Financial Performance - The company recorded revenue of approximately HKD 623,761,000 for the year ended December 31, 2021, a slight decrease of 4.88% compared to the previous year[7] - Gross profit for the year was approximately HKD 358,020,000, representing a year-on-year increase of 5.59%, with a gross margin of 57.40% compared to 51.71% in the previous year[7] - The company recorded a net profit of approximately HKD 132,572,000 for the year 2021, a decrease from HKD 167,623,000 in 2020, primarily due to increased competition in COVID-19 testing services and rising employee costs[41] - Revenue from COVID-19 nucleic acid testing services continued to account for over 85% of the segment's revenue in the fiscal year 2021, driven by ongoing demand due to the pandemic[24] - Revenue from the manufacturing and sales of healthcare and pharmaceutical products decreased from approximately HKD 869,000 in 2020 to about HKD 107,000 in 2021, primarily due to the economic impact of COVID-19[29] - Revenue from insurance brokerage services increased by 15.23%, from approximately HKD 6,875,000 in 2020 to about HKD 7,922,000 in 2021[31] - The logistics services segment recorded revenue of approximately HKD 6,712,000 in 2021, a significant increase from zero in 2020[32] - Administrative expenses rose by 18.56% to approximately HKD 157,081,000 in 2021, driven by increased employee costs and depreciation[39] COVID-19 Testing and Services - The company completed over 3,600,000 COVID-19 nucleic acid tests in 2021, an increase of over 50% compared to 2,300,000 tests completed in 2020[10] - The company is preparing for the post-pandemic era by adjusting its business direction in response to the evolving local nucleic acid testing market[7] - The emergence of the Omicron variant has led to sustained demand for nucleic acid testing services, with the company preparing for potential increases in demand as new variants arise[50] - The company entered into a total service agreement with BGI Genomics for COVID-19 testing services, enhancing its operational capabilities in this area[45] - The company has launched several new testing services in 2021, including cervical cell screening and COVID-19 neutralizing antibody testing, to meet increased health awareness[51] Research and Development - The company is advancing a new project aimed at commercializing the world's first approved precision radiotherapy technology for treating solid tumors[8] - The company has made significant progress in research and development of immune cell therapy as part of its precision treatment initiatives[8] - The company has initiated the first approved clinical trial for its investigational new drug LY007, a CAR-T therapy for relapsed CD20-positive B-cell non-Hodgkin lymphoma, marking a significant milestone in its R&D efforts[15] - The company is sponsoring two investigator-initiated trials for CAR-T products targeting CLDN18.2 and CD19, with ongoing patient recruitment expected to yield significant results[18] - The company is developing a next-generation nasal COVID-19 vaccine and conducting laboratory research on innovative COVID-19 testing technology platforms[51] - The company is advancing two additional CAR-T products in preclinical trials, targeting CLDN18.2 for pancreatic or gastric cancer and CD19 for B-cell non-Hodgkin lymphoma or leukemia[51] Corporate Governance - The company has adhered to the GEM Listing Rules Appendix 15 Corporate Governance Code for the fiscal year 2021[89] - The company has implemented corporate governance measures focusing on integrity towards shareholders, quality of information disclosure, transparency, and accountability[89] - The board is responsible for formulating the overall strategic development of the group and overseeing management, administration, and operations[97] - The company has established written terms of reference for its audit committee, remuneration committee, and nomination committee[98] - The company has confirmed that all directors complied with the trading standards and relevant conduct codes during the fiscal year 2021[90] Environmental, Social, and Governance (ESG) Initiatives - The company is committed to reducing negative environmental impacts and contributing to community welfare[166] - The ESG report covers major business segments including tumor immunotherapy and health management services in China[159] - The group consumed 374,815 kWh of electricity in 2021, a decrease of 57.3% from 874,427 kWh in 2020, resulting in a consumption density of 0.60 kWh per thousand HKD revenue[183] - Water consumption was 6,867 cubic meters in 2021, slightly down from 6,989 cubic meters in 2020, maintaining a consumption density of 0.01 cubic meters per thousand HKD revenue[183] - The group generated nitrogen oxides (NOx) emissions of 7.5 kg, sulfur oxides (SOx) emissions of 0.20 kg, and particulate matter (PM) emissions of 0.55 kg during the reporting period[184] Employee and Workforce Management - The group employed a total of 211 full-time employees as of December 31, 2021, compared to 129 in 2020[73] - Total employee costs for the year 2021 amounted to approximately HKD 99,354,000, an increase from HKD 67,551,000 in 2020[73] - Contributions to the mandatory provident fund plan for the year 2021 totaled approximately HKD 2,089,000, up from HKD 1,543,000 in 2020[74] Financial Position and Assets - As of December 31, 2021, the company's cash and bank balances were approximately HKD 150,554,000, a decrease of about HKD 233,985,000 from HKD 384,539,000 in 2020[56] - The total assets of the company as of December 31, 2021, were approximately HKD 706,782,000, while total liabilities were about HKD 240,887,000, resulting in a debt-to-asset ratio of approximately 34.08%[58] - The company holds an investment in Pillar Biosciences valued at HKD 67,940,000, representing 9.61% of total assets as of December 31, 2021[63] - The investment in Kintor Pharmaceutical is valued at HKD 54,081,000, accounting for 7.65% of total assets as of December 31, 2021[63] Shareholder and Financial Management - The company repurchased a total of 2,695,000 shares in 2021 at prices ranging from HKD 1.27 to HKD 1.78 per share, demonstrating a commitment to shareholder value[46] - The company has adopted a dividend policy to allow shareholders to share in profits while retaining liquidity for future growth opportunities[155] - The board will consider factors such as operational and financial performance, capital needs, and liquidity before declaring dividends[156]

