Financial Performance - Revenue for the six months ended June 30, 2022, was HKD 655,825,000, a decrease of 11.1% compared to HKD 737,374,000 for the same period in 2021[10]. - Gross profit for the period was HKD 586,644,000, down 5.8% from HKD 622,694,000 year-on-year[10]. - The company reported a net profit of HKD 139,231,000, representing a decline of 14.1% from HKD 162,186,000 in the previous year[10]. - The total comprehensive income for the six months ended June 30, 2022, was HKD 46,030,000, compared to HKD 180,212,000 for the same period in 2021, representing a decrease of approximately 74.5%[14]. - Cash generated from operating activities for the six months ended June 30, 2022, was HKD 180,085,000, down from HKD 205,156,000 in the previous year, indicating a decline of about 12.2%[16]. - The reported profit before tax for the six months ended June 30, 2022, was HKD 162,701,000, compared to HKD 183,074,000 for the same period in 2021, representing a decrease of approximately 11.5%[26]. - The group recorded a consolidated revenue of approximately HKD 655.8 million for the six months ended June 30, 2022, a decrease of 11.1% compared to the same period last year[117]. - The group's profit decreased by 14.2% to approximately HKD 139.2 million, down from approximately HKD 162.2 million in the same period last year, primarily due to COVID-19 restrictions impacting outpatient operations in Chinese hospitals[118]. Assets and Liabilities - Total assets as of June 30, 2022, amounted to HKD 2,794,303,000, a decrease from HKD 2,863,439,000 at the end of 2021[12]. - Current liabilities decreased to HKD 621,173,000 from HKD 689,585,000, indicating improved liquidity management[12]. - The total liabilities decreased from HKD 1,742,906,000 as of June 30, 2021, to HKD 1,577,353,000 as of June 30, 2022, indicating a reduction of approximately 9.5%[14]. - The company’s cash and cash equivalents stood at HKD 641,136,000, down from HKD 671,336,000 at the end of 2021[12]. - The company’s total liabilities decreased from HKD 1,259,471,000 as of December 31, 2021, to HKD 1,422,203,000 as of June 30, 2022, indicating a change in financial structure[30]. - The debt-to-asset ratio as of June 30, 2022, was 37.6%, a decrease from 39.4% as of December 31, 2021, reflecting improved financial stability[137]. Cash Flow and Investments - The net cash used in investing activities for the six months ended June 30, 2022, was HKD 143,617,000, compared to HKD 119,463,000 in the same period of 2021, reflecting an increase of approximately 20.2%[18]. - The company reported a decrease in cash and cash equivalents of HKD 7,813,000 for the six months ended June 30, 2022, compared to an increase of HKD 52,673,000 in the same period of 2021[18]. - The company has capital commitments of 73,814,000 HKD for development costs and 211,251,000 HKD for acquired intangible assets as of June 30, 2022[94]. - The company secured bank financing of approximately HKD 629.7 million, with around HKD 505.8 million already utilized as of June 30, 2022[137]. Shareholder Information - The company paid dividends amounting to HKD 31,610,000 during the six months ended June 30, 2022[18]. - The company declared an interim dividend of HKD 0.04 per ordinary share for the six months ended June 30, 2022, consistent with the previous year[40]. - The company aims to enhance shareholder value through share repurchases to improve net asset value per share and earnings per share[187]. - Major shareholders include Yan Ming Chi with 153,945,667 shares (26.81%) and Liu Hui Juan with 153,945,667 shares (26.81%) as of June 30, 2022[176][183]. Research and Development - Research and development costs recognized as expenses amounted to HKD 11,606,000 for the six months ended June 30, 2022, compared to HKD 11,080,000 for the same period in 2021[36]. - The group has initiated a five-year R&D plan (2021-2025) to enhance its R&D capabilities and position in the ophthalmology field[110]. - The group has 15 R&D projects in various stages, with three ophthalmology projects currently in clinical stages, viewed as mid-term growth drivers[112]. Market and Product Development - The estimated number of moderate to severe dry eye patients in China exceeded 117 million in 2019, indicating a significant market potential for the SkQ1 product[103]. - The estimated number of patients for the four types of conditions treatable by the anti-VEGF licensed product in China exceeded 15.5 million in 2019[105]. - The bFGF product series accounted for approximately 86.5% of the total revenue during the review period[98]. Corporate Governance - The company maintained compliance with the corporate governance code throughout the review period[189]. - All directors confirmed compliance with the code of conduct regarding securities trading for the six months ended June 30, 2022[194].

Financial Performance - The company reported a consolidated revenue of approximately HKD 1,637,700,000 for the fiscal year ending December 31, 2021, representing a 67.4% increase from approximately HKD 978,100,000 in 2020[11]. - The company achieved a profit after tax of approximately HKD 346,000,000, a 58.0% increase from approximately HKD 218,900,000 in 2020, correlating with the revenue growth of 67.4%[17]. - Net profit for 2021 was HKD 346.0 million, up 58.0% from HKD 218.9 million in 2020[85]. - The gross profit margin improved to 85.2% in 2021 from 81.2% in 2020[85]. - Total assets increased by 18.3% to HKD 2,863.4 million in 2021 from HKD 2,421.3 million in 2020[85]. - The company recorded a profit after tax of approximately HKD 346,000,000 for the year ended December 31, 2021, representing a 58.0% increase from approximately HKD 218,900,000 in 2020[165]. Revenue Segmentation - The ophthalmology segment contributed approximately HKD 673,300,000 to the total revenue, a 60.6% increase from approximately HKD 419,200,000 in 2020, while the surgical segment recorded revenue of approximately HKD 964,400,000, up 72.6% from approximately HKD 558,900,000 in 2020[13]. - The flagship biopharmaceutical products, Beifu Shu series and Beifu Ji series, accounted for approximately 84.3% of the total revenue, with Beifu Shu series contributing 26.1% and Beifu Ji series contributing 58.2%[12]. - The ophthalmology and surgical segments contributed approximately 41.1% and 58.9% to the total revenue, respectively, with flagship products accounting for 84.3% of total revenue[92]. Research and Development - The group has initiated a five-year R&D plan (2021-2025) to enhance its R&D capabilities and position in the ophthalmology field[35]. - There are currently 15 R&D projects in various stages, with 3 ophthalmology projects in clinical stages, which are considered mid-term growth drivers[35]. - The company has a pipeline of 15 R&D projects, with 3 in clinical stages for ophthalmology, viewed as mid-term growth drivers[78]. - The group is engaged in multiple clinical projects at different stages of development, including single-dose ophthalmic products and growth factor and antibody biopharmaceuticals[58]. - The group’s key projects under the enhancement plan include EB11-18136P for dry eye syndrome in late-stage clinical trials and EB12-20145P for wet age-related macular degeneration in phase three clinical trials[161]. Strategic Partnerships and Acquisitions - A joint development agreement was established with Mitotech S.A. for a dry eye treatment eye drop containing SkQ1, with positive results from the second phase of the Phase III clinical trial[17]. - The company entered into a joint development and exclusive licensing agreement with Shanghai Junshi Biosciences for a drug product targeting wet age-related macular degeneration, with ongoing Phase III clinical trials in multiple countries[18]. - The acquisition of product rights related to various formulations containing phosphatidylcholine was completed for a consideration of RMB 97,000,000 (approximately HKD 118,900,000), expected to strengthen the company's ophthalmology business[18]. - The group completed the acquisition of rights related to the product research and development of the Ailison® product for a consideration of RMB 97 million (approximately HKD 118.9 million), which is expected to strengthen the group's ophthalmology business[65]. Market Presence and Sales - The group has established a network of 43 regional sales offices in China with approximately 1,265 sales personnel, of which 64% are full-time employees and 36% are contract or agency personnel[19]. - The therapeutic products are available in over 10,500 hospitals and medical institutions, as well as approximately 2,110 pharmacies across major cities, provinces, and counties in China[19]. - The group has a commercial portfolio of preservative-free single-dose eye drops, including tobramycin, levofloxacin, and sodium hyaluronate, with recent approval for moxifloxacin eye drops in China[58]. Financial Management and Investments - Cash and cash equivalents as of December 31, 2021, were approximately HKD 671,300,000, compared to approximately HKD 599,800,000 as of December 31, 2020[17]. - The company has a convertible loan agreement with the International Finance Corporation for a principal amount of HKD 150,000,000, with an interest rate of 1.9%[101]. - The net proceeds from the convertible loan, approximately HKD 145,000,000, were utilized for strategic investments and the development of the biopharmaceutical business[102]. - The company has a bank financing limit of approximately HKD 763,000,000, of which about HKD 491,200,000 has been utilized[120]. Challenges and Risks - The company faced challenges due to extended lockdowns and border closures in its region, impacting operations during the year[11]. - The ongoing COVID-19 pandemic has created uncertainties regarding its potential financial impact on the company's operations and financial performance for the fiscal year ending December 31, 2022[176]. - The Chinese drug pricing system is government-controlled, leading to a general decline in treatment drug prices over the past 20 years, which may negatively impact market share, revenue, and profitability[175]. Shareholder Information - The proposed final dividend is HKD 0.055 per ordinary share, increasing from HKD 0.05 in the previous year, leading to a total dividend of HKD 0.095 for 2021[39]. - The company’s share repurchase program aims to enhance net asset value per share and earnings per share for the benefit of all shareholders[117]. - The company reported a profit attributable to owners of approximately HKD 346,000,000 for the year ended December 31, 2021, resulting in basic and diluted earnings per share of HKD 0.60 and HKD 0.58, respectively[109].

