Financial Performance - Revenue for the six months ended June 30, 2023, was $128.356 million, an increase from $118.933 million in the same period of 2022, representing a growth of 10.7%[4] - Gross profit decreased to $38.988 million, down from $44.200 million year-over-year, resulting in a gross margin of 30.4%, compared to 37.2% in 2022[4] - Profit before tax was $7.407 million, significantly lower than $17.930 million in the prior year, indicating a decline of 58.8%[4] - Net profit for the period was $4.558 million, down from $13.102 million, reflecting a net margin of 3.6%, compared to 11.0% in 2022[4] - Adjusted net profit was $10.223 million, compared to $18.768 million in the previous year, with an adjusted net margin of 8.0% versus 15.8%[4] - The group's revenue increased by 8.0% from approximately $118.9 million for the six months ended June 30, 2022, to approximately $128.4 million for the six months ended June 30, 2023[8] - North American business revenue rose by 5.9% from approximately $94.4 million to approximately $100.0 million during the same period[18] - Revenue from China increased by 24.2%, from approximately RMB 159.3 million (approximately $24.5 million) to approximately RMB 197.8 million (approximately $28.4 million)[18] - The net profit decreased by 64.9% from approximately $13.1 million for the six months ended June 30, 2022, to approximately $4.6 million for the six months ended June 30, 2023, with a net profit margin of 3.6% compared to 11.0% in the prior period[30] - Adjusted net profit decreased by 45.7% from approximately $18.8 million for the six months ended June 30, 2022, to approximately $10.2 million for the six months ended June 30, 2023, with an adjusted net profit margin of 8.0% compared to 15.8% in the prior period[32] Assets and Liabilities - Total assets as of June 30, 2023, were $537.048 million, a decrease from $550.594 million at the end of 2022[4] - Total liabilities decreased to $198.089 million from $214.746 million, indicating improved financial stability[4] - Cash and cash equivalents were $77.526 million, down from $87.433 million at the end of 2022[4] - Current liabilities decreased to $80,249 thousand from $97,472 thousand, a reduction of 17.7%[96] - Trade and other receivables increased by 3.5% from approximately $57.6 million on December 31, 2022, to approximately $59.6 million on June 30, 2023, primarily due to business growth[39] - Unbilled revenue rose by 5.1% from approximately $17.7 million on December 31, 2022, to approximately $18.6 million on June 30, 2023, also driven by business growth[39] - Total bank borrowings increased to $51.5 million on June 30, 2023, from $48.9 million on December 31, 2022[43] - The leverage ratio increased to 10.3% on June 30, 2023, from 8.2% on December 31, 2022, primarily due to significant financing activities to support business expansion[44] Expenses and Costs - The group's service costs rose by 19.7% from approximately $74.7 million to approximately $89.4 million, primarily due to capacity expansion in North America and China[23] - Research and development expenses increased by 93.8% from approximately $1.6 million to approximately $3.1 million, reflecting enhanced investment in new technologies and platforms[27] - Sales and marketing expenses rose by 17.6% from approximately $3.4 million to approximately $4.0 million due to increased activities post-COVID-19[25] - Administrative expenses increased by 6% from approximately $21.6 million to approximately $22.9 million, with a notable rise in operational costs[26] - Financial costs increased by 121.4% from approximately $1.4 million for the six months ended June 30, 2022, to approximately $3.1 million for the six months ended June 30, 2023, primarily due to increased borrowings for expansion and operations[28] Shareholder Information - The board has resolved not to declare an interim dividend for the six months ended June 30, 2023[4] - The company repurchased a total of 2,000,000 shares at a total cost of approximately HKD 4,745,680 during the six months ended June 30, 2023[51] - The highest repurchase price per share was HKD 2.4, while the lowest was HKD 2.31[52] - The company aims to attract and retain employees through its share option plans, with options having a contract term of 5 to 10 years[64] - The total number of issued shares as of June 30, 2023, is 2,058,579,910 shares[60] - The company has granted a total of 7,990,000 share options under the 2015 Share Incentive Plan at an exercise price of $2.00[64] Strategic Initiatives - The company aims to expand its global presence and enhance service quality in the contract research sector, particularly in North America and China[7] - The company is committed to improving its technical capabilities, including strengthening its R&D team and laboratory facilities in China[12] - The company is actively expanding its service platforms' technical capabilities to meet the increasing demand for drug development outsourcing services[12] - The company is committed to enhancing its position as a value-added partner, focusing on solving complex drug discovery and development issues for clients in the pharmaceutical and biotechnology sectors[47] - The company plans to continue focusing on market expansion and new product development to drive future growth[100] Acquisitions and Investments - The company entered into a share purchase agreement to acquire 100% of Nucro-Technics Inc. for a cash consideration of CAD 70 million (approximately HKD 410.4 million) on August 15, 2023[46] - The company has capital commitments of $2,495,000 for the purchase of property, plant, and equipment as of June 30, 2023[165] Market and Industry Trends - The overall market for biopharmaceuticals continues to expand, despite a decline in investment activities in the global and Chinese biopharmaceutical capital markets[12] - The company continues to focus on providing laboratory and related services to pharmaceutical and pesticide companies, maintaining its core business strategy[102] Compliance and Reporting - The report references the International Financial Reporting Standards for its financial reporting[182] - The company is subject to the listing rules of the Hong Kong Stock Exchange, which may be amended from time to time[183]

Financial Performance - Revenue for the six months ended June 30, 2023, was $128.4 million, an increase of 8.0% from $118.9 million in the same period of 2022[2]. - Gross profit decreased to $39.0 million with a gross margin of 30.4%, down from $44.2 million and a gross margin of 37.2% in 2022, representing a decline of 11.8%[2]. - Adjusted EBITDA for the period was $29.8 million, a decrease of 14.1% compared to $34.7 million in the prior year[2]. - Net profit for the six months was $4.6 million, a significant decline of 64.9% from $13.1 million in the same period last year[2]. - Basic earnings per share decreased to $0.0023, down 63.5% from $0.0063 in 2022[2]. - The company reported a total comprehensive income of $4.6 million for the period, down from $13.1 million in the previous year[4]. - Adjusted net profit for the six months ended June 30, 2023, was $10,223 thousand, a decrease of 45.7% from $18,768 thousand in the same period last year[68]. - The company’s EBITDA for the six months ended June 30, 2023, was $27,500 thousand, a decrease of 15.4% from $32,500 thousand in the prior year[70]. - Adjusted EBITDA decreased by 14.1% from approximately $34.7 million for the six months ended June 30, 2022, to approximately $29.8 million for the six months ended June 30, 2023, with an EBITDA margin decline from 29.2% to 23.2%[71]. Revenue Breakdown - Laboratory testing services generated $51.909 million in revenue, up from $45.867 million in the previous year, reflecting a growth of about 13.4%[17]. - Early clinical/bioequivalence services saw significant growth, with revenue increasing to $9.672 million from $3.448 million, marking an increase of approximately 180.5%[17]. - Preclinical research services contributed $50.849 million, slightly up from $48.878 million, indicating a growth of about 4%[17]. - Chemical, manufacturing, and control services reported a decline in revenue to $10.826 million from $13.191 million, a decrease of approximately 18.0%[17]. - North America contributed $99,983 thousand to total revenue, while China contributed $28,373 thousand, indicating North America's dominance in revenue generation[19]. - Revenue from the United States was $95,030 thousand, accounting for 74.0% of total revenue, compared to $89,113 thousand and 74.9% in the prior year[58]. Assets and Liabilities - Total assets as of June 30, 2023, were $456.8 million, compared to $453.1 million as of December 31, 2022[6]. - Current liabilities decreased to $80.2 million from $97.5 million at the end of 2022, improving the net current asset position[6]. - The total equity attributable to owners of the company was $336.323 million, compared to $333.079 million in the previous period, showing a slight increase[8]. - Total equity reached $338.959 million, up from $335.848 million, reflecting an increase of approximately 0.6%[8]. - Trade receivables from third parties amounted to $53,610,000 as of June 30, 2023, compared to $50,081,000 as of December 31, 2022[33]. - Trade payables to third parties increased to $11,209 thousand as of June 30, 2023, compared to $10,923 thousand as of December 31, 2022[37]. Operational Highlights - The company continues to focus on enhancing operational efficiency and exploring market expansion opportunities[3]. - The company continues to focus on providing laboratory and related services to pharmaceutical and pesticide companies, with a strong emphasis on research and development[9]. - The company aims to leverage its growing expertise to become a global contract research organization, providing high-quality services to clients[46]. - The company has established a total of 11 laboratories and production facilities in China, covering an area of 810,000 square feet, enhancing its service capabilities[52]. - The company has initiated new services in cell and gene therapy (CGT), providing analytical development and GMP analysis services for large molecules and CGT products[50]. Governance and Compliance - The company has adhered to the corporate governance code principles, except for the separation of roles between the Chairman and CEO as per code C.2.1[92]. - The Audit and Risk Management Committee reviewed the interim performance and confirmed that the financial statements fairly reflect the group's financial position[94]. - The company is committed to maintaining compliance with the listing rules and has made necessary disclosures regarding director changes[93]. - The company has a strong governance framework in place, ensuring effective risk management and internal controls[94]. Future Outlook - The company plans to expand and enhance existing capacity to meet anticipated growth service demands, allocating approximately 20% of the net proceeds for this purpose[88]. - The company has recognized the importance of market trends in shaping its business outlook, particularly in the evolving life sciences industry[86]. - Despite a significant decline in investment activities in the global and Chinese biopharmaceutical capital markets since 2023, the demand for R&D outsourcing services remains on the rise[51].

Share Award Scheme - The weighted average closing price of shares prior to the vesting date under the 2021 Share Award Scheme was HKD 3.90[1] - A total of 5,362,374 shares were vested to grantees under the 2021 Share Award Scheme for the fiscal year ending December 31, 2022[1]

Financial Performance - Revenue for 2022 reached $250.36 million, a 35.7% increase from $184.44 million in 2021[4] - Gross profit for 2022 was $89.19 million, representing a gross margin of 35.6%[4] - Adjusted net profit for 2022 was $36.17 million, up from $32.24 million in 2021, reflecting a 12.1% increase[4] - The company reported a net profit margin of 10.3% for 2022, consistent with the previous year[4] - The company's net profit increased by 37.0% from approximately $18.9 million in 2021 to approximately $25.9 million in 2022, maintaining a net profit margin of 10.3%[43] - Adjusted net profit increased by 12.4% from approximately $32.2 million in 2021 to approximately $36.2 million in 2022, with an adjusted net profit margin of 14.4% compared to 17.5% in 2021[45] - EBITDA rose by 35.5% from approximately $51.6 million in 2021 to approximately $69.9 million in 2022, with an EBITDA margin of 27.9% compared to 28.0% in 2021[46] - Adjusted EBITDA increased by 20.4% from approximately $60.8 million in 2021 to approximately $73.2 million in 2022, with an adjusted EBITDA margin declining from 33.0% to 29.3%[47] Assets and Liabilities - Total assets as of December 31, 2022, amounted to $550.59 million, compared to $475.84 million in 2021[4] - Total liabilities increased to $214.75 million in 2022 from $152.76 million in 2021[4] - Cash and cash equivalents decreased to $87.43 million in 2022 from $144.63 million in 2021[4] - Property, plant, and equipment increased by 26.8% from approximately $90.7 million in 2021 to approximately $115.0 million in 2022, driven by R&D and manufacturing capacity expansion[50] - Goodwill increased by 108.7% from approximately $71.5 million in 2021 to approximately $149.2 million in 2022, primarily due to the acquisition of Experimur and Clinical[52] Market Expansion and Strategy - The company plans to continue expanding its market presence and investing in new technologies[4] - Future guidance indicates a focus on increasing revenue through new product development and potential acquisitions[4] - The company aims to improve its adjusted net profit margin by optimizing operational efficiencies[4] - The company completed the acquisition of Experimur LLC and Frontage Clinical Services Inc., enhancing its capabilities and expanding into new research areas[8] - The company plans to expand its service capabilities through internal growth and acquisitions, focusing on key areas such as cell and gene therapy in 2023[10] - The company established a global project management team to manage clinical trials and provide logistical support for global pharmaceutical companies[16] Operational Developments - A new laboratory facility of approximately 25,000 square feet in Hayward, California, commenced operations in May 2022, significantly improving the company's bioanalytical and biomanufacturing service capabilities[9] - The company’s new API production facility in Weihai, China, has completed Phase I construction, covering 120,000 square feet and equipped with reactors totaling 50,000 liters[9] - The establishment of a frozen biorepository in Exton, Pennsylvania, supports clinical trial research with over forty -20°C and -70°C freezers[16] - The company enhanced its capabilities