Financial Performance - For the three months ended September 30, 2021, the revenue was HKD 131,242,000, a decrease of 74.6% compared to HKD 515,725,000 in the same period of 2020[7]. - The gross profit for the same period was HKD 77,051,000, down 70.7% from HKD 263,125,000 year-on-year[7]. - Operating profit for the three months was HKD 32,179,000, a decline of 85.5% compared to HKD 222,058,000 in the previous year[7]. - The net profit for the three months was HKD 22,901,000, a decrease of 87.3% from HKD 179,322,000 in the same quarter of 2020[7]. - The total comprehensive income for the three months was HKD 71,666,000, down 60.1% from HKD 179,444,000 year-on-year[14]. - For the nine months ended September 30, 2021, the revenue was HKD 505,401,000, a decrease of 7.6% compared to HKD 547,030,000 in the same period of 2020[7]. - The operating profit for the nine months was HKD 179,463,000, an increase of 0.8% from HKD 177,966,000 year-on-year[7]. - The net profit for the nine months was HKD 131,891,000, a decrease of 1.2% compared to HKD 133,543,000 in the previous year[7]. - The basic and diluted earnings per share for the three months was HKD 0.003, down from HKD 0.064 in the same period of 2020[14]. - The company's profit attributable to owners for the nine months ended September 30, 2021, was HKD 27,254,000, compared to HKD 21,532,000 for the same period last year, reflecting a 26.5% increase[42]. - Basic and diluted earnings per share for the nine months ended September 30, 2021, were HKD 0.028, up from HKD 0.022 in the same period last year, indicating a 27.3% increase[42]. Revenue Streams - For the nine months ended September 30, 2021, the revenue from medical laboratory testing services and health check services was HKD 491.61 million, compared to HKD 539.26 million for the same period in 2020, reflecting a decrease of approximately 8.8%[26]. - The revenue from insurance brokerage services for the nine months ended September 30, 2021, was HKD 6.42 million, an increase of approximately 6.2% from HKD 6.05 million in the same period of 2020[26]. - The revenue from logistics services for the nine months ended September 30, 2021, was HKD 6.32 million, with no revenue reported in the same period of 2020, indicating a new revenue stream[26]. - The total revenue for the nine months ended September 30, 2021, was HKD 547.03 million, compared to HKD 505.40 million for the same period in 2020, representing an increase of approximately 8.3%[26]. - The company reported a significant decrease in revenue from the manufacturing and sales of health-related and pharmaceutical products, with no revenue recorded for the three months ended September 30, 2021, compared to HKD 161,000 in the same period of 2020[26]. Operational Developments - The company continues to focus on expanding its services in tumor immunotherapy and health management services in China, which are key areas of growth[21]. - The company operates primarily in tumor immunotherapy, health management services, and medical laboratory testing in China and Hong Kong[49]. - The group has established a basic laboratory in Hong Kong to provide COVID-19 nucleic acid testing services, and a mobile laboratory at Hong Kong International Airport for rapid testing[50]. - Shanghai Longyao has initiated clinical research for a new CAR-T therapy, LY007, which received approval for clinical trials in January 2021[52]. - The company is exploring diversification in its testing business and plans to expedite the Phase I clinical trials for CAR-T products that have received clinical approval[72]. Shareholder Information - As of September 30, 2021, the total number of issued shares of the company was 963,231,150, with a par value of HKD 0.10 per share[79]. - Mr. Liu Xiaolin holds 529,500,546 shares, representing approximately 54.97% of the company's total shares[78]. - Genius Earn, a controlled corporation, also holds 529,500,546 shares, equivalent to 54.97%[83]. - Guoyuan Securities Investment (Hong Kong) Limited holds 22,428,571 shares, accounting for 2.33% of the total shares[83]. - Guoyuan International Holdings Limited has a controlled interest in 475,082,640 shares, representing 49.32%[83]. - The total number of options granted under the share option scheme is 13,760,000, which is approximately 1.44% of the total shares[81]. - The company has implemented a share option scheme to reward eligible participants for their contributions to the group's success[87]. - The company has a significant concentration of ownership, with major shareholders holding over 54% of the total shares[84]. Corporate Governance - The company maintained compliance with the GEM Listing Rules regarding corporate governance during Q3 2021[109]. - The audit committee, consisting of three independent non-executive directors, reviewed the financial reporting procedures and internal controls for Q3 2021[111]. - The company confirmed that all directors adhered to the trading standards and code of conduct during Q3 2021[107]. - The company expressed gratitude to stakeholders for their support in the Q3 2021 report[114]. Financial Costs and Income - Interest income for the three months ended September 30, 2021, was HKD 1,000, down from HKD 4,000 in the same period last year, representing a 75% decrease[29]. - Miscellaneous income increased significantly to HKD 171,000 for the three months ended September 30, 2021, compared to HKD 55,000 in the same period last year, marking a 210.9% increase[29]. - Total financing costs for the three months ended September 30, 2021, were HKD 1,210,000, a decrease of 47.5% from HKD 2,307,000 in the same period last year[30]. - Financing costs increased to approximately HKD 5,286,000 in Q3 2021, compared to HKD 4,180,000 in Q3 2020[63]. Market Outlook - The economic outlook for the coming year is expected to improve slightly despite ongoing geopolitical and macroeconomic challenges[70]. - The global CAR-T market is projected to grow at a compound annual growth rate of 59%, reaching USD 8.71606 billion by 2025[71].

中期報告 CHINA BIOTECH SERVICES HOLDINGS LIMITED 中國生物科技服務控股有限公司 CHINA BIOTECH SERVICES HOLDINGS LIMITED 中國生物科技服務控股有限公司 (Incorporated in the Cayman Islands and continued in Bermuda with limited liability) Stock Code: 8037 INTERIM REPORT 2021 Precision Diagnosis 精準檢測 Future Biotechnology Platform 未來生物科技平臺Precision Treatment 精準治療 CHINA BIOTECH SERVICES HOLDINGS LIMITED 中國生物科技服務控股有限公司 (於開曼群島註冊成立並在百慕達繼續營業之有限公司) 股份代號: 8037 2021 中身 Future Biotechnology Platform 未來生物科技平臺Precision Treatment 精準治療 Precision Diagnosis 精準檢測 ...