Financial Performance - Revenue for the six months ended June 30, 2021, was HKD 737,374,000, representing a 128% increase from HKD 323,835,000 in the same period of 2020[12] - Gross profit for the same period was HKD 622,694,000, up 144% from HKD 254,710,000 year-on-year[12] - Profit before tax increased to HKD 183,074,000, a 216% rise compared to HKD 57,790,000 in the prior year[12] - Net profit for the period was HKD 162,186,000, compared to HKD 49,188,000 in the previous year, marking a 229% increase[12] - The total comprehensive income for the period was HKD 180,212,000, significantly higher than HKD 2,826,000 in the same period of 2020[12] - The profit for the six months ended June 30, 2021, was HKD 218,712,000, compared to HKD 69,667,000 for the same period in 2020, reflecting a growth of 213.5%[29] - The group’s profit for the period was approximately HKD 162.2 million, a 229.7% increase from approximately HKD 49.2 million in the same period last year[118] Assets and Liabilities - Total assets as of June 30, 2021, amounted to HKD 2,618,277,000, up from HKD 2,421,339,000 at the end of 2020[14] - The company's total liabilities increased to HKD 1,040,924,000 from HKD 995,148,000, reflecting a growth of 4.6%[14] - The net asset value of the company reached HKD 1,577,353,000, compared to HKD 1,426,191,000 at the end of 2020, indicating a 10.6% increase[14] - Cash and cash equivalents increased to HKD 657,754,000 as of June 30, 2021, compared to HKD 390,388,000 at the end of 2020, marking a growth of 68.6%[29] - The company’s total liabilities included convertible loans with a fair value determined to be insignificant as of June 30, 2021[79] Earnings and Dividends - Basic earnings per share for the period were HKD 0.2812, up from HKD 0.0851 in the same period last year[12] - The company declared an interim dividend of HKD 0.04 per ordinary share for the six months ended June 30, 2021, compared to no dividend in the same period of 2020[45] - The basic and diluted earnings per share for the six months ended June 30, 2021, were HKD 0.2812 and HKD 0.2738, respectively, based on a profit attributable to shareholders of approximately HKD 162.2 million[129] Cash Flow and Financing - Cash generated from operating activities increased significantly to HKD 209,824,000 in the first half of 2021, up from HKD 57,828,000 in the same period of 2020, reflecting improved operational efficiency[18] - The net cash used in financing activities was HKD (37,688,000) for the six months ended June 30, 2021, an improvement from HKD (43,955,000) in the same period of 2020[29] - The total financing cost for the period was approximately HKD 5.4 million, compared to HKD 3.4 million in the same period last year[121] Research and Development - The group has initiated a five-year R&D plan from 2021 to 2025 to enhance its R&D capabilities in the ophthalmology field[108] - The group is conducting multiple research and development projects at various clinical stages, including single-dose ophthalmic products and biologics[97] - Total R&D expenses amounted to approximately HKD 85.9 million, representing 11.7% of revenue, compared to 14.7% in the same period last year, with HKD 74.8 million capitalized[120] Market and Product Development - The company is focusing on expanding its market presence and enhancing its product offerings, as indicated by ongoing investments in new technologies and product development[19] - The estimated number of moderate to severe dry eye patients in China exceeded 117 million in 2019, indicating a significant market potential for the SkQ1 product[102] - The group has launched T-Bactum®, an antimicrobial oral care product, leveraging patented nano-emulsion technology[97] Employee and Management - The salary and other benefits paid to key management personnel amounted to HKD 4,827,000 for the six months ended June 30, 2021, compared to HKD 2,934,000 for the same period in 2020[93] - The group employed 1,308 full-time employees as of June 30, 2021, an increase from 1,242 full-time employees as of December 31, 2020[144] Corporate Governance - The audit committee reviewed the accounting principles and practices adopted by the group and discussed internal controls and financial reporting matters for the six months ended June 30, 2021[187] - The company has complied with the corporate governance code as per the listing rules throughout the review period[186] - All directors confirmed compliance with the standards set forth in the code regarding securities transactions during the six months ended June 30, 2021[191]

Financial Performance - For the year ended December 31, 2020, the company reported a consolidated revenue of approximately HKD 978.1 million, a decrease of 23.6% compared to the previous year, primarily due to a 44.3% decline in the first half of 2020 caused by COVID-19 control measures in China[11]. - The company's net profit after tax for the year was approximately HKD 218.9 million, down 27.6% from HKD 302.5 million in 2019, attributed to the impacts of COVID-19[13]. - The company's total assets increased by 16.5% to HKD 2,421.3 million, up from HKD 2,077.9 million in 2019[89]. - The company's gross profit margin improved slightly to 81.2% from 80.8% in the previous year[89]. - The distribution and selling expenses decreased by 24.7% to approximately HKD 476.6 million, aligning with the revenue decline[101]. - The company reported a total revenue of approximately HKD 978.1 million for the year ended December 31, 2020, representing a decrease of 23.6% compared to HKD 1,279.5 million in 2019[96]. - Net profit for the year was approximately HKD 218.9 million, down 27.6% from HKD 302.5 million in the previous year[101]. Revenue Segmentation - The ophthalmology segment contributed approximately HKD 419.2 million to the company's revenue, a decrease of 26.1%, while the surgical segment recorded total revenue of approximately HKD 558.9 million, a decrease of 21.5%[13]. - The bFGF product series accounted for approximately 83.3% of the total revenue for the group in the reviewed year[57]. - The ophthalmology segment contributed approximately HKD 419.2 million to the group's revenue, down 26.1% year-on-year[173]. - The surgical segment recorded total revenue of approximately HKD 558.9 million, a decrease of 21.5% compared to the previous year[173]. Research and Development - The company is investing in new products and technologies to enhance its product and R&D pipeline, focusing on ophthalmology and oncology as growth drivers[17]. - The company initiated a five-year R&D plan (2021-2025) to enhance its capabilities and position in the ophthalmology field, with 15 R&D projects in various stages, including 4 in clinical trial phases[34]. - The group has 15 R&D projects in various stages, with 4 ophthalmology projects currently in the IND/NDA stages[80]. - The group is advancing its pipeline under the enhancement program, with key projects in late-stage clinical development, including EB11-18136P for dry eye syndrome and EB12-20145P for wet age-related macular degeneration[167]. - The group has ongoing clinical research and development projects, including single-dose ophthalmic products and biologics involving growth factors and antibodies[61]. Strategic Partnerships and Agreements - A framework agreement was signed with Tibet Linzhi Baisheng Pharmaceutical Co., Ltd. for the potential acquisition of all intellectual property related to the development and production of various formulations of a specific product[18]. - The company entered into a co-development and exclusive licensing agreement with Shanghai Junshi Biosciences Co., Ltd. to develop a product for treating wet age-related macular degeneration, with a commitment to fund up to USD 24 million, covering 80% of development costs[18]. - The company entered an IP licensing agreement with Guangzhou Kangrui Biopharmaceutical Technology Co., Ltd. to develop and commercialize molecules for oncology treatment[22]. - The group entered into an IP licensing agreement with Guangzhou Kangrui Biopharmaceutical Technology Co., Ltd. to develop and commercialize therapeutic products for oncology[68]. Market Expansion - The company is expanding its market channels to Southeast Asia by establishing a base in Singapore[24]. - The company plans to leverage its investment in YesDok to expand into the Southeast Asian market, particularly Indonesia[181]. - The company aims to leverage online platforms for chronic disease patients through medical technology innovations[23]. Financial Position and Investments - As of December 31, 2020, the company's cash and cash equivalents amounted to approximately HKD 599.8 million, an increase from approximately HKD 473.3 million as of December 31, 2019[16]. - The group had bank credit facilities of approximately HKD 848.7 million, with HKD 434.1 million utilized[122]. - The group's cash and cash equivalents amounted to approximately HKD 599.8 million as of December 31, 2020, up from HKD 473.3 million as of December 31, 2019, representing a year-over-year increase of 26.7%[122]. - The total investment cost for the clinical development of the SkQ1 product with Mitotech S.A. amounted to approximately HKD 296,200,000, representing 12.2% of the total assets as of December 31, 2020[69]. - The actual investment cost for the co-development of licensed products with Fuhong Hanlin was approximately HKD 73,700,000, accounting for 3.0% of the total assets as of December 31, 2020[69]. Employee and Operational Insights - The total employee compensation for the year was approximately HKD 235.9 million, compared to HKD 214.5 million in the previous year, marking an increase of 9.9%[131]. - The group had 1,242 full-time employees as of December 31, 2020, an increase from 1,110 in 2019, representing a growth of 11.9%[131]. - The company has established a network of 43 regional sales offices in China, employing approximately 1,290 sales personnel, with about 38% being contract or agency staff[23]. - The company sells products to over 9,000 hospitals and medical institutions, as well as approximately 2,000 pharmacies in major cities, provinces, and counties in China[199]. Future Outlook and Challenges - The company anticipates rapid development in new drug discovery and development involving recombinant DNA technology and other pharmaceutical technologies[186]. - The COVID-19 pandemic continues to pose uncertainties regarding its potential financial impact on the company's operations and financial performance for the fiscal year ending December 31, 2021[188]. - Ongoing changes in local regulations and policies in China's healthcare and pharmaceutical sectors may significantly impact the company's operational performance and development prospects[187]. - The Chinese drug pricing system, controlled by the government, has led to a general decline in treatment drug prices over the past 20 years, potentially exerting downward pressure on drug prices and adversely affecting market share and profitability[186]. Corporate Social Responsibility - The company emphasizes environmental protection and aims to create an eco-friendly work environment through energy conservation and recycling initiatives[189]. - The company has been recognized with the "Most Socially Responsible Listed Company" award and ranked in the Forbes Asia Small and Medium Listed Companies list for 2020[71][72]. - The company has established long-term partnerships with multiple suppliers, ensuring compliance with quality and ethical commitments[198].

