Financial Performance - Revenue for the six months ended June 30, 2024, was RMB 700,919 thousand, a decrease of 23.8% from RMB 919,457 thousand in the same period of 2023[2] - Gross profit for the same period was RMB 145,417 thousand, down 22.2% from RMB 186,933 thousand year-on-year[3] - Operating profit for the six months was RMB 17,254 thousand, compared to an operating loss of RMB 5,509 thousand in the previous year[3] - Profit attributable to owners of the company from continuing operations was RMB 5,877 thousand, recovering from a loss of RMB 7,379 thousand in the same period last year[4] - The company reported a net profit of RMB 4,189 thousand for the period, a significant recovery from a loss of RMB 72,186 thousand in the same period last year[5] - Total revenue for the group was approximately RMB 700.9 million for the six months ended June 30, representing a decrease of about 23.8% compared to the same period in 2023[72] Assets and Liabilities - Total assets as of June 30, 2024, were RMB 2,136,820 thousand, a slight decrease from RMB 2,158,972 thousand at the end of 2023[6] - As of June 30, 2024, total liabilities amounted to RMB 1,356,190 thousand, a decrease from RMB 1,383,499 thousand as of December 31, 2023, reflecting a reduction of approximately 2%[7] - Non-current liabilities decreased from RMB 205,812 thousand to RMB 168,564 thousand, representing a decline of about 18%[7] - Current liabilities totaled RMB 1,187,626 thousand, slightly up from RMB 1,177,687 thousand, indicating an increase of approximately 1%[7] - The total equity of the group increased to approximately RMB 780.6 million as of June 30, 2024, from approximately RMB 775.5 million as of December 31, 2023[101] Cash Flow - The net cash generated from operating activities for the period was approximately RMB 19.5 million, a significant improvement from a net cash used of RMB 64.8 million in the previous year[94] - The net cash generated from investing activities was approximately RMB 12.4 million, compared to a net cash used of RMB 25.4 million in the previous year[94] - The net cash used in financing activities amounted to approximately RMB 56.0 million, primarily due to loan repayments of RMB 185.8 million[94] Segment Performance - The integrated process and packaging systems segment generated revenue of RMB 309,273 thousand, while the life science equipment and consumables segment contributed RMB 175,060 thousand[12] - Revenue from the Integrated Process and Packaging Systems segment decreased by approximately RMB 147.3 million or 32.3% to about RMB 309.3 million[74] - Revenue from the Consulting, Digitalization, and Construction segment decreased by approximately RMB 85.1 million or 28.2% to about RMB 216.6 million[75] - Revenue from the Life Science Equipment and Consumables segment increased by approximately RMB 13.9 million or 8.6% to about RMB 175.1 million, primarily due to an increase in order volume during the review period[76] Orders and Contracts - Total orders from continuing operations reached approximately RMB 906.1 million, an increase of about RMB 186.4 million or 25.9% compared to RMB 719.7 million for the same period in 2023[43] - The Integrated Process and Packaging Systems segment reported orders of approximately RMB 430.7 million, up RMB 73.6 million or 20.6% from RMB 357.0 million in the previous year[44] - The Consulting, Digitalization, and Construction segment saw significant growth, with orders amounting to approximately RMB 290.5 million, an increase of RMB 95.9 million or 49.3% compared to RMB 194.6 million in the prior period[45] - The total value of uncompleted contracts as of June 30, 2024, was RMB 1,127.3 million, with 1,633 contracts in total[48] Research and Development - Research and development expenses for the six months ended June 30, 2024, were RMB 23,468 thousand, compared to RMB 27,465 thousand in the same period of 2023[14] - The company has developed core process equipment for biopharmaceuticals, enhancing product quality and increasing yield through streamlined production processes[54] - The company has created 24 new brochures and shared a total of 219 brochures on its resource center, enhancing global customer access to product and service information[53] Corporate Governance - The company acknowledges the importance of good corporate governance to enhance management standards and protect shareholder interests[108] - The board believes that having the same individual serve as both Chairman and CEO is beneficial for effective leadership and strategic planning[109] - The audit committee, established in October 2014, includes two independent non-executive directors and one non-executive director, responsible for reviewing financial reports and internal controls[111] Market Trends and Strategy - The antibody-drug conjugate industry is experiencing rapid growth, with a focus on expanding indications to non-tumor diseases, including autoimmune diseases and infections[37] - The Chinese pharmaceutical industry is expected to enter a new round of industrial upgrades, particularly in the sterile preparation sector, due to the implementation of new EU GMP regulations and China's accession to PIC/S[36] - The company aims to increase the share of its service business to achieve higher profit margins and reduce reliance on customer capital expenditure fluctuations[39] - The company is exploring global expansion opportunities, particularly in regions with higher profit margins, such as the Middle East and Southeast Asia[60]

Financial Performance - Total revenue for 2023 was RMB 1,763,734, a decrease of 18.2% compared to RMB 2,156,869 in 2022[9]. - Gross profit for 2023 was RMB 336,050, down 31.2% from RMB 488,796 in 2022, resulting in a gross margin of 19.1%[9]. - The company reported a loss attributable to owners of RMB (113,473) in 2023, compared to a profit of RMB 87,461 in 2022[9]. - Total assets decreased by 9.6% to RMB 2,158,972 in 2023 from RMB 2,388,763 in 2022[9]. - The debt-to-asset ratio increased to 39.2% in 2023 from 27.8% in 2022[9]. - The company recorded a net loss of approximately RMB 151.3 million for the year, compared to a profit of approximately RMB 67.7 million for the previous year[138]. - The gross profit decreased by approximately RMB 152.7 million or 31.2% to about RMB 336.1 million, reflecting the decline in revenue[114]. - The overall gross margin decreased from 22.7% to 19.1% due to lower profitability across various segments[115]. - The company expects gradual improvement in gross profit and margin over the next few years as market share grows and globalization expands[118]. Revenue Breakdown - Revenue from the Fluid and Bioprocess Systems segment was RMB 611,292, accounting for 34.7% of total revenue[11]. - Revenue from Cleanroom and Automation Control Systems was RMB 441,209, representing 25.0% of total revenue[11]. - Revenue from mainland China accounted for approximately 95.3% of total revenue, down from 96.1% in the previous year[112]. - Revenue from the Fluid and Bioprocess Systems segment decreased by 30.4% to approximately RMB 611.3 million, primarily due to a reduction in uncompleted contracts and order amounts[105]. - Revenue from the Cleanroom and Automation Control Systems segment decreased by 14.2% to approximately RMB 441.2 million, mainly due to a decline in order amounts[106]. - Revenue from the Powder Solid Systems segment increased by 2.4% to approximately RMB 251.8 million, attributed to a higher number of uncompleted contracts at the beginning of the year[107]. - Revenue from the Life Science Consumables segment decreased by 21.9% to approximately RMB 303.4 million, primarily due to a reduction in order amounts[110]. - Revenue from the Pharmaceutical Equipment Distribution and Agency segment increased by 84.0% to approximately RMB 65.9 million, driven by an increase in uncompleted contracts and improved project execution efficiency[111]. Strategic Initiatives - The company plans to expand its product offerings and enhance R&D capabilities in the biopharmaceutical sector[14]. - The company is focusing on strategic partnerships to enhance market presence and operational efficiency[14]. - Future guidance indicates a continued emphasis on innovation and market expansion despite recent financial challenges[14]. - The company plans to introduce a significant number of new products developed with proprietary intellectual property over the next two to three years[28]. - The company is enhancing its manufacturing capabilities and digital tools to support the development of proprietary equipment products, aiming to replace its previous role as a core equipment agent[56]. - The company is focusing on restructuring its business model to create a more synergistic and efficient operation, seeking new technological solutions for cost-effective comprehensive solutions[41]. - The company aims to enhance its competitiveness in the global market by continuously improving its products, services, and spare parts in freeze-drying, filling, and inspection technologies[78]. Market Trends and Opportunities - The biopharmaceutical industry is experiencing a shift towards differentiated and competitive pipelines, with a focus on long-term innovative technologies like AI-driven drug development[33]. - The demand for medical beauty products, including hyaluronic acid and botulinum toxin, is driving opportunities for fermentation and sterile powder equipment and technology[34]. - The company is optimistic about the long-term trends in the cell and gene therapy industry, despite a temporary slowdown in investment in China[101]. - The company is actively involved in the development of advanced therapy medicinal products (ATMP), with a strategic goal to provide competitive sterile protection solutions globally[100]. Operational Developments - In 2023, the company officially launched new manufacturing centers in Shanghai and Shijiazhuang[17]. - The company has established a strategic partnership with Endress+Hauser in Shanghai to enhance its operational capabilities[17]. - The company launched a new continuous manufacturing R&D platform for solid dosage forms in October 2023[17]. - The company has completed the development of a lipid nanoparticle preparation system, which is high-throughput, automated, and compliant with GMP regulations[72]. - The company has launched the ContiFlex10 flexible continuous production system, promoting the development of continuous manufacturing in China[70]. Human Resources and Training - Employee costs for the year were approximately RMB 459.8 million, a slight increase of about 0.5% compared to RMB 457.5 million for the year ended December 31, 2022[147]. - The company had a total of 1,610 full-time employees as of December 31, 2023, a decrease of 303 employees compared to the previous year[147]. - The production team introduced a "Lean Operations Room" to enhance the skills of on-site personnel, integrating training, motivation, simulation, and practical operations[59]. - The company has invested in employee training and development to maintain a skilled and dedicated workforce[182]. Research and Development - The company is investing in R&D, allocating 15% of its revenue towards developing new technologies and improving existing products[161]. - The company has developed 12 technical application teams focusing on areas such as pharmaceutical automation, cleanroom technology, and biopharmaceutical processes, enhancing its technical capabilities[94]. - The introduction of an AI predictive model in collaboration with Zhejiang University aims to optimize laboratory operations and reduce personnel requirements[67]. Customer and Supplier Relations - The group’s major customers accounted for approximately 13.2% of total revenue for the year, with stable relationships maintained for 1 to 17 years[188]. - The group has implemented a series of policies to maintain close relationships with major customers, including customer complaint management and satisfaction surveys[188]. - The group has established stable relationships with several key suppliers, typically retaining one to three suppliers for major raw materials[190]. Sustainability and Compliance - The management team emphasized the importance of sustainability initiatives, aiming to reduce operational costs by 10% through eco-friendly practices[165]. - The group is committed to sustainable development and has complied with multiple environmental laws and regulations during the year[191]. - The company has implemented energy-saving research for cleanroom air conditioning, aligning with national carbon neutrality policies[67]. Future Outlook - The company provided guidance for the next fiscal year, projecting revenue growth of 25% and aiming to reach $625 million[167]. - Overall, the company remains optimistic about future growth, driven by strong market demand and a robust pipeline of new products[159].

Revenue Performance - The total revenue for the year ended December 31, 2023, was approximately RMB 1,763.7 million, a decrease of 18.2% from RMB 2,156.9 million in 2022[1]. - The Fluid and Bioprocess Systems segment reported revenue of approximately RMB 611.3 million, down 30.4% from RMB 878.6 million in 2022, primarily due to a decrease in uncompleted contracts and order volume[2]. - The Cleanroom and Automation Control and Monitoring Systems segment saw revenue decline by 14.2% to approximately RMB 441.2 million from RMB 514.1 million, mainly due to a drop in order volume in 2023[3]. - The Powder Solid Systems segment experienced a revenue increase of 2.4%, reaching approximately RMB 251.8 million, attributed to a higher number of uncompleted contracts at the beginning of the year[5]. - The GMP Compliance Services segment's revenue decreased by 4.5% to approximately RMB 90.1 million from RMB 94.3 million, due to a reduction in order volume and lower conversion rates of COVID-19 related projects[6]. - The Life Science Consumables segment reported a revenue decline of 21.9% to approximately RMB 303.4 million from RMB 388.3 million, primarily due to decreased order volume in 2023[7]. - The Pharmaceutical Equipment Distribution and Agency segment saw a significant revenue increase of 84.0%, reaching approximately RMB 65.9 million from RMB 35.8 million, driven by an increase in uncompleted contracts and improved project execution efficiency[8]. Profitability and Financial Performance - The gross profit for the year was approximately RMB 336.1 million, a decrease of 31.2% from RMB 488.8 million in 2022, reflecting the decline in revenue[12]. - The gross profit margin for the year was 19.1%, down from 22.7% in the previous year[38]. - The company reported a loss attributable to owners of RMB 32.6 million from continuing operations, compared to a profit of RMB 104.2 million in the previous year[40]. - The total comprehensive income attributable to the company's owners for the year ended December 31, 2023, was RMB (123,931) thousand, compared to RMB 114,965 thousand for the year ended December 31, 2022, reflecting a significant decline[71]. - The company reported a net loss from continuing operations of RMB (43,065) thousand for the year ended December 31, 2023, compared to a loss of RMB (80,866) thousand for the previous year[71]. - The company reported a basic loss per share of RMB (32,607) for the year ended December 31, 2023, compared to a profit of RMB 104,237 for the year ended December 31, 2022[151]. Assets and Liabilities - The total assets decreased to RMB 2,158.97 million from RMB 2,388.76 million in the previous year[38]. - Total liabilities decreased from RMB 1,505,182 thousand in 2022 to RMB 1,383,499 thousand in 2023, a reduction of approximately 8.1%[94]. - Current assets decreased to RMB 1,573,819 thousand as of December 31, 2023, from RMB 1,801,007 thousand as of December 31, 2022, indicating a reduction of approximately 12.6%[72]. - The total equity attributable to the company's owners was RMB 775,473 thousand as of December 31, 2023, down from RMB 883,581 thousand as of December 31, 2022, reflecting a decrease of about 12.2%[72]. - Non-current assets totaled RMB 585,153 thousand as of December 31, 2023, slightly down from RMB 587,756 thousand as of December 31, 2022[72]. Research and Development - Research and development expenses decreased by RMB 14.9 million or 21.1% to approximately RMB 55.3 million, primarily due to a reduction in workforce and material consumption[65]. - The company is actively involved in the research and commercialization of new therapies, which is a key growth driver for its business[33]. - The company has introduced more cell-related equipment and systems in the ATMP industry in 2023, leveraging its proprietary intellectual property[35]. Market and Industry Outlook - The company is optimistic about the mid to long-term trends in the cell and gene therapy industry despite a recent slowdown in investment in China[35]. - The market for GLP-1 drugs is expected to continue driving research and production investments for several years, indicating a strong future outlook for the pharmaceutical industry[169]. - The expansion of production capacity for oral anti-tumor formulations and related CDMO services is creating new business opportunities in engineering technology systems[170]. - The company anticipates significant growth potential for domestic pharmaceutical service providers due to competitive pricing, stable supply chains, and effective after-sales service[171]. Operational Highlights - The company has classified assets held for sale at RMB 8,590 thousand as of December 31, 2023, with no comparable figure for the previous year[72]. - The company has been actively investing in human resources, regional expansion, and enhancing product and application solution capabilities, expecting to achieve more satisfactory business results[179]. - The company participated in and organized 55 events in 2023, including 16 exhibitions and 26 industry conferences, to enhance brand visibility[194].