Financial Performance - The company reported a revenue of HKD 154,169,000 for the first quarter of 2021, a significant increase from HKD 12,704,000 in the same period of 2020, representing a growth of approximately 1,113%[9] - Gross profit for the first quarter of 2021 was HKD 75,220,000, compared to HKD 2,997,000 in the first quarter of 2020, indicating a substantial increase[9] - Operating profit for the first quarter of 2021 was HKD 38,865,000, a turnaround from an operating loss of HKD 24,570,000 in the same quarter of the previous year[9] - The company achieved a profit before tax of HKD 36,585,000, compared to a loss before tax of HKD 25,026,000 in the first quarter of 2020[9] - Net profit for the first quarter of 2021 was HKD 27,239,000, a significant improvement from a net loss of HKD 24,708,000 in the same period last year[9] - The total comprehensive income for the first quarter of 2021 was HKD 26,746,000, compared to a total comprehensive loss of HKD 24,980,000 in the first quarter of 2020[11] - Basic and diluted earnings per share for the first quarter of 2021 were HKD 0.002, recovering from a loss per share of HKD 0.023 in the same quarter of 2020[11] Revenue Segmentation - Revenue from medical laboratory testing and health check services was HKD 146,440 thousand, up from HKD 8,885 thousand year-over-year[25] - The insurance brokerage services segment recorded a revenue increase of 22.51%, rising from approximately HKD 3,084,000 in the first quarter of 2020 to approximately HKD 3,777,000 in the first quarter of 2021[44] - The manufacturing and sales of health-related and pharmaceutical products segment saw a decrease in revenue from approximately HKD 407,000 in the first quarter of 2020 to approximately HKD 107,000 in the first quarter of 2021, attributed to the challenging economic environment and COVID-19 outbreak[42] Expenses and Costs - Administrative expenses increased to HKD 33,419,000 from HKD 24,793,000 year-on-year, reflecting ongoing investments in operations[9] - Interest expenses for Q1 2021 amounted to approximately HKD 2,280,000, a significant increase from HKD 456,000 in Q1 2020, attributed to higher short-term borrowings[53] - Sales and distribution expenses were approximately HKD 3,138,000 in Q1 2021, up about HKD 221,000 or 7.58% from HKD 2,917,000 in Q1 2020, maintaining a stable level[49] Strategic Focus and Development - The company is focused on expanding its biotechnology services and enhancing its precision diagnosis and treatment capabilities in the market[8] - The company continues to focus on expanding its services in tumor immunotherapy and health management in China[19] - The company is actively involved in the research and development of healthcare-related products and services[19] - The company aims to enhance its market presence through strategic partnerships and potential acquisitions in the healthcare sector[19] - The company plans to diversify its testing business and expedite clinical trials for CAR-T products, aiming to establish itself as an advanced biomedical innovation platform[59] Shareholder Information - The company has not recommended any dividend distribution for the three months ended March 31, 2021, consistent with the previous year[30] - The weighted average number of ordinary shares used for calculating basic and diluted earnings per share was 966,052,000 for the three months ended March 31, 2021, compared to 969,806,000 for the same period in 2020[32] - Genius Earn holds a controlling interest in 529,500,546 shares, representing 54.85% of the total shares[81] - The company repurchased 485,000 shares at a price between HKD 1.27 and HKD 1.35 per share during Q1 2021[55] - The share repurchase price ranged from HKD 1.27 to HKD 1.35, with a total expenditure of HKD 1,147,850[97] Corporate Governance - The company has adopted a set of trading standards for directors in compliance with GEM listing rules[99] - The board is committed to maintaining high standards of corporate governance and compliance with legal and regulatory requirements[100] - The company has confirmed compliance with the GEM listing rules during the first quarter of 2021[101] - There were no conflicts of interest reported among directors or controlling shareholders during the first quarter of 2021[102] - The audit committee has been established to comply with GEM listing rules and consists of three independent non-executive directors[103]

Business Performance - The company recorded a revenue of approximately HKD 655,792,000 for the year ended December 31, 2020, a significant increase of about 10.07 times compared to HKD 59,214,000 for the year ended December 31, 2019[17]. - The revenue from the medical laboratory testing and health check services segment increased significantly from approximately HKD 53,551,000 in 2019 to approximately HKD 646,748,000 in 2020, representing a growth of 1,108%[22]. - The gross profit for 2020 was approximately HKD 339,082,000, up from approximately HKD 22,373,000 in 2019, an increase of approximately HKD 316,709,000[26]. - The gross profit margin improved to approximately 51.71% in 2020, up from approximately 37.78% in 2019, an increase of about 13.93 percentage points[26]. - The total revenue from the insurance brokerage services segment was approximately HKD 6,875,000 in 2020, compared to HKD 2,402,000 in 2019, marking a significant increase[23]. - The company recorded a net profit of approximately HKD 167,623,000 in 2020, reversing a net loss of approximately HKD 107,483,000 in 2019[32]. COVID-19 Response - The company completed over 1,700,000 COVID-19 tests, with a peak daily testing capacity of 230,000 samples[1]. - The establishment of the mobile laboratory at Hong Kong International Airport provided rapid RT-PCR testing services, reducing passenger wait times from 8-12 hours to 2-3 hours[1]. - The company established a laboratory and an additional temporary laboratory with 16 air membranes in Hong Kong to provide COVID-19 testing services[22]. - The company entered into a service agreement for COVID-19 testing services, with a transaction value of HKD 145,393,461.77[42]. Biotechnology Developments - Shanghai Longyao Biotechnology Co., a non-wholly owned subsidiary, achieved a milestone with its LY007 cell injection, becoming the first CAR-T product targeting CD20 to receive clinical application approval in China[8]. - The company aims to continue developing its biotechnology platform and provide high-quality immune cell therapy technologies[12]. - The company aims to diversify its testing business and expedite clinical trials for CAR-T products, with a focus on the Greater Bay Area healthcare market[45]. Financial Management - Administrative expenses rose to approximately HKD 132,489,000 in 2020, an increase of about 40.78% from approximately HKD 94,111,000 in 2019[30]. - Interest income from the lending business was approximately HKD 1,300,000 in 2020, down from HKD 1,688,000 in 2019[24]. - The financing costs increased to approximately HKD 6,498,000 in 2020, compared to HKD 1,692,000 in 2019, primarily due to the issuance of convertible bonds[31]. - The company strengthened its capital base through the issuance of convertible bonds, which will not immediately dilute existing shareholders' equity[36]. Corporate Governance - The company adhered to the GEM Listing Rules Appendix 15 Corporate Governance Code during the fiscal year ending December 31, 2020[87]. - The board consists of six executive directors and three independent non-executive directors, reflecting a mix of skills and experience[89]. - The company has implemented corporate governance measures focusing on integrity, quality of information disclosure, transparency, and accountability[86]. - The company has established an audit committee, nomination committee, and remuneration committee as part of its corporate governance practices[104]. - The audit committee consists of three independent non-executive directors and has reviewed the financial performance for the year 2020[104]. Environmental Responsibility - The group is committed to protecting the environment and fulfilling social responsibilities while adhering to strict corporate governance standards[149]. - The environmental policy includes monitoring compliance with applicable environmental laws and promoting an eco-friendly culture among employees[164]. - The company has not recorded any violations of environmental laws during the reporting period[175]. - The company aims to maintain a zero-violation record in hazardous waste management, reflecting its commitment to environmental responsibility[182]. Employee Management - The total employee cost for the year was approximately HKD 67,551,000, an increase from HKD 48,739,000 in the previous year[67]. - The company employed a total of 129 full-time employees as of December 31, 2020, down from 143 in 2019[67].