in targeted nucleic acid analysis and next-generation sequencing (NGS) during the reporting period[16] Employee and Workforce - The company has a workforce of 1,698 employees across over 23 locations in three countries as of December 31, 2022[9] - Employee costs for the fiscal year ended December 31, 2022, were approximately $102.9 million, compared to $73.7 million for the fiscal year ended December 31, 2021, indicating a rise of 39.6%[59] - Approximately 80% of the company's employees hold a bachelor's degree or higher, with 556 employees holding advanced degrees[59] Governance and Leadership - The company has a strong leadership team with diverse backgrounds in pharmaceuticals, finance, and investment banking, enhancing its strategic decision-making capabilities[66] - The board believes that the directors can dedicate sufficient time and effort to fulfill their responsibilities as independent non-executive directors, ensuring effective governance[66] - The company is committed to maintaining high professional standards in its board meetings and committee activities, ensuring accountability and transparency[66] - The board consists of seven directors, including a balanced mix of executive and independent non-executive directors[166] Risk Management - Key operational risks include dependency on client demand for outsourcing services, which is influenced by clients' financial performance and R&D spending[129] - Business risks include potential loss of contracts, inability to convert backlog into revenue, and financial risks from underestimating fixed-price contracts[130] - The company faces additional risks related to its acquisition strategy, including the ability to realize expected synergies and manage financial risks associated with debt[131] - The company has implemented various risk management procedures and guidelines to manage risks across key business processes, including financial reporting and compliance[194] Compliance and Regulatory - The company has established compliance policies and procedures to ensure adherence to applicable laws and regulations, with no known violations during the reporting period[151] - The company has adopted a standard code for securities trading by directors, confirming compliance during the reporting period[154] - The company has received annual confirmations of independence from all independent non-executive directors[85] Shareholder Information - As of December 31, 2022, the total distributable reserves available for shareholders amounted to approximately $97.3 million[81] - The group did not declare any final dividend for the reporting period[78] - The company has adopted a dividend policy to ensure sufficient reserves for future growth while allowing shareholders to participate in profit distribution[78] IPO and Financial Activities - The company raised approximately $193.2 million from its IPO, with a remaining unutilized net amount of about $11.6 million as of December 31, 2022[145] - 20% of the IPO proceeds, amounting to $38.6 million, was allocated to expand and enhance existing capacity to meet anticipated service demand[146] - The company reported a total of $181.6 million in actual utilization of IPO proceeds by December 31, 2022[146] Environmental and Social Responsibility - The company is committed to environmental responsibility and will implement further environmental measures to enhance sustainability[152] - The company values its employees as important assets and provides competitive compensation and training to enhance their understanding of corporate values[155]

Financial Performance - Revenue for the year ended December 31, 2022, was $250.4 million, representing a 35.8% increase from $184.4 million in 2021[2] - Gross profit was $89.2 million with a gross margin of 35.6%, compared to $66.7 million and a gross margin of 36.2% in 2021, indicating a 33.7% increase in gross profit[2] - Adjusted EBITDA for the year was $73.2 million, with an adjusted EBITDA margin of 29.3%, up from $60.8 million and a margin of 33.0% in the previous year, reflecting a 20.4% increase[2] - Net profit for the year was $25.9 million, maintaining a net profit margin of 10.3%, compared to $18.9 million and the same margin in 2021, marking a 37.0% increase[2] - Basic earnings per share (EPS) increased to $0.0126 from $0.0090, representing a 40.0% growth year-over-year[2] - The company reported a pre-tax profit of $36.10 million for 2022, compared to $25.07 million in 2021, indicating a year-over-year increase of 43.9%[19] - The company's earnings for 2022 were $25,735,000, an increase of 39.5% compared to $18,428,000 in 2021[32] - Adjusted net profit rose by 12.4% to approximately $36.2 million, with an adjusted net profit margin of 14.4% in 2022, down from 17.5% in 2021[88] - The company's tax expense increased by 67.2% to approximately $10.2 million, attributed to higher pre-tax income and effective tax rates[86] - EBITDA for the year ended December 31, 2022, was approximately $69.9 million, a 35.5% increase from $51.6 million in 2021[89] Assets and Liabilities - Total assets as of December 31, 2022, were $453.1 million, up from $402.8 million in 2021[6] - Current assets decreased to $171.8 million from $211.1 million, while current liabilities increased to $97.5 million from $73.0 million, resulting in a net current asset value of $74.4 million[6] - Non-current assets increased to $378.8 million from $264.8 million, driven by significant investments in property, plant, and equipment[7] - The company reported a total equity of $335.8 million, up from $323.1 million in 2021, indicating a solid capital position[9] - The company reported cash and cash equivalents of approximately $31,000 as of December 31, 2022, down from approximately $825,000 in 2021[39] - Trade receivables from third parties increased to $50,081,000 in 2022 from $37,465,000 in 2021, reflecting a growth of 33.6%[35] - The total customer advances increased to $34,797,000 in 2022 from $23,632,000 in 2021, representing a growth of 47.2%[42] - The company's property, plant, and equipment increased by 26.8% from approximately $90.7 million as of December 31, 2021, to approximately $115.0 million as of December 31, 2022, primarily due to capacity expansion in R&D and manufacturing[93] - Goodwill rose by 108.7% from approximately $71.5 million as of December 31, 2021, to approximately $149.2 million as of December 31, 2022, mainly due to the acquisition of Experimur and Clinical[95] Revenue Breakdown - Total revenue for the year ended December 31, 2022, was $250.36 million, an increase of 35.7% from $184.44 million in 2021[14] - Laboratory testing services generated $93.44 million in revenue, up 13.9% from $82.61 million in 2021[14] - Preclinical research services saw significant growth, with revenue increasing to $102.33 million from $47.09 million, representing a 117.9% increase[14] - Early clinical/bioequivalence services revenue rose to $14.32 million, a 33.9% increase from $10.74 million in 2021[14] - The chemical, manufacturing, and control services segment generated $24.40 million, a decrease of 13.4% from $28.05 million in the previous year[14] - Revenue from laboratory testing in North America reached $71.22 million, while in China it was $22.22 million, contributing to a total of $93.44 million for this segment[18] - Revenue from innovative drug projects contributed over 70% to total revenue in China for the year ending December 31, 