Financial Performance - The company recorded revenue of approximately RMB 964 million, a decrease of about 45.6% compared to the same period in 2022 due to slow recovery post-COVID-19 and reduced capital expenditure investment sentiment[6]. - Total revenue for the first half of 2023 was approximately RMB 964.3 million, a decrease of about 12.7% compared to the same period in 2022[47]. - Revenue for the six months ended June 30, 2023, was RMB 964,269,000, a decrease of 12.7% from RMB 1,103,980,000 in the same period of 2022[137]. - The company reported a loss before tax of RMB 70,286,000, compared to a profit of RMB 48,234,000 in the previous year[137]. - The company recorded a loss of approximately RMB 72.2 million during the period, including net losses from H+E Pharma and S-Tec of RMB 63.9 million[85]. - The company expects to incur a loss of approximately RMB 60 million in the second half of 2023 due to bankruptcy applications from H+E Pharma GmbH and S-Tec GmbH[151]. - The net loss attributable to the owners of the company for the period was RMB 72,186 thousand, a significant decline from a profit of RMB 36,664 thousand in the same period last year[158]. Segment Performance - Revenue from the Fluid and Bioprocess Systems segment was RMB 371.8 million, accounting for 38.6% of total revenue, down 25.3% from RMB 497.8 million in 2022[48]. - The Cleanroom and Automation Control Systems segment generated RMB 222.1 million, representing 23.0% of total revenue, a decrease of 7.8% from RMB 240.9 million in 2022[48]. - The Powder Solid Systems segment saw an increase in revenue to RMB 129.6 million, up 19.1% from RMB 108.8 million in 2022, contributing 13.4% to total revenue[48]. - GMP Compliance Services revenue increased by 13.9% to RMB 50.4 million, representing 5.2% of total revenue[48]. - Life Science Consumables revenue decreased by 17.6% to RMB 161.2 million, accounting for 16.7% of total revenue[48]. - The Pharmaceutical Equipment Distribution and Agency segment experienced significant growth, with revenue rising 74.7% to RMB 29.2 million, contributing 3.1% to total revenue[48]. Market Trends and Strategic Focus - The company observed a potential recovery in capital expenditure projects within the pharmaceutical industry in July 2023, indicating a more active market[6]. - The company is focusing on enhancing its service business to meet broader customer needs, which is expected to provide new significant revenue sources and higher profit margins in the future[7]. - The company is actively investing in human resources, regional expansion, and enhancing product and application solution capabilities to achieve stronger business outcomes[8]. - The company is restructuring its product lines to provide more cost-effective integrated solutions, which will enhance its adaptability to a more competitive environment[10]. - The company is positioned to leverage its high-level technical solutions and compliance verification knowledge to capitalize on opportunities arising from stricter drug regulation in China[2]. - The company is witnessing a shift in the pharmaceutical equipment market, with domestic suppliers becoming more competitive in terms of price, quality, and supply chain reliability[4]. Research and Development - The company has developed 12 technical application teams to enhance its technology solutions across various business units[41]. - The company is focusing on continuous manufacturing technologies and aims to collaborate with academic institutions and strategic partners for further development[41]. - The group has completed the development of a pre-filled syringe (PFS) and combination filling line compatible with ampoules and vials, enhancing its competitive advantage for future business development[31]. - The group has strengthened research on particle size control technology, developing laboratory grinding machines to provide application solutions for particle size control from micrometers to nanometers[29]. - The development of fermentation processes and suspension culture bioreactors has been completed, enhancing the group's capabilities in biopharmaceutical core process systems[38]. Operational Efficiency - The company is enhancing its digital tools and data analysis efficiency through the establishment of standardized data information systems at new production facilities[21]. - The group has established a business intelligence data visualization platform to provide clients with various templates for data processing and visualization[36]. - The company has implemented a digital integration management system for project execution, ensuring seamless connection from concept design to project completion[22]. Financial Position and Liabilities - As of June 30, 2023, the total current assets of the group amounted to approximately RMB 1,714.6 million, a decrease of about RMB 86.4 million from RMB 1,801.0 million as of December 31, 2022[88]. - The group's total liabilities to equity ratio increased from approximately 27.8% as of December 31, 2022, to about 34.8% as of June 30, 2023[89]. - The group had a total equity of approximately RMB 859.5 million as of June 30, 2023, down from RMB 896.9 million as of December 31, 2022[98]. - The company's total liabilities as of June 30, 2023, were RMB 1,492,008,000, a slight decrease from RMB 1,505,182,000 as of December 31, 2022[154]. Governance and Management - The company has adopted and is committed to implementing corporate governance codes to enhance management standards and protect shareholder interests[119]. - The roles of Chairman and CEO are held by the same individual, Mr. He Guoqiang, which the board believes enhances leadership and strategic planning efficiency[122]. - All directors confirmed compliance with the standards set forth in the code of conduct during the review period[123].

[Financial Summary](index=1&type=section&id=Financial%20Summary) Financial Summary for the Six Months Ended June 30, 2023 | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change | | :--- | :--- | :--- | :--- | | Revenue (million yuan) | 964 | 1,104 | -12.7% | | Gross Profit (million yuan) | 147 | 236 | -37.5% | | Gross Margin | 15.3% | 21.4% | -6.1pp | | (Loss)/Profit attributable to owners of the Company (million yuan) | (39.944) | 45.843 | Swung to Loss | | Basic (Loss)/Earnings per Share (RMB) | (0.08) | 0.09 | Swung to Loss | Balance Sheet Summary | Metric | June 30, 2023 | December 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Total Assets (billion yuan) | 2.302 | 2.389 | -3.6% | | Net Assets (million yuan) | 810 | 884 | -8.4% | | Gearing Ratio | 34.8% | 27.8% | +7.0pp | [Interim Results](index=2&type=section&id=Interim%20Results) [Interim Condensed Consolidated Statement of Profit or Loss](index=2&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Profit%20or%20Loss) For the six months ended June 30, 2023, the Group's revenue decreased by 12.7% to 964 million yuan, gross profit fell by 37.5% to 147 million yuan, and operating profit swung to a loss of 69.37 million yuan, resulting in a loss attributable to owners of the Company of 39.94 million yuan Key Items from Interim Condensed Consolidated Statement of Profit or Loss (RMB in thousands) | Item | 2023 H1 (Unaudited) | 2022 H1 (Unaudited) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 964,269 | 1,103,980 | -12.7% | | Cost of Sales | (816,996) | (868,245) | -5.9% | | **Gross Profit** | **147,273** | **235,735** | **-37.5%** | | Selling and Marketing Expenses | (92,978) | (83,777) | +11.0% | | Administrative Expenses | (86,656) | (67,812) | +27.8% | | Impairment Loss on Assets | (11,410) | – | Not Applicable | | **Operating (Loss)/Profit** | **(69,368)** | **46,013** | **Swung to Loss** | | (Loss)/Profit Before Income Tax | (70,286) | 48,234 | Swung to Loss | | **(Loss)/Profit for the Period** | **(72,186)** | **36,664** | **Swung to Loss** | | **(Loss) Attributable to Owners of the Company** | **(39,944)** | **45,843** | **Swung to Loss** | | Basic (Loss)/Earnings per Share (RMB) | (0.08) | 0.09 | Swung to Loss | [Interim Condensed Consolidated Statement of Comprehensive Income](index=3&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Comprehensive%20Income) During the reporting period, the Group recorded a total comprehensive loss of 72.82 million yuan, compared to a total comprehensive income of 53.04 million yuan in the prior period, primarily due to the swing from profit to loss and negative foreign currency translation differences - Total comprehensive loss attributable to owners of the Company was **36.85 million yuan**, compared to a total comprehensive income of **62.15 million yuan** in the prior period[45](index=45&type=chunk) - Exchange differences on translation of foreign operations resulted in a loss of **0.636 million yuan**, compared to an income of **16.376 million yuan** in the prior period, negatively impacting comprehensive income[45](index=45&type=chunk) [Interim Condensed Consolidated Statement of Financial Position](index=4&type=section&id=Interim%20Condensed%20Consolidated%20Statement%20of%20Financial%20Position) As of June 30, 2023, the Group's total assets were 2.302 billion yuan, a 3.6% decrease from the end of 2022, with total liabilities remaining stable at 1.492 billion yuan and total equity decreasing by 8.3% to 810 million yuan, while current assets saw reductions in inventories and trade receivables but an increase in contract assets Balance Sheet Summary (RMB in thousands) | Item | June 30, 2023 (Unaudited) | December 31, 2022 (Audited) | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **2,302,221** | **2,388,763** | **-3.6%** | | Total Non-current Assets | 587,651 | 587,756 | -0.02% | | Total Current Assets | 1,714,570 | 1,801,007 | -4.8% | | **Total Liabilities** | **1,492,008** | **1,505,182** | **-0.9%** | | Total Non-current Liabilities | 156,170 | 145,417 | +7.4% | | Total Current Liabilities | 1,335,838 | 1,359,765 | -1.8% | | **Total Equity** | **810,213** | **883,581** | **-8.3%** | - Within current assets, inventories decreased from **388 million yuan** to **330 million yuan**, and trade and bills receivables decreased from **417 million yuan** to **385 million yuan**[53](index=53&type=chunk) - Among current liabilities, short-term borrowings increased from **172 million yuan** to **265 million yuan**, while contract liabilities decreased from **383 million yuan** to **269 million yuan**[55](index=55&type=chunk) [Notes to the Interim Condensed Consolidated Financial Information](index=6&type=section&id=Notes%20to%20the%20Interim%20Condensed%20Consolidated%20Financial%20Information) [Segment Information](index=7&type=section&id=Segment%20Information) The Group operates through six business segments, with total revenue decreasing year-on-year to 964 million yuan during the reporting period, primarily due to significant declines in revenue and gross profit from Fluid and Bioprocess Systems and Life Science Consumables, while GMP Compliance Services and Pharmaceutical Equipment Distribution and Agency segments saw gross profit growth Revenue and Gross Profit by Business Segment (RMB in thousands) | Business Segment | 2023 H1 Revenue | 2022 H1 Revenue | 2023 H1 Gross Profit | 2022 H1 Gross Profit | | :--- | :--- | :--- | :--- | :--- | | Fluid and Bioprocess Systems | 371,814 | 497,778 | 4,527 | 63,038 | | Cleanroom and Automation Control and Monitoring Systems | 222,090 | 240,861 | 37,205 | 43,452 | | Powder and Solid Systems | 129,557 | 108,819 | 16,721 | 19,969 | | GMP Compliance Services | 50,448 | 44,292 | 23,451 | 18,018 | | Life Science Consumables | 161,205 | 195,538 | 55,789 | 85,546 | | Pharmaceutical Equipment Distribution and Agency | 29,155 | 16,692 | 9,580 | 5,712 | | **Total** | **964,269** | **1,103,980** | **147,273** | **235,735** | - Geographically, Mainland China remains the primary revenue source, accounting for **91.5%** of total revenue with **882 million yuan**, a year-on-year decrease of **12.9%**[1](index=1&type=chunk) [Income Tax Expense](index=13&type=section&id=Income%20Tax%20Expense) During the reporting period, the Group's income tax expense significantly decreased to 1.9 million yuan from 11.57 million yuan in the prior period, primarily due to lower profit before tax, with certain Chinese subsidiaries enjoying a preferential 15% corporate income tax rate as high-tech enterprises - Current income tax expense decreased from **9.988 million yuan** in the prior period to **2.279 million yuan**[5](index=5&type=chunk) - Certain subsidiaries of the Group in Mainland China (Shanghai Austar, Austar Hengxun, Austar Shijiazhuang) are certified as high-tech enterprises, enjoying a preferential tax rate of **15%** compared to the standard rate of **25%**[11](index=11&type=chunk) [(Loss)/Earnings per Share](index=14&type=section&id=(Loss)%2FEarnings%20per%20Share) For the six months ended June 30, 2023, the loss attributable to owners of the Company was 39.944 million yuan, resulting in a basic loss per share of RMB 0.08, compared to a basic earnings per share of RMB 0.09 in the prior period, with no diluted ordinary shares during the reporting period Calculation of Basic (Loss)/Earnings per Share | Item | 2023 H1 (Unaudited) | 2022 H1 (Unaudited) | | :--- | :--- | :--- | | (Loss)/Profit attributable to owners of the Company (RMB in thousands) | (39,944) | 45,843 | | Weighted average number of ordinary shares in issue (thousands) | 512,582 | 512,582 | | **Basic (Loss)/Earnings per Share (RMB)** | **(0.08)** | **0.09** | [Dividends](index=14&type=section&id=Dividends) The Board of Directors decided not to declare an interim dividend for the six months ended June 30, 2023, consistent with the policy for the same period in 2022 - The Company did not declare an interim dividend for the six months ended June 30, 2023 (2022: nil)[6](index=6&type=chunk) [Management Discussion and Analysis](index=19&type=section&id=Management%20Discussion%20and%20Analysis) [Market Review](index=19&type=section&id=Market%20Review) In H1 2023, the biopharmaceutical industry saw divergence, with a significant decline in monoclonal antibody drug project demand impacting related service and supply companies, while areas like API, complex drug formulations, and GLP-1 class drugs showed strong demand or new investment, and China's impending PIC/S accession and national policy support created opportunities for high-tech and compliant domestic equipment providers - Demand for monoclonal antibody drug projects significantly declined, but capital expenditure for other biologics like blood products and insulin remained strong[32](index=32&type=chunk) - Some CDMO clients reduced costs, slowed, or canceled capital expenditure projects due to capital market funding shortages[38](index=38&type=chunk) - The significant efficacy of GLP-1 class weight-loss drugs sparked an investment boom in upstream areas such as peptide production[39](index=39&type=chunk) - China's impending formal application to join PIC/S increased demand from pharmaceutical companies for production lines built to PIC/S GMP standards, creating business opportunities for the Company[41](index=41&type=chunk) [Business Review](index=21&type=section&id=Business%20Review) During the reporting period, the Group recorded revenue of 964 million yuan, but order intake significantly decreased by 45.6% year-on-year due to slow post-pandemic recovery and cautious capital expenditure sentiment, resulting in a loss of 72.2 million yuan, with 63.9 million yuan attributable to a German non-wholly-owned subsidiary that subsequently filed for bankruptcy; the Group is responding by integrating product lines, enhancing technical solutions, expanding service businesses, and investing in R&D and global expansion for long-term competitiveness - During the reporting period, the Group's order intake decreased