Financial Performance - Total revenue for the three months ended September 30, 2020, was HKD 515,725,000, a significant increase from HKD 14,151,000 in the same period of 2019[5] - Gross profit for the three months ended September 30, 2020, was HKD 263,125,000, compared to HKD 5,307,000 in the prior year, reflecting a substantial growth[5] - Operating profit for the three months ended September 30, 2020, was HKD 222,058,000, a turnaround from an operating loss of HKD 23,335,000 in the same quarter of 2019[5] - Profit before tax for the three months ended September 30, 2020, was HKD 218,812,000, compared to a loss of HKD 24,297,000 in the previous year[5] - Net profit for the three months ended September 30, 2020, was HKD 179,322,000, compared to a loss of HKD 23,976,000 in the same period of 2019[5] - Total revenue for the nine months ended September 30, 2020, was HKD 547,030,000, up from HKD 42,721,000 in the same period of 2019[5] - Basic and diluted earnings per share for the three months ended September 30, 2020, was HKD 0.064, compared to a loss of HKD 0.023 in the prior year[10] - The company reported a total comprehensive income of HKD 179,444,000 for the three months ended September 30, 2020, compared to a loss of HKD 24,485,000 in the same period of 2019[10] - The company has shown a strong recovery in financial performance, indicating potential for future growth and market expansion[5] - The increase in revenue and profit margins suggests successful implementation of new strategies and operational efficiencies[5] Equity and Assets - As of September 30, 2020, the total equity attributable to the owners of the company was HKD 96,685 million, a decrease from HKD 96,981 million as of January 1, 2020[12] - The company reported a net loss of HKD 56,148 million for the period, compared to a loss of HKD 60,294 million in the previous period[15] - The total comprehensive loss for the period amounted to HKD 57,252 million, which includes other comprehensive losses of HKD 1,104 million[15] - The company’s total assets as of September 30, 2020, were HKD 457,018 million, reflecting a decrease from HKD 493,363 million as of January 1, 2020[12] - The company reported a cumulative loss of HKD 509,528 million as of September 30, 2020[12] - The company’s revenue for the nine months ended September 30, 2020, was HKD 289,192 million, compared to HKD 313,363 million for the same period in the previous year[12] - The company’s cash and cash equivalents as of September 30, 2020, were HKD 24,171 million[12] Market Strategy and Expansion - The company plans to expand its market presence in China and Hong Kong through new healthcare services and product offerings[18] - The company is focusing on research and development of immunotherapy and health management services in China[18] - The company established a laboratory and an additional temporary laboratory with 16 air membranes in Hong Kong to provide COVID-19 testing services, responding to the increased demand due to the pandemic[52] - The company has initiated clinical research for a new generation CD20-targeted CAR-T therapy, with the product LY007 cell injection undergoing clinical trial registration[53] - The group aims to maintain its market share in medical testing and healthcare in Hong Kong while focusing on the development and registration of immune cell products[71] - The management is confident in the biotechnology industry's prospects and is committed to obtaining clinical approval for cell therapy products as soon as possible[71] Revenue Sources - Revenue from medical laboratory testing and health check services was HKD 513,688,000 for the three months ended September 30, 2020, compared to HKD 13,162,000 in 2019, indicating a substantial growth[24] - Revenue from the sale of healthcare-related and pharmaceutical products was HKD 161,000 for the three months ended September 30, 2020, down from HKD 398,000 in 2019[24] - The company did not recognize any revenue from tumor immunotherapy services for the three months ended September 30, 2020, compared to HKD 77,000 in 2019[24] - The revenue from the medical laboratory testing and health check services segment increased significantly from approximately HKD 40,059,000 in Q3 2019 to approximately HKD 539,259,000 in Q3 2020, representing a growth of 1,246.16%[56] - The total revenue from the insurance brokerage services segment was approximately HKD 6,046,000 in Q3 2020, compared to zero in Q3 2019[57] Expenses and Costs - Interest expenses for the three months ended September 30, 2020, amounted to HKD 2,307,000, compared to HKD 488,000 in 2019, showing a significant increase in financing costs[27] - Administrative expenses increased by approximately HKD 26,728,000 or 41.47%, totaling about HKD 91,184,000 in Q3 2020 compared to approximately HKD 64,456,000 in Q3 2019[62] - The total employee cost for the third quarter of 2020 was approximately HKD 50,529,000, compared to HKD 34,895,000 in the same period of 2019, reflecting an increase of about 45.0%[75] - The company borrowed additional short-term loans, leading to an increase in interest expenses to approximately HKD 4,180,000 in Q3 2020 from HKD 772,000 in Q3 2019[63] Shareholder Information - As of September 30, 2020, the total number of shares issued by the company was 966,851,150, with a par value of HKD 0.10 per share[88] - Genius Earn holds 529,500,546 shares, representing approximately 54.77% of the total shares[94] - Yao Xin Venture Limited holds 128,300,000 shares, representing approximately 13.27% of the total shares[94] - The total number of shares held by major shareholders amounts to 29,680,000, which is approximately 3.06%[91] - The company has a stock option plan established to reward eligible participants for their contributions to the group's success[99] - The total stock options granted during Q3 2020 amounted to 20,020,000 shares, with a total value of HKD 29,680,000[100] - The total number of stock options exercised during the quarter was 2,955,000 shares[112] - The company repurchased a total of 2,955,000 shares of its ordinary stock during the third quarter of 2020, reflecting confidence in its long-term business prospects[113] Governance and Compliance - The board confirmed that all directors complied with the trading standards and the code of conduct during the third quarter of 2020[115] - The company maintained compliance with the corporate governance code as per GEM listing rules during the third quarter[116] - There were no conflicts of interest reported among directors or controlling shareholders during the third quarter[117] - The audit committee, consisting of three independent non-executive directors, reviewed the financial reporting procedures and internal controls during the third quarter[118] - The company ensured sufficient public float as required by GEM listing rules as of the report date[120] - The board expressed gratitude to all shareholders for their support during the third quarter[121]

