Company Overview - As of June 30, 2024, Yum China operates 15,423 restaurants across over 2,100 cities in China, making it the largest restaurant company in the country by system sales[5]. - KFC is the leading fast-food brand in China, with 10,931 restaurants as of June 30, 2024, while Pizza Hut is the largest casual dining brand with 3,504 restaurants[5]. - The company has exclusive operating rights for KFC, Pizza Hut, and Taco Bell (pending certain milestones) in mainland China, and fully owns the intellectual property for Little Sheep and Huang Ji Huang brands[5]. - The company is exploring expansion opportunities in existing and new cities within China, indicating a strong outlook for future growth[5]. - The company has established a joint venture with Lavazza Group to explore and develop the Lavazza coffee brand concept in China[5]. Financial Performance - System sales growth for the six months ended June 30, 2024, was 5%, down from 24% in the same period of 2023[9]. - Same-store sales decreased by 3% for the six months ended June 30, 2024, compared to an increase of 11% in the same period of 2023[9]. - Operating profit for the six months ended June 30, 2024, was 673 million in the same period of 2023[9]. - Net profit increased by 3% to 486 million in the same period of 2023[11]. - Total revenue for the six months ended June 30, 2024, was 5.571 billion in the same period of 2023[11]. - Core operating profit for the six months ended June 30, 2024, was 639 million in the same period of 2023[11]. - Adjusted EBITDA for the six months ended June 30, 2024, was 927 million in 2023[17]. - The company reported a restaurant profit of 967 million[19]. Shareholder Returns - The company aims to return a record 0.16 per share, totaling approximately 868 million and 2.1 million shares for 700 million and 2.2 billion from a global issuance in September 2020, which supports future operations and capital expenditures[48]. Tax and Regulatory Matters - The company is undergoing a tax audit by Chinese tax authorities regarding transfer pricing, which may have significant implications for its financial condition and operating performance[42]. - The actual tax rate for the six months ended June 30, 2024, was 26.2%, down from 27.0% in 2023[16]. - The company anticipates potential significant developments in the next 12 months regarding the ongoing tax review and discussions with tax authorities[42]. Risk Management - The company faces foreign currency exchange rate risks, primarily due to its operations in China, which could impact reported revenues and cash flows[62]. - The company manages commodity price risks through pricing agreements with suppliers, although its ability to pass on increased costs may be limited by the competitive environment[63]. Employee and Operational Insights - The company employs around 400,000 employees, with approximately 90% being restaurant staff, and about 70% of restaurant employees working part-time[61]. - The company received temporary subsidies from the government for employee benefits and training, which were recognized as reductions in restaurant expenses[21]. Corporate Governance - The company has complied with all corporate governance code provisions during the reporting period, except for certain provisions related to the audit, compensation, and nomination committees[117]. - The company’s governance principles align with the corporate governance code as per the Hong Kong Listing Rules[117]. Future Outlook - The company plans to continue expanding its market presence and investing in new product development to drive future growth[20]. - The company is currently evaluating the potential impact of new accounting standards effective from January 1, 2024, and January 1, 2025, on its financial statements[60].
百胜中国(09987) - 2024 - 中期财报