by approximately **45.6%** year-on-year, primarily due to slow post-COVID-19 recovery and project delays[49](index=49&type=chunk) - The Group recorded a loss of approximately **72.2 million yuan**, with approximately **63.9 million yuan** attributable to a German non-wholly-owned subsidiary which filed for bankruptcy on August 3, 2023, an action expected to help the Group cease financial support and terminate recording its losses[49](index=49&type=chunk) - The Group is actively expanding its service business, aiming for it to become a new significant revenue source and a higher profit growth driver in the future[50](index=50&type=chunk) - As of June 30, 2023, the Group had obtained **402 patents**, with **30 new patents** granted during the period and **66 applications** pending[129](index=129&type=chunk) [Order Book Analysis](index=22&type=section&id=Order%20Book%20Analysis) For the six months ended June 30, 2023, the Group's total order intake was 733 million yuan, a significant year-on-year decrease of 45.6%, with all business segments experiencing substantial declines except for a modest 2.7% increase in Pharmaceutical Equipment Distribution and Agency, and Cleanroom and Automation Control and Monitoring Systems seeing the largest drop at 64.4% Order Intake by Business Segment (RMB in thousands) | Business Segment | 2023 H1 | 2022 H1 | Change | | :--- | :--- | :--- | :--- | | Fluid and Bioprocess Systems | 264,403 | 478,315 | -44.7% | | Cleanroom and Automation Control and Monitoring Systems | 112,786 | 317,081 | -64.4% | | Powder and Solid Systems | 105,524 | 224,630 | -53.0% | | GMP Compliance Services | 47,590 | 58,522 | -18.7% | | Life Science Consumables | 168,096 | 234,990 | -28.5% | | Pharmaceutical Equipment Distribution and Agency | 34,255 | 33,345 | 2.7% | | **Total** | **732,654** | **1,346,883** | **-45.6%** | [Outlook](index=29&type=section&id=Outlook) Looking ahead, the Group will focus on developing and integrating 12 key technology applications to offer comprehensive solutions, sees significant potential in emerging areas like continuous manufacturing, Pharma 4.0 digital transformation, and cell and gene therapy, and plans to increase investment through collaborations, while also vigorously developing its service business to enhance gross margins and customer loyalty - The Group has established **12 technology application teams** to integrate single product line capabilities into comprehensive technical solutions, including "Pharmaceutical Automation and Digitalization" and "Biopharmaceutical Process and Technology"[143](index=143&type=chunk) - The Group believes continuous manufacturing technology holds significant potential in the API and OSD industries and plans to invest in developing related technologies[145](index=145&type=chunk) - The Group is vigorously developing Pharma 4.0-related digital transformation businesses and has created the REMOIIS platform to provide solutions as a system integrator[146](index=146&type=chunk) - Service business is considered key to improving gross margins and brand recognition, with the Group having established a dedicated growth acceleration team to increase service revenue[151](index=151&type=chunk) [Operating Results](index=32&type=section&id=Operating%20Results) In H1 2023, the Group's total revenue decreased by 12.7% year-on-year to 964 million yuan, with gross profit significantly declining by 37.5% to 147 million yuan and gross margin falling from 21.4% to 15.3%, primarily due to lower gross margins in Fluid and Bioprocess Systems and Life Science Consumables segments, while increased selling and administrative expenses and asset impairment losses led to a loss of 72.2 million yuan for the period [Revenue](index=32&type=section&id=Revenue) During the reporting period, the Group's total revenue was 964 million yuan, a 12.7% year-on-year decrease, primarily driven by revenue declines in Fluid and Bioprocess Systems, Cleanroom and Automation Control and Monitoring Systems, and Life Science Consumables segments, while Powder and Solid Systems, GMP Compliance Services, and Pharmaceutical Equipment Distribution and Agency segments achieved revenue growth Revenue Breakdown by Business Segment (RMB in thousands) | Business Segment | 2023 H1 | 2022 H1 | Change | | :--- | :--- | :--- | :--- | | Fluid and Bioprocess Systems | 371,814 | 497,778 | -25.3% | | Cleanroom and Automation Control and Monitoring Systems | 222,090 | 240,861 | -7.8% | | Powder and Solid Systems | 129,557 | 108,819 | 19.1% | | GMP Compliance Services | 50,448 | 44,292 | 13.9% | | Life Science Consumables | 161,205 | 195,538 | -17.6% | | Pharmaceutical Equipment Distribution and Agency | 29,155 | 16,692 | 74.7% | | **Total** | **964,269** | **1,103,980** | **-12.7%** | [Gross Profit and Gross Margin](index=35&type=section&id=Gross%20Profit%20and%20Gross%20Margin) The Group's overall gross profit decreased by 37.5% year-on-year to 147 million yuan, with gross margin falling from 21.4% to 15.3%, primarily due to a 92.8% plunge in Fluid and Bioprocess Systems' gross profit and a drop to 1.2% gross margin (13.7% excluding the German non-wholly-owned subsidiary's gross loss), and a decline in Life Science Consumables' gross margin due to product mix changes Gross Profit and Gross Margin by Business Segment | Business Segment | 2023 H1 Gross Profit (thousands) | 2023 H1 Gross Margin | 2022 H1 Gross Profit (thousands) | 2022 H1 Gross Margin | | :--- | :--- | :--- | :--- | :--- | | Fluid and Bioprocess Systems | 4,527 | 1.2% | 63,038 | 12.7% | | Cleanroom and Automation Control and Monitoring Systems | 37,205 | 16.8% | 43,452 | 18.0% | | Powder and Solid Systems | 16,721 | 12.9% | 19,969 | 18.4% | | GMP Compliance Services | 23,451 | 46.5% | 18,018 | 40.7% | | Life Science Consumables | 55,789 | 34.6% | 85,546 | 43.7% | | Pharmaceutical Equipment Distribution and Agency | 9,580 | 32.9% | 5,712 | 34.2% | | **Total** | **147,273** | **15.3%** | **235,735** | **21.4%** | [Liquidity and Financial Resources](index=40&type=section&id=Liquidity%20and%20Financial%20Resources) As of June 30, 2023, the Group's cash and cash equivalents totaled 126 million yuan, with net cash outflows of 64.83 million yuan from operating activities and 25.37 million yuan from investing activities, and net cash inflows of 82.37 million yuan from financing activities during the period, while the gearing ratio increased from 27.8% at the end of 2022 to 34.8%, and total short-term and long-term borrowings increased with changes in interest rate ranges Condensed Consolidated Cash Flow Statement (RMB in thousands) | Item | 2023 H1 (Unaudited) | 2022 H1 (Unaudited) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (64,830) | (42,542) | | Net Cash Used in Investing Activities | (25,366) | (79,442) | | Net Cash Generated from Financing Activities | 82,370 | 102,627 | | **Net Decrease in Cash and Cash Equivalents** | **(7,826)** | **(19,357)** | - The Group's gearing ratio increased from **27.8%** as of December 31, 2022, to **34.8%** as of June 30, 2023[216](index=216&type=chunk) - As of June 30, 2023, the Group had **1,838 full-time employees**, a **3.9% decrease** from the end of 2022, with employee costs for the period approximately **261 million yuan**, a **3.1% increase** year-on-year[220](index=220&type=chunk) [Events After Reporting Period](index=45&type=section&id=Events%20After%20Reporting%20Period) Subsequent to the reporting period, the Company's two indirect non-wholly-owned German subsidiaries, H+E Pharma and S-Tec, filed for bankruptcy on August 3, 2023, with the Group expecting to record a loss of approximately 60 million yuan in the second half of 2023 due to this application - The Company's indirect non-wholly-owned German subsidiaries, H+E Pharma and S-Tec, filed for bankruptcy on **August 3, 2023**[188](index=188&type=chunk) - The Group expects to record a loss of approximately **60 million yuan** in the second half of the year ending December 31, 2023, due to the bankruptcy application[188](index=188&type=chunk) [Corporate Governance and Other Information](index=45&type=section&id=Corporate%20Governance%20and%20Other%20Information) [Corporate Governance Practices](index=45&type=section&id=Corporate%20Governance%20Practices) The Company is committed to maintaining high corporate governance standards, adhering to most code provisions during the reporting period, with one deviation being the combined roles of Chairman and Chief Executive Officer held by Mr. He Guoqiang, an arrangement the Board believes ensures leadership consistency and decision-making efficiency, balanced by the Board's composition - The Company deviated from the Corporate Governance Code's provision requiring separation of the roles of Chairman and Chief Executive Officer, with Mr. He Guoqiang currently holding both positions[190](index=190&type=chunk) - The Board believes that combining the roles of Chairman and Chief Executive Officer helps ensure leadership continuity and enhances the efficiency of overall strategic planning[190](index=190&type=chunk) [Audit Committee](index=46&type=section&id=Audit%20Committee) The Audit Committee, chaired by Mr. Zhang Liji, comprises two independent non-executive directors and one non-executive director, with primary responsibilities including reviewing financial reports and overseeing internal control and risk management systems, and has reviewed the unaudited condensed consolidated interim financial information for the current period - The Audit Committee has reviewed the Group's unaudited condensed consolidated interim financial information for the review period[194](index=194&type=chunk)

Financial Performance - In 2022, the company's revenue was RMB 87,461,000, a decrease from RMB 277,300,000 in 2021, representing a decline of approximately 68.4%[66]. - The gross profit for 2022 was RMB 462,669,000, compared to RMB 479,008,000 in 2021, indicating a slight decrease of about 3.4%[66]. - The profit attributable to owners of the company for 2022 was RMB 0, down from RMB 0.54 in 2021, reflecting a significant decline[66]. - The basic and diluted earnings per share for 2022 were RMB 0.17, compared to RMB 0.54 in 2021, marking a decrease of approximately 68.5%[66]. - Revenue for the year ended December 31, 2022, was RMB 2,228,644, representing a 10.6% increase from RMB 2,015,028 in 2021[74]. - Net profit attributable to the owners of the company was RMB 87,461, a significant decline from RMB 277,300 in 2021[74]. - The total revenue for the year was approximately RMB 2,228.6 million, representing a growth of about 10.6% compared to the previous year[181]. Shareholder Information - As of December 31, 2022, the company's reserves available for distribution to shareholders amounted to RMB 434,700,000, an increase from RMB 415,313,000 as of December 31, 2021, representing a growth of approximately 3.34%[1]. - Mr. He Guoqiang holds 335,929,000 shares in the company, representing 65.54% of the total equity, while his spouse holds 3,750,000 shares, accounting for 0.73%[7]. - The company’s major shareholder, Kai Rui Holdings, is fully owned by Mr. He Guoqiang, indicating a concentrated ownership structure[8]. Corporate Governance - The company has established five professional committees, including the Audit Committee and the Remuneration Committee, to ensure effective governance and oversight[31]. - The board of directors has complied with the listing rules, maintaining at least three independent non-executive directors, constituting at least one-third of the board[21]. - The company recognizes the importance of good corporate governance in enhancing management standards and protecting shareholder interests[18]. - The company is committed to evaluating the independence of its non-executive directors annually to ensure unbiased decision-making[34]. - The company plans to continue monitoring its governance mechanisms annually to ensure compliance with listing rules[40]. Business Segments and Revenue Contribution - The revenue contribution by business segment in 2022 showed that Fluid and Bioprocess Systems accounted for 42.7%, Cleanroom and Automation Control and Monitoring Systems for 23.1%, and Life Science Consumables for 17.4%[68]. - The fluid and bioprocess systems segment generated RMB 950,341 in revenue, accounting for 42.7% of total revenue[75]. - The cleanroom and automation control segment contributed RMB 514,070, representing 23.1% of total revenue[75]. - The revenue from the Powder Solid Systems business segment increased significantly by approximately RMB 107.5 million or 77.7% to about RMB 245.8 million, driven by investments in new products[183]. - The GMP Compliance Services business segment's revenue rose by approximately RMB 28.2 million or 42.7% to RMB 94.3 million, stimulated by new international standards and regulations[184]. - The revenue from the Life Science Consumables business segment decreased by approximately RMB 32.8 million or 7.8% to about RMB 388.3 million, attributed to a decline in business related to COVID-19 vaccine production[185]. Market Expansion and Strategic Initiatives - The company signed its first pharmaceutical engineering contract in Algeria, marking a significant step in market expansion[79]. - The company is focusing on digital transformation projects for major domestic pharmaceutical enterprises, enhancing operational efficiency[82]. - The company is focusing on the development of new products and services in the cell and gene therapy sector, which is expected to drive future growth[173]. - The company plans to launch more cell-related equipment and systems in the ATMP industry starting in 2023, leveraging its proprietary intellectual property[176]. - The company has established a growth-driving team for its service business to increase revenue through more proactive approaches and action plans[179]. Research and Development - Research and development expenses increased by approximately RMB 4.6 million or 7.0% to about RMB 70.2 million, primarily due to increased spending on new product and technology development[195]. - The company has achieved three invention patents and seven utility model patents through collaboration with Tianjin University on energy-saving strategies[146]. - The company has developed 12 technology application teams focusing on areas such as pharmaceutical automation, cleanroom technology, and biopharmaceutical processes[149]. Operational Challenges and Future Outlook - The company anticipates that the adjustment of pandemic prevention policies in December 2022 will lead to an increase in new pharmaceutical projects and the resumption of capital expenditure investments[99]. - The order amount decreased by about 11.5% compared to the same period in 2021 due to difficulties in communication and meeting arrangements caused by the pandemic[102]. - The order amount for the Fluid and Bioprocess Systems segment was approximately RMB 777.4 million, a decrease of 35.6% from RMB 1,207.5 million in the previous year[106][107]. - The total order amount for the group was RMB 2,356.4 million, a decrease of 11.5% from RMB 2,662.9 million in the previous year[106]. Product Development and Innovation - The company launched the WAVE single-use bioreactor in July 2022, which is crucial for cell therapy and immune cell expansion processes[120]. - A new product brand, vivafill, was established following the acquisition of the BOSTA business to enhance brand recognition in sterile product filling and freeze-drying solutions[142]. - The company is developing a new closed isolator system, with the first unit completed and a second more complex unit expected to be finished in Q1 2023[148]. - The company has developed a data analysis system to assist clients in analyzing and predicting bioreaction processes, enhancing product lifecycle research[117].