2022, with future contract revenue contribution at approximately 80%[56] - Revenue from new facilities and service platforms accounted for approximately 14% of the company's total revenue in China during the reporting period[61] Operational Developments - The company operates primarily in North America and China, with all consolidated assets and liabilities located in these regions[17] - The company established 11 laboratories and production facilities in China, covering a total area of 810,000 square feet, significantly enhancing service capabilities[56] - The company commenced operations at a 215,000 square feet preclinical animal research facility in Suzhou in January 2022, achieving AAALAC certification by March 2023[57] - A new 34,000 square feet pharmacology unit in Wuhan began operations in June 2022, enhancing the company's drug efficacy research capabilities[57] - The Shanghai Lingang laboratory, covering 67,000 square feet, started operations in September 2022, significantly improving DMPK and bioanalysis services[57] - The company integrated RMI Laboratories, LLC into its DMPK unit, creating a center of excellence for metabolite identification and analysis[53] - The company expanded logistics services to support global clinical trials, enhancing reliability and efficiency in sample management[54] - The company is focused on enhancing capabilities in bioanalysis, biomanufacturing, and biomarker analysis across its operations in the U.S. and China[54] Employee and Governance - The company has approximately 1,700 employees across 23 facilities in three countries[50] - Employee costs, including director remuneration, rose to $112.89 million in 2022 from $83.77 million in 2021, an increase of 34.8%[27] - The company has adopted various employee incentive plans to reward contributions from eligible participants[105] - The company has established a training system for all employees to enhance their knowledge and skills, including management training for senior management[105] - The company has complied with corporate governance codes, with a recent change in leadership to separate the roles of Chairman and CEO[113] Market and Strategic Initiatives - The company aims to become a leading contract research organization by leveraging its expanding expertise and capabilities[50] - The company plans to enhance interactions between its China and North America markets to leverage its unique advantages in both regions[61] - The company is exploring market expansion opportunities in Southeast Asia, targeting a 30% growth in that region by 2024[124] - The company plans to launch three new products in the next quarter, aiming for a 25% increase in market share[124] - The company anticipates continued growth in the life sciences industry driven by increasing complexity in drug development and a rising demand for specialized expertise[73] Compliance and Quality Assurance - The quality assurance team has implemented a risk-based internal audit plan to manage regulatory requirements and customer expectations[63] - During the reporting period, the group's facilities in the US and Canada underwent inspections by various regulatory bodies, with a noted issue leading to a $125,000 settlement with the DEA[64] - The group emphasizes animal welfare and adheres to strict procedures to maintain animal rights, with no compliance reports received from the USDA or FDA during the reporting period[65] Future Outlook - The company has set a performance guidance of RMB 1.8 billion for the next fiscal year, indicating a projected growth of 20%[124] - The company is investing in new technologies to enhance operational efficiency, with an expected ROI of 15% over the next two years[124] - The company plans to utilize the remaining unutilized proceeds by December 31, 2023, for organic expansion and capacity broadening[107]

Revenue Growth - Revenue increased by 39.7% from approximately $85.1 million for the six months ended June 30, 2021, to approximately $118.9 million for the six months ended June 30, 2022[7]. - The group's revenue increased by 39.7% from approximately $85.1 million for the six months ended June 30, 2021, to approximately $118.9 million for the six months ended June 30, 2022[21]. - North American revenue rose by 67.7% from approximately $56.3 million to approximately $94.4 million during the same period[21]. - Revenue from Chinese operations decreased by 14.7%, from approximately RMB 186.7 million (approximately $28.8 million) to approximately RMB 159.3 million (approximately $24.5 million)[21]. - Total revenue for the six months ended June 30, 2022, was $118.93 million, an increase from $85.13 million in the same period of 2021, representing a growth of 39.8%[96]. Profitability - Gross profit for the six months ended June 30, 2022, was $44.2 million, compared to $29.7 million for the same period in 2021, reflecting a gross margin of 37.2%[4]. - Adjusted net profit for the six months ended June 30, 2022, was $18.8 million, compared to $14.5 million for the same period in 2021, with an adjusted net profit margin of 15.8%[4]. - The group's net profit increased by 44.0% from approximately $9.1 million for the six months ended June 30, 2021, to approximately $13.1 million for the six months ended June 30, 2022, with a net profit margin of 11.0% compared to 10.6% in the previous period[32]. - Adjusted net profit rose by 29.7% from approximately $14.5 million for the six months ended June 30, 2021, to approximately $18.8 million for the six months ended June 30, 2022, with an adjusted net profit margin of 15.8% down from 17.1%[34]. - EBITDA increased by 51.2% from approximately $21.5 million for the six months ended June 30, 2021, to approximately $32.5 million for the six months ended June 30, 2022, with an EBITDA margin of 27.3% compared to 25.3% in the previous period[35]. Assets and Liabilities - Total assets as of June 30, 2022, were $492.9 million, an increase from $475.8 million as of December 31, 2021[4]. - The total liabilities as of June 30, 2022, were $164.9 million, compared to $152.8 million as of December 31, 2021[4]. - Cash and cash equivalents decreased to $67.8 million as of June 30, 2022, from $144.6 million as of December 31, 2021[4]. - Goodwill increased by 88.8% from approximately $71.5 million as of December 31, 2021, to approximately $135.0 million as of June 30, 2022, mainly due to the acquisition of Experimur[41]. - Trade and other receivables increased by 19.8% from approximately $42.5 million as of December 31, 2021, to approximately $50.9 million as of June 30, 2022, driven by business growth[42]. Operational Developments - The company has over 1,500 employees and operates 22 facilities across three countries[7]. - The company completed the construction of a 25,000 square foot facility in Hayward, California, which began operations in May 2022, enhancing capabilities in LC-MS bioanalysis and biopharmaceutical testing[11]. - The acquisition of Experimur LLC, completed on January 10, 2022, expands the company's service offerings in toxicology and non-clinical development services for the pharmaceutical and biotechnology sectors[12]. - The new GMP kilogram laboratory in Shanghai, covering 7,000 square feet, became fully operational during the reporting period, enhancing chemical service capabilities[15]. - A new 89,000 square feet facility in Suzhou is expected to be operational by Q4 2022, aimed at improving formulation