Company Information [Board of Directors and Committees](index=6&type=section&id=董事会) This section outlines the composition of the company's board, including executive and independent non-executive directors, and members of key committees - Executive Directors: **Yim Ming Chi** (Chairman), **Fong Hoi Chow** (Managing Director)[10](index=10&type=chunk) - Independent Non-Executive Directors: **Fung Chi Ying**, **Mauffrey Benoit Jean Marie**, **Yau Mui Mui**[10](index=10&type=chunk) - The Audit Committee Chairman is **Fung Chi Ying**, while the Remuneration, Nomination, and Corporate Governance Committees Chairwoman is **Yau Mui Mui**[10](index=10&type=chunk) [Registered and Principal Offices](index=6&type=section&id=注册办事处) This section details the company's registered office in the Cayman Islands, principal place of business in Hong Kong, and Zhuhai headquarters - Registered office is located at Cricket Square, Hutchins Drive, P.O. Box 2681 Grand Cayman KY1-1111, Cayman Islands[10](index=10&type=chunk) - The principal place of business in Hong Kong is Room 2818, China Merchants Tower, Shun Tak Centre, 168–200 Connaught Road Central, Hong Kong[10](index=10&type=chunk) - Zhuhai headquarters is located at No. 88, Keji 6th Road, High-tech Zone, Zhuhai, Guangdong, China[10](index=10&type=chunk) [Share and Banking Information](index=6&type=section&id=主要股份过户登记处) This section provides essential information on the company's share registrars, principal bankers, and stock code - The principal share registrar is SMP Partners (Cayman) Limited; Hong Kong share registrar is Hong Kong Registrars Limited[10](index=10&type=chunk) - Principal bankers include The Hongkong and Shanghai Banking Corporation Limited, Bank of China, Bank of Communications Co., Ltd., China Merchants Bank, China Construction Bank, and Industrial and Commercial Bank of China (Asia) Limited[10](index=10&type=chunk) - The company's stock code is **01061**[10](index=10&type=chunk) Financial Statements [Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=7&type=section&id=简明综合损益及其他全面收益表) This report presents the unaudited consolidated profit or loss and other comprehensive income for the six months ended June 30, 2020, showing significant year-on-year declines in turnover and profit, with exchange differences leading to an other comprehensive loss Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data | Indicator | H1 2020 (thousand HKD) | H1 2019 (thousand HKD) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Turnover | 323,835 | 581,716 | -44.3% | | Gross Profit | 254,710 | 468,766 | -45.7% | | Profit Before Income Tax | 57,790 | 149,780 | -61.4% | | Profit for the Period | 49,188 | 129,575 | -62.0% | | Other Comprehensive Income for the Period | (46,362) | 11,116 | N/A (turned to loss) | | Total Comprehensive Income for the Period | 2,826 | 140,691 | -98.0% | | Basic Earnings Per Share | 8.51 HK cents | 22.39 HK cents | -61.9% | | Diluted Earnings Per Share | 8.51 HK cents | 21.96 HK cents | -61.2% | [Condensed Consolidated Statement of Financial Position](index=8&type=section&id=简明综合财务状况表) As of June 30, 2020, the company's total assets and net assets both decreased, while current liabilities slightly increased, leading to a reduction in net current assets and a change in the asset-liability structure Condensed Consolidated Statement of Financial Position Key Data | Indicator | June 30, 2020 (thousand HKD) | December 31, 2019 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Total Non-Current Assets | 773,233 | 810,453 | (37,220) | | Total Current Assets | 1,084,610 | 1,267,490 | (182,880) | | Total Assets | 1,857,843 | 2,077,943 | (220,100) | | Total Current Liabilities | 518,843 | 509,090 | 9,753 | | Total Non-Current Liabilities | 167,492 | 371,708 | (204,216) | | Total Liabilities | 686,335 | 880,798 | (194,463) | | Net Assets | 1,171,508 | 1,197,145 | (25,637) | [Condensed Consolidated Statement of Changes in Equity](index=9&type=section&id=简明综合权益变动表) For the six months ended June 30, 2020, total equity decreased from HK$1,197,145 thousand at the beginning of the period to HK$1,171,508 thousand, primarily due to reduced profit, exchange differences, and fair value changes of equity instruments at fair value through other comprehensive income - As of June 30, 2020, the company's total equity was **HK$1,171,508 thousand**, a decrease from **HK$1,197,145 thousand** as of January 1, 2020[16](index=16&type=chunk) - Profit for the period was **HK$49,188 thousand**, but this was largely offset by exchange differences arising from the translation of financial statements of overseas operations (**HK$27,261 thousand loss**) and fair value changes of equity instruments at fair value through other comprehensive income (**HK$19,101 thousand loss**)[16](index=16&type=chunk) - Dividends paid amounted to **HK$28,897 thousand**[16](index=16&type=chunk) [Condensed Consolidated Statement of Cash Flows](index=10&type=section&id=简明综合现金流量表) For the six months ended June 30, 2020, net cash from operating activities decreased, cash outflow from investing activities increased, and financing activities shifted from net inflow to net outflow, resulting in a net decrease in cash and cash equivalents Condensed Consolidated Statement of Cash Flows Key Data | Indicator | H1 2020 (thousand HKD) | H1 2019 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Net Cash Generated from Operating Activities | 57,828 | 83,618 | (25,790) | | Net Cash Used in Investing Activities | (88,588) | (76,332) | (12,256) | | Net Cash (Used in) / Generated from Financing Activities | (43,955) | 17,596 | (61,551) | | Net (Decrease) / Increase in Cash and Cash Equivalents | (74,715) | 24,882 | (99,597) | | Cash and Cash Equivalents at End of Period | 390,388 | 334,730 | 55,658 | Notes to the Condensed Consolidated Interim Financial Statements [1. General Information](index=12&type=section&id=1.%20一般资料) Essex Bio-Technology Limited is incorporated in the Cayman Islands, listed on the HKEX, and primarily engaged in investment holding and the development, manufacturing, and sale of biopharmaceutical products in China - The company was incorporated as a limited liability company in the Cayman Islands on **July 31, 2000**, and its shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (Stock Code: **1061**)[24](index=24&type=chunk) - The Group's principal activities are investment holding and the development, manufacture, and sale of biopharmaceutical products in the People's Republic of China[24](index=24&type=chunk) [2. Basis of Preparation and Accounting Policies](index=12&type=section&id=2.%20编制基准) The condensed consolidated interim financial statements are prepared in accordance with HKAS 34 and HKEX Listing Rules, using consistent accounting policies with the 2019 annual financial statements, with no significant impact from new standards - The condensed consolidated interim financial statements have been prepared in accordance with Hong Kong Accounting Standard **34 Interim Financial Reporting** issued by the Hong Kong Institute of Certified Public Accountants and the applicable disclosure requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[25](index=25&type=chunk) - The accounting policies adopted in the preparation of these condensed consolidated interim financial statements are consistent with those followed in the preparation of the 2019 financial statements, except for the adoption of revised standards effective for annual periods beginning on or after **January 1, 2020**, which had no significant impact[27](index=27&type=chunk) [4. Segment Reporting](index=13&type=section&id=4.%20分部报告) The company manages its business by product type (ophthalmic and surgical products) and has reorganized its internal reporting structure; both segments saw significant year-on-year declines in revenue and profit in H1 2020, with a major customer contributing over 10% of revenue - The Group manages its businesses by product type, and the identified reportable operating segments have been reorganized into **ophthalmic products** and **surgical products**[30](index=30&type=chunk) Reportable Segment Revenue and Profit | Segment | H1 2020 Revenue (thousand HKD) | H1 2019 Revenue (thousand HKD) | Revenue YoY Change (%) | H1 2020 Profit (thousand HKD) | H1 2019 Profit (thousand HKD) | Profit YoY Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Ophthalmic Products | 146,048 | 249,919 | -41.6% | 32,695 | 69,701 | -53.1% | | Surgical Products | 177,787 | 331,797 | -46.4% | 36,972 | 92,195 | -59.9% | | **Total** | **323,835** | **581,716** | **-44.3%** | **69,667** | **161,896** | **-57.0%** | - For the six months ended June 30, 2020, one major customer contributed **HK$78,200,000** in revenue, accounting for over **10%** of the Group's total revenue[34](index=34&type=chunk) [5. Turnover and Other Income](index=14&type=section&id=5.%20营业额) Turnover primarily represents sales value of products and service income, net of sales taxes. Other income and gains decreased year-on-year in H1 2020, mainly due to reduced government grants, royalty income, and processing income, but fair value changes of financial assets at fair value through profit or loss increased - Turnover refers to the sales value of products supplied to customers and service income (net of sales taxes, value-added tax, trade discounts, and sales returns)[35](index=35&type=chunk) Other Income and Other Gains and Losses | Item | H1 2020 (thousand HKD) | H1 2019 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Interest income from convertible loans receivable | 944 | 392 | 552 | | Government grants | 2,871 | 4,047 | (1,176) | | Interest income from bank deposits | 2,823 | 888 | 1,935 | | Fair value changes of financial assets at fair value through profit or loss | 7,959 | 5,791 | 2,168 | | Royalty income | 2,577 | 5,399 | (2,822) | | Miscellaneous income | 780 | 2,569 | (1,789) | | Processing income | – | 1,070 | (1,070) | | **Total** | **15,747** | **20,156** | **(4,409)** | [7. Finance Costs and Profit Before Income Tax](index=15&type=section&id=7.