Annual Results Announcement [Company Information](index=1&type=section&id=Company%20Information) Austar Lifesciences Limited was incorporated in the Cayman Islands on January 9, 2014, listed on the HKEX Main Board on November 7, 2014, and primarily provides integrated engineering solutions and manufactures pharmaceutical equipment and consumables in China - The Company was incorporated as an exempted company in the Cayman Islands on **January 9, 2014**[9](index=9&type=chunk) - The Company's shares have been listed on the Main Board of the Stock Exchange of Hong Kong since **November 7, 2014**[45](index=45&type=chunk) - The Group is primarily engaged in providing integrated engineering solutions to pharmaceutical manufacturers and research institutes, and manufacturing and distributing pharmaceutical equipment and consumables in the People's Republic of China[25](index=25&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) For the year ended December 31, 2022, the company's revenue increased by 10.6% to RMB 2,228.6 million, but gross profit and profit attributable to owners significantly decreased, with gross margin falling from 23.8% to 20.8%, and basic earnings per share from RMB 0.54 to RMB 0.17 2022 vs 2021 Key Financial Data Comparison | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 2,228,644 | 2,015,028 | | Gross Profit | 462,669 | 479,008 | | Profit Before Income Tax | 86,485 | 319,225 | | Profit Attributable to Owners of the Company | 87,461 | 277,300 | | Total Assets | 2,388,763 | 2,044,777 | | Net Assets | 883,581 | 788,420 | | Gross Profit Margin | 20.8% | 23.8% | | Current Ratio | 1.3 | 1.5 | | Capital to Debt Ratio | 27.8% | 16.4% | | Net Debt to Equity Ratio | 23.4% | Net Cash | | Basic and Diluted Earnings Per Share | RMB 0.17 | RMB 0.54 | - The Company had no diluted ordinary shares for the years ended December 31, 2022 and 2021, thus basic and diluted earnings per share are the same[20](index=20&type=chunk) [Consolidated Statement of Profit or Loss](index=2&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss) For the year ended December 31, 2022, the company's revenue grew by 10.6% to RMB 2,228.6 million, but cost of sales increased more, leading to a 3.4% decrease in gross profit, a 73.1% drop in operating profit to RMB 83.9 million, and a 75.1% decrease in profit for the year to RMB 67.7 million Key Data from Consolidated Statement of Profit or Loss | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 2,228,644 | 2,015,028 | | Cost of Sales | (1,765,975) | (1,536,020) | | Gross Profit | 462,669 | 479,008 | | Selling and Marketing Expenses | (178,659) | (170,289) | | Administrative Expenses | (134,614) | (128,094) | | Research and Development Expenses | (70,163) | (65,598) | | Other (Losses) / Gains – Net | (9,630) | 196,804 | | Operating Profit | 83,978 | 311,918 | | Finance Costs – Net | (7,029) | (3,353) | | Profit Before Income Tax | 86,485 | 319,225 | | Profit for the Year | 67,744 | 272,624 | | Profit Attributable to Owners of the Company | 87,461 | 277,300 | | Profit Attributable to Non-controlling Interests | (19,717) | (4,676) | [Consolidated Statement of Comprehensive Income](index=3&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income) For the year ended December 31, 2022, the company's total comprehensive income significantly decreased by 64.3% to RMB 94.3 million, mainly due to a reduction in profit for the year and a shift from foreign currency translation loss to gain Key Data from Consolidated Statement of Comprehensive Income | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Profit for the Year | 67,744 | 272,624 | | Other Comprehensive Income: | | | | Exchange Differences on Translation | 27,114 | (8,767) | | Share of Other Comprehensive Loss of Investments Accounted for Using the Equity Method | (515) | (11) | | Other Comprehensive Income / (Loss) for the Year, Net of Tax | 26,599 | (8,778) | | Total Comprehensive Income for the Year | 94,343 | 263,846 | | Total Comprehensive Income Attributable to Owners of the Company | 114,965 | 268,685 | | Total Comprehensive Income Attributable to Non-controlling Interests | (20,622) | (4,839) | [Consolidated Statement of Financial Position](index=4&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) As of December 31, 2022, the company's total assets increased by 16.8% to RMB 2,388.8 million, with growth in both non-current and current assets; total liabilities increased by 19.8% to RMB 1,505.2 million, driven by a larger increase in current liabilities; and total equity grew by 12.1% to RMB 883.6 million Key Data from Consolidated Statement of Financial Position | Indicator | December 31, 2022 (RMB thousands) | December 31, 2021 (RMB thousands) | | :--- | :--- | :--- | | **ASSETS** | | | | Total Non-current Assets | 587,756 | 381,536 | | Total Current Assets | 1,801,007 | 1,663,241 | | **TOTAL ASSETS** | **2,388,763** | **2,044,777** | | **EQUITY** | | | | Equity Attributable to Owners of the Company | 896,944 | 786,584 | | Non-controlling Interests | (13,363) | 1,836 | | **TOTAL EQUITY** | **883,581** | **788,420** | | **LIABILITIES** | | | | Total Non-current Liabilities | 145,417 | 120,161 | | Total Current Liabilities | 1,359,765 | 1,136,196 | | **TOTAL LIABILITIES** | **1,505,182** | **1,256,357** | | **TOTAL EQUITY AND LIABILITIES** | **2,388,763** | **2,044,777** | Notes to the Consolidated Financial Statements [General Information](index=6&type=section&id=General%20Information) This section outlines the company's and its subsidiaries' basic information, including registration, listing status, primary business activities, and ultimate holding company - The Company is an investment holding company, and its subsidiaries are primarily engaged in providing integrated engineering solutions to pharmaceutical manufacturers and research institutes, and manufacturing and distributing pharmaceutical equipment and consumables in the People's Republic of China[25](index=25&type=chunk) - The ultimate holding company of the Company is Kai Rui Holdings Limited, which is wholly owned by Mr. He Guoqiang, the Chairman and Chief Executive Officer of the Board[25](index=25&type=chunk) [Summary of Significant Accounting Policies](index=6&type=section&id=Summary%20of%20Significant%20Accounting%20Policies) The Group's consolidated financial statements are prepared in accordance with International Financial Reporting Standards and the Hong Kong Companies Ordinance, using the historical cost basis, and have adopted amendments to IAS 16 and IAS 37, and Annual Improvements to IFRS 2018-2020 for the first time - The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and the requirements of the Hong Kong Companies Ordinance, and on a historical cost basis, except for certain financial assets measured at fair value[2](index=2&type=chunk) - The Group has adopted the amendments to IAS 16, IAS 37, and Annual Improvements to IFRS 2018-2020 for the first time for the annual reporting period beginning on **January 1, 2022**[48](index=48&type=chunk) [Segment Information](index=7&type=section&id=Segment%20Information) The Group's business is divided into six reportable segments, with key operating decision-makers assessing performance based on gross profit; total revenue in 2022 was RMB 2,228.6 million, with mainland China contributing 93.0%, and segment revenue and gross profit performance varied, with Fluid and Bioprocess Systems and Life Science Consumables seeing gross profit declines, while Powder and Solid Systems and GMP Compliance Services experienced growth - Key operating decision-makers primarily consider the business from a product and service perspective, including six reportable segments: Fluid and Bioprocess Systems, Cleanroom and Automation Control and Monitoring Systems, Powder and Solid Systems, GMP Compliance Services, Life Science Consumables, and Pharmaceutical Equipment Distribution and Agency[49](index=49&type=chunk) 2022 Revenue and Gross Profit by Business Segment | Business Segment | Revenue (RMB thousands) | Gross Profit (RMB thousands) | | :--- | :--- | :--- | | Fluid and Bioprocess Systems | 950,341 | 114,377 | | Cleanroom and Automation Control and Monitoring Systems | 514,070 | 92,757 | | Powder and Solid Systems | 245,795 | 51,702 | | GMP Compliance Services | 94,349 | 43,028 | | Life Science Consumables | 388,264 | 146,668 | | Pharmaceutical Equipment Distribution and Agency | 35,825 | 14,137 | | **Total** | **2,228,644** | **462,669** | 2022 Revenue by Geographical Region | Region | Revenue (RMB thousands) | | :--- | :--- | | Mainland China | 2,073,560 | | Other Regions | 155,084 | | **Total** | **2,228,644** | [Operating Segments](index=7&type=section&id=Operating%20Segments) The Group's six operating segments showed varied revenue and gross profit performance in 2022 and 2021; in 2022, Fluid and Bioprocess Systems had the highest revenue but decreased gross profit, Powder and Solid Systems saw significant growth in both revenue and gross profit, while Life Science Consumables experienced declines in both 2022 Segment Revenue and Gross Profit | Segment | Revenue (RMB thousands) | Gross Profit (RMB thousands) | | :--- | :--- | :--- | | Fluid and Bioprocess Systems | 950,341 | 114,377 | | Cleanroom and Automation Control and Monitoring Systems | 514,070 | 92,757 | | Powder and Solid Systems | 245,795 | 51,702 | | GMP Compliance Services | 94,349 | 43,028 | | Life Science Consumables | 388,264 | 146,668 | | Pharmaceutical Equipment Distribution and Agency | 35,825 | 14,137 | | **Total** | **2,228,644** | **462,669** | 2021 Segment Revenue and Gross Profit | Segment | Revenue (RMB thousands) | Gross Profit (RMB thousands) | | :--- | :--- | :--- | | Fluid and Bioprocess Systems | 882,953 | 143,745 | | Cleanroom and Automation Control and Monitoring Systems | 479,706 | 90,275 | | Powder and Solid Systems | 138,293 | 41,694 | | GMP Compliance Services | 66,114 | 28,381 | | Life Science Consumables | 421,070 | 163,044 | | Pharmaceutical Equipment Distribution and Agency | 26,892 | 11,869 | | **Total** | **2,015,028** | **479,008** | [Segment Assets and Liabilities](index=11&type=section&id=Segment%20Assets%20and%20Liabilities) As of December 31, 2022, the Group's total segment assets were RMB 1,940.7 million, and total segment liabilities were RMB 1,080.7 million, with Fluid and Bioprocess Systems and Cleanroom and Automation Control and Monitoring Systems being the largest segments by asset size 2022 Total Segment Assets | Segment | Total Assets (RMB thousands) | | :--- | :--- | | Fluid and Bioprocess Systems | 1,034,779 | | Cleanroom and Automation Control and Monitoring Systems | 429,886 | | Powder and Solid Systems | 140,264 | | GMP Compliance Services | 48,626 | | Life Science Consumables | 277,240 | | Pharmaceutical Equipment Distribution and Agency | 9,866 | | **Total Segment Assets** | **1,940,661** | 2022 Total Segment Liabilities | Segment | Total Liabilities (RMB thousands) | | :--- | :--- | | Fluid and Bioprocess Systems | 510,217 | | Cleanroom and Automation Control and Monitoring Systems | 241,315 | | Powder and Solid Systems | 118,626 | | GMP Compliance Services | 44,224 | | Life Science Consumables | 142,989 | | Pharmaceutical Equipment Distribution and Agency | 23,310 | | **Total Segment Liabilities** | **1,080,681** | [Geographical Information](index=13&type=section&id=Geographical%20Information) The Group's revenue primarily originates from mainland China, accounting for 93.0% of total revenue in 2022, with other regions contributing 7.0%; non-current assets are also mainly concentrated in mainland China 2022 Revenue and Non-current Assets by Geographical Region | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | **Revenue** | | | | Mainland China | 2,073,560 | 1,890,654 | | Other Regions | 155,084 | 124,374 | | **Non-current Assets** | | | | Mainland China | 501,499 | 303,794 | | Other Regions | 73,474 | 68,827 | [Finance Costs – Net](index=14&type=section&id=Finance%20Costs%20%E2%80%93%20Net) Net finance costs increased from RMB 3.3 million in 2021 to RMB 7.0 million this year, primarily due to higher interest expenses on bank borrowings Finance Costs – Net | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Bank Borrowings | (7,155) | (2,381) | | Lease Liabilities | (3,092) | (2,021) | | Exchange Gains / (Losses) – Net | 945 | (422) | | Loans Provided to PALL-AUSTAR Lifesciences Limited | – | 92 | | Bank Deposits | 2,273 | 1,379 | | **Total** | **(7,029)** | **(3,353)** | [Other (Losses) / Gains – Net](index=14&type=section&id=Other%20(Losses)%20%E2%80%93%20Net) The year recorded a net other loss of RMB 9.6 million, compared to a gain of RMB 196.8 million in 2021, mainly due to a one-off gain from the disposal of a joint venture equity in 2021, increased exchange losses, and contract termination compensation in 2022 Other (Losses) / Gains – Net | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Gain on Disposal of Joint Venture | – | 198,988 | | Loss on Disposal of Property, Plant and Equipment | (297) | (716) | | Exchange Losses, Net | (6,117) | (3,322) | | Others | (3,216) | 1,854 | | **Total** | **(9,630)** | **196,804** | - The net other loss in 2022 was mainly due to an increase in exchange losses of approximately **RMB 2.8 million** and a one-off compensation of approximately **RMB 3.7 million** for contract termination[218](index=218&type=chunk) [Expenses by Nature](index=15&type=section&id=Expenses%20by%20Nature) Total expenses for the year increased by 13.1% to RMB 2,149.4 million compared to 2021, with significant increases in raw materials used and on-site subcontracting fees, as well as higher staff costs Expenses by Nature | Expense Item | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Raw Materials Used | 1,242,546 | 1,202,876 | | On-site Subcontracting Fees | 196,329 | 67,864 | | Staff Costs (Including Directors' Emoluments) | 486,403 | 414,432 | | Depreciation – Property, Plant and Equipment | 13,586 | 11,936 | | Depreciation – Right-of-use Assets | 20,861 | 15,964 | | Amortization | 5,293 | 3,675 | | Travel Expenses | 30,890 | 34,693 | | Freight and Port Charges | 28,711 | 28,153 | | Professional Fees | 22,659 | 17,929 | | Technical Service Fees | 17,198 | 13,055 | | Business Taxes and Surcharges | 11,365 | 10,439 | | After-sales Service Provision | 11,060 | 9,521 | | Office Expenses | 8,421 | 7,931 | | Business Entertainment Expenses | 7,290 | 12,561 | | Impairment of Inventories | 7,017 | 6,544 | | Promotion Expenses | 5,927 | 12,764 | | Auditor's Remuneration – Audit Services | 3,450 | 3,450 | | Auditor's Remuneration – Other Auditors | 448 | 149 | | Auditor's Remuneration – Non-audit Services | 85 | 725 | | Auditor's Remuneration – Other Auditors | 29 | – | | Repair and Maintenance Expenses | 1,941 | 2,186 | | Human Resources Management Fees | 1,633 | 1,356 | | Labor Production Costs | 1,451 | 681 | | Bank Charges | 1,224 | 1,920 | | Communication Expenses | 1,035 | 1,879 | | Renovation Expenses | 490 | 198 | | Conference Fees | 437 | 674 | | Property Management Fees | 59 | 429 | | Impairment of Goodwill | – | 1,091 | | Other Operating Expenses | 21,573 | 14,926 | | **Total** | **2,149,411** | **1,900,001** | [Staff Costs](index=16&type=section&id=Staff%20Costs) Staff costs, including directors' emoluments, increased by 17.4% to RMB 486.4 million this year, primarily due to higher salaries and bonuses, and increased pension and social responsibility expenses Staff Costs (Including