Financial Performance - Total revenue for the six months ended June 30, 2020, was HKD 31,305,000, an increase of 9.1% compared to HKD 28,570,000 for the same period in 2019[8]. - Gross profit for the six months ended June 30, 2020, was HKD 9,438,000, a decrease of 9.1% from HKD 10,382,000 in the same period of 2019[8]. - Operating loss for the six months ended June 30, 2020, was HKD 44,092,000, compared to a loss of HKD 35,800,000 for the same period in 2019, representing a 23.5% increase in losses[8]. - The company reported a net loss of HKD 45,779,000 for the six months ended June 30, 2020, compared to a loss of HKD 36,318,000 in the same period of 2019, indicating a 26.5% increase in net losses[10]. - Basic and diluted loss per share for the six months ended June 30, 2020, was HKD 0.042, compared to HKD 0.036 for the same period in 2019, indicating a worsening loss per share[10]. - The group reported a total loss of HKD 45,779,000 for the period, compared to a loss of HKD 36,318,000 in the same period of the previous year[42]. - The gross profit for the six months ended June 30, 2020, was approximately HKD 9,438,000, a decrease of about HKD 944,000 from HKD 10,382,000 in the same period of 2019, with a gross margin of approximately 30.15%, down 6.19 percentage points from 36.34%[105]. Revenue Breakdown - Revenue from medical laboratory testing and health check services was HKD 25,571,000 for the six months ended June 30, 2020, compared to HKD 26,897,000 in 2019, a decrease of 4.9%[36]. - Revenue from the sale of healthcare-related and pharmaceutical products decreased to HKD 585,000 in the first half of 2020 from HKD 794,000 in 2019, a decline of 26.3%[36]. - The insurance brokerage service generated revenue of HKD 4,492,000 for the six months ended June 30, 2020, while there was no revenue reported in the same period of 2019[36]. - The revenue from the medical laboratory testing and health check services segment decreased by approximately 4.93% to HKD 25,571,000 in the 2020 interim period from HKD 26,897,000 in 2019[102]. - The manufacturing and sales of health-related and pharmaceutical products segment saw a slight decrease in revenue from approximately HKD 794,000 in 2019 to about HKD 585,000 in 2020[100]. Assets and Liabilities - Cash and cash equivalents increased to HKD 59,549,000 as of June 30, 2020, up from HKD 45,518,000 as of December 31, 2019, reflecting a 30.8% increase[13]. - The company's total assets as of June 30, 2020, were HKD 435,989,000, compared to HKD 416,584,000 as of December 31, 2019, showing a growth of 4.6%[13]. - The total liabilities as of December 31, 2019, were HKD 103,221,000, with the highest liabilities in the pharmaceutical products segment at HKD 819,000[47]. - The total liabilities decreased to HKD 126,433,000 from HKD 49,462,000, showing a significant reduction of approximately 61.1%[19]. - The group’s total liabilities increased to approximately HKD 161,803,000 as of June 30, 2020, from HKD 103,221,000 on December 31, 2019[126]. - The group’s debt-to-asset ratio was approximately 37.11% as of June 30, 2020, compared to 24.78% on December 31, 2019, indicating increased leverage[126]. Cash Flow - Net cash used in operating activities was HKD (37,129,000), worsening from HKD (17,078,000) year-over-year[27]. - Net cash used in investing activities was HKD (908,000), significantly improved from HKD (72,258,000) in the previous year[27]. - Net cash generated from financing activities was HKD 52,216,000, a substantial increase from HKD 8,744,000 in the prior period[27]. - Cash and cash equivalents at the end of the period totaled HKD 59,549,000, down from HKD 72,940,000 year-over-year[27]. Employee Costs - The company experienced a significant increase in employee costs, totaling HKD 24,792,000 for the six months ended June 30, 2020, compared to HKD 22,549,000 in 2019[53]. - Total employee costs for the mid-year period were approximately HKD 25,561,000, an increase from HKD 23,579,000 in the same period of 2019[144]. - The group employed a total of 142 full-time employees as of June 30, 2020, compared to 134 employees as of June 30, 2019[144]. Shareholder Information - The company did not recommend any dividend for the six months ended June 30, 2020, remaining unchanged from the same period in 2019[58]. - The company has not declared any dividends, maintaining a dividend yield of 0%[88]. - Genius Earn holds a controlling interest with 529,500,546 shares, representing 54.60% of the total issued shares as of June 30, 2020[155]. - The total number of issued shares of the company is 969,806,150, with a par value of HKD 0.10 per share[157]. Corporate Governance - The company has established an audit committee to oversee financial reporting and internal controls[180]. - The company has maintained compliance with GEM listing rules regarding public float requirements[181]. - The company has adhered to corporate governance measures to ensure transparency and accountability[176]. - The board consists of six executive directors and three independent non-executive directors[182]. Strategic Initiatives - The company aims to achieve clinical approval for its cell therapy products and expedite the market launch of CAR-T products, which are expected to create significant value[119]. - The CAR-T technology market is projected to grow at a compound annual growth rate (CAGR) of 46.1% from 2019 to 2028, benefiting companies in the sector[116]. - The group has established distribution agreements for COVID-19 testing kits to mitigate the impact of the pandemic on its performance[102]. - The group plans to explore collaboration opportunities with Broncus to strategically position itself in the precision diagnosis and treatment industry[136].

Financial Performance - Total revenue for the first quarter of 2020 was HKD 12,704,000, a decrease of 10.4% from HKD 14,181,000 in the same period of 2019[5] - Gross profit for the first quarter of 2020 was HKD 2,997,000, down 34.5% from HKD 4,579,000 in the first quarter of 2019[5] - Operating loss for the first quarter of 2020 was HKD 24,570,000, compared to an operating loss of HKD 14,596,000 in the same period of 2019, representing a 68.3% increase in losses[5] - Loss before tax for the first quarter of 2020 was HKD 25,026,000, up from HKD 14,969,000 in the first quarter of 2019, indicating a 67.1% increase in losses[5] - The company reported a total comprehensive loss of HKD 24,980,000 for the first quarter of 2020, compared to HKD 15,350,000 in the same period of 2019, reflecting a 62.5% increase in comprehensive losses[7] - Basic and diluted loss per share for the first quarter of 2020 was HKD 0.023, compared to HKD 0.016 in the first quarter of 2019, representing a 43.8% increase in loss per share[7] Revenue Breakdown - Revenue for the three months ended March 31, 2020, was HKD 12,704,000, a decrease of 10.5% from HKD 14,181,000 in the same period of 2019[18] - Revenue from the manufacturing and sales of healthcare-related and pharmaceutical products was HKD 407,000, down 14.6% from HKD 477,000 in 2019[18] - Revenue from medical laboratory testing and health check services was HKD 8,885,000, a decline of 33.5% compared to HKD 13,257,000 in 2019[18] Expenses and Costs - Administrative expenses increased significantly to HKD 24,793,000 in the first quarter of 2020, compared to HKD 15,915,000 in the same period of 2019, marking a 55.8% rise[5] - Total financing costs for the period were HKD 456,000, significantly higher than HKD 74,000 in the same period of 2019[22] - Interest income for the three months ended March 31, 2020, was HKD 8,000, down 52.9% from HKD 17,000 in 2019[20] - Interest expenses for Q1 2020 were approximately HKD 456,000, an increase from HKD 74,000 in Q1 2019, attributed to higher levels of short-term borrowings for operational funding[47] - Sales and distribution expenses for Q1 2020 were approximately HKD 2,917,000, a decrease of about HKD 27,000 or 0.92% compared to Q1 2019[45] Foreign Exchange and Other Income - The foreign exchange loss from overseas operations was HKD 272,000 in the first quarter of 2020, compared to a gain of HKD 58,000 in the same period of 2019[7] - The group reported a net loss of HKD 9,000 from foreign exchange, compared to a loss of HKD 31,000 in 2019[20] - The company recorded other income of HKD 143,000 in the first quarter of 2020, compared to a loss of HKD 316,000 in the same period of 2019[5] Strategic Focus and Future Plans - The company aims to enhance