development and manufacturing capabilities[16]. Shareholder Actions - The company has repurchased a total of 11,688,000 shares at a total cost of approximately HKD 35,243,000, reflecting confidence in its business outlook[56]. - The company has not declared an interim dividend for the six months ended June 30, 2022, consistent with the previous year[54]. - The company aims to enhance its position as a value-added partner, focusing on solving complex drug discovery and development issues for clients[51]. - The company has identified the small and medium-sized biopharmaceutical market as a rapidly growing area with further development opportunities[51]. - The total amount raised from the IPO, after deducting underwriting fees and related expenses, was approximately $193.2 million, with an unutilized net balance of about $28.8 million as of June 30, 2022[52]. Tax and Regulatory Matters - The effective tax rate increased to 26.9% for the six months ended June 30, 2022, from 21.1% in the previous period, leading to a rise in income tax expense from approximately $2.4 million to approximately $4.8 million[31]. - The group's subsidiaries in China benefit from a preferential tax rate of 15% due to their status as high-tech enterprises[9]. - The consolidated income tax rate for the six months ended June 30, 2022, was 24.62%, a decrease from 25.50% for the same period in 2021[9]. Cash Flow and Investments - The net cash generated from operating activities for the six months ended June 30, 2022, was $24,511 thousand, compared to $12,424 thousand for the same period in 2021, representing a 97% increase[87]. - Net cash used in investing activities was $(102,412) thousand for the six months ended June 30, 2022, compared to $(40,815) thousand for the same period in 2021, indicating a significant increase in investment outflows[87]. - Capital expenditures for the six months ended June 30, 2022, were approximately $20.8 million, a decrease of 27.3% from $28.6 million for the same period in 2021[46]. - The company has capital commitments totaling $24,718,000 as of June 30, 2022, down from $85,695,000 as of December 31, 2021[149]. - The company incurred a cash outflow of $(74,911) thousand for the acquisition of subsidiaries, compared to $(1,000) thousand in the previous year, indicating a substantial increase in acquisition activity[87].

Financial Performance - Revenue for 2021 reached $184.441 million, a 46.5% increase from $125.811 million in 2020[8] - Gross profit for 2021 was $66.701 million, representing a gross margin of 36.2%[8] - Adjusted net profit for 2021 was $32.238 million, up 58.5% from $20.346 million in 2020[11] - The company reported a net profit margin of 10.3% for 2021, down from 13.8% in 2020[8] - The adjusted net profit margin for 2021 was 17.5%, compared to 16.2% in 2020, showing an improvement[11] - Revenue for the fiscal year 2021 was approximately $184.4 million, a significant increase from $125.8 million in 2020, reflecting robust growth across all reportable segments[69] - North American revenue rose by 42.5% from approximately $87.9 million in 2020 to approximately $125.3 million in 2021, driven by marketing efforts and recovery in market demand due to COVID-19[105] - Revenue from China increased by 46.8%, from approximately RMB 259.9 million (about $37.9 million) in 2020 to approximately RMB 381.5 million (about $59.1 million) in 2021[105] - The gross profit rose by 60.7% from approximately $41.5 million in 2020 to approximately $66.7 million in 2021, with a gross margin increase from about 33.0% to approximately 36.2%[113] - Net profit increased by 8.6% from approximately $17.4 million for the year ended December 31, 2020, to approximately $18.9 million for the year ended December 31, 2021, with a net profit margin of 10.3%[127] - Adjusted net profit grew by 58.6% from approximately $20.3 million for the year ended December 31, 2020, to approximately $32.2 million for the year ended December 31, 2021, with an adjusted net profit margin of 17.5%[130] - EBITDA increased by 51.8% from approximately $34.0 million for the year ended December 31, 2020, to approximately $51.6 million for the year ended December 31, 2021, with an EBITDA margin of 28.0%[131] - Adjusted EBITDA rose by 73.7% from approximately $35.0 million for the year ended December 31, 2020, to approximately $60.8 million for the year ended December 31, 2021, with an adjusted EBITDA margin of 33.0%[132] Assets and Liabilities - Total assets increased to $475.842 million in 2021, compared to $382.714 million in 2020, reflecting a growth of 24.4%[8] - Total liabilities rose to $152.758 million in 2021, up from $93.842 million in 2020, indicating a 62.7% increase[8] - Cash and cash equivalents decreased to $144.629 million in 2021 from $212.087 million in 2020, a decline of 31.9%[8] - The group's property, plant, and equipment increased by 113.9% from approximately $42.4 million on December 31, 2020, to approximately $90.7 million on December 31, 2021, primarily due to expansion in R&D and manufacturing capacity[138] - Right-of-use assets rose by 39.4% from approximately $39.8 million on December 31, 2020, to approximately $55.5 million on December 31, 2021, mainly due to new leases established to support business growth[139] - Trade and other receivables increased by 55.7% from approximately $27.3 million on December 31, 2020, to approximately $42.5 million on December 31, 2021, driven by business growth[142] - Unbilled revenue grew by 59.7% from approximately $7.7 million on December 31, 2020, to approximately $12.3 million on December 31, 2021, reflecting business expansion[144] - The group's cash and cash equivalents decreased from approximately $212.1 million on December 31, 2020, to approximately $144.6 million on December 31, 2021, due to payments for property, plant, and equipment, and acquisitions[148] Operational Expansion - The company plans to continue expanding its market presence and investing in new technologies[2] - Future outlook remains positive, with expectations of further revenue growth driven by new product developments and market expansion strategies[2] - The company expanded its laboratory space by 71,000 square feet in Pennsylvania and is renovating a new 25,000 square feet bioanalytical lab in California, expected to be operational in Q1 2022[19] - The company aims to triple its capacity in China with the completion of renovations at its Suzhou and Shanghai facilities, expected to be operational in Q1 2022[19] - The company plans to focus on operational efficiency, integration of new acquisitions, and expansion of existing service capabilities in 2022[20] - The company has established ten facilities in North America as of December 31, 2021, to support its operations and client needs[73] - The company has ten facilities in China as of December 31, 2021, including four in Shanghai and four in Suzhou[75] - A new laboratory facility of approximately 200,000 square feet was leased in Wuhan, China, to expand early drug discovery capacity[100] Acquisitions and Partnerships - Three companies were acquired during the year, including Ocean Ridge, Quintara, and 合研生物科技, enhancing the company's capabilities in DNA sequencing and drug discovery[19] - Frontage Labs acquired Ocean Ridge Biosciences, Inc. for $1,000,000, enhancing its genomics services portfolio[85] - The acquisition of Quintara Discovery, Inc. involved a maximum cash consideration of $72,000,000, aimed at expanding ADME analysis capabilities[88] - Frontage Labs purchased a 70% stake in 合研生物 for approximately $6,349,000, enhancing drug discovery services[91] - An investment of $5,333,000 was made for a 48.57% stake in 誠弘製藥, expanding capabilities in API commercial manufacturing[92] - The acquisition of Experimur LLC was completed for up to $76,000,000, strengthening capabilities in pharmacology safety assessment and toxicology services[95] - Following the acquisition of Experimur, Frontage Labs aims to enhance its service offerings through additional scientists, equipment, and facilities[96] Employee and Management - The company employed over 1,300 staff across more than 22 locations in three countries as of December 31, 2021, despite a challenging labor market[19] - As of December 31, 2021, the group had a total of 1,322 employees, with 567 in North America and 755 in China[160] - Employee costs for the year ended December 31, 2021, were approximately $73.7 million, up from $49.8 million for the year ended December 31, 2020, representing a year-over-year increase of about 47.5%[160] - Approximately 85% of employees hold a bachelor's degree or higher, with 469 employees holding advanced degrees[160] - The group has implemented various employee training programs, including onboarding and ongoing training, to enhance knowledge and technical skills[161] - The management team has extensive experience in pharmaceutical development and has held significant positions in various companies prior to joining the group[163][168] - The management team includes individuals with diverse backgrounds in finance, pharmaceuticals, and research, enhancing the company's strategic capabilities[172] Strategic Focus and Future Outlook - The company plans to enhance operational efficiency through capacity utilization and optimization strategies aimed at improving profit margins[67] - The company aims to expand its global business presence by selectively establishing sales, marketing, and service infrastructure in regions with low penetration and significant growth opportunities, particularly outside North America and China[66] - The company intends to invest in internal growth and strategic acquisitions to strengthen its scientific capabilities and enhance global product development[66] - The company is focused on expanding its market presence and enhancing its product offerings through strategic investments and partnerships[177] - The company is exploring new strategies for market expansion and product development to drive future revenue growth[177] - The ongoing COVID-19 pandemic has positively impacted revenue, operating profit, and cash flow, with clients increasingly utilizing strategic outsourcing for early research programs[69] Compliance and Governance - The company successfully passed multiple regulatory inspections, including assessments by the DEA and FDA at its facilities in Pennsylvania and Ohio, with no significant adverse findings reported[76] - The company emphasizes animal welfare and has implemented standard operating procedures to ensure humane treatment of animals, with no compliance reports received from the USDA or FDA during the reporting period[77] - The company has a commitment to compliance and regulatory oversight, ensuring adherence to industry standards[194] - The board actively participates in risk management and audit committees, ensuring robust governance and oversight[177] - The company is committed to maintaining high professional standards across its various board roles, ensuring effective governance[177]

Financial Performance - Revenue increased by 67.9% from approximately $50.7 million for the six months ended June 30, 2020, to approximately $85.1 million for the six months ended June 30, 2021[8]. - Adjusted net profit for the six months ended June 30, 2021, was $14.5 million, compared to $5.5 million for the same period in 2020, representing a 163.5% increase[5]. - Gross profit increased by 103.4% from approximately $14.6 million for the six months ended June 30, 2020, to approximately $29.7 million for the six months ended June 30, 2021, with a gross margin rise from 28.9% to 34.8%[37]. - Net profit surged by 102.2% from approximately $4.5 million to approximately $9.1 million, with a net profit margin of 10.6% compared to 8.8% in the previous period[44]. - EBITDA rose by 80.7% from approximately $11.9 million to approximately $21.5 million, with an EBITDA margin of 25.3%[47]. - Adjusted EBITDA increased by 112.4% from approximately $12.1 million to approximately $25.7 million, with an adjusted EBITDA margin of 30.1%[48]. - Total comprehensive income for the period was $9,874,000, compared to $3,784,000 in the previous year, marking a 161% increase[100]. - The company reported revenues of approximately $85.1 million for the reporting period, a significant increase from approximately $50.7 million in the same period of 2020[19]. Assets and Liabilities - Total assets as of June 30, 2021, were $408.6 million, up from $382.7 million as of December 31, 2020, reflecting a growth of 6.9%[5]. - Cash and cash equivalents decreased to $182.6 million as of June 30, 2021, from $212.1 million as of December 31, 2020[5]. - Property, plant, and equipment increased by 54.2% from approximately $42.4 million to $65.4 million due to expansion in R&D and manufacturing capacity[52]. - Trade and other receivables increased by 32.2% from approximately $27.3 million to $36.1 million, driven by business growth[56]. - The company's total liabilities as of June 30, 2021, were $48,759 thousand, a slight increase from $48,315 thousand at the end of 2020, representing an increase of approximately 0.9%[102]. Revenue Breakdown - North America revenue rose by 53.8% from approximately $36.6 million to approximately $56.3 million during the same period[31]. - Revenue from China increased by 88.4%, from approximately RMB 99.1 million (about $14.1 million) to approximately RMB 186.7 million (about $28.8 million)[31]. - Revenue contribution from innovative drug projects in China exceeded 50% for the six months ending June 30, 2021, with future contract revenue contribution from innovative drugs accounting for over 60% of total future contract revenue in China[9]. - Revenue from the top five customers grew by 61.4% to approximately $21.3 million, accounting for 25.0% of total revenue for the six months ended June 30, 2021[34]. - Revenue from external customers reached $85,125 thousand for the six months ended June 30, 2021, compared to $50,659 thousand for the same period in 2020, representing a 68% increase[128]. Operational Expansion - The company is focused on expanding its operations in North America and China, capitalizing on growth opportunities in these markets[8]. - The chemical unit's new GMP kilo-scale laboratory in Shanghai, covering 7,000 square feet, is expected to commence operations in the second half of 2021, enhancing the ability to provide GMP active pharmaceutical ingredient (API) manufacturing services[10]. - A new microbiology laboratory in Exton, Pennsylvania, has been completed, offering comprehensive microbiological development and quality control testing services[11]. - The construction of an 89,000 square foot facility in Suzhou is underway, aimed at expanding manufacturing capabilities for various dosage forms, expected to partially commence operations in the first half of 2022[11]. - The company plans to begin construction