Directors' Emoluments) | Item | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Salaries and Bonuses | 377,758 | 318,805 | | Pension and Social Responsibility | 108,645 | 95,627 | | **Total** | **486,403** | **414,432** | [Income Tax Expense](index=16&type=section&id=Income%20Tax%20Expense) Income tax expense decreased by 59.9% to RMB 18.7 million this year, mainly due to a reduction in profit before income tax; Chinese subsidiaries enjoy preferential tax rates as high-tech enterprises Income Tax Expense | Item | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Current Income Tax Expense | 15,688 | 33,836 | | Deferred Income Tax Expense | 3,053 | 12,765 | | **Total** | **18,741** | **46,601** | - Shanghai Austar, Austar Shijiazhuang, and Austar Hengxun, as high-tech enterprises, enjoy a preferential corporate income tax rate of **15%** when meeting relevant tax law requirements[62](index=62&type=chunk) [Earnings Per Share](index=17&type=section&id=Earnings%20Per%20Share) Basic earnings per share for the year significantly decreased to RMB 0.17 from RMB 0.54 in 2021, primarily due to a reduction in profit attributable to owners of the Company; diluted earnings per share are the same as basic earnings per share due to the absence of potential ordinary shares Earnings Per Share | Item | 2022 | 2021 | | :--- | :--- | :--- | | Profit Attributable to Owners of the Company (RMB thousands) | 87,461 | 277,300 | | Weighted Average Number of Ordinary Shares in Issue (in thousands) | 512,582 | 512,582 | | Basic Earnings Per Share (RMB) | 0.17 | 0.54 | - As the Company had no potential ordinary shares for the years ended December 31, 2022 and 2021, diluted earnings per share are the same as basic earnings per share[87](index=87&type=chunk) [Dividends](index=18&type=section&id=Dividends) The Board does not recommend a final dividend for the year ended December 31, 2022, consistent with 2021 - The Board does not recommend a final dividend for the year ended December 31, 2022 (2021: nil)[65](index=65&type=chunk)[277](index=277&type=chunk) [Trade and Bills Receivables](index=18&type=section&id=Trade%20and%20Bills%20Receivables) As of December 31, 2022, total trade and bills receivables were RMB 416.5 million, a 40.6% increase from 2021; most trade receivables are due within 90 days, and bills receivables are primarily bank acceptance bills due within six months Trade and Bills Receivables | Item | December 31, 2022 (RMB thousands) | December 31, 2021 (RMB thousands) | | :--- | :--- | :--- | | Trade Receivables | 413,202 | 302,930 | | Bills Receivables | 33,432 | 24,746 | | Less: Impairment Allowance | (30,121) | (31,377) | | **Total** | **416,513** | **296,299** | - The majority of trade receivables are due within **90 days** according to sales contracts[89](index=89&type=chunk) - The majority of bills receivables are bank acceptance bills due within **six months**[66](index=66&type=chunk) [Assets and Liabilities Related to Contracts with Customers](index=19&type=section&id=Assets%20and%20Liabilities%20Related%20to%20Contracts%20with%20Customers) As of December 31, 2022, total contract assets were RMB 585.4 million, a significant increase from 2021, while contract liabilities were RMB 382.7 million, a decrease from 2021 Assets and Liabilities Related to Contracts with Customers | Item | December 31, 2022 (RMB thousands) | December 31, 2021 (RMB thousands) | | :--- | :--- | :--- | | Contract Assets | 591,660 | 386,482 | | Less: Loss Allowance | (7,767) | (9,951) | | Costs to Obtain Contracts | 1,471 | 1,406 | | **Total Contract Assets** | **585,364** | **377,937** | | Contract Liabilities | (382,707) | (466,689) | [Trade and Other Payables](index=19&type=section&id=Trade%20and%20Other%20Payables) As of December 31, 2022, total trade and other payables were RMB 739.6 million, a 23.5% increase from 2021, with trade payables being the largest component and most due within six months Trade and Other Payables | Item | December 31, 2022 (RMB thousands) | December 31, 2021 (RMB thousands) | | :--- | :--- | :--- | | Trade Payables | 426,204 | 350,846 | | Accrued Wages and Welfare | 126,830 | 98,623 | | Accrued Expenses | 34,031 | 40,119 | | Payables for Construction, Machinery and Equipment to Suppliers | 21,001 | 23,714 | | Indirect Taxes Payable | 17,690 | 13,410 | | Warranty Provision | 16,499 | 13,517 | | Amounts Due to Employees | 2,378 | 3,208 | | Loans from Non-controlling Shareholders of a Subsidiary | 1,299 | 1,263 | | Bills Payable | – | 1,500 | | Others | 93,671 | 52,792 | | **Total** | **739,603** | **598,992** | Ageing Analysis of Trade Payables | Ageing | December 31, 2022 (RMB thousands) | December 31, 2021 (RMB thousands) | | :--- | :--- | :--- | | Within 6 Months | 348,478 | 326,305 | | 6 Months to 1 Year | 55,297 | 7,335 | | 1 to 2 Years | 7,997 | 4,419 | | 2 to 3 Years | 4,014 | 5,546 | | Over 3 Years | 10,418 | 7,241 | | **Total** | **426,204** | **350,846** | [Long-term Borrowings](index=20&type=section&id=Long-term%20Borrowings) As of December 31, 2022, net long-term borrowings were RMB 40.1 million, a decrease from 2021; secured long-term bank borrowings are collateralized by buildings, construction in progress, and land use rights, bearing interest at annual rates ranging from 4.45% to 4.65% Long-term Borrowings | Item | December 31, 2022 (RMB thousands) | December 31, 2021 (RMB thousands) | | :--- | :--- | :--- | | Secured Bank Borrowings | 85,737 | 54,271 | | Less: Long-term Borrowings Due Within One Year | (45,670) | – | | **Total** | **40,067** | **54,271** | - Secured long-term bank borrowings are denominated in RMB and collateralized by the Group's buildings, construction in progress, and land use rights[5](index=5&type=chunk) - For the year ended December 31, 2022, secured long-term bank borrowings bore interest at annual rates ranging from **4.45% to 4.65%**[5](index=5&type=chunk) [Short-term Borrowings](index=21&type=section&id=Short-term%20Borrowings) As of December 31, 2022, total short-term borrowings significantly increased to RMB 172.3 million, with both secured and guaranteed bank borrowings rising and an expanded interest rate range Short-term Borrowings | Item | December 31, 2022 (RMB thousands) | December 31, 2021 (RMB thousands) | | :--- | :--- | :--- | | Secured Bank Borrowings | 21,464 | 20,000 | | Guaranteed Bank Borrowings | 150,790 | 34,830 | | **Total** | **172,254** | **54,830** | - Secured short-term bank borrowings are guaranteed by the Group's buildings and right-of-use assets, bearing interest at annual rates ranging from **4.00% to 4.52%**[70](index=70&type=chunk) - Guaranteed short-term bank borrowings are guaranteed by subsidiaries, bearing interest at annual rates ranging from **3.80% to 7.00%**[94](index=94&type=chunk) Management Discussion and Analysis [Market Review](index=22&type=section&id=Market%20Review) The 2022 market was impacted by the COVID-19 pandemic, but with adjusted prevention policies, new pharmaceutical projects are expected to increase; growing investments in cell therapy, antibody-drug conjugates, and radiopharmaceuticals, along with China's NMPA aligning with international drug supervision, create new opportunities and development momentum for the pharmaceutical industry - The COVID-19 pandemic negatively impacted supply chains and normal business operations, but with adjusted prevention policies, the number of new pharmaceutical projects is expected to increase[124](index=124&type=chunk) - Increasing investments in cell therapy products, antibody-drug conjugates, and radiopharmaceuticals will create opportunities for new projects and service providers[95](index=95&type=chunk) - China's NMPA applying to join PIC/S will promote China's alignment with international drug supervision systems, facilitating overseas new drug applications and accelerating the upgrading of the pharmaceutical industry[96](index=96&type=chunk) - The release of EU GMP Annex 1 "Manufacture of Sterile Medicinal Products" will bring business opportunities for engineering projects, sterile pharmaceutical equipment, contamination control, and compliance consulting services[97](index=97&type=chunk) [Business Review](index=23&type=section&id=Business%20Review) Despite pandemic impacts, the Group's 2022 revenue grew by 10.6%, though order intake decreased by 11.5%; the company actively responded to market changes through the acquisition of BOSTA business, expansion of service offerings, product line restructuring, and technology investments, with Powder and Solid Systems and GMP Compliance Services showing the fastest revenue growth, while Life Science Consumables revenue declined due to reduced COVID-19 vaccine-related business - The Group's revenue for the year increased by approximately **10.6%** compared to the same period in 2021, but order intake decreased by approximately **11.5%**, mainly due to COVID-19 pandemic lockdowns[98](index=98&type=chunk) - The Group successfully acquired the BOSTA business, further enriching its integrated business portfolio for filling line systems and lyophilizer systems[99](index=99&type=chunk) - The Group believes that building world-class technological capabilities requires continuous resource investment, which will enhance competitiveness in the long run[7](index=7&type=chunk) - Service business volume continues to increase, and a new business brand has been established, which is expected to become a new significant revenue source and a higher-margin business[100](index=100&type=chunk) [Revenue](index=37&type=section&id=Revenue) Total revenue for the year was RMB 2,228.6 million, a 10.6% year-on-year increase; all business segments except Life Science Consumables achieved revenue growth, with Powder and Solid Systems and GMP Compliance Services growing fastest; mainland China remains the primary revenue source, accounting for 93.0% of total revenue - The Group's total revenue was approximately **RMB 2,228.6 million**, an increase of approximately **10.6%** compared to 2021[202](index=202&type=chunk) - All business segments achieved revenue growth, except for a slight decline in Life Science Consumables, with Powder and Solid Systems and GMP Compliance Services segments growing the fastest[202](index=202&type=chunk) [Cost of Sales](index=40&type=section&id=Cost%20of%20Sales) Cost of sales increased by 15.0% to RMB 1,766.0 million this year, primarily due to increased revenue, higher operating losses from a non-wholly owned European subsidiary, and increased manufacturing overhead during manufacturing facility shutdowns caused by the pandemic - Cost of sales increased by approximately **RMB 230.0 million** or **15.0%** from approximately RMB 1,536.0 million in 2021 to approximately **RMB 1,766.0 million** for the current year[189](index=189&type=chunk) - The increase in costs was mainly due to increased revenue, higher operating losses from a non-wholly owned European subsidiary, and the negative impact of the COVID-19 pandemic on operations, especially the shutdown of manufacturing facilities in Shanghai and Shijiazhuang[189](index=189&type=chunk) [Gross Profit and Gross Profit Margin](index=40&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) Gross profit slightly decreased by 3.4% to RMB 462.7 million this year, with the gross profit margin falling from 23.8% to 20.8%, mainly affected by losses from a European subsidiary and production shutdowns due to the pandemic; gross profit margins varied across business segments, with GMP Compliance Services increasing, while Fluid and Bioprocess Systems and Powder and Solid Systems decreased Gross Profit and Gross Profit Margin by Business Segment | Business Segment | 2022 Gross Profit (RMB thousands) | 2022 Gross Profit Margin | 2021 Gross Profit (RMB thousands) | 2021 Gross Profit Margin | | :--- | :--- | :--- | :--- | :--- | | Fluid and Bioprocess Systems | 114,377 | 12.0% | 143,745 | 16.3% | | Cleanroom and Automation Control and Monitoring Systems | 92,757 | 18.0% | 90,275 | 18.8% | | Powder and Solid Systems | 51,702 | 21.0% | 41,694 | 30.1% | | GMP Compliance Services | 43,028 | 45.6% | 28,381 | 42.9% | | Life Science Consumables | 146,668 | 37.8% | 163,044 | 38.7% | | Pharmaceutical Equipment Distribution and Agency | 14,137 | 39.5% | 11,869 | 44.1% | | **Total** | **462,669** | **20.8%** | **479,008** | **23.8%** | - The decrease in gross profit margin was mainly due to increased operating losses from a non-wholly owned subsidiary established in Europe, and the negative impact of the COVID-19 pandemic on operations, especially the shutdown of manufacturing facilities in Shanghai and Shijiazhuang[189](index=189&type=chunk) [Order Intake](index=25&type=section&id=Order%20Intake) Total order intake decreased by 11.5% to RMB 2,356.4 million this year, primarily affected by the COVID-19 pandemic and related control measures; Fluid and Bioprocess Systems saw a significant drop in order intake, while Cleanroom and Automation Control and Monitoring Systems, Powder and Solid Systems, and Pharmaceutical Equipment Distribution and Agency experienced growth Order Intake by Business Segment | Business Segment | 2022 (RMB thousands) | 2022 Share | 2021 (RMB thousands) | 2021 Share | Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Fluid and Bioprocess Systems | 777,428 | 33.0% | 1,207,477 | 45.4% | –35.6% | | Cleanroom and Automation Control and Monitoring Systems | 647,892 | 27.5% | 524,786 | 19.7% | 23.5% | | Powder and Solid Systems | 328,414 | 13.9% | 226,225 | 8.5% | 45.2% | | GMP Compliance Services | 108,255 | 4.6% | 117,673 | 4.4% | –8.0% | | Life Science Consumables | 426,165 | 18.1% | 548,875 | 20.6% | –22.4% | | Pharmaceutical Equipment Distribution and Agency | 68,286 | 2.9% | 37,923 | 1.4% | 80.1% | | **Total** | **2,356,440** | **100.0%** | **2,662,959** | **100.0%** | **–11.5%** | - Total order intake decreased by approximately **RMB 306.6 million** or **11.5%**, mainly due to difficulties in traveling and communicating for new business acquisitions and project suspensions caused by the COVID-19 pandemic and related control measures[103](index=103&type=chunk) - Order intake for the Life Science Consumables business decreased by **22.4%** due to COVID-19 prevention and control measures and reduced business volume related to COVID-19 vaccine production[19](index=19&type=chunk) [Other Income](index=42&type=section&id=Other%20Income) Other income increased by 76.4% to RMB 11.2 million this year, primarily due to increased subsidies granted by local government authorities in China - Other income increased by approximately **RMB 4.9 million** or **76.4%** from approximately RMB 6.3 million in 2021 to approximately **RMB 11.2 million** for the current year[235](index=235&type=chunk) - This was mainly due to an increase in subsidies granted by local government authorities in China during the current year[235](index=235&type=chunk) [Other (Losses) / Gains – Net](index=43&type=section&id=Other%20(Losses)%20%E2%80%93%20Net) The year recorded a net other loss of RMB 9.6 million, primarily due to increased exchange losses and a one-off compensation for contract termination - For the current year, the Group recorded a net other loss of approximately **RMB 9.6 million**, mainly due to an increase in exchange losses of approximately **RMB 2.8 million** and a one-off compensation payment of approximately **RMB 3.7 million** to a customer for contract termination by mutual agreement[218](index=218&type=chunk) [Selling and Marketing