%20融资成本) Finance costs decreased year-on-year in H1 2020, mainly due to increased capitalization. Profit before income tax was affected by various expenses, including depreciation, amortization, staff costs, and R&D costs Finance Costs | Item | H1 2020 (thousand HKD) | H1 2019 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Interest expense on bank borrowings | 2,759 | 996 | 1,763 | | Interest expense on lease liabilities | 114 | 129 | (15) | | Imputed interest expense on convertible loan payable | 4,465 | 4,256 | 209 | | Less: Amount capitalized | (3,957) | (1,142) | (2,815) | | **Total** | **3,381** | **4,239** | **(858)** | - Profit before income tax was **HK$57,790 thousand** (H1 2019: **HK$149,780 thousand**), primarily influenced by factors such as cost of inventories, cost of services, depreciation, amortization, staff costs, and research and development costs[12](index=12&type=chunk)[38](index=38&type=chunk) [9. Income Tax and Dividends](index=15&type=section&id=9.%20所得税) The company's main operating subsidiary in Zhuhai, China, enjoys a preferential tax rate of 15% as a high-tech enterprise, with different rates in other regions. The board does not recommend an interim dividend for H1 2020 - The Group's principal operating subsidiary in Zhuhai, China, as a high-tech enterprise, enjoys a preferential tax rate of **15%**[39](index=39&type=chunk) - Other operating subsidiaries of the Group in China, Singapore, and the United States are subject to corporate income tax rates of **25%**, **17%**, and **27.3%**, respectively[40](index=40&type=chunk) - The Board does not recommend the declaration of an interim dividend for the six months ended June 30, 2020 (six months ended June 30, 2019: interim dividend of **HK$0.035** per ordinary share declared)[41](index=41&type=chunk) [11. Earnings Per Share](index=16&type=section&id=11.%20每股盈利) Basic and diluted earnings per share for H1 2020 were both 8.51 HK cents, a significant decrease from the prior year, primarily due to reduced profit for the period Earnings Per Share | Indicator | H1 2020 | H1 2019 | YoY Change (%) | | :--- | :--- | :--- | :--- | | Basic Earnings Per Share | 8.51 HK cents | 22.39 HK cents | -61.9% | | Diluted Earnings Per Share | 8.51 HK cents | 21.96 HK cents | -61.2% | - For the six months ended June 30, 2020, the calculation of diluted earnings per share did not assume the issuance of potential ordinary shares related to all outstanding share options and convertible loans payable, as they had an anti-dilutive effect[47](index=47&type=chunk) [12. Property, Plant and Equipment](index=17&type=section&id=12.%20物业、厂房及设备) As of June 30, 2020, the carrying value of property, plant and equipment increased to HK$195,023 thousand, mainly due to additions to construction in progress and plant and machinery, also affected by exchange adjustments Property, Plant and Equipment Carrying Value | Item | June 30, 2020 (thousand HKD) | December 31, 2019 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Buildings and leasehold improvements | 99,320 | 102,936 | (3,616) | | Plant and machinery | 39,467 | 44,332 | (4,865) | | Furniture, fixtures and equipment | 18,772 | 16,297 | 2,475 | | Motor vehicles | 2,105 | 2,141 | (36) | | Construction in progress | 35,359 | 14,655 | 20,704 | | **Total** | **195,023** | **180,361** | **14,662** | - In H1 2020, additions to construction in progress amounted to **HK$21,195 thousand**, and additions to plant and machinery were **HK$1,130 thousand**[50](index=50&type=chunk) [13. Other Intangible Assets](index=18&type=section&id=13.%20其他无形资产) As of June 30, 2020, the carrying value of other intangible assets increased to HK$412,709 thousand, primarily due to additions in development costs and intangible assets Other Intangible Assets Carrying Value | Item | June 30, 2020 (thousand HKD) | December 31, 2019 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Development costs | 134,326 | 124,665 | 9,661 | | Intangible assets | 278,383 | 252,363 | 26,020 | | **Total** | **412,709** | **377,028** | **35,681** | - In H1 2020, additions to development costs amounted to **HK$13,250 thousand**, and additions to intangible assets were **HK$31,421 thousand**[54](index=54&type=chunk) [14. Convertible Loans Receivable](index=18&type=section&id=14.%20应收可换股贷款) The company holds Convertible Loan C, Convertible Loan E, and Convertible Loan F, totaling HK$53,420 thousand, with most being current portions. Fair values are calculated using a binomial option pricing model - The Group's convertible loans receivable totaled **HK$53,420 thousand** (December 31, 2019: **HK$46,075 thousand**), comprising Convertible Loan C, Convertible Loan E, and Convertible Loan F[65](index=65&type=chunk) - As of June 30, 2020, the current portion of convertible loans receivable was **HK$48,527 thousand**, and the non-current portion was **HK$4,893 thousand**[65](index=65&type=chunk) - The fair value of convertible loans receivable is calculated using a binomial option pricing model, with key assumptions including expected volatility (C: **113%**, E: **54%**, F: **81%**)[65](index=65&type=chunk) [15. Financial Assets at Fair Value Through Other Comprehensive Income and Profit or Loss](index=21&type=section&id=15.%20按公平值计入其他全面收益之财务资產及按公平值计入损益之财务资產) The company holds equity investments designated at fair value through other comprehensive income (listed and unlisted) and equity investments designated at fair value through profit or loss. In H1 2020, both non-current and current portions significantly decreased Financial Assets at Fair Value Through Other Comprehensive Income and Profit or Loss | Item | June 30, 2020 (thousand HKD) | December 31, 2019 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Non-current - Equity investments designated at fair value through other comprehensive income | 94,478 | 109,774 | (15,296) | | Current - Equity investments designated at fair value through other comprehensive income | 1,940 | 10,564 | (8,624) | | Current - Equity investments designated at fair value through profit or loss | 20 | 25 | (5) | - Unlisted equity investments include investments in private companies in the United States and Singapore, as well as equity investments in Shanggong and Antikor[69](index=69&type=chunk) - During the period ended June 30, 2020, the Group disposed of a portion of its equity interest in MeiraGTx, with cumulative gains of approximately **HK$1,600 thousand** recognized in other comprehensive income reclassified to retained earnings[69](index=69&type=chunk) [16. Inventories](index=22&type=section&id=16.%20存货) As of June 30, 2020, the company's total inventories slightly increased, mainly reflecting growth in work-in-progress and finished goods Inventory Composition | Item | June 30, 2020 (thousand HKD) | December 31, 2019 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Raw materials | 10,837 | 10,998 | (161) | | Work in progress | 15,018 | 9,309 | 5,709 | | Finished goods | 94,459 | 93,818 | 641 | | **Total** | **120,314** | **114,125** | **6,189** | [17. Trade and Other Receivables](index=23&type=section&id=17.%20应收货款及其他应收款项) As of June 30, 2020, total trade and other receivables significantly decreased, primarily due to a reduction in trade receivables, though trade receivables aged over 90 days increased Trade and Other Receivables | Item | June 30, 2020 (thousand HKD) | December 31, 2019 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Trade receivables (net of impairment losses) | 429,808 | 608,811 | (179,003) | | Other receivables | 37,375 | 42,926 | (5,551) | | **Total** | **467,183** | **651,737** | **(184,554)** | - The Group's policy grants its trade customers an average credit period of **90 days**[76](index=76&type=chunk) Trade Receivables Ageing Analysis | Ageing | June 30, 2020 (thousand HKD) | December 31, 2019 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | 0 to 60 days | 204,844 | 418,493 | (213,649) | | 61 to 90 days | 70,164 | 54,291 | 15,873 | | Over 90 days | 154,800 | 136,027 | 18,773 | [18. Deposits and Prepayments](index=23&type=section&id=18.%20按金及预付款项) As of June 30, 2020, total deposits and prepayments increased to HK$34,816 thousand, mainly due to higher deposits paid for property, plant and equipment Deposits and Prepayments | Item | June 30, 2020 (thousand HKD) | December 31, 2019 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Deposits paid for acquisition of property, plant and equipment | 15,170 | 10,201 | 4,969 | | Deposits paid for acquisition of other intangible assets | 5,483 | – | 5,483 | | Other deposits | 906 | 840 | 66 | | Other prepayments | 13,257 | 13,008 | 249 | | **Total** | **34,816** | **24,049** | **10,767** | [19. Trade and Other Payables](index=24&type=section&id=19.%20应付货款及其他应付款项) As of June 30, 2020, total trade and other payables significantly decreased, primarily due to reductions in trade payables and other payables Trade and Other Payables | Item | June 30, 2020 (thousand HKD) | December 31, 2019 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Trade payables | 5,515 | 53,139 | (47,624) | | Other payables and accrued expenses | 297,813 | 412,816 | (115,003) | | **Total** | **303,328** | **465,955** | **(162,627)** | - Other payables and accrued expenses include accrued sales and marketing costs of approximately **HK$283,700 thousand** (December 31, 2019: approximately **HK$355,500 thousand**)[81](index=81&type=chunk) [20. Bank Borrowings](index=24&type=section&id=20.