39] - The Group serves as a supplier of hotpot seasoning products to Haidilao Group, Tehai International Group, and their respective subsidiaries, while also serving Chinese home cooking customers, catering service providers, and food industry companies[39] Sales Channels The Group prioritized third-party sales, achieving a 16.2% increase in revenue through refined management, while e-commerce sales grew by 3.4% and related party sales decreased by 23.0% due to the pandemic - Third-party sales revenue was RMB 4,657.4 million, a 16.2% year-on-year increase, primarily through distributors, e-commerce, and catering customers[39] - E-commerce channel sales revenue was RMB 332.1 million, a 3.4% year-on-year increase, with 9 flagship stores on platforms such as Tmall, JD.com, and Pinduoduo[39] - Related party sales revenue was RMB 1,489.7 million, a 23.0% year-on-year decrease, mainly due to the impact of the pandemic causing Haidilao Group restaurants to suspend operations or dine-in services[39] Products The Group enhanced product R&D and methodology to innovate new categories and products, continued its multi-brand strategy, and launched 45 new hotpot seasonings, Chinese compound seasonings, and convenient food products in 2022 - Optimized product R&D system, combining "innovation committee overall planning with product team leader detailed research" to seek breakthroughs in new categories and products[40] - Continuously implemented a multi-brand strategy, enhancing "Kuaishou Xiaochu" brand awareness through joint promotion with "Haidilao" brand[40] - In 2022, a total of 11 new hotpot seasonings, 16 new Chinese compound seasonings, and 18 new convenient food products were launched, with some product specifications integrated[40] Revenue, Sales Volume and Average Selling Price by Product Category and Distribution Channel This section details the 2022 and 2021 revenue, sales volume, and average selling price per kilogram, categorized by product (hotpot seasonings, Chinese compound seasonings, convenient food, others) and distribution channel (third-party, related party) 2022 Revenue, Sales Volume and Average Selling Price by Product Category and Distribution Channel | Product Category/Channel | Revenue (RMB thousand) | Sales Volume (tons) | Average Selling Price per kg (RMB) | | :------------ | :---------------- | :-------- | :------------------------ | | Hotpot Seasonings| 3,664,696 | 148,048 | 24.8 | | Third-party | 2,263,898 | 77,625 | 29.2 | | Related Party | 1,400,798 | 70,423 | 19.9 | | Chinese Compound Seasonings| 568,863 | 22,279 | 25.5 | | Third-party | 558,449 | 21,878 | 25.5 | | Related Party | 10,414 | 401 | 26.0 | | Convenient Food Products | 1,870,069 | 47,690 | 39.2 | | Third-party | 1,791,639 | 45,752 | 39.2 | | Related Party | 78,430 | 1,938 | 40.5 | | Others | 43,383 | 12,930 | 3.4 | | Total | 6,147,011 | 230,947 | 26.6 | Revenue by Product In 2022, hotpot seasonings accounted for 59.6% of revenue, Chinese compound seasonings 9.3%, and convenient food products 30.4%, with third-party sales growing for hotpot seasonings and convenient food, while related party sales generally declined 2022 Revenue and Proportion by Product Category | Product Category | 2022 Revenue (RMB thousand) | Percentage of Revenue | | :--------------- | :---------------------- | :----------- | | Hotpot Seasonings Revenue | 3,664,696 | 59.6% | | Chinese Compound Seasonings Revenue | 568,863 | 9.3% | | Convenient Food Products Revenue | 1,870,069 | 30.4% | | Other Revenue | 43,383 | 0.7% | | Total Revenue | 6,147,011 | 100% | Hotpot Seasonings Revenue Hotpot seasonings revenue increased by 1.6% year-on-year to RMB 3,664.7 million, with third-party sales growing by 23.6% and related party sales decreasing by 21.1% due to pandemic impacts - Total hotpot seasonings product revenue increased by 1.6% year-on-year to RMB 3,664.7 million, accounting for 59.6% of total revenue[44] - Revenue from third-party sales of hotpot seasonings products increased by 23.6% year-on-year, mainly due to increased sales volume after terminal price adjustments for some hotpot base products[44] - Revenue from related party sales of hotpot seasonings products decreased by 21.1% year-on-year, mainly due to the impact of the COVID-19 pandemic causing related party restaurants to suspend operations or dine-in services and reduced customer traffic[44] Chinese Compound Seasonings Revenue Chinese compound seasonings revenue increased by 7.2% year-on-year to RMB 568.9 million, with third-party sales growing by 15.7% and related party sales significantly decreasing by 78.2% due to reduced in-store retail - Total Chinese compound seasonings revenue increased by 7.2% year-on-year to RMB 568.9 million, accounting for 9.3% of total revenue[45] - Revenue from third-party sales of Chinese compound seasonings increased by 15.7%, mainly due to product upgrades and new product launches[45] - Revenue from related party sales of Chinese compound seasonings