Expenses](index=43&type=section&id=Selling%20and%20Marketing%20Expenses) Selling and marketing expenses slightly increased by 4.9% to RMB 178.7 million, mainly due to increased expenses for strengthening the sales team, partially offset by reduced marketing activity expenses - Selling and marketing expenses slightly increased by approximately **RMB 8.4 million** or **4.9%** from approximately RMB 170.3 million in 2021 to approximately **RMB 178.7 million** for the current year[218](index=218&type=chunk) - This increase was a combined result of a decrease in marketing activity expenses of approximately **RMB 6.8 million** and an increase in expenses for strengthening the sales team[218](index=218&type=chunk) [Administrative Expenses](index=43&type=section&id=Administrative%20Expenses) Administrative expenses slightly increased by 5.1% to RMB 134.6 million, primarily due to increased rent from opening multiple new offices in China to meet business development needs - Administrative expenses slightly increased by approximately **RMB 6.5 million** or **5.1%** from approximately RMB 128.1 million in 2021 to approximately **RMB 134.6 million** for the current year[219](index=219&type=chunk) - This increase was due to increased rent from opening multiple new offices in China to meet business development needs[219](index=219&type=chunk) [Research and Development Expenses](index=43&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses increased by 7.0% to RMB 70.2 million, primarily due to increased R&D expenses for new products and technologies, with R&D personnel accounting for approximately 2.9% of total employees - Research and development expenses increased by approximately **RMB 4.6 million** or **7.0%** from approximately RMB 65.6 million in 2021 to approximately **RMB 70.2 million** for the current year, mainly due to increased R&D expenses for new products and technologies[219](index=219&type=chunk) - As of December 31, 2022, the Group added new R&D talents, bringing the total number of R&D personnel to approximately **2.9%** of the Group's total employees[219](index=219&type=chunk) [Finance Costs – Net](index=43&type=section&id=Finance%20Costs%20%E2%80%93%20Net) Net finance costs increased from RMB 3.3 million in 2021 to RMB 7.0 million this year, primarily due to increased interest expenses from new borrowings - Finance costs – net increased from approximately **RMB 3.3 million** in 2021 to approximately **RMB 7.0 million** for the current year, mainly due to increased interest expenses from new borrowings during the year[220](index=220&type=chunk) [Share of Net Profit of Investments Accounted for Using the Equity Method](index=44&type=section&id=Share%20of%20Net%20Profit%20of%20Investments%20Accounted%20for%20Using%20the%20Equity%20Method) Share of net profit of investments accounted for using the equity method decreased by 11.2% to RMB 9.5 million, primarily due to reduced profit contributions from associates ROTA Verpackungstechnik GmbH & Co.KG and ROTA Verpackungstechnik Verwaltungsgesellschaft GmbH - Share of net profit of investments accounted for using the equity method decreased by approximately **RMB 1.2 million** from approximately RMB 10.7 million in 2021 to approximately **RMB 9.5 million** for the current year[242](index=242&type=chunk) - This was mainly due to reduced profit contributions from associates ROTA Verpackungstechnik GmbH & Co.KG and ROTA Verpackungstechnik Verwaltungsgesellschaft GmbH[242](index=242&type=chunk) [Profit Before Income Tax](index=44&type=section&id=Profit%20Before%20Income%20Tax) Profit before income tax significantly decreased by 72.9% to RMB 86.5 million, primarily due to the combined impact of increased expenses and reduced gains mentioned above - Profit before income tax decreased by approximately **RMB 232.7 million** from approximately RMB 319.2 million in 2021 to approximately **RMB 86.5 million** for the current year, due to the factors mentioned in this section[243](index=243&type=chunk) [Income Tax Expense](index=44&type=section&id=Income%20Tax%20Expense) Income tax expense decreased by 59.9% to RMB 18.7 million, primarily due to a reduction in profit before income tax - Income tax expense decreased by approximately **RMB 27.9 million** from approximately RMB 46.6 million in 2021 to approximately **RMB 18.7 million** for the current year, mainly due to a reduction in profit before income tax[244](index=244&type=chunk) [Profit for the Year](index=44&type=section&id=Profit%20for%20the%20Year) Profit for the year significantly decreased by 75.2% to RMB 67.7 million, primarily due to the reduction in profit before income tax - Profit for the year decreased by approximately **RMB 204.9 million** from approximately RMB 272.6 million in 2021 to approximately **RMB 67.7 million** for the current year, mainly due to the factors mentioned in this section[245](index=245&type=chunk) [Production, Execution and Organization](index=28&type=section&id=Production%2C%20Execution%20and%20Organization) The Group's new production bases in Shijiazhuang and Shanghai are completed and will be fully operational in early 2023 to enhance production volume and capacity; the AUSTAR UK factory maintains ISO 9001 and 14001 certifications and plans to lease additional space for order growth; the Project Execution Center overcame pandemic challenges to ensure successful project execution and continues to advance its informatized project management platform - Two new production bases in Shijiazhuang and Shanghai have been completed and will be fully operational in early **2023** to meet growth demands for the next five years[140](index=140&type=chunk) - The AUSTAR UK factory passed ISO 9001 certification in early 2021 and maintained ISO 9001 and 14001 certifications this year, with arrangements being made to lease additional space to increase production volume and capacity[109](index=109&type=chunk) - The Group's Project Execution Center made every effort to overcome the impact of the pandemic, ensuring successful project execution in 2022, and will continue to implement operational excellence management concepts and an informatized project management platform[161](index=161&type=chunk) [Sales and Marketing](index=29&type=section&id=Sales%20and%20Marketing) The Group enhances sales efficiency and customer satisfaction through an internal sales collaboration model, a closed-loop customer service response system, global team expansion, and digital marketing; in 2022, it actively participated in 47 global events, launched a new brand image, and promoted its brand through social media and an online resource center - The Group's internal sales collaboration model aims to encourage sales teams from different departments and product lines to support each other, providing more tailored solutions[111](index=111&type=chunk) - A closed-loop customer service response system was developed in 2022 and is expected to be fully implemented in **2023** to enhance customer satisfaction and loyalty[111](index=111&type=chunk) - The Company has recruited European and Southeast Asian teams to directly handle relevant sales opportunities and introduced more agents in Southeast Asia, the Middle East, and North Africa to expand global markets[112](index=112&type=chunk) - In 2022, the Group published over **310 news and articles** through **17 social media accounts** and participated in **47 global events**, achieving good brand exposure[113](index=113&type=chunk)[143](index=143&type=chunk) [Research and Development](index=30&type=section&id=Research%20and%20Development) The Group in 2022 obtained 76 registered patents and made R&D progress in various areas, including utility and process automation reporting systems, full-process material control systems, HVAC dynamic airflow control systems, OSD granulation and coating equipment upgrades, large-scale stainless steel bioreactor production, WAVE single-use bioreactors, cell preparation isolators, and cell culture systems, to enhance technological capabilities and product portfolio - As of December 31, 2022, the Group had obtained **384 patents**, with **76 registered patents** obtained during the current year[144](index=144&type=chunk) - Developed a utility and process automation reporting system based on the Siemens software platform, which can improve automated system functions and shorten project R&D cycles[114](index=114&type=chunk) - Completed the development of a full-process material control system, achieving automatic weighing, unpacking, and feeding signal interaction for materials, assisting customers in achieving full-process unmanned resource allocation[115](index=115&type=chunk) - Collaborated with Tianjin University to develop an HVAC dynamic airflow control system, which has been used in Class C clean environments of newly constructed facilities, resulting in **3 invention patents** and **7 utility model patents**[116](index=116&type=chunk) - Completed the development of cell preparation isolators and cell culture systems by the end of 2022, complementing capabilities in cell therapy process systems and services[148](index=148&type=chunk) [Outlook](index=32&type=section&id=Outlook) The Group is optimistic about future development, anticipating cell and gene therapy, continuous manufacturing, digital transformation, high-potency/high-active drug production, and service businesses to be key growth drivers; the company will continue to invest in R&D, expand global markets, and enhance competitiveness through technological innovation and service expansion - Cell and gene therapy technologies and processes are still in early development, with significant room for service providers to launch new businesses, products, and services around these projects[151](index=151&type=chunk) - Continuous manufacturing shows economic benefits in the biopharmaceutical industry, and the Group is prepared to collaborate with academic institutions and component wholesalers to further invest in developing related technologies[153](index=153&type=chunk) - Digital transformation is increasingly recognized in the biopharmaceutical industry, and the Group provides solutions through its REMOIIS platform, with significant growth potential expected for this business[174](index=174&type=chunk)[200](index=200&type=chunk) - Demand for high-potency/high-active drugs continues to increase, and the Group can support this trend with its knowledge and experience, strengthening its powder and solid systems engineering business through automated equipment[175](index=175&type=chunk)[198](index=198&type=chunk) - Service businesses require less working capital, rely on fixed human capital and streamlined processes, and gain brand recognition from long-term customer loyalty and satisfaction, with a more significant contribution to gross profit margin expected[157](index=157&type=chunk)[176](index=176&type=chunk) [Liquidity and Financial Resources](index=44&type=section&id=Liquidity%20and%20Financial%20Resources) Net cash used in operating activities was RMB 37.9 million, net cash used in investing activities was RMB 153.1 million, and net cash from financing activities was RMB 125.3 million this year; net current assets decreased by 16.3% to RMB 441.2 million, and the capital to debt ratio increased to 27.8% Consolidated Cash Flow Statement Summary | Item | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (37,926) | (103,451) | | Net Cash (Used in) / From Investing Activities | (153,143) | 65,022 | | Net Cash From Financing Activities | 125,301 | 59,349 | | Net (Decrease) / Increase in Cash and Cash Equivalents | (65,768) | 20,920 | - Net cash used in operating activities was mainly due to profit before income tax, depreciation and amortization, and an increase in trade and other payables, partially offset by an increase in contract assets, a decrease in contract liabilities, and an increase in trade and other receivables[223](index=223&type=chunk)[246](index=246&type=chunk) - Net cash used in investing activities was mainly due to the acquisition of property, plant, equipment, and intangible assets, as well as the acquisition of associates[223](index=223&type=chunk) - Net cash from financing activities was mainly due to proceeds from borrowings, partially used for repayment of borrowings, lease payments, and interest paid[247](index=247&type=chunk) [Cash Flow](index=44&type=section&id=Cash%20Flow) Net cash used in operating activities was RMB 37.9 million, net cash used in investing activities was RMB 153.1 million, and net cash from financing activities was RMB 125.3 million this year, resulting in a net decrease in cash and cash equivalents of RMB 65.8 million Consolidated Cash Flow Statement Summary | Item | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (37,926) | (103,451) | | Net Cash (Used in) / From Investing Activities | (153,143) | 65,022 | | Net Cash From Financing Activities | 125,301 | 59,349 | | Net (Decrease) / Increase in Cash and Cash Equivalents | (65,768) | 20,920 | [Net Current Assets](index=46&type=section&id=Net%20Current%20Assets) The Group's net current assets decreased by 16.3% to RMB 441.2 million, primarily due to more effective utilization of external funding resources and management of supplier payment terms, leading to an increase in current liabilities - The Group's net current assets decreased by approximately **RMB 85.8 million** or **16.3%** from approximately RMB 527.0 million as of December 31, 2021, to approximately **RMB 441.2 million** as of December 31, 2022[249](index=249&type=chunk) - Total current liabilities increased by approximately **RMB 223.6 million** to **RMB 1,359.8 million**[269](index=269&type=chunk) [Borrowings and Capital to Debt Ratio](index=46&type=section&id=Borrowings%20and%20Capital%20to%20Debt%20Ratio) As of December 31, 2022, total short-term interest-bearing bank borrowings were RMB 172.3 million, and long-term bank borrowings were RMB 85.7 million; the capital to debt ratio increased to 27.8% - As of December 31, 2022, total short-term interest-bearing bank borrowings were **RMB 172.3 million**, and long-term bank borrowings were **RMB 85.7 million**[227](index=227&type=chunk) - The capital to debt ratio was approximately **27.8%** (December 31, 2021: 16.4%)[270](index=270&type=chunk) [Pledged Assets](index=46&type=section&id=Pledged%20Assets) As of December 31, 2022, the Group's buildings, right-of-use assets, and construction in progress were pledged as collateral for short-term and long-term bank borrowings - As of December 31, 2022, the Group's buildings and right-of-use assets with total carrying amounts of approximately **RMB 4.1 million** and approximately **RMB 68.8 million** respectively (December 31, 2021: approximately RMB 5.0 million and approximately RMB 71.1 million respectively), and construction in progress with a carrying amount of approximately **RMB 124.4 million** (December 31, 2021: approximately RMB 85.0 million) were pledged as collateral for short-term and long-term bank borrowings with carrying amounts of approximately **RMB 107.2 million** (December 31, 2021: approximately RMB 74.3 million)[228](index=228&type=chunk) [Contingent Liabilities](index=47&type=section&id=Contingent%20Liabilities) As of December 31, 2022, the Group provided bank guarantees for two irrevocable letters of credit totaling EUR 887,000 utilized by ROTA KG - As of December 31, 2022, the Group provided bank guarantees for two irrevocable letters of credit totaling **EUR 887,000** (approximately **RMB 6,584,000**) utilized by ROTA KG[229](index=229&type=chunk) [Capital Commitments](index=48&type=section&id=Capital%20Commitments) As of December 31, 2022, capital expenditures contracted but not yet incurred for property, plant, equipment, and intangible assets amounted to approximately RMB 54.5 million, primarily arising from construction contracts for new facilities in Shanghai and Shijiazhuang - As of December 31, 2022, capital expenditures contracted but not yet incurred for property, plant, equipment, and intangible assets amounted to approximately **RMB 54.5 million**, primarily arising from construction contracts for new facilities in Shanghai and Shijiazhuang that were contracted but only partially executed[232](index=232&type=chunk) [Significant Investment Matters, Significant Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures](index=48&type=section&id=Significant%20Investment%20Matters%2C%20Significant%20Acquisitions%20and%20Disposals%20of%20Subsidiaries%2C%20Associates%20and%20Joint%20Ventures) The Group had no significant investment matters, significant acquisitions, or disposals of subsidiaries, associates, or joint ventures during the current year - The Group had no significant investment matters, significant acquisitions, or disposals of subsidiaries, associates, or joint ventures during the current year[256](index=256&type=chunk) [Foreign Exchange Risk](index=48&type=section&id=Foreign%20Exchange%20Risk) The Group faces foreign exchange risk from various currencies, primarily EUR, USD, and HKD, but the directors consider the risk not significant and therefore do not use financial instruments for hedging - The Group primarily operates in China and faces foreign exchange risk from various currencies, mainly involving **EUR, USD, and HKD**[233](index=233&type=chunk) - The directors consider foreign exchange rate risk not significant to the Group and therefore do not use any financial instruments, such as forward foreign exchange contracts, to hedge the risk[233](index=233&type=chunk) [Human Resources](index=47&type=section&id=Human%20Resources) As of December 31, 2022, the Group had 1,913 full-time employees, an increase of 331 from 2021; employee costs increased by 17.4% to RMB 486.4 million, mainly due to increased headcount and enhanced compensation attractiveness; the company has established comprehensive welfare programs and training systems, believing that continuous investment in top talent will strengthen long-term competitiveness - As of December 31, 2022, the Group had **1,913 full-time employees**, an increase of **331** from 2021[253](index=253&type=chunk) - Employee costs (including directors' emoluments) for the current year were approximately **RMB 486.4 million**, an increase of approximately **17.4%** compared to 2021[253](index=253&type=chunk) - The Group has established various welfare programs, including basic medical insurance, unemployment insurance, and other related insurances, and makes statutory contributions for overseas employees[273](index=273&type=chunk) - The Group believes that building world-class technological capabilities requires continuous resource investment, and while recruiting top talents and consultants may reduce profits in the short term, it will enhance our competitiveness in the long run[274](index=274&type=chunk) [Events After the Reporting Period](index=48&type=section&id=Events%20After%20the%20Reporting%20Period) As of the date of this announcement, neither the Company nor the Group has undertaken any significant events after the reporting period - Subsequent to December 31, 2022, and up to the date of this announcement, neither the Company nor the Group has undertaken any significant events after the reporting period[276](index=276&type=chunk) Corporate Governance and Other Information [Closure of Register of Members](index=49&type=section&id=Closure%20of%20Register%20of%20Members) To determine eligibility for attending and voting at the 2023 Annual General Meeting, the Company will suspend its share transfer registration from May 25 to May 31, 2023 - The Company will suspend its share transfer registration from **Thursday, May 25, 2023, to Wednesday, May 31, 2023** (both dates inclusive), during which no share transfers will be registered[259](index=259&type=chunk) [Corporate Governance Practices](index=49&type=section&id=Corporate%20Governance%20Practices) The Company has adopted and is committed to implementing the code provisions of the Corporate Governance Code set out in Appendix 14 of the Listing Rules; despite the Chairman and CEO being the same person, the Board believes this arrangement benefits consistent leadership, and the balanced board composition provides sufficient safeguards - The Company has adopted and is committed to implementing the code provisions of the Corporate Governance Code set out in Part 2 of Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[259](index=259&type=chunk) - Mr. He Guoqiang serves as both the Chairman of the Board and the Chief Executive Officer of the Company, and the Board believes this arrangement is beneficial for ensuring consistent leadership of the Group and enhancing the effectiveness and efficiency of the Group's overall strategic planning[260](index=260&type=chunk) [Directors' Compliance with Model Code](index=50&type=section&id=Directors'%20Compliance%20with%20Model%20Code) The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 of the Listing Rules, and all directors confirmed compliance with the code during the current year - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules as the code of conduct for securities transactions by its directors[282](index=282&type=chunk) - All directors confirmed that they have complied with the required standards set out in the Model Code during the current year[282](index=282&type=chunk) [Purchase, Sale or Redemption of Listed Securities](index=50&type=section&id=Purchase%2C%20Sale%20or%20Redemption%20of%20Listed%20Securities) Neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities during the current year - Neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities during the current year[283](index=283&type=chunk) [Audit Committee](index=50&type=section&id=Audit%20Committee) The Audit Committee, established on October 21, 2014, is primarily responsible for reviewing interim and annual results, overseeing financial reporting processes and internal control systems, and communicating with external auditors; the committee has reviewed the consolidated financial statements for the current year - The Board established the Audit Committee on **October 21, 2014**, and adopted written terms of reference in accordance with Rules 3.21 to 3.23 of the Listing Rules and the Corporate Governance Code[283](index=283&type=chunk) - The primary responsibilities of the Audit Committee are to review the Company's interim and annual results and to oversee the Group's financial reporting process and internal control systems[263](index=263&type=chunk) - The Audit Committee has reviewed the Company's consolidated financial statements for the current year[284](index=284&type=chunk) [Scope of Work of PricewaterhouseCoopers](index=51&type=section&id=Scope%20of%20Work%20of%20PricewaterhouseCoopers) PricewaterhouseCoopers has reconciled the figures in the Group's preliminary results announcement with the audited consolidated financial statements, but their work does not constitute an assurance engagement, thus no opinion or assurance conclusion has been issued on the preliminary results announcement - PricewaterhouseCoopers has reconciled the figures in the Group's preliminary results announcement regarding the consolidated statement of financial position, consolidated statement of profit or loss, consolidated statement of comprehensive income, and related notes for the current year with the figures presented in the Group's audited consolidated financial statements for the current year[265](index=265&type=chunk) - The work performed by PricewaterhouseCoopers in this regard does not constitute an assurance engagement, and therefore no opinion or assurance conclusion has been issued on this preliminary results announcement[265](index=265&type=chunk) [Publication of Annual Results and Annual Report](index=51&type=section&id=Publication%20of%20Annual%20Results%20and%20Annual%20Report) This annual results announcement will be published on the HKEX website and the Company's website, and the Company's annual report, containing all information required by the Listing Rules, will be dispatched to shareholders and published on the websites in due course - This annual results announcement will be published on the HKEX website (www.hkexnews.hk) and the Company's website (www.austar.com.hk)[266](index=266&type=chunk) - The Company's annual report for the current year, containing all information required by the Listing Rules, will be dispatched to shareholders and published on the respective websites of the HKEX and the Company in due course[266](index=266&type=chunk) [Acknowledgement](index=51&type=section&id=Acknowledgement) The Company expresses gratitude to all shareholders and stakeholders for their continuous support and thanks all employees for their efforts and commitment to the Group - The Company takes this opportunity to thank all shareholders and stakeholders for their continuous support[267](index=267&type=chunk) - At the same time, the Company expresses its deep gratitude to all employees for their efforts and commitment to the Group[267](index=267&type=chunk) [Board Composition](index=51&type=section&id=Board%20Composition) As of the date of this announcement, the Board comprises four executive directors, one non-executive director, and three independent non-executive directors - As of the date of this announcement, the Board comprises four executive directors, Mr. He Guoqiang, Mr. He Jianhong, Mr. Chen Yuewu, and Ms. Zhou Ning; one non-executive director, Ms. Ji Lingling; and three independent non-executive directors, Mr. Cheung Lap Kei, Ms. Zhao Kaishan, and Mr. Leung Hoi Kin[268](index=268&type=chunk)

Financial Performance - Revenue for the six months ended June 30, 2022, was RMB 1,103,980 thousand, representing a 29% increase from RMB 855,376 thousand in the same period of 2021[12]. - Gross profit for the same period was RMB 235,735 thousand, with a gross margin of 21.4%, down from 26.2% in 2021[12]. - Profit attributable to owners of the company was RMB 45,843 thousand, a decrease of 79% compared to RMB 217,870 thousand in 2021[12]. - The company's total revenue for the review period was approximately RMB 1,104.0 million, representing a significant increase of about 29.1% compared to the same period in 2021[60]. - The company reported a net profit of RMB 45,843 thousand for the six months ended June 30, 2022, compared to a loss in the previous period[151]. - The group recorded a profit before tax of approximately RMB 48.2 million, a significant decrease from RMB 251.9 million for the six months ended June 30, 2021[92]. - The company reported a basic and diluted earnings per share of RMB 0.09 for the first half of 2022, down from RMB 0.43 in the same period of 2021[146]. Assets and Liabilities - Total assets as of June 30, 2022, were RMB 2,373,618 thousand, up from RMB 2,044,777 thousand as of December 31, 2021[12]. - Total liabilities increased to RMB 1,531,534 thousand as of June 30, 2022, compared to RMB 1,256,357 thousand at the end of 2021, marking an increase of 21.8%[142]. - The group's current assets decreased to approximately RMB 476.4 million from RMB 527.0 million as of December 31, 2021, while total current assets increased to approximately RMB 1,888.5 million[99]. - The total value of uncompleted contracts as of June 30, 2022, was approximately RMB 1,661.986 million, with fluid and bioprocess systems accounting for 43.7% of the total[38]. Revenue Segmentation - Revenue from fluid and bioprocess systems accounted for 45.1% of total revenue, up from 43.1% in 2021[14]. - The cleanroom and automation control systems segment generated RMB 240,861 thousand, representing 21.8% of total revenue[14]. - Revenue from the Fluid and Bioprocess Systems segment increased by approximately RMB 129.5 million or 35.2% to about RMB 497.8 million, driven by an increase in uncompleted contract amounts and improved project execution efficiency[62]. - Revenue from GMP Compliance Services rose by approximately RMB 15.6 million or 54.4% to about RMB 44.3 million, driven by increased uncompleted contract amounts and enhanced service brand through software applications[65]. - Revenue from the Pharmaceutical Equipment Distribution and Agency segment surged by approximately RMB 8.1 million or 93.5% to about RMB 16.7 million, attributed to increased uncompleted contract amounts and expanded business scope[67]. Operational Developments - The company is focusing on expanding its local market production capabilities due to supply chain disruptions caused by COVID-19[21]. - The company is adapting to the changing market by shifting towards high-end generics and integrated strategies in response to national procurement policies[21]. - The company successfully acquired several technologies related to sterile liquid and powder filling lines, enhancing its integrated solutions for sterile product filling and freeze-drying[24]. - The company has integrated manufacturing execution systems across three production bases to ensure consistent production control[40]. - The company has established 12 technology application teams to integrate technical capabilities into comprehensive solutions for clients[55]. Employee and Management - As of June 30, 2022, the group had 1,785 full-time employees, an increase of approximately 12.8% from 1,582 employees as of December 31, 2021[106]. - Employee costs amounted to approximately RMB 253.0 million, representing an increase of about 31.2% compared to RMB 192.9 million for the six months ended June 30, 2021[106]. - The group has implemented training programs categorized into onboarding, expatriate training, management training, professional skills training, and corporate culture training[108]. - The chairman, Mr. He, holds both the roles of chairman and CEO, which the board believes enhances leadership effectiveness[131]. Research and Development - R&D expenses increased by RMB 6.6 million or 24.7% to approximately RMB 33.3 million, driven by higher employee costs and material consumption for research projects[86]. - The online liquid preparation system developed based on PAT technology is in the trial phase and is expected to achieve breakthroughs within the year[49]. Market and Competitive Landscape - The company is focused on integrating different product lines to provide cost-effective solutions, enhancing its adaptability to a competitive environment[26]. - The global life sciences market is expected to continue growing, with the company leveraging its project experience in the Chinese biopharmaceutical market to enhance its core competencies[53]. Corporate Governance - The company recognizes the importance of good corporate governance to enhance management standards and protect shareholder interests[130]. - The company has adopted the code of conduct for directors' securities transactions as per the listing rules[132]. - The audit committee reviewed the unaudited condensed consolidated interim financial information for the review period[133].

Financial Performance - Total revenue for 2021 reached RMB 2,015,028, an increase of 55.5% compared to RMB 1,295,980 in 2020[8] - Gross profit for 2021 was RMB 479,008, reflecting a growth of 48.1% from RMB 323,530 in 2020[8] - Net profit attributable to owners of the company was RMB 277,300, significantly up from RMB 33,100 in 2020[8] - Basic and diluted earnings per share for 2021 were RMB 0.54, compared to RMB 0.06 in 2020[8] - The company achieved a revenue of over RMB 2 billion (approximately USD 316.6 million) in 2021, representing a growth of 55.5% compared to 2020[39] - The compound annual growth rate (CAGR) of the company's revenue over the past five years was 38.5%[39] - The company recorded an operating profit of approximately RMB 311.9 million in 2021, showing significant growth from 2020[39] - The order amount for the year was RMB 2.663 billion, marking a substantial increase of approximately 43.3%[39] - The total order amount for 2021 reached approximately RMB 2,663.0 million, a significant increase of 43.3% compared to RMB 1,857.9 million in 2020[42] Business Segments and Growth - Revenue contribution by business segments showed that Fluid and Bioprocess Systems accounted for 43.8% of total revenue in 2021[11] - The Fluid and Bioprocess Systems segment reported an order amount of approximately RMB 1,207.5 million, up 37.4% from RMB 878.7 million in the previous year[45] - The Cleanroom and Automation Control and Monitoring Systems segment saw orders increase to RMB 524.8 million, a growth of 20.4% from RMB 435.9 million in 2020[45] - The Powder Solid Systems segment experienced a substantial increase in orders to RMB 226.2 million, reflecting a growth of 48.4% from RMB 152.4 million in the prior year[45] - The GMP Compliance Services segment's order amount surged by 151.3% to RMB 117.8 million, compared to RMB 46.8 million in 2020[48] - The Life Science Consumables segment achieved an order amount of RMB 548.9 million, marking a 69.8% increase from RMB 323.2 million in the previous year[49] - The Pharmaceutical Equipment Distribution and Agency segment's orders rose to RMB 37.9 million, an increase of 80.9% from RMB 21.0 million in 2020[50] Investments and Expansion - The company plans to continue its global expansion strategy and invest in capital expenditures, human resources, and enhancing product and application solutions capabilities[39] - The establishment of a production site in the UK continues to hire more talent to provide equipment for oral solid dosage forms beyond sterile testing isolators[23] - Two new factory projects commenced in 2021, expanding the factory space significantly, with an expected increase in assembly space starting mid-2022[23] - The new manufacturing facility in Shanghai, covering approximately 31,200 square meters, is under construction and expected to commence operations in Q2 2022, aimed at meeting growth demands over the next five years[53] - The company is expanding its manufacturing capabilities in Shijiazhuang with a new facility of approximately 24,000 square meters, expected to be completed in Q2 2022, to support growth in powder solid systems and cleanroom automation[56] Research and Development - The company is developing more equipment, systems, and services for cell and gene therapy production processes and quality control[27] - The company is focusing on microbial rapid detection technology and clean process R&D platforms to enhance its offerings in the CMO and CAR-T industries[86] - The company is developing a flexible control system for small-scale API and biopharmaceutical processes, aimed at reducing costs and increasing operational flexibility[64] - The company has developed 12 technology applications and established 11 specialized teams, focusing on areas such as pharmaceutical automation and digitalization, clean utilities, and biopharmaceutical processes[72] Strategic Partnerships and Collaborations - The company signed a strategic partnership agreement with Endress+Hauser in Shanghai, enhancing its market position[21] - The company established a joint research and development base with Tianjin University, indicating a focus on innovation and collaboration[21] - The company is recognized as a certified system integrator by Rockwell Automation, enhancing its credibility in the market[19] Market Trends and Challenges - The company anticipates that the growth momentum for COVID-19 vaccine-related projects in China may not match that of the second half of 2021, with inquiries slowing down domestically[39] - The company faces risks related to intense competition in the pharmaceutical equipment and process systems market, which may lead to downward pricing pressure[180] Employee and Governance - The employee count increased by 178 to 1,582 full-time employees as of December 31, 2021, with employee costs rising by approximately 34.2% to RMB 414.4 million from RMB 308.8 million in the previous year[142] - The group’s board consists of 8 members, including 4 executive directors, 1 non-executive director, and 3 independent non-executive directors, ensuring diverse governance[149] - The company has a strong leadership team with extensive experience in the pharmaceutical industry, including over 40 years for Mr. He Jianhong and over 30 years for Mr. Chen Yawoo[154][155] Financial Position and Cash Flow - Cash and cash equivalents increased by approximately RMB 20.9 million, reaching approximately RMB 198.4 million as of December 31, 2021[129] - Current assets increased by approximately RMB 573.9 million to approximately RMB 1,663.2 million as of December 31, 2021, primarily due to rapid business expansion[136] - The company's capital to debt ratio improved to approximately 16.4% as of December 31, 2021, compared to 12.7% in the previous year[137] Customer Relationships and Market Presence - The group’s five largest customers accounted for approximately 22.8% of total revenue for the year, maintaining stable relationships ranging from 5 to 17 years[187] - The group has implemented policies to manage customer complaints and satisfaction, ensuring strong relationships with major clients[187] - The company is committed to improving brand recognition and awareness through seminars, publications, and participation in international exhibitions[180]

Financial Performance - Revenue for the six months ended June 30, 2021, was RMB 855,376,000, representing a 65.1% increase from RMB 517,985,000 in the same period of 2020[10]. - Gross profit for the same period was RMB 224,315,000, with a gross margin of 26.2%, slightly down from 26.6% in 2020[10]. - Profit attributable to owners of the company was RMB 217,870,000, compared to RMB 12,782,000 in the prior year, marking a significant increase[10]. - The company reported a significant net profit increase of approximately 1,638.9% compared to the same period in 2020, primarily due to a one-time gain from the sale of equity in a joint venture[19]. - The total order amount for the review period was approximately RMB 1,221.9 million, representing a substantial increase of about 68.2% from approximately RMB 726.6 million for the six months ended June 30, 2020[26]. - The company achieved a significant increase in sales orders in the first half of 2021, demonstrating the strength and resilience of its sales team[43]. - The company reported a total comprehensive income of RMB 16,528 thousand for the six months ended June 30, 2021, compared to RMB 12,482 thousand for the same period in 2020, representing an increase of approximately 32.4%[163]. Assets and Liabilities - Total assets as of June 30, 2021, were RMB 1,818,945,000, up from RMB 1,378,844,000 at the end of 2020[10]. - The group’s total current liabilities increased to approximately RMB 1,018.3 million as of June 30, 2021, from approximately RMB 805.7 million as of December 31, 2020[108]. - The asset-liability ratio decreased from approximately 12.7% as of December 31, 2020, to approximately 10.1% as of June 30, 2021, due to an increase in retained earnings[109]. - The total current assets increased to approximately RMB 1,522.9 million as of June 30, 2021, up from approximately RMB 1,089.3 million as of December 31, 2020, driven by business expansion[108]. Segment Performance - The Fluid and Bioprocess Systems segment contributed RMB 368,269,000, accounting for 43.1% of total revenue, up from 41.8% in 2020[12]. - Cleanroom and Automation Control Systems generated RMB 221,420,000, representing 25.9% of total revenue, an increase from 21.2% in the previous year[12]. - Revenue from the Fluid and Bioprocess Systems segment increased by approximately RMB 151.9 million or 70.2% to about RMB 368.3 million, driven by increased order amounts and improved project execution efficiency[70]. - The Cleanroom and Automation Control and Monitoring Systems segment saw revenue rise by approximately RMB 111.5 million or 101.4% to about RMB 221.4 million, attributed to increased order amounts and uncompleted contract amounts[71]. - The Life Science Consumables segment's revenue increased by approximately RMB 65.9 million or 61.5% to about RMB 173.0 million, due to enhanced core competencies in cleaning, disinfection, and sterilization solutions[75]. Research and Development - Research and development expenses increased by approximately RMB 4.2 million or 18.6% to RMB 26.7 million, reflecting a focus on enhancing technical capabilities through collaboration with academic institutions[96]. - The company is developing a flexible hardware and software control system for small-scale API and biopharmaceutical process systems, aimed at reducing costs and increasing operational flexibility[47]. - The company has established ten technical application teams to enhance its capabilities in various pharmaceutical automation and digitalization technologies[51]. Market Strategy and Expansion - The company is focusing on expanding its market presence in emerging countries, particularly in response to COVID-19 vaccine supply shortages[16]. - The management highlighted ongoing investments in new technologies and product development to enhance operational capabilities[16]. - The company aims to strengthen partnerships with WHO-approved COVID-19 vaccine manufacturers to facilitate faster vaccine supply in developing nations[16]. - The company is focusing on global expansion, with increased recruitment in Europe and Southeast Asia to handle sales opportunities directly[43]. Operational Efficiency - The project execution center has successfully shortened delivery times and improved project quality through lean management practices, addressing challenges posed by COVID-19 vaccine delivery expectations[42]. - The company is focusing on expanding its facility management services, which are expected to become a significant source of revenue and higher profit margins in the future[20]. - The company has expanded its service offerings to include laboratory turnkey engineering solutions, covering system design, procurement, installation, and commissioning[59]. Corporate Governance - The audit committee, established on October 21, 2014, includes two independent non-executive directors and one non-executive director, overseeing financial reporting and risk management[143]. - The company has adopted and is committed to implementing the corporate governance code, ensuring compliance with applicable standards[139]. - The chairman and CEO roles are held by the same individual, Mr. He, which the board believes enhances leadership and strategic planning efficiency[141]. Shareholder Information - The company did not declare any interim dividend for the six months ended June 30, 2021[113]. - The company completed the sale of 60% of its shares in PALL-AUSTAR JV for approximately $34.4 million on March 31, 2021[118]. - As of June 30, 2021, the company’s major shareholders held significant stakes, with Mr. He Guoqiang owning 65.54% and Mr. He Jianhong owning 7.27% of the company[128].