Hard Discount Philippines Inc. (HDPI), operator of DALI Everyday Grocery, reported that its net loss more than doubled last year to P1.88 billion from the loss of P894.68 million in 2022 despite a revenue surge.

Documents filed with the Securities and Exchange Commission (SEC) showed that the firm’s revenues jumped 140 percent to P22.31 billion in 2023 from P9.27 billion in 2022 while cost of sales and rent rose by 125 percent to P20.82 billion last year from P9.24 billion.

However, operating expenses leaped 254 percent to P3.01 billion last year from P850 million in 2022, while other charges ballooned by 395 percent to P291.54 million from P58.88 million.

In the report of SGV & Co., the auditing firm raised a concern: “We draw attention to Note I to the financial statements, which indicates that the Company incurred cumulative losses resulting in a deficit of (P3.26 billion and P1.39 billion) as of December 31, 2023 and 2022, respectively, that resulted to a capital deficiency of (Pl.29 billion) and P890.7 million as of December 31, 2023 and 2022, respectively."

“In addition, the Company has negative operating cash flows of P534.8 million and P476.0 million in 2023 and 2022, respectively,” it said.

It noted that HDPI said “these conditions indicate that a material uncertainty exists that may cast significant doubt on the Company's ability to continue as a going concern.”

HDPI reported to the SEC that “the Company may be unable to realize its assets and discharge its liabilities in the normal course of business.”

However, it said additional capital was already infused by its stockholders amounting to P4.67 billion and P2.76 billion as of Dec. 31, 2023 and 2022, presented as deposit for future stocks subscription.

HDPI said its parent company has committed to providing the company with financing or procuring the provision of such finances as may be necessary to enable the company to continue to trade and to meet its liabilities as and when they fall due for a period of twelve months from the auditor's report date.

In addition, HDPI forecasts that profit margins will improve over the next five years, resulting from the implementation of cost efficiency measures.

“Management believes that with the planned increase in equity, the commitment of and continued financial support from the Parent Company and the projected improvement in net profit margin, the Company will be able to generate sufficient cash flows from its operations to meet its obligations as and when they fall due,” it added.

Asian Development Bank (ADB) announced last month that it is investing $10 million into HDPI to finance its store and distribution centers expansion. This is on top of the $15 million investment ADB made last year, also for store and distribution network expansion and for cold chain infrastructure.

HDPI is owned by Switzerland-based Dali Discount AG, private equity firm Creador, Navegar and Venturi Partners. HDPI’s direct parent company is Singapore-incorporated HDPM Sin Pte. Ltd.