decreased by 78.2%, mainly due to reduced retail product sales at related party company stores impacted by the COVID-19 pandemic[45] Convenient Food Products Revenue Convenient food products revenue increased by 9.8% year-on-year to RMB 1,870.1 million, with third-party sales growing by 12.6% due to increased demand during the pandemic, while related party sales decreased by 30.0% - Total convenient food products revenue increased by 9.8% year-on-year to RMB 1,870.1 million, accounting for 30.4% of total revenue[47] - Revenue from third-party sales of convenient food products increased by 12.6%, attributed to increased demand influenced by the COVID-19 pandemic outbreak[47] - Revenue from related party sales of convenient food products decreased by 30.0%[47] Revenue by Distribution Network In 2022, distributor sales revenue increased by 17.9% to RMB 4,300.5 million, accounting for 70.0% of total revenue, while e-commerce sales grew by 3.4% and related party sales decreased by 23.0% 2022 Revenue and Proportion by Distribution Network | Distribution Network | 2022 Revenue (RMB thousand) | Percentage of Total Revenue | 2021 Revenue (RMB thousand) | Percentage of Total Revenue | | :--------------- | :---------------------- | :------------- | :---------------------- | :------------- | | Related Party Customers | 1,489,651 | 24.2% | 1,935,018 | 32.6% | | Distributors | 4,300,513 | 70.0% | 3,648,339 | 61.4% | | E-commerce | 332,091 | 5.4% | 321,291 | 5.4% | | Third-party Catering Enterprises | 24,756 | 0.4% | 37,360 | 0.6% | | One-off Sales Activities | – | 0.0% | 609 | 0.0% | | Total Revenue | 6,147,011 | 100% | 5,942,617 | 100% | - Related party sales revenue decreased by 23.0% year-on-year, primarily due to the impact of the pandemic causing Haidilao Group's restaurants to suspend operations or dine-in services[48] - Distributor sales revenue increased by 17.9% year-on-year, and e-commerce channel sales revenue increased by 3.4% year-on-year[49] Revenue by Geographical Region In 2022, South China accounted for 50.2% of revenue, North China 44.1%, and other markets 5.7%, with North China revenue increasing and South China slightly decreasing 2022 Revenue and Proportion by Geographical Region | Region | 2022 Revenue (RMB thousand) | Percentage of Revenue | 2021 Revenue (RMB thousand) | Percentage of Revenue | | :------- | :---------------------- | :----------- | :---------------------- | :----------- | | North China | 2,707,534 | 44.1% | 2,494,343 | 42.0% | | South China | 3,088,220 | 50.2% | 3,145,006 | 52.9% | | Other Markets | 351,257 | 5.7% | 303,268 | 5.1% | | Total | 6,147,011 | 100% | 5,942,617 | 100% | Financial Review In 2022, the Group's revenue grew by 3.4%, but a 6.8% increase in cost of sales led to a 3.6% decrease in gross profit and a decline in gross margin to 30.2% - 2022 revenue increased by 3.4% year-on-year to RMB 6,147.0 million[42] - Net profit decreased by 4.8% year-on-year to RMB 816.0 million, and basic earnings per share decreased to RMB 75.7 cents[59] Revenue The Group's revenue increased by 3.4% to RMB 6,147.0 million for the year ended December 31, 2022, compared to RMB 5,942.6 million in the prior year - The Group's revenue increased by 3.4% from RMB 5,942.6 million for the year ended December 31, 2021, to RMB 6,147.0 million for the same period in 2022[42] Cost of Sales Cost of sales increased by 6.8% to RMB 4,293.1 million for the year ended December 31, 2022, primarily due to rising raw material prices - Cost of sales increased by 6.8% from RMB 4,018.7 million for the year ended December 31, 2021, to RMB 4,293.1 million for 2022, primarily due to rising prices of certain raw materials[51] Gross Profit and Gross Margin Gross profit decreased by 3.6% to RMB 1,853.9 million in 2022, with the gross margin declining from 32.4% to 30.2%, mainly due to increased raw material costs - Gross profit decreased by 3.6% from RMB 1,924.0 million for the year ended December 31, 2021, to RMB 1,853.9 million for 2022, with the gross margin declining from 32.4% to 30.2%[52] - The primary reason for the decline in gross margin was the increase in cost of sales due to rising prices of raw materials such as oils and fats, and beef meal kits[52] Gross Profit and Gross Margin by Product Category | Product Category | 2022 Gross Profit (RMB thousand) | 2022 Gross Margin (%) | 2021 Gross Profit (RMB thousand) | 2021 Gross Margin (%) | | :--------------- | :---------------------- | :--------------- | :---------------------- | :--------------- | | Hotpot Seasonings | 1,273,682 | 34.8% | 1,304,891 | 36.2% | | Third-party | 1,092,304 | 48.2% | 929,346 | 50.7% | | Related Party | 181,378 | 12.9% | 375,545 | 21.2% | | Chinese Compound Seasonings | 183,381 | 32.2% | 182,572 | 34.4% | | Third-party | 181,519 | 32.5% | 173,178 | 35.9% | | Related Party | 1,862 | 17.9% | 9,394 | 19.7% | | Convenient Food Products | 396,019 | 21.2% | 435,083 | 25.5% | | Third-party | 379,354 | 21.2% | 403,056 | 25.3% | | Related Party | 16,665 | 21.2% | 32,027 | 28.6% | | Others | 800 | 1.8% | 1,407 | 1.4% | | Total | 1,853,882 | 30.2% | 1,923,953 | 32.4% | Distribution Expenses Distribution expenses decreased by 7.4% to RMB 646.6 million in 2022, representing 10.5% of the Group's revenue, primarily due to lower advertising and marketing costs - Distribution expenses decreased by 7.4% from RMB 697.9 million for the year ended December 31, 2021, to RMB 646.6 million for 2022, with the percentage of the Group's revenue decreasing from 11.7% to 10.5%[53] - The primary reason for the decrease in distribution expenses was lower advertising and marketing costs[53] Administrative Expenses Administrative expenses decreased by 7.6% to RMB 227.8 million in 2022, representing 3.7% of the Group's revenue, mainly due to lower management personnel salaries - Administrative expenses decreased by 7.6% from RMB 246.7 million for the year ended December 31, 2021, to RMB 227.8 million for 2022, with the percentage of the Group's revenue decreasing from 4.2% to 3.7%[54] - The primary reason for the decrease in administrative expenses was lower management personnel salaries[54] Other Income and Gains, Net Other income and gains, net, decreased by 17.6% to RMB 138.2 million in 2022, primarily due to lower government grants and fair value changes of financial assets - Other income and gains, net, decreased by 17.6% from RMB 167.7 million for the year ended December 31, 2021, to RMB 138.2 million for 2022, primarily due to lower government grants and fair value changes of financial assets[55] Finance Income, Net Net finance income increased by 5.6% to RMB 24.4 million in 2022, primarily due to higher interest income from fixed deposits - Net finance income increased by 5.6% from RMB 23.1 million for the year ended December 31, 2021, to RMB 24.4 million for 2022, primarily due to increased interest income from fixed deposits[56] Profit Before Income Tax Profit before income tax decreased by 2.4% to RMB 1,142.1 million for the year ended December 31, 2022, compared to RMB 1,170.2 million in the prior year - Profit before income tax decreased by 2.4% from RMB 1,170.2 million for the year ended December 31, 2021, to RMB 1,142.1 million for 2022[57] Income Tax Expense Income tax expense increased by 4.3% to RMB 326.2 million in 2022, with the effective tax rate rising to 28.6% due to increased withholding tax on profit distributions from PRC subsidiaries - Income tax expense increased by 4.3% from RMB 312.6 million for the year ended December 31, 2021, to RMB 326.2 million for 2022[58] - The effective tax rate increased from 26.7% for the year ended December 31, 2021, to 28.6% for the year ended December 31, 2022, primarily due to increased withholding tax on expected profit distributions from the Group's PRC subsidiaries to its overseas subsidiaries[58] Profit for the Year Profit for the year decreased by 4.8% to RMB 816.0 million in 2022, with the net profit margin declining to 13.3% due to higher raw material prices, lower gross margin, and increased income tax expense - Profit for the year decreased by 4.8% from RMB 857.6 million for the year ended December 31, 2021, to RMB 816.0 million for 2022[59] - Net profit margin decreased from 14.4% for the year ended December 31, 2021, to 13.3% for 2022, primarily due to rising raw material prices, lower gross margin, and increased income tax expense[59] Liquidity and Financial Resources As of year-end 2022, the Group primarily funded operations through cash generated from operations, with increased cash and cash equivalents, a slight rise in gearing ratio, and no bank borrowings - For the year ended December 31, 2022, the Group primarily funded its operations through cash generated from operations[60] Cash and Cash Equivalents As of December 31, 2022, the Group's cash and cash equivalents increased to approximately RMB 1,880.5 million, primarily denominated in RMB, HKD, and USD - As of December 31, 2022, cash and cash equivalents amounted to approximately RMB 1,880.5 million (December 31, 2021: RMB 1,573.6 million)[61] - Cash and cash equivalents primarily consist of RMB, HKD, and USD[61] Gearing Ratio As of December 31, 2022, the Group's gearing ratio slightly increased to 18.3% from 17.9% in 2021, with no bank borrowings - As of December 31, 2022, the Group's gearing ratio was 18.3% (December 31, 2021: 17.9%)[62] - The Group had no bank borrowings[62] Inventories As of December 31, 2022, inventories were approximately RMB 387.5 million, with inventory turnover days decreasing from 35.9 days in 2021 to 33.3 days in 2022, reflecting improved inventory efficiency - As of December 31, 2022, inventories amounted to approximately RMB 387.5 million (December 31, 2021: RMB 395.3 million)[63] - Inventory turnover days decreased from 35.9 days for the year ended December 31, 2021, to 33.3 days for the year ended December 31, 2022, primarily due to the Group's improved control over inventory efficiency[63] Trade Receivables As of December 31, 2022, trade receivables decreased to approximately RMB 155.6 million, primarily due to lower related party revenue, with turnover days reducing from 12.9 to 11.6 - As of December 31, 2022, trade receivables amounted to approximately RMB 155.6 million (December 31, 2021: RMB 236.5 million), with the change primarily due to a decrease in related party revenue[64] - Trade receivables turnover days decreased from 12.9 days for the year ended December 31, 2021, to 11.6 days for the year ended December 31, 2022[64] Trade Payables As of December 31, 2022, trade payables increased to approximately RMB 396.3 million, with turnover days rising from 25.7 to 29.4, influenced by seasonal production and procurement cycles - As of December 31, 2022, trade payables amounted to approximately RMB 396.3 million (December 31, 2021: RMB 294.3 million)[65] - Trade payables turnover days increased from 25.7 days for the year ended December 31, 2021, to 29.4 days for the year ended December 31, 2022, influenced by peak and off-peak production and sales seasons and seasonal procurement cycles[65] Contingent Liabilities As of December 31, 2022, the Company had no significant contingent liabilities - As of December 31, 2022, the Company had no significant contingent liabilities[66] Pledge of Assets As of December 31, 2022, the Company had not pledged any fixed assets as security for borrowings - As of December 31, 2022, the Company had not pledged any fixed assets as security for borrowings[66] Borrowings As of December 31, 2022, the Company had no bank borrowings - As of December 31, 2022, the Company had no bank borrowings[66] Capital Gearing Ratio As of December 31, 2022, the Company's capital gearing ratio decreased to 2.5% from 3.4% in 2021 - As of December 31, 2022, the Company's capital gearing ratio was 2.5% (2021: 3.4%)[66] Foreign Exchange Risk and Hedging The Group primarily operates in China with most transactions in RMB, but holds HKD and USD cash, exposing it to foreign exchange risk, which is currently not hedged but closely monitored - The Group primarily operates in China, with most transactions denominated and settled in RMB; however, it holds certain cash denominated in HKD and USD, exposing it to foreign exchange risk, which is currently not hedged but will be closely monitored[66] - The Group does not hedge foreign exchange risk; however, it will closely monitor the situation and take necessary measures to ensure foreign exchange risk is within a controllable range[66] Employees and Remuneration Policy As of December 31, 2022, the Group had 2,720 employees with a total staff cost of RMB 545.4 million, continuously optimizing its incentive system and implementing competitive remuneration policies - As of December 31, 2022, the Group had a total of 2,720 employees (including temporary staff), with a total employee cost of RMB 545.4 million[66] - The Group continuously optimizes its incentive system and implements competitive remuneration policies in line with business development needs[66] Major Acquisitions and Disposals As of December 31, 2022, the Group had no major acquisitions or disposals of subsidiaries, associates, or joint ventures - As of December 31, 2022, the Group had no major acquisitions or disposals of subsidiaries, associates, or joint ventures[67] Future Outlook and Investments This section outlines the Group's future prospects and strategic investments, focusing on market recovery, product development, brand promotion, channel expansion, and supply chain optimization Future Prospects Looking ahead to 2023, with pandemic prevention and control entering a new phase, the consumer market is expected to recover, and the Group will focus on product R&D, brand promotion, channel, and supply chain development - The consumer market is expected to recover in 2023, and the Group will continue to prioritize product R&D, brand promotion, channel development, and supply chain construction as key company strategies[68] - In product development, the Group will continue to introduce differentiated new products, optimize and upgrade existing products, expand B-end catering customer demand, and focus on overseas markets[68] - In brand strategy, the "multi-brand" strategy will continue to be implemented, enhancing brand awareness for "Haidilao," "Kuaishou Xiaochu," and "Wa'ao" brands[68] - In channel development, the Group will improve operational efficiency through segmented channels and standardized process management, cover lower-tier markets, and enhance intelligent management levels[68] - In supply chain construction, the Group will build and improve domestic and international factories, invest in lean production and equipment R&D, optimize supply technology division, enhance automation, and has initially completed the construction of a Southeast Asian supply center[68] Industry and Business Outlook The consumer market is expected to stabilize and recover in 2023, with the Group focusing on enhancing R&D capabilities, introducing differentiated new products, and expanding into overseas markets - The foundation for stable recovery in the consumer market will be more solid in 2023, with the consumer market expected to improve[68] - The Group will continue to adhere to the optimized "product project system," combining "methodology" with practice to continuously enhance product developers' R&D capabilities, break through product innovation stalemates, continuously introduce differentiated new products, and improve product success rates and overall competitiveness[68] - The Group will focus on overseas markets, leveraging its R&D and market exploration capabilities to enrich the overseas product matrix, guided by unique local flavors and exotic styles[68] Major Investments and Prospects The Group is undertaking several capacity expansion projects, including phases two in Bazhou and Ma'anshan, new production bases in Luohe and Jianyang, and an overseas factory in Thailand, to optimize production and sales layout and enhance supply capabilities - The Phase II project in Bazhou, Hebei Province, commenced construction in June 2022, with an estimated production start in Q3 2023, planning an annual capacity of 82,000 tons of convenient food products, primarily covering North and Northeast China[69] - The main factory building for Phase II in Ma'anshan, Anhui Province, has been completed and commenced production in February 2023, planning an annual capacity of 15,000 tons of seasonings, primarily to enrich the production lines for meal kits and meat buns[69] - Phase I of the Luohe production base in Henan Province has a planned annual capacity of 150,000 tons, with the dipping sauce production line commencing operation in September 2022 and the spice production line in Q1 2023[69] - The Jianyang production base in Sichuan Province has a planned annual capacity of 25,000 tons, expected to commence production by the end of 2023, focusing on covering demand for hotpot bases and compound seasonings in Southwest China[69] - Phase I of the Thailand factory has a planned annual capacity of 16,000 tons, commenced construction at the end of February 2021, and is expected to start production in April 2023, primarily serving the Southeast Asian market[69] Future Major Investment Plans The Group will continue to actively seek potential strategic investment opportunities that can bring synergistic effects in product R&D, product portfolio, channel expansion, or cost control - The Group will continue to broadly seek potential strategic investment opportunities, continuously looking for high-quality targets that can bring synergistic effects to the Group in terms of product R&D, product portfolio, channel expansion, or cost control[70] Corporate Governance and Other Information This section covers the Company's adherence to corporate governance codes, compliance with trading standards, audit committee activities, and other relevant post-reporting period events Compliance with Corporate Governance Code The Company has complied with the code provisions in Part 2 of the Corporate Governance Code of The Stock Exchange of Hong Kong Limited for the year ended December 31, 2022 - The Company has complied with the code provisions in Part 2 of the Corporate Governance Code of The Stock Exchange of Hong Kong Limited for the year ended December 31, 2022[71] Compliance with Model Code The Company adopted the Model Code for Securities Transactions by Directors of Listed Issuers, with all directors confirming compliance for 2022, and no non-compliance incidents reported for employees with inside information - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers, and all directors have confirmed their compliance with the Model Code for the year ended December 31, 2022, following specific inquiries[72] - Employees of the Company who may possess inside information are also required to comply with the Model Code, and no incidents of non-compliance by employees were reported in 2022 to the Company's knowledge[72] Purchase, Sale or Redemption of Listed Securities For the year ended December 31, 2022, neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities - For the year ended December 31, 2022, neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities[72] Audit Committee The Board's Audit Committee, composed of three independent non-executive directors, reviewed accounting principles, internal controls, and financial reporting, confirming compliance and appropriate disclosure for the 2022 annual financial results - The Board's Audit Committee comprises three members, including all independent non-executive directors[73] - The Audit Committee has considered and reviewed the accounting principles and practices adopted by the Company and the Group, and has discussed internal controls and financial reporting matters with management, including the Group's audited consolidated results for the year ended December 31, 2022[73] - The Audit Committee believes that the annual financial results for the year ended December 31, 2022, have complied with relevant accounting standards, rules, and regulations, and have been appropriately disclosed[73] Auditor's Scope of Work The figures in this announcement for the Group's 2022 consolidated balance sheet, income statement, and related notes have been agreed by PwC, the Company's auditor, to be consistent with the audited consolidated financial statements, but their work does not constitute an assurance engagement - The figures in this announcement for the Group's consolidated balance sheet, consolidated statement of profit or loss and other comprehensive income, and related notes for the year ended December 31, 2022, have been agreed by PricewaterhouseCoopers, the Company's auditor, to be consistent with the amounts in the Group's audited consolidated financial statements for the year[74] - The work performed by PricewaterhouseCoopers in this regard does not constitute an assurance engagement conducted in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements, or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants[74] Restricted Share Unit Scheme The Company adopted a Restricted Share Unit Scheme, approved by shareholders and the Board, and will comply with the revised Chapter 17 of the Listing Rules effective from the financial year beginning January 1, 2023, with no units granted in 2022 - The Company has approved and adopted a Restricted Share Unit Scheme pursuant to resolutions of its shareholders and the Board on February 24, 2016[75] - The Company will comply with the requirements set out in the newly revised Chapter 17 of the Listing Rules, effective from the financial year commencing January 1, 2023[75] - The Company did not grant any restricted share units in 2022[75] Events After Reporting Period To the best knowledge of the Directors, no material events requiring disclosure have occurred after December 31, 2022, and up to the date of this announcement, other than those disclosed herein - Save as disclosed in this announcement, to the best knowledge of the Directors, no material events requiring disclosure have occurred after December 31, 2022, and up to the date of this announcement[76] Final Dividend The Board resolved to recommend a final dividend of RMB 17.72 cents per share for the year ended December 31, 2022, totaling approximately RMB 185.5 million, payable in HKD around June 14, 2023, subject to shareholder approval - The Board resolved to recommend a final dividend of RMB 17.72 cents per share for the year ended December 31, 2022, amounting to RMB 185,510,680, to be paid to shareholders at the upcoming Annual General Meeting on May 18, 2023[76] - The final dividend is expected to be paid on or about June 14, 2023, to shareholders whose names appear on the Company's register of members on May 25, 2023, and will be converted into HKD at the average benchmark exchange rate of RMB to HKD announced by the People's Bank of China on March 30, 2023[76] - The proposed final dividend is subject to the shareholders' consideration and approval at the Annual General Meeting[76] Closure of Register of Members and Record Date The Company will close its register of members from May 15 to May 18, 2023, to determine eligibility for attending and voting at the AGM, and again from May 24 to May 25, 2023, to determine entitlement to the final dividend - The Company's register of members will be closed from Monday, May 15, 2023, to Thursday, May 18, 2023 (both days inclusive), to determine shareholders' eligibility to attend and vote at the Annual General Meeting to be held on Thursday, May 18, 2023[77] - The Company's register of members will also be closed from Wednesday, May 24, 2023, to Thursday, May 25, 2023 (both days inclusive), to determine shareholders' entitlement to the final dividend[77] Publication of Annual Results Announcement and Annual Report This announcement is published on the HKEX and Company websites, and the annual report for the year ended December 31, 2022, containing all Listing Rules required information, will be dispatched to shareholders and published online in due course - This announcement is published on the HKEX website (www.hkexnews.hk) and the Company's website (www.yihchina.com)[77](index=77&type=chunk) - The annual report for the year ended December 31, 2022, which includes all information required by the Listing Rules, will be dispatched to shareholders and published on the HKEX and Company websites in due course[77] Acknowledgement The Board extends its sincere gratitude to the Company's shareholders, management team, employees, business partners, and customers for their support and contributions to the Group - The Board hereby expresses its sincere gratitude to the Company's shareholders, management team, employees, business partners, and customers for their support and contributions to the Group[77]