on a new 25,000 square foot facility in Hayward, California in the second half of 2021[15]. Employee and Governance - The company has over 1,000 employees and operates 20 facilities across three countries[8]. - As of June 30, 2021, the group had a total of 1,133 employees, with 503 located in the US and Canada, and 630 in China[62]. - Employee costs for the six months ended June 30, 2021, were approximately $33.1 million, compared to $22.9 million for the same period in 2020, representing a 44% increase[62]. - The company has adhered to the corporate governance code, with some deviations due to the dual role of the executive director as both chairman and CEO[70]. Acquisitions and Investments - The acquisition of Ocean Ridge Biosciences, Inc. in April 2021 enhanced the company's genomics services, including novel therapies related to biofluid analysis and RNA sequencing[15]. - Frontage Labs acquired Quintara Discovery, Inc. for a maximum cash consideration of $72 million, which includes $44.1 million as the base cash amount at closing and up to $9 million contingent on performance targets over three years[28]. - The company completed the acquisition of Ocean Ridge Biosciences, Inc. for $1,000,000, enhancing its capabilities in genomic services for the healthcare and life sciences sectors[178][179]. - The company acquired Acme Bioscience, Inc. for a total consideration of $27,397,000, with fair value adjustments pending as of the acquisition date[118]. COVID-19 Impact - The company’s operations were significantly disrupted by the COVID-19 pandemic, but delivery efficiency improved from Q3 2020 onwards, positively impacting revenue and cash flow[19]. - The ongoing impact of the COVID-19 pandemic on the company's future performance remains uncertain, with potential disruptions to operations and supply chains[21]. - The company continues to implement measures to mitigate the adverse effects of the COVID-19 pandemic on its projects and client relationships[20]. Compliance and Reporting - The company confirmed that the unaudited condensed consolidated financial statements fairly reflect its financial position and performance for the reporting period[74]. - The company is committed to adhering to international accounting standards and has received a clean review report from auditors[97]. - The financial statements are prepared in accordance with International Accounting Standards and the applicable disclosure requirements of the Hong Kong Stock Exchange[110].

Financial Performance - Revenue for 2020 reached $125.811 million, a 25.4% increase from $100.415 million in 2019[5] - Adjusted net profit for 2020 was $20.364 million, down 6.4% from $21.397 million in 2019[6] - Gross profit margin decreased to 33.0% in 2020 from 37.1% in 2019[5] - Total assets increased to $380.115 million in 2020, up from $315.268 million in 2019[5] - Total liabilities rose significantly to $91.243 million in 2020, compared to $49.990 million in 2019[5] - Cash and cash equivalents stood at $212.087 million at the end of 2020, slightly up from $207.752 million in 2019[5] - The company reported a net profit margin of 13.8% for 2020, compared to 18.4% in 2019[5] - The adjusted net profit margin for 2020 was 16.2%, down from 21.3% in 2019[5] - The company's revenue increased by 25.3% year-on-year in 2020, despite challenges posed by the COVID-19 pandemic[9] - The future contract revenue as of December 31, 2020, was $172.0 million, a 57.1% increase from $109.5 million on December 31, 2019[9] Operational Developments - The company is renovating a 16,000 square foot biological laboratory in Shanghai and expanding its facilities in Pennsylvania and Suzhou[11] - The company made significant investments in personnel, increasing its workforce to over 1,000 employees across more than 18 locations in three countries[11] - The company acquired Biotranex, LLC in March and Acme Biosciences, Inc. in July 2020 to expand its business[11] - The company successfully developed COVID-19 RT-PCR and IgM testing methods at its headquarters in Pennsylvania[11] - Plans for 2021 include completing renovations of a 71,000 square foot facility in Pennsylvania and a new 25,000 square foot facility in California[13] - The company aims to enhance operational efficiency and profitability while strengthening its scientific and management teams[13] Market Strategy and Future Outlook - The company plans to continue expanding its market presence and investing in new technologies[3] - Future outlook remains cautious due to potential market risks and uncertainties[3] - The company will continue to focus on business development and marketing efforts to increase brand awareness and promote its services[13] - The company aims to expand its global business footprint through selective establishment of sales, marketing, and service infrastructure[26] COVID-19 Impact - The company has implemented various measures to mitigate the impact of COVID-19, including remote work and emergency plans for employee safety[28] - During the peak of COVID-19 in February 2020, the company suspended production activities in China for 14 days[29] - The company experienced significant disruptions in global operations due to COVID-19, particularly in the first half of 2020[29] - The company reported improved delivery efficiency in the third quarter of 2020 as lockdown measures were gradually lifted[29] - The company continues to monitor the demand for its products and services, which remains stable despite the uncertainties caused by the pandemic[29] Acquisitions and Investments - The acquisition of Biotranex for approximately $2.4 million enhances Frontage Labs' drug metabolism and pharmacokinetics services, filling a gap in DILI capabilities[46] - The acquisition of Acme, with a cash consideration of up to $26 million, will expand the company's organic synthesis and drug chemistry capabilities, particularly in antiviral and antibacterial research[47] Employee and Management Insights - The company emphasizes the importance of employee training and development to attract and retain top talent[26] - The management team has a strong academic background, with degrees from prestigious institutions such as McGill University and the University of Chicago[88][90] - The company is committed to strategic growth and innovation through its experienced leadership team[90] Corporate Governance - The board includes independent directors with extensive backgrounds in finance and management across various sectors[91] - The company has adopted a standard code of conduct for securities trading, with all directors confirming compliance throughout the reporting period[188] - The company aims to maintain high standards of corporate governance to protect shareholder interests and enhance corporate value[183] Financial Health and Reserves - The total distributable reserves available for shareholders as of December 31, 2020, amounted to approximately $53 million[109] - The company has adopted a dividend policy to allow shareholders to participate in profit distribution while retaining sufficient reserves for future growth[105] Risk Management - The company faces operational risks due to dependency on client demand for outsourcing services, which is influenced by clients' financial performance and R&D spending decisions[145] - International operations expose the company to additional risks and costs, including compliance with foreign laws and regulations, which may adversely affect business performance[146] - Cybersecurity risks are significant, as the company operates complex computer systems that handle sensitive data, and it continues to invest in advanced technologies to protect its information systems[149] Community and Environmental Responsibility - The group emphasizes environmental responsibility and aims to reduce operational impact on the environment through effective resource utilization and waste reduction[171] - Total charitable donations for the reporting period amounted to approximately $0.5 million, compared to $3,000 in 2019[111]