its biotechnology platform and expand its market presence in the future[1] - The company continues to focus on expanding its healthcare services and product offerings in China and Hong Kong[13] - The company is focusing on the development and registration of immune cell products, aiming to achieve significant R&D milestones amid a challenging economic outlook[51] - CAR-T technology is projected to experience a compound annual growth rate of 46.1% from 2019 to 2028, indicating strong market potential for the company's tumor treatment products[51] - The company has entered into distribution agreements for COVID-19 testing kits to capture market demand shifted towards COVID-19 testing[40] Corporate Governance and Compliance - The group has maintained its compliance with the GEM listing rules and applicable disclosure requirements[14] - The board has established an audit committee to oversee financial reporting and internal controls, consisting of three independent non-executive directors[83] - The board emphasizes the importance of corporate governance and compliance with legal and regulatory requirements[79] - The company confirmed that all directors complied with the trading standards during the first quarter of 2020[78] - The company has adopted a set of trading standards for directors in accordance with GEM listing rules[78] Shareholding and Stock Options - As of March 31, 2020, Mr. Liu Xiaolin holds approximately 67.83% of the company's shares, indicating strong insider ownership[53] - Genius Earn holds 529,500,546 shares, representing 54.60% of the total shares[62] - Genius Lead, fully owned by Genius Earn, also holds 529,500,546 shares, equating to 54.60%[64] - Yao Xin Venture Limited holds 128,300,000 shares, which is 13.23% of the total shares[62] - The total number of stock options granted amounts to 20,020,000, representing 2.06% of the total issued shares[60] - The company has a stock option plan approved by shareholders on May 29, 2014, to reward eligible participants for their contributions[66] Miscellaneous - The company did not recommend any dividend for the three months ended March 31, 2020, consistent with no dividend declared for the same period in 2019[30] - The group did not adopt any new accounting standards that would have a significant financial impact on the unaudited consolidated results[15] - No significant acquisitions or disposals of subsidiaries or associates occurred during Q1 2020[53] - The company did not purchase, sell, or redeem any listed securities during the first quarter of 2020[77] - There were no arrangements made for directors to acquire shares or debentures of the company during the first quarter of 2020, except for stock options granted in 2018 and 2019[75] - The company has not disclosed any new product developments or market expansion strategies in the provided documents[63] - There are no reported mergers or acquisitions in the recent financial disclosures[63]

[Company Information](index=4&type=section&id=Company%20Information) [Company Basic Information](index=4&type=section&id=Company%20Basic%20Information) This section provides fundamental information about China Biotech Services Holdings Limited, including board composition, committee responsibilities, registered and principal office addresses, main bankers, and stock code, outlining the company's governance structure and operational foundation - Executive Directors include Liu Xiaolin (Co-Chairman), Yao Yi (Co-Chairman, appointed on May 20, 2019), He Xun, Huang Song (re-designated on December 16, 2019), Liang Bo Hao, and Wang Zheng[7](index=7&type=chunk) - Independent Non-Executive Directors include Yan Guoxiang (Chairman of the Audit Committee), Dr He Junjie, and Qian Hongji[7](index=7&type=chunk) - The company's stock code is **8037**[7](index=7&type=chunk) [Chairman's Statement](index=5&type=section&id=Chairman's%20Statement) [2019 Annual Review and Strategic Layout](index=5&type=section&id=2019%20Annual%20Review%20and%20Strategic%20Layout) The Chairman's Statement reviews the impact of global economic slowdown and social unrest in Hong Kong on the Group's business in 2019, highlighting efforts to consolidate market share in medical testing and healthcare while accelerating cell therapy industry deployment, particularly the R&D progress of Shanghai Longyao's CAR-T product, and expresses confidence in the biotechnology industry's prospects - Global economic growth slowed in 2019, international trade frictions intensified, and social unrest in Hong Kong affected investor and consumer confidence, leading to a volatile business environment in China and Hong Kong, impacting the healthcare industry to varying degrees[9](index=9&type=chunk) - The Group is committed to steady progress, consolidating its market share in medical testing and healthcare businesses in Hong Kong, and focusing on the development and registration of immune cell products, striving for breakthroughs in product R&D milestones[9](index=9&type=chunk) - Mr Yao Yi, former Clinical Medical Reviewer of the Gene and Cell Therapy Division at the US Food and Drug Administration (FDA), was appointed Co-Chairman and Executive Director on May 20, 2019, leading clinical research and drug registration for the immune cell division[10](index=10&type=chunk) - Mr Huang Song, Deputy Director of the National Institute of Biological Sciences, Beijing, was re-designated as Executive Director and Chief Technology Officer, strengthening the Group's potential for technical cooperation and development in cell therapy products[10](index=10&type=chunk) - Subsidiary Shanghai Longyao Biotechnology Co Ltd's novel CD20-targeted CAR-T showed significant efficacy in human clinical trials, has largely completed investigator-initiated clinical trials, and has submitted Pre-IND application materials to the Center for Drug Evaluation of China[11](index=11&type=chunk) - The Group subscribed for shares in Pillar Biosciences, Inc, a US cancer gene precision testing company, and established a joint venture, Asia Molecular Diagnostics Laboratory Limited, in Hong Kong to introduce advanced international cancer testing technology, which is expected to change the previous practice of sending cancer samples to the US from Hong Kong[14](index=14&type=chunk) - Completed the acquisition of 51% of the issued shares of Richstone International (Hong Kong) Limited, expanding insurance brokerage services to provide insurance and wealth management plans for high-net-worth clients in Greater China, creating synergy with the health check-up business[15](index=15&type=chunk) - The Group's management is confident in the biotechnology industry's prospects, will strive to obtain clinical approvals for cell therapy products and launch CAR-T products as soon as possible, and will continue to seek better technology and product cooperation and acquisitions globally[16](index=16&type=chunk) [Management Discussion and Analysis](index=8&type=section&id=Management%20Discussion%20and%20Analysis) [Financial Review](index=8&type=section&id=Financial%20Review) This section reviews the Group's financial performance for the 2019 fiscal year, with total revenue decreasing by **15.77%** to **HK$59.214 million**, primarily due to the disposal of Shuangsheng Pharmaceutical and market competition in Hong Kong, resulting in a **HK$107.5 million** loss mainly from reduced gross profit, increased administrative expenses, and impairment of goodwill/intangible assets 2019 Annual Revenue and Year-on-Year Change | Business Type | 2019 Revenue (HK$ thousand) | 2018 Revenue (HK$ thousand) | Year-on-Year Change (HK$ thousand) | Year-on-Year Change (%) | | :--------------------------- | :-------------------------- | :-------------------------- | :--------------------------------- | :---------------------- | | Total