%20银行借贷) As of June 30, 2020, total bank borrowings were HK$210,375 thousand, with most repayable after one year. The company secured bank facilities of approximately HK$626,100 thousand, of which HK$220,000 thousand was utilized - As of June 30, 2020, bank borrowings amounted to **HK$210,375 thousand** (December 31, 2019: **HK$19,250 thousand** current, **HK$200,750 thousand** non-current)[15](index=15&type=chunk) - Bank borrowings and bank facilities are secured by corporate guarantees provided by the company and its subsidiaries, and pledged bank deposits of approximately **HK$42,100 thousand**[83](index=83&type=chunk) - As of June 30, 2020, the Group had bank facilities of approximately **HK$626,100 thousand**, of which **HK$220,000 thousand** had been utilized[83](index=83&type=chunk) [21. Convertible Loan Payable](index=24&type=section&id=21.%20应付可换股贷款) The company's HK$150,000 thousand convertible loan with IFC, bearing 1.9% annual interest and a conversion price of HK$5.9 per share, had its maturity date extended by three years to the eighth anniversary of the disbursement date - The Group entered into a convertible loan agreement with International Finance Corporation (IFC) involving a principal amount of **HK$150,000,000**, bearing interest at an annual rate of **1.9%**[84](index=84&type=chunk)[86](index=86&type=chunk) - The conversion price is **HK$5.9** per share[87](index=87&type=chunk) - On **July 10, 2020**, the Group entered into an amendment agreement to the convertible loan agreement with IFC, extending the maturity date by **3 years** to the eighth anniversary of the disbursement date[84](index=84&type=chunk) Convertible Loan Payable Movement | Item | June 30, 2020 (thousand HKD) | December 31, 2019 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Debt component | 143,183 | 140,159 | 3,024 | | Conversion component | 33,323 | 33,323 | 0 | | **Total** | **176,506** | **173,482** | **3,024** | [22. Fair Value Measurement of Financial Instruments](index=26&type=section&id=22.%20财务工具之公平值计量) The fair value measurement of the company's financial instruments uses market observable inputs, categorized into three fair value levels. Convertible loans receivable and equity investments are measured at fair value, while other financial instruments' carrying amounts approximate their fair values - Fair value measurements are categorized into three levels: Level 1 (quoted prices in active markets for identical assets or liabilities), Level 2 (directly or indirectly observable inputs), and Level 3 (inputs not based on observable market data)[92](index=92&type=chunk) - Convertible loans receivable and equity investments are measured and disclosed at fair value[93](index=93&type=chunk) - The carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables, bank borrowings, lease liabilities, and other instruments approximate their fair values[95](index=95&type=chunk) Financial Instruments Measured at Fair Value | Item | Level 1 (thousand HKD) | Level 2 (thousand HKD) | Level 3 (thousand HKD) | Total (thousand HKD) | | :--- | :--- | :--- | :--- | :--- | | **June 30, 2020** | | | | | | Listed equity investments | 28,682 | – | – | 28,682 | | Unlisted equity investments | – | 36,881 | 30,875 | 67,756 | | Convertible loans receivable | – | – | 53,420 | 53,420 | | **December 31, 2019** | | | | | | Listed equity investments | 44,580 | – | – | 44,580 | | Unlisted equity investments | – | 49,913 | 25,870 | 75,783 | | Convertible loans receivable | – | – | 46,075 | 46,075 | [23. Capital Commitments and Contingent Liabilities](index=27&type=section&id=23.%20资本承擔) As of June 30, 2020, total capital commitments were HK$331,747 thousand, primarily for new factory construction, acquired intangible assets, and development expenditures. The group had no significant contingent liabilities Capital Commitments | Item | June 30, 2020 (thousand HKD) | December 31, 2019 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Property, plant and equipment | 3,080 | 5,096 | (2,016) | | Development expenditure | 29,469 | 28,025 | 1,444 | | Acquired intangible assets | 108,147 | 133,446 | (25,299) | | Construction of new factory | 181,401 | 199,237 | (17,836) | | Expansion of existing factory | 9,650 | – | 9,650 | | **Total** | **331,747** | **365,804** | **(34,057)** | - As of June 30, 2020, the Group had no significant contingent liabilities[148](index=148&type=chunk) [24. Related Party Transactions](index=28&type=section&id=24.%20关连方交易) In May 2020, the company acquired 100% equity of Majeton Pte. Ltd., with part of the payment made to the son of Chairman Yim Ming Chi. Remuneration paid to key management personnel is also disclosed - On **May 29, 2020**, the Group acquired **100%** equity interest in Majeton Pte. Ltd. from Yim Yin Lung (son of Yim Ming Chi, Chairman and Executive Director of the Company) and two independent third parties, with **SGD260,000** (approximately **HK$1,400,000**) paid to Yim Yin Lung[103](index=103&type=chunk) Remuneration Paid to Key Management Personnel (Directors) | Item | H1 2020 (thousand HKD) | H1 2019 (thousand HKD) | Change (thousand HKD) | | :--- | :--- | :--- | :--- | | Salaries and other benefits | 2,934 | 3,048 | (114) | | Pension scheme contributions | 14 | 20 | (6) | | **Total** | **2,948** | **3,068** | **(120)** | [25. Events After Reporting Period](index=28&type=section&id=25.%20报告期后事项) In addition to the amendment of the convertible loan agreement with IFC, the company also entered into a US$25,000,000 loan agreement with IFC, which had not been drawn down as of the reporting date - In addition to the amendment agreement with IFC disclosed in Note 21, on **July 10, 2020**, the Group entered into a loan agreement with IFC, whereby IFC conditionally agreed to lend and the Group conditionally agreed to borrow a loan with a principal amount of **US$25,000,000** (approximately **HK$193,800,000**) [105](index=105&type=chunk) - As of the date of this report, the Group had not drawn down any portion of the loan[105](index=105&type=chunk) Management Discussion and Analysis [Business Review and Outlook](index=29&type=section&id=业务回顾及展望) The company focuses on R&D, production, and sales of gene-engineered drug rb-bFGF, primarily for ophthalmic and surgical fields, expanding into new areas via the "Enhancement Program." The bFGF series is the core revenue source, accounting for approximately 81.5% of total turnover - The Group focuses on the research, development, production, and sale of gene-engineered drug **rb-bFGF**, which promotes the repair and regeneration of various cells[109](index=109&type=chunk) - Key therapeutic areas are **ophthalmology** and **surgery**, with expansion into new therapeutic areas such as oncology, orthopedics, and neurology through the Group's Enhancement Program[109](index=109&type=chunk) - The combined turnover of the **bFGF series** (including Beifushu, Beifuji, and Beifuxin) accounts for approximately **81.5%** of the Group's total turnover[109](index=109&type=chunk) - The Group has received approval in China for the registration, production, and commercialization of several preservative-free single-dose eye drops, which are expected to strengthen the product pipeline in the coming years[110](index=110&type=chunk) [Enhancement Program](index=30&type=section&id=增进计划) Since 2015, the company has invested approximately HK$439,200 thousand through its "Enhancement Program" to boost R&D capabilities and expand its product portfolio, mainly focusing on ophthalmic, oncology, and medical technology therapeutic areas - The Enhancement Program, launched in **2015**, has invested a total of approximately **HK$439,200 thousand** in multiple projects and/or entities at different clinical development stages, primarily focusing on ophthalmic and oncology fields, as well as medical technology therapies[112](index=112&type=chunk) - On **June 4, 2020**, the Group entered into a framework agreement with Tibet Linzhi Baisheng Pharmaceutical Co., Ltd. regarding the potential acquisition of all intellectual property rights related to the R&D technology and production processes of Iodized Lecithin and other different dosage forms of drugs with Iodized Lecithin as the active pharmaceutical ingredient[112](index=112&type=chunk) [Market Development](index=30&type=section&id=市场开发) The company maintains a strong sales and distribution network in China, covering approximately 8,880 hospitals and 2,000 pharmacies. To adapt to regulatory changes, the company implemented strategies such as investing in clinical observation, covering lower-tier cities, developing pharmacy channels, and building online platforms, while also expanding into Southeast Asian markets - The Group maintains a strong sales and distribution network in China by establishing **43** regional sales offices and deploying approximately **1,310** sales personnel and marketing representatives[113](index=113&type=chunk) - The Group's pharmaceutical products are prescribed in approximately **8,880** hospitals and medical institutions and approximately **2,000** pharmacies across major cities, provinces, and counties in China[113](index=113&type=chunk) - Sales and marketing strategies have been implemented to enhance competitiveness, including investing in clinical observation programs, covering lower-tier city markets, developing pharmacies as supplementary sales channels, and building online platforms[113](index=113&type=chunk) - During the review period, the Group began expanding its sales and distribution network into Southeast Asian countries by establishing a base in Singapore[114](index=114&type=chunk) [Research and Development and Production Capacity](index=31&type=section&id=研发) The company's main R&D initiatives include growth factors, antibodies, drug formulations, and blow-fill-seal platforms, possessing a recombinant protein technology platform and 30 patents. It has secured approval for 4 preservative-free single-dose eye drops in China and established an R&D center in the US for oncology and ophthalmic targeted antibody research - The Group's main R&D programs include **growth factors**, **antibodies**, **drug formulations**, and **blow-fill-seal platforms**[117](index=117&type=chunk) - As of June 30, 2020, the Group had received approval in China for the registration and commercialization of **4** preservative-free single-dose eye drops[117](index=117&type=chunk) - As of the date of this report, the Group holds a total of **30** patent certificates or authorizations, including **23** invention patents, **3** utility model patents, and **4** design patents[118](index=118&type=chunk) - The Group established a wholly-owned subsidiary, EssexBio Therapeutics Inc., in the United States on **March 9, 2020**, to serve as its R&D center in the US and to manage clinical trials for the Group's products[118](index=118&type=chunk) - The Group's Zhuhai plant is equipped with well-appointed production lines for manufacturing pharmaceutical raw materials, flagship biopharmaceutical formulations, and advanced blow-fill-seal production lines[119](index=119&type=chunk) - The Group is constructing a second plant in Zhuhai High-tech Zone, expected to be completed by mid-**2023**, which will house an R&D center, additional manufacturing facilities, administrative offices, and staff dormitories[120](index=120&type=chunk) [Financial Review](index=32&type=section&id=财务回顾) Total turnover for H1 2020 decreased by 44.3% year-on-year to HK$323.8 million, and profit for the period decreased by 62.0% to HK$49.2 million, primarily due to the impact of the COVID-19 pandemic. Distribution and selling expenses declined in line with turnover, while administrative expenses increased due to donations and business expansion - For the six months ended June 30, 2020, the Group recorded a total turnover of approximately **HK$323.8 million**, a **44.3%** decrease compared to the same period last year, primarily attributed to the restrictive measures implemented by various provincial and municipal governments in China during the review period to curb the spread of COVID-19[122](index=122&type=chunk) Turnover Composition | Segment | H1 2020 (million HKD) | H1 2019 (million HKD) | YoY Change (%) | | :--- | :--- | :--- | :--- | | Ophthalmic | 146.0 | 249.9 | -41.6% | | Surgical | 177.8 | 331.8 | -46.4% | | **Total** | **323.8** | **581.7** | **-44.3%** | - During the review period, the Group's profit was approximately **HK$49.2 million**, a **62.0%** decrease compared to approximately **HK$129.6 million** in the same period last year, due to the aforementioned impact of COVID-19[125](index=125&type=chunk) - Distribution and selling expenses for the review period were approximately **HK$163.5 million**, a **45.6%** decrease from approximately **HK$300.7 million** in the same period last year, consistent with the decrease in turnover[125](index=125&type=chunk) - Administrative expenses for the review period were approximately **HK$45.7 million**, primarily including approximately **HK$5.8 million** in donations and approximately **HK$3.7 million** for business expansion in Singapore and the United States, as well as the establishment of an online medical consultation platform[126](index=126&type=chunk) - Research and development expenses for the period ended June 30, 2020, increased to approximately **HK$3.0 million** from approximately **HK$1.1 million** in the same period last year[126](index=126&type=chunk) [Convertible Loan from International Finance Corporation ("IFC")](index=33&type=section&id=国际金融公司（「国际金融公司」）提供的可换股贷款) The company's HK$150,000 thousand convertible loan with IFC had its maturity date extended by three years. The net proceeds were used for strategic investments and biopharmaceutical business development. As of June 30, 2020, the loan remained unconverted, and the company is capable of meeting its repayment obligations - The company entered into a convertible loan agreement with IFC to borrow a convertible loan with a principal amount of **HK$150,000,000**, bearing an annual interest rate of **1.9%**, and a conversion price of **HK$5.90** per share[129](index=129&type=chunk) - On **July 10, 2020**, the company entered into an amendment agreement to the convertible loan agreement with IFC to extend the maturity date by **three years**[130](index=130&type=chunk) - The net proceeds from the convertible loan, approximately **HK$145,000,000**, were utilized in **2018** according to the intended purposes, for the company's strategic investments and development of the Group's biopharmaceutical business, as well as general working capital needs[132](index=132&type=chunk) - As of June 30, 2020, no portion of the outstanding principal amount of **HK$150,000,000** of the convertible loan had been converted[133](index=133&type=chunk) - The company is capable of fulfilling its repayment obligations under the convertible loan[138](index=138&type=chunk) - Under the loan agreement, Yim Ming Chi, Yim Ming Kit, and Liu Hui Juan (as a group) are required to maintain at least **35%-40%** of the economic and voting rights and remain the single largest direct and indirect shareholders of the company; otherwise, it would constitute an event of default[140](index=140&type=chunk) [Liquidity and Financial Resources](index=35&type=section&id=流動資金及財務資源) As of June 30, 2020, the company had bank credit facilities of HK$626,100 thousand, with HK$220,000 thousand utilized, and cash and cash equivalents of HK$390,400 thousand. The gearing ratio was 36.9%, a year-on-year decrease - As of June 30, 2020, the Group had bank credit facilities of approximately **HK$626,100 thousand**, of which **HK$220,000 thousand** had been utilized[143](index=143&type=chunk) - As of June 30, 2020, the Group's cash and cash equivalents amounted to approximately **HK$390,400 thousand** (December 31, 2019: approximately **HK$473,300 thousand**)[143](index=143&type=chunk) - The gearing ratio (defined as total liabilities to total assets) as of June 30, 2020, was **36.9%** (December 31, 2019: **42.4%**)[143](index=143&type=chunk) - As of June 30, 2020, bank deposits of approximately **HK$42,100 thousand** were pledged as security for the Group's bank facilities[146](index=146&type=chunk) - As of June 30, 2020, the Group's capital commitments amounted to approximately **HK$331,700 thousand**[147](index=147&type=chunk) - The Group's assets, liabilities, and transactions are primarily denominated in HKD, RMB, or USD, and the Directors believe that the Group's operating cash flows and liquidity are not exposed to significant foreign exchange risk, thus no hedging arrangements have been made[151](index=151&type=chunk) [Share Capital and Share Options](index=37&type=section&id=股本及购股权) The company's authorized share capital remained unchanged. No share options were exercised, cancelled, or lapsed during the period ended June 30, 2020. The scheme aims to recognize contributions, optimize performance, and attract and retain talent - The company's authorized share capital remained unchanged during the review period[154](index=154&type=chunk) - During the period ended June 30, 2020, no share options granted under the company's share option scheme were exercised, cancelled, or lapsed[154](index=154&type=chunk)[178](index=178&type=chunk) - The purpose of the share option scheme is to recognize and acknowledge the contributions of eligible participants, provide opportunities to acquire ownership interests in the company to encourage optimized performance, and attract and retain talent[155](index=155&type=chunk) - The total number of ordinary shares of the company available for issue under the scheme is **25,375,000 shares**, representing **4.39%** of the issued share capital[157](index=157&type=chunk)[158](index=158&type=chunk) - The exercise price will be determined by the Board and shall not be less than the highest of the closing price on the date of grant, the average closing price for the five trading days immediately preceding the date of grant, and the nominal value of the shares[167](index=167&type=chunk) Details of Granted Share Options (Unexercised) | Participant | Grant Date | Exercise Price (HKD) | Exercise Period | Unexercised as of Jan 1, 2020 | Unexercised as of June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | Employees | 11.11.2016 | 5.9 | 11.05.2017–10.11.2021 | 2,243,000 | 2,243,000 | | Employees | 27.06.2018 | 10.0 | 27.06.2020–26.06.2023 | 1,000,000 | 1,000,000 | | Investor Relations Consultant | 01.11.2017 | 7.5 | 01.11.2019–31.10.2020 | 1,085,507 | 1,085,507 | | Investor Relations Consultant | 01.11.2017 | 8.5 | 01.11.2020–31.10.2021 | 1,600,000 | 1,600,000 | | **Total** | | | | **5,928,507** | **5,928,507** | Other Information [Directors' and Chief Executive's Interests and Short Positions in Shares, Underlying Shares and Debentures](index=42&type=section&id=董事及行政总裁于股份、相关股份及债券的权益及淡仓) As of June 30, 2020, Yim Ming Chi held 26.64% equity interest in the company, Fong Hoi Chow held 0.91%, and Zhong Sheng held 0.35% Directors' and Chief Executive's Long Positions in Shares of the Company | Name | Capacity | Number of Ordinary Shares / Underlying Shares of the Company | Approximate Percentage of Interest in the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Yim Ming Chi | Beneficial owner and interest in controlled corporation | 153,945,667 | 26.64% | | Fong Hoi Chow | Beneficial owner | 5,244,300 | 0.91% | | Zhong Sheng (retired on July 4, 2020) | Beneficial owner | 2,036,150 | 0.35% | - Yim Ming Chi's interests include **147,279,000** ordinary shares held in his personal name and **6,666,667** ordinary shares held through Dynatech Ventures Pte Ltd[187](index=187&type=chunk) [Major Shareholders' and Other Persons' Interests Discloseable Under Part XV of the Securities and Futures Ordinance](index=43&type=section&id=须根据证券及期货条例第XV部披露权益的主要股東及其他人士) As of June 30, 2020, Yim Ming Kit held 26.30% equity interest in the company, and Liu Hui Juan held a 26.64% family interest Major Shareholders' and Other Persons' Long Positions in Shares of the Company | Name | Capacity | Number of Ordinary Shares / Underlying Shares of the Company | Approximate Percentage of Interest in the Company's Issued Share Capital | | :--- | :--- | :--- | :--- | | Yim Ming Kit | Beneficial owner and interest in controlled corporation | 152,020,667 | 26.30% | | Liu Hui Juan | Family interest | 153,945,667 | 26.64% | - Yim Ming Kit's interests include **145,354,000** ordinary shares held in his personal name and **6,666,667** ordinary shares held through Dynatech Ventures Pte Ltd[191](index=191&type=chunk) - Liu Hui Juan, spouse of Executive Director Yim Ming Chi, is deemed under the Securities and Futures Ordinance to have an interest in the **153,945,667** shares in which Yim Ming Chi has an interest[191](index=191&type=chunk) [Purchase, Redemption or Sale of the Company's Listed Securities](index=44&type=section&id=购买、赎回或出售本公司的上市證券) During the review period, neither the company nor any of its subsidiaries purchased, redeemed, or sold any of the company's listed securities - During the review period, neither the company nor any of its subsidiaries purchased, redeemed, or sold any of the company's listed securities[193](index=193&type=chunk) [Corporate Governance and Review](index=44&type=section&id=企业管治) The company complied with the Code Provisions of the Corporate Governance Code in Appendix 14 of the Listing Rules throughout the review period. The Audit Committee reviewed accounting principles, internal controls, and financial reporting matters - Throughout the review period, the company consistently complied with the Code Provisions set out in the Corporate Governance Code in Appendix 14 of the Listing Rules[194](index=194&type=chunk) - The company's Audit Committee has reviewed the accounting principles and practices adopted by the Group and discussed internal control and financial reporting matters[195](index=195&type=chunk) - The Board does not recommend the declaration of an interim dividend for the six months ended June 30, 2020[196](index=196&type=chunk) - After specific inquiries to all Directors, all Directors have confirmed their full compliance with the required standards and provisions of the Model Code throughout the six months ended June 30, 2020[197](index=197&type=chunk)

Financial Performance - The company achieved a total revenue of approximately HKD 1,279,500,000 for the fiscal year ending December 31, 2019, representing an increase of 8.8% compared to the previous year, with a growth of 13.4% in RMB terms[30]. - The net profit for the year rose to approximately HKD 302,500,000, marking a significant increase of 30.9% year-on-year, with a 36.5% increase in RMB terms[30]. - The gross profit margin decreased to 80.8% from 82.8% in the previous year, while the net profit margin improved to 23.6% from 19.6%[19]. - Basic earnings per share increased by 29.1% to HKD 0.5229, while diluted earnings per share rose by 29.6% to HKD 0.5113[19]. - The interim dividend declared is HKD 0.035 per ordinary share, totaling HKD 20,247,745, an increase from HKD 0.03 per share and HKD 17,155,200 in the previous year[58]. - The company plans to distribute a final dividend of HKD 0.05 per ordinary share, pending approval at the upcoming annual general meeting[58]. - The company reported a total revenue of approximately HKD 1,279.5 million for the year ended December 31, 2019, representing an increase of 8.8% compared to HKD 1,176.5 million in 2018[135]. - Net profit for the year was approximately HKD 302,500,000, representing a 30.9% increase from HKD 231,100,000 in 2018[195]. - The ophthalmology segment contributed approximately HKD 567,500,000 to the total revenue, an increase of 7.3% compared to the previous year[195]. - The surgical segment recorded total revenue of approximately HKD 712,000,000, reflecting a 10.0% increase from the prior year[195]. Assets and Liabilities - The company's total assets increased by 43.3% to HKD 2,077,943,000, while total liabilities rose by 69.1% to HKD 880,798,000[18]. - Cash and cash equivalents amounted to approximately HKD 473,300,000, reflecting a 52.2% increase from the previous year[32]. - The company’s current ratio was reported at 2.49, indicating a slight decrease from 2.74 in the previous year[19]. - As of December 31, 2019, the group's bank borrowings amounted to HKD 220,000,000, an increase from HKD 55,000,000 in 2018, with an interest rate of 3.7%[142]. - The debt-to-asset ratio as of December 31, 2019, was 42.4%, compared to 35.9% in 2018[157]. Investments and Development - The company has invested approximately HKD 432.2 million in various clinical development projects, particularly in ophthalmology and oncology, since the initiation of its enhancement plan in 2015[38]. - The company has committed up to USD 20 million for the second phase of the Phase III clinical trial for the SkQ1 product, with the first patient being treated in December 2019[42]. - The company has entered into a conditional agreement to invest approximately USD 3.1 million in Antikor Biopharma Limited, which focuses on developing small antibody-drug conjugates for cancer treatment[43]. - The company has provided a convertible loan of RMB 15 million to Chengdu Shangong Medical Technology Co., with a conversion potential of approximately 15.4% equity[45]. - The company has established a wholly-owned subsidiary, EssexBio Therapeutics Inc., in the United States to serve as a research and development center and manage clinical trials[129]. - The company invested RMB 15,000,000 in a medical data analysis company focused on diabetic retinopathy, analyzing over 1,000,000 retinal images[200]. - The company acquired 100% equity in Wuhan Yadian Biotechnology Co., Ltd. for approximately RMB 1.2 million, focusing on minimally invasive medical technology[183]. Sales and Marketing - The bFGF product series accounted for 79.2% of total revenue, with the Beifu Shou series contributing 24.7% and the Beifu Ji series contributing 54.5%[30]. - The company has established 43 regional sales offices and employs around 1,300 sales personnel, including approximately 730 full-time employees[51]. - The company is focusing on developing online platforms for medical consultations and electronic prescriptions for chronic disease patients as part of its sales and marketing strategy[122]. - The average revenue generated by each salesperson and marketing representative increased by 10.4% to approximately HKD 984,000, reflecting effective sales and marketing management[140]. - The company has implemented sales and marketing strategies to penetrate lower-tier cities and develop online platforms for medical consultations and electronic prescriptions[51]. Research and Development - The company has a focus on research for new treatment solutions, particularly in oncology and ophthalmology targeted antibodies[56]. - Research and development expenses decreased to approximately HKD 32.6 million for the year ended December 31, 2019, down from HKD 35.1 million in 2018[141]. - The company has developed a blow-fill-seal platform to enhance its core competitiveness and produce preservative-free single-dose drugs, with four such products approved for registration and commercialization in China as of December 31, 2019[128]. - The flagship biopharmaceutical product rb-bFGF series is expected to maintain organic growth in the coming years, supported by expanded sales across major provinces in China and additional clinical plans[198]. Challenges and Future Outlook - Ongoing clinical trial programs may face delays due to the COVID-19 pandemic, which has been declared a global pandemic by the World Health Organization[57]. - The company is committed to taking necessary measures to overcome unforeseen difficulties arising from the pandemic[57]. - The Phase II trial was initially scheduled for completion in Q2 2020 but has been delayed to Q3 2020 due to the COVID-19 pandemic[199]. Corporate Governance - The management team has extensive experience in the pharmaceutical industry, with key members holding significant shares in the company[66][68][70][80]. - The group’s discretionary annual bonuses for directors are capped at 5% of the audited consolidated profit after tax and non-controlling interests, provided the profit exceeds HKD 50 million[168]. - The company has achieved significant recognition by being included in the MSCI China Small Cap Index, effective from May 28, 2019[36].

Financial Performance - Revenue for the six months ended June 30, 2019, was HKD 581.716 million, an increase of 3.6% compared to HKD 561.278 million for the same period in 2018[17]. - Gross profit for the same period was HKD 468.766 million, up from HKD 459.295 million, reflecting a gross margin improvement[17]. - Profit before tax increased to HKD 149.780 million, representing a 23.1% increase from HKD 121.641 million in the prior year[17]. - Net profit for the period was HKD 129.575 million, compared to HKD 98.916 million in the previous year, marking a 30.9% increase[17]. - Basic earnings per share rose to 22.39 HKD cents, up from 17.46 HKD cents, indicating strong earnings growth[17]. - Total comprehensive income for the period was HKD 140.691 million, significantly higher than HKD 82.217 million in the same period last year[17]. - The company reported a foreign exchange loss of HKD 2.670 million from the translation of overseas financial statements, compared to a loss of HKD 13.157 million in the previous year[17]. - Administrative expenses increased to HKD 34.219 million from HKD 24.904 million, reflecting higher operational costs[17]. - Financing costs rose to HKD 4.239 million, compared to HKD 3.397 million in the previous year, indicating increased borrowing costs[17]. Assets and Liabilities - Total assets increased to HKD 1,642,677 thousand, up from HKD 1,449,688 thousand, representing a growth of 13.3% year-over-year[19]. - Cash and cash equivalents rose to HKD 334,730 thousand, compared to HKD 311,098 thousand, reflecting an increase of 7.6%[19]. - Net current assets reached HKD 628,209 thousand, up from HKD 547,312 thousand, indicating a growth of 14.7%[19]. - Total liabilities increased to HKD 591,130 thousand, compared to HKD 520,787 thousand, marking a rise of 13.5%[19]. - Equity attributable to owners increased to HKD 1,051,547 thousand, up from HKD 928,901 thousand, showing a growth of 13.2%[19]. Segment Performance - As of June 30, 2019, the total external customer revenue for ophthalmic products was HKD 249,919, while for surgical products it was HKD 331,797, totaling HKD 581,716[44]. - The reported segment profit for the ophthalmic products was HKD 69,701 and for surgical products was HKD 92,195, leading to a total segment profit of HKD 161,896 for the six months ended June 30, 2019[44]. - The company reported a total segment profit of HKD 161,896 for the six months ended June 30, 2019, compared to HKD 130,781 for the same period in 2018, indicating a year-over-year increase[49]. Cash Flow and Investments - Operating cash flow before changes in working capital was HKD 161,202,000, an increase of 24% from HKD 129,891,000 in the same period last year[22]. - Net cash generated from operating activities was HKD 83,618,000, down from HKD 90,811,000 year-on-year[22]. - Total cash used in investing activities was HKD 76,332,000, compared to HKD 49,333,000 in the prior year, indicating a significant increase in investment outflows[22]. - The company incurred financing costs of HKD 4,239,000, an increase from HKD 3,397,000 year-on-year[22]. Research and Development - The company has developed five types of rb-bFGF biopharmaceuticals approved for sale in China, with three classified as national class 1 new drugs[130]. - The company is focusing on R&D and commercialization of preservative-free single-dose eye drops and other ophthalmic products[131]. - The company has maintained multiple R&D projects, some involving growth factors and antibodies for ophthalmic and respiratory diseases[131]. Acquisitions and Strategic Investments - The company acquired 100% equity of Wuhan Yadian Biotechnology Co., Ltd. for approximately HKD 1,400,000, with the main product being Carisolv for minimally invasive dental treatment[134]. - The company has committed to invest up to $16,500,000 (approximately HKD 129,700,000) in the clinical development of the SkQ1 product for dry eye disease[80]. - The company anticipates that the acquisition aligns with its expansion strategy in the dental and oral health sector[103]. Employee and Management Compensation - The total employee compensation for the period was approximately HKD 98,500,000, compared to HKD 68,500,000 in the previous period[178]. - The company reported a total remuneration of HKD 3,068,000 for key management personnel, slightly down from HKD 3,080,000 in the previous year[26]. Stock Options and Shareholder Information - The company has a total of 578,807,000 shares outstanding as of June 30, 2019, with a par value of HKD 0.1 per share[101]. - The total number of ordinary shares available for issuance under the plan is 25,375,000 shares, representing 4.38% of the issued share capital[184]. - The company issued 57,000 shares due to the exercise of stock options during the reporting period[181].

Financial Performance - The company achieved a consolidated revenue of approximately HKD 1,176,500,000 for the fiscal year ending December 31, 2018, representing a 30.8% increase from the previous year[16]. - The net profit for the year increased to approximately HKD 231,100,000, up 38.1% from approximately HKD 167,300,000 in the prior year[16]. - The gross profit margin was reported at 82.8%, slightly up from 82.0% in the previous year[11]. - The earnings per share (EPS) increased significantly, with basic EPS rising to HKD 0.4050 from HKD 0.2975, a growth of 36.1%[11]. - The profit for the year was approximately HKD 231.1 million, an increase of 38.1% compared to HKD 167.3 million in the previous year[108]. - The overall revenue contribution from ophthalmic products for the year ended December 31, 2018, was approximately HKD 529 million, representing a 20.8% increase from the previous year, driven by a 17.9% growth in the Beifu series[105]. - Surgical products recorded total revenue of approximately HKD 647.5 million for the year ended December 31, 2018, a 40.2% increase, primarily due to a significant 48.7% growth in the Beifuji series, although overall growth was tempered by a 52.9% decline in third-party product revenue[106]. - The flagship biopharmaceuticals generated revenue of approximately HKD 984.4 million, accounting for 83.7% of total revenue, with a year-on-year increase of 35.9, supported by sales expansion in second and third-tier cities in China[106]. Assets and Liabilities - The company's total assets reached HKD 1,449,689,000, a 25.0% increase from HKD 1,159,777,000 in the previous year[11]. - Total liabilities increased to HKD 520,787,000, up 23.9% from HKD 420,288,000 in the prior year[11]. - The company's cash and cash equivalents amounted to HKD 311,098,000, reflecting a 29.3% increase from HKD 240,627,000[11]. - The current ratio improved to 2.74 from 2.58, indicating better short-term financial health[11]. - The group’s debt-to-asset ratio as of December 31, 2018, was 35.9%, compared to 36.2% in 2017[123]. Investments and Development - The company plans to continue focusing on its core product lines while exploring opportunities for market expansion and new product development[16]. - The total investment committed to 12 entities/projects under the enhancement plan is approximately $53.9 million, with about $43.4 million already invested[23]. - The company has invested approximately $20 million in Chengdu Shangong Medical Technology Co., holding about 8% equity, to develop big data business in medical data analysis[22]. - The company is investing up to $16.5 million in a joint development agreement with Mitotech S.A. for the clinical development of SkQ1 eye drops in the U.S.[19]. - The company has invested approximately $5 million in MeiraGTx Limited, acquiring about 7.7% of its expanded issued preferred C shares[21]. - The group is currently discussing strategic cooperation with MeiraGTx Limited for future projects[149]. - The group is collaborating with Mitotech S.A. to develop eye drops containing SkQ1, which is undergoing Phase III clinical trials[149]. - The group has invested a total of USD 3,600,000 in Abpro Corporation and is discussing collaborative research projects[145]. Research and Development - The company has established a research and development platform focused on recombinant cell factors, particularly the development of recombinant basic fibroblast growth factor (bFGF) for wound healing products[97]. - Research and development expenses increased to approximately HKD 35.1 million, with about HKD 17 million capitalized, compared to HKD 27.1 million in the previous year[110]. - The group maintains a focus on R&D and clinical plans across multiple projects, particularly in ophthalmology and respiratory diseases[141]. Market Presence and Sales - The company has established 42 regional sales offices and approximately 1,320 sales personnel, including about 730 full-time employees and 590 contract or agency personnel[27]. - The company continues to expand its sales and distribution network, particularly in second- and third-tier cities in China, to maintain sustainable growth[75]. - The company’s products cover approximately 6,300 hospitals and medical institutions and about 1,000 pharmacies across major cities, provinces, and counties in China[142]. - The group successfully extended the distribution rights for Yixuean granules in China for a price of RMB 20,000,000[145]. Dividends and Shareholder Returns - The board declared an interim dividend of HKD 0.03 per ordinary share, totaling HKD 17,155,200, an increase from HKD 0.025 per share and HKD 14,055,525 in the previous year[35]. - The board proposed a final dividend of HKD 0.033 per ordinary share, pending approval at the upcoming annual general meeting[35]. - The company reported a mid-term dividend of HKD 0.03 per share paid on September 21, 2018, and proposed a final dividend of HKD 0.033 per share for the fiscal year ending December 31, 2018, subject to shareholder approval[136]. Strategic Challenges and Outlook - The Chinese drug pricing system, controlled by the government, has led to a general decline in treatment drug prices over the past 20 years, potentially exerting downward pressure on drug prices and adversely affecting market share, revenue, and profitability[164]. - The current healthcare reform in China is characterized by frequent changes in regulations, which may lead to significant adverse impacts on the company, including high costs and resource diversion[165]. - The group maintains an optimistic outlook for strong growth in the ophthalmology and surgical divisions in 2019[35]. Corporate Governance and Management - The company has a strong management team with over 24 years of experience in gene recombination technology and drug quality standards research[53]. - The company has appointed a new Chief Scientist with extensive experience in anti-tumor drug development, overseeing R&D in oncology, ophthalmology, and dermatology[55]. - The company provides competitive compensation and training opportunities to employees, aiming to be an attractive employer[172]. - The company’s success is partly reliant on the expertise and experience of its senior management and researchers, with potential adverse effects if key personnel leave[163].