Financial Performance - For the six months ended June 30, 2020, the group's revenue was approximately $50.7 million, an increase of about 2.0% compared to approximately $49.7 million for the six months ended June 30, 2019[5]. - The group's gross profit for the six months ended June 30, 2020, was approximately $14.6 million, a decrease of about 24.0% from approximately $19.2 million for the same period in 2019[5]. - The group's net profit for the six months ended June 30, 2020, was approximately $4.5 million, a decrease of about 51.6% compared to approximately $9.3 million for the same period in 2019[5]. - Adjusted net profit for the same period was approximately $4.9 million, down about 59.5% from approximately $12.1 million in 2019[5]. - Basic earnings per share for the six months ended June 30, 2020, were approximately $0.0022, a decrease from approximately $0.0058 for the same period in 2019[5]. - Diluted earnings per share for the same period were approximately $0.0021, down from $0.0057 in 2019[5]. - The total comprehensive income for the period was $3,784,000, compared to $9,191,000 in 2019, marking a decline of around 59%[89]. - The company's total assets as of June 30, 2020, were $249,877,000, an increase from $242,408,000 at the end of 2019, showing a growth of about 3%[90]. - The company reported a cumulative profit of $35.963 million, with a total reserve of $264.579 million as of June 30, 2020[92]. - The company’s basic earnings per share for the period was $0.0022, a decrease from $0.0058 in 2019, reflecting a decline of approximately 62%[89]. Revenue Breakdown - North American revenue rose by 5.8% from approximately $34.6 million to approximately $36.6 million during the same period[25]. - Revenue from China decreased by 3.4% from approximately RMB 102.6 million to approximately RMB 99.1 million, primarily due to the impact of COVID-19[25]. - Revenue from the U.S. was $30,947 thousand, accounting for 61.1% of total revenue, while revenue from China was $12,467 thousand, representing 24.6%[27]. - Revenue from the top five customers decreased by 19.0% to approximately $13.2 million, accounting for 26.0% of total revenue for the six months ended June 30, 2020[27]. - Revenue from bioanalytical services was $26.631 million, up from $25.800 million in 2019, indicating a growth of 3.2%[102]. - Chemical, manufacturing, and control services generated $9.298 million, an increase from $8.346 million, reflecting a growth of 11.4%[102]. - The company experienced a significant decrease in revenue from bioequivalence services, which fell to $2.853 million from $5.316 million, a decline of 46.4%[102]. COVID-19 Impact - The COVID-19 pandemic has posed challenges, impacting global supply chains and financial markets, but the company has adapted to these challenges[8]. - The company established a special task force to address COVID-19, focusing on employee and partner safety and business continuity[10]. - The company faced operational disruptions due to COVID-19, including reduced laboratory service capacity and supply chain interruptions[11]. - The overall impact of COVID-19 on the company's business and financial performance remains highly uncertain and difficult to estimate[14]. - The company continues to provide high-cost-effective bioanalytical services to accelerate development processes against COVID-19[10]. - The pandemic caused a temporary halt in production activities in China for 14 days, impacting overall performance[96]. - The financial impact of government subsidies related to COVID-19 was noted, although specific amounts were not disclosed[96]. Operational Developments - The company continues to enhance its position as a value-added partner, focusing on solving critical and complex drug discovery and development issues[7]. - The company provides integrated, science-driven research, analysis, and development services throughout the drug discovery and development process[7]. - The company is actively monitoring the evolution of the COVID-19 pandemic and may adopt further preventive measures as necessary[10]. - The company has been involved in innovative research projects, including a rapid COVID-19 testing kit that can deliver results in 15 minutes[10]. - The company aims to improve core business performance and expand capacity to meet increasing customer demands despite operational impacts from COVID-19[68]. - Frontage Labs expanded its capabilities in Pennsylvania, including a 71,000 square foot laboratory for chemistry, manufacturing, and control services, expected to be operational in Q1 2021[20]. - The establishment of a quantitative whole-body autoradiography (QWBA) center of excellence in Pennsylvania will support regulatory submissions and human clinical studies[21]. Acquisitions and Investments - The acquisition of Biotranex, LLC for approximately $2.4 million enhances Frontage Labs' drug metabolism and pharmacokinetics services[24]. - Frontage Labs agreed to acquire 100% of Acme Bioscience, Inc. for up to $26 million, enhancing its capabilities in organic synthesis and drug chemistry[66]. - The acquisition includes a cash payment of $15 million upon completion and an additional $11 million contingent on achieving performance targets over three years[66]. - The acquisition of ACME is expected to capture growth in drug development and early-stage development services[163]. - The acquisition contributed an additional profit of $41,000 and revenue of $271,000 during the interim period[149]. Future Outlook - The company provided a future outlook, projecting a revenue growth of 25% for the next fiscal year, driven by new product launches and market expansion[166]. - The company plans to expand its market presence in Southeast Asia, targeting a 10% market share within the next two years[166]. - The company aims to improve operational efficiency, targeting a reduction in costs by 15% through process optimization[166]. - The company is committed to enhancing shareholder value through consistent dividend payments, with a proposed increase of 5% in the upcoming fiscal year[166]. - The company emphasized its focus on sustainability initiatives, aiming to reduce carbon emissions by 20% over the next five years[166]. Shareholder Information - Dr. Li Zhihe holds 56,901,560 shares and has options for 4,500,000 shares, representing a 3.03% equity interest[75]. - Hong Kong Tiger holds 1,032,964,090 shares, accounting for 50.94% of the total equity[77]. - Dr. Li Song owns 192,647,320 shares, which is 9.50% of the total equity[77]. - Hillhouse Capital Advisors, Ltd. manages 122,632,000 shares, representing 6.05% of the total equity[77]. - The company granted a total of 7,990,000 options under the 2015 Share Incentive Plan at an exercise price of $2.00[81]. - The company aims to attract and retain talent through its share incentive plans[81].