Revenue | 59,214 | 70,304 | (11,090) | (15.77%) | | Oncology Immuno-Cell Therapy Services | 125 | 0 | 125 | N/A | | Healthcare-related and Pharmaceutical Product Manufacturing and Sales | 1,448 | 9,732 | (8,284) | (85.12%) | | Medical Biochemical Testing and Health Check-up Services | 53,551 | 58,698 | (5,147) | (8.77%) | | Insurance Brokerage Services | 2,402 | 0 | 2,402 | N/A | | Money Lending Business (Interest Income) | 1,688 | 1,604 | 84 | 5.24% | | Securities Trading (Net Loss) | (1,252) | (397) | (855) | 215.37% | 2019 Annual Key Financial Indicators | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | Year-on-Year Change (HK$ thousand) | Year-on-Year Change (%) | | :----------------------- | :------------------ | :------------------ | :--------------------------------- | :---------------------- | | Gross Profit | 22,373 | 28,084 | (5,711) | (20.34%) | | Gross Profit Margin | 37.78% | 39.95% | (2.17) percentage points | (5.43%) | | Selling and Distribution Expenses | 12,379 | 16,966 | (4,587) | (27.04%) | | Administrative Expenses | 94,111 | 78,988 | 15,123 | 19.15% | | Finance Costs | 1,692 | 3,472 | (1,780) | (51.27%) | | Impairment Loss on Goodwill | 264 | 0 | 264 | N/A | | Impairment Loss on Intangible Assets | 28,838 | 0 | 28,838 | N/A | | Loss for the Year | 107,483 | 69,433 | 38,050 | 54.80% | - The net loss for the year was partially offset by a gain on remeasurement of a previously held equity interest in an associate of approximately **HK$8,096,000** and a gain on fair value change of contingent consideration of approximately **HK$8,038,000**[40](index=40&type=chunk) [Business Review](index=11&type=section&id=Business%20Review) This section reviews the Group's significant business activities in 2019, including the completion of acquisitions of Shanghai Longyao (immune cell therapy) and Richstone (insurance brokerage), and investment in Pillar Biosciences (cancer precision diagnostics), while also noting the lapse of certain acquisition and disposal matters, and the granting of share options and share repurchases during the year - The Group completed the acquisition of approximately **67%** equity interest in Shanghai Longyao Biotechnology Co Ltd on March 29, 2019, making it a non-wholly owned subsidiary, with a total consideration of approximately **RMB225 million**[44](index=44&type=chunk) - Shanghai Longyao has completed clinical research on cell therapy in collaboration with three Grade A tertiary hospitals in China and initiated investigator-initiated clinical research on a new generation of CD20-targeted CAR-T with Jiangsu Provincial People's Hospital and Xuzhou Medical University Affiliated Hospital[49](index=49&type=chunk) - The Group completed the acquisition of **51%** of the issued shares of Richstone International (Hong Kong) Limited on October 31, 2019, for a consideration of **HK$12.24 million**, aiming to extend products and services to the insurance industry and generate synergies with the health check-up business[50](index=50&type=chunk)[51](index=51&type=chunk) - The Group completed the disposal of Dragon Rise Enterprise Limited and its subsidiaries on August 16, 2019, to save administrative costs[55](index=55&type=chunk) - The Group subscribed for a total of **1,638,216** Series B preferred shares in Pillar Biosciences, Inc in 2019, for a total consideration of approximately **HK$39.208 million**, representing approximately **5.60%** of Pillar's issued share capital, aiming to introduce cancer precision diagnostic technology[56](index=56&type=chunk) - The possible acquisition of **70%** of the issued shares of China Precision Medical Technology Holdings Limited terminated on December 31, 2019, due to non-fulfillment of certain preconditions[57](index=57&type=chunk) - The possible disposal of the entire issued share capital of Gainful Holdings Limited lapsed on September 30, 2019[61](index=61&type=chunk) - The Group granted a total of **25,420,000** share options to eligible participants on August 20, 2019[62](index=62&type=chunk) - The Group repurchased and cancelled **380,000** company shares in 2019, for a total consideration of approximately **HK$508,800**[63](index=63&type=chunk)[378](index=378&type=chunk) [Future Outlook](index=14&type=section&id=Future%20Outlook) Facing challenges from an uncertain geopolitical and macroeconomic environment, the Group will continue to adjust its strategy, consolidate its medical testing and healthcare businesses, and prioritize the development and launch of immune cell products, especially CAR-T technology, aiming to become a competitive company in the international cell therapy industry - The economic outlook for the coming year is expected to remain sluggish, affected by factors such as the US-China trade conflict, Brexit, social unrest in Hong Kong, and the outbreak of the novel coronavirus[64](index=64&type=chunk) - The Group will continue to overcome adverse impacts, adjust its strategy, consolidate its market share in medical testing and healthcare businesses in Hong Kong, and focus on the development and registration of immune cell products[64](index=64&type=chunk) - CAR-T technology is considered the most promising cancer treatment, with the market size projected to grow exponentially between 2019 and 2028, at a compound annual growth rate of up to **46.1%**[64](index=64&type=chunk) - The Group's management is confident in the biotechnology industry's prospects, will strive to obtain clinical approvals for cell therapy products as soon as possible, launch CAR-T products for cancer treatment early, and continue to seek better technology and product cooperation and acquisitions internationally[64](index=64&type=chunk) [Liquidity, Financial Resources, and Capital Structure](index=15&type=section&id=Liquidity,%20Financial%20Resources,%20and%20Capital%20Structure) This section outlines the Group's liquidity position, sources of financial resources, and capital structure, noting a significant decrease in cash and bank balances in 2019 primarily due to acquisitions and investments, with notable changes in both the gearing ratio and current ratio reflecting the Group's capital deployment during business expansion 2019 December 31 Liquidity and Capital Structure Indicators | Indicator | 2019 December 31 (HK$ thousand) | 2018 December 31 (HK$ thousand) | Year-on-Year Change (HK$ thousand) | Year-on-Year Change (%) | | :------------------------ | :------------------------------ | :------------------------------ | :--------------------------------- | :---------------------- | | Cash and Bank Balances | 45,518 | 154,479 | (108,961) | (70.54%) | | Loans from Controlling Shareholder | 20,000 | 0 | 20,000 | N/A | | Other Borrowings | 3,911 | 0 | 3,911 | N/A | | Total Assets | 416,584 | 337,761 | 78,823 | 23.34% | | Total Liabilities | 103,221 | 18,846 | 84,375 | 447.72% | | Gearing Ratio | 24.78% | 5.58% | 19.20 percentage points | 344.09% | | Current Ratio | 1.61 times | 13.76 times | (12.15) times | (88.30%) | | Total Issued Share Capital | 96,980,615 shares | 93,534,675 shares | 3,445,940 shares | 3.68% | - The decrease in cash and bank balances was mainly used for the acquisition of Shanghai Longyao (approximately **HK$90.28 million**) and subscription for Pillar shares (approximately **HK$39.208 million**)[69](index=69&type=chunk) - Richstone, as an insurance brokerage company, complied with the capital and net asset requirements under the Insurance Ordinance as of December 31, 2019, maintaining a minimum net asset value of **HK$100,000** and minimum paid-up share capital[70](index=70&type=chunk) [Placing of New Shares Under General Mandate and Use of Proceeds](index=16&type=section&id=Placing%20of%20New%20Shares%20Under%20General%20Mandate%20and%20Use%20of%20Proceeds) This section discloses the company's fundraising through placing new shares in 2018 and the allocation of proceeds, primarily for the acquisition of Shanghai Longyao, subscription for Pillar shares, and general working capital for the Group - On August 22, 2018, the company raised approximately **HK$132 million** net proceeds by placing **79,500,000** new shares at **HK$1.68** per share[75](index=75&type=chunk) - Use of proceeds: approximately **HK$78.68 million** for the acquisition of Shanghai Longyao; approximately **HK$19.638 million** for the subscription of Pillar shares; and approximately **HK$33.682 million** for the Group's general working capital[75](index=75&type=chunk) [Significant Investments Held and Performance](index=16&type=section&id=Significant%20Investments%20Held%20and%20Performance) This section outlines the Group's significant investments and their performance in 2019, primarily focusing on investments in Pillar Biosciences and Broncus Holding Corporation, strategically aimed at precision diagnostics and entering the precision treatment industry - In 2019, the Group invested **US$4,999,999.06** (approximately **HK$39.208 million**) in financial assets measured at fair value through other comprehensive income by subscribing for new shares in Pillar Biosciences, Inc[76](index=76&type=chunk) - As of December 31, 2019, the Group held approximately **5.21%** interest in Pillar, recording an unaudited consolidated loss of approximately **HK$13.9 million**, with the Group recording a fair value loss of approximately **HK$328,000** on its investment[77](index=77&type=chunk) - As of December 31, 2019, the Group held approximately **2.05%** interest in Broncus Holding Corporation, recording an unaudited consolidated loss of approximately **HK$17.3 million**[81](index=81&type=chunk) - The Group believes that the investment in Pillar will create synergies with medical laboratory testing services and health check-up services, while the investment in Broncus will contribute to strategic allocation in precision diagnostics and entry into the precision treatment industry[77](index=77&type=chunk)[81](index=81&type=chunk) [Employees and Remuneration Policy](index=18&type=section&id=Employees%20and%20Remuneration%20Policy) This section outlines the Group's employee headcount, total staff costs, and remuneration policy, which is determined based on employee performance, experience, and market rates, offering various benefits while complying with relevant retirement benefit plan regulations - As of December 31, 2019, the Group employed a total of **143** full-time employees (2018: 125), located in China and Hong Kong[89](index=89&type=chunk) - Total staff costs for the year 2019 were approximately **HK$48.739 million** (2018: HK$52.323 million)[89](index=89&type=chunk) - The Group determines remuneration based on employee performance, experience, and prevailing market rates, offering discretionary bonuses, Mandatory Provident Fund, insurance and medical benefits, training, and share option schemes[89](index=89&type=chunk) - The Group has established an MPF scheme for eligible employees in Hong Kong and participates in state-managed defined contribution retirement benefit plans for employees in China[90](index=90&type=chunk) [Biographical Details of Directors](index=19&type=section&id=Biographical%20Details%20of%20Directors) [Executive Directors' Biographies](index=19&type=section&id=Executive%20Directors'%20Biographies) This section details the personal backgrounds, educational qualifications, professional experience, and key positions held by the company's Executive Directors both within and outside the company, highlighting their extensive experience and expertise in investment, biotechnology, medical review, and corporate management - Mr Liu Xiaolin (Co-Chairman and Executive Director): Possesses over **15 years** of experience in investment, equity fund management, and mergers and acquisitions, currently serving as Vice Chairman of the Board of Nanjing Medical University[95](index=95&type=chunk) - Mr Yao Yi (Co-Chairman and Executive Director): Former Senior Medical Reviewer at the US Food and Drug Administration (FDA) Gene and Cell Therapy Division, recipient of the FDA Lifetime Achievement Award, with outstanding achievements in gene and cell therapy[96](index=96&type=chunk) - Mr Huang Song (Executive Director and Chief Technology Officer): Administrative Deputy Director of the National Institute of Biological Sciences, Beijing, and Director of its Synthetic Biology Center, holding a Bachelor of Biological Sciences and a PhD in Biochemistry[98](index=98&type=chunk) - Mr Liang Bo Hao (Executive Director and Compliance Officer): Experienced in securities trading, fund management, corporate management, and corporate finance, with approximately **15 years** of experience in pharmaceutical manufacturing and sales investment, management, and operations[102](index=102&type=chunk) - Mr Wang Zheng (Executive Director): Possesses over **10 years** of accounting and management experience, previously served as Audit Manager at KPMG Singapore, and holds a Master of Science degree in Risk Management and Financial Engineering[103](index=103&type=chunk) [Independent Non-Executive Directors' Biographies](index=20&type=section&id=Independent%20Non-Executive%20Directors'%20Biographies) This section introduces the professional backgrounds and qualifications of the company's Independent Non-Executive Directors, who possess extensive experience in accounting, medicine, and law, providing independent professional advice to the Board - Mr Yan Guoxiang: Possesses over **20 years** of accounting and management experience, is a Chinese Intermediate Financial Economist, Certified Asset Appraiser, and Certified Public Accountant, currently serving as General Manager of Shenzhen Junhang Information Technology Co Ltd[104](index=104&type=chunk) - Dr He Junjie: MD from Harvard Medical School, currently a partner in Cardiac Electrophysiology at Los Angeles Cardiology Associate, and holds important positions in multiple medical centers[108](index=108&type=chunk) - Mr Qian Hongji: Senior lawyer with extensive practice experience in M&A and other corporate matters, currently a Senior Partner at Dacheng Law Offices[109](index=109&type=chunk) [Corporate Governance Report](index=22&type=section&id=Corporate%20Governance%20Report) [Corporate Governance Practices and Board Operations](index=22&type=section&id=Corporate%20Governance%20Practices%20and%20Board%20Operations) This section outlines the company's corporate governance practices in 2019, confirming compliance with GEM Listing Rules (except for individual directors' absence from general meetings), detailing Board composition, responsibilities, meeting attendance, and mechanisms for director appointment, re-election, and removal, emphasizing the Board's commitment to maintaining high corporate governance standards - The company complied with the code provisions set out in Appendix 15 of the GEM Listing Rules Corporate Governance Code for the year 2019, except for Mr Huang Song, Dr He Junjie, and Mr Qian Hongji who were unable to attend the annual general meeting[113](index=113&type=chunk) - The company has adopted a code of conduct for directors' securities transactions no less exacting than the required standard set out in Rules 5.48 to 5.67 of the GEM Listing Rules, and all directors confirmed compliance during 2019[114](index=114&type=chunk) - As of December 31, 2019, the Board comprised six Executive Directors and three Independent Non-Executive Directors, whose composition reflects the directors' skