HARD Discount Philippines Inc., the operator of the DALI grocery chain, reported a capital deficiency of P1.03 billion at the end of 2025, prompting its auditor to flag a material uncertainty that may cast significant doubt on the company’s ability to continue operating.
In its audited financial statements, SyCip Gorres Velayo & Co. (SGV) said the company’s accumulated losses had reached P7.07 billion as of Dec. 31, 2025, up 35 percent from P5.24 billion a year earlier.
The company’s current liabilities also exceeded its current assets by P1.19 billion, substantially higher than the P134.6 million deficit recorded at the end of 2024.
“These conditions indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern and, therefore, the company may be unable to realize its assets and discharge its liabilities in the normal course of business,” SGV said.
Nevertheless, SGV said its opinion on the financial statements was not modified in respect of the matter.
Hard Discount, which has been operating commercially for five years, attributed its losses to the early stages of its large-scale operations and expansion.
In the notes accompanying its financial statements, the company said it intended to open additional stores to achieve economies of scale while implementing cost-efficiency measures to improve financial performance.
It also cited continued shareholder support, an established customer base and a reliable supplier network as factors supporting its growth plans.
Despite the capital deficiency, the company narrowed its net loss by 7.05 percent to P1.83 billion in 2025 from the P1.97 billion loss recorded in 2024.
Sales revenue climbed 52.29 percent to P51.66 billion from P33.93 billion a year earlier, while cost of sales increased at a slower pace of 49.21 percent to P45.65 billion from P30.59 billion.
This lifted gross income by 80.51 percent to P6.02 billion from P3.33 billion, with gross profit margin improving to 11.64 percent from 9.82 percent a year earlier.
Operating expenses rose 47.69 percent to P7.10 billion from P4.81 billion. However, the company said operating expenses as a share of total revenue declined to 13.75 percent from 14.17 percent.
Other charges increased 45.63 percent to P626.98 million from P430.53 million previously, while pretax loss narrowed by 10.14 percent to P1.71 billion from P1.91 billion.
The company said total assets grew 21.17 percent to P25.41 billion at the end of 2025 from P20.97 billion a year earlier, but total liabilities increased faster by 30.63 percent to P26.44 billion from P20.25 billion.
It said current assets stood at P6.62 billion, including P1.45 billion in cash and P3.99 billion in merchandise inventories. Noncurrent assets amounted to P18.79 billion, largely comprising P12.04 billion in right-of-use assets and P6.29 billion in property and equipment.
Current liabilities reached P7.81 billion, primarily consisting of P7.04 billion in trade and other payables. Noncurrent liabilities totaled P18.64 billion, including P12.32 billion in lease liabilities and P5.23 billion in deposits for future stock subscriptions.
A P4-billion deposit for future stock subscriptions received in 2024 had helped the company post positive equity of P728.76 million that year. In 2025, the deposit was converted into capital stock, increasing the company’s capital stock to P6 billion from P2 billion.
However, the year’s net loss and other movements in equity resulted in a capital deficiency of P1.03 billion by the end of 2025.
The company also received P1.67 billion in deposits for future stock subscriptions in 2025 and recorded P573.83 million in amounts due to a related party.
Its financial statements identified its parent company as HDPM Sin Pte. Ltd., a Singapore-incorporated company, while Dali Discount AG, founded in Switzerland, was identified as its ultimate parent.
Management maintained that continued shareholder support, store expansion and cost-efficiency measures would enable the company to meet its obligations as they fall due in the foreseeable future.
The financial statements were authorized for issuance by the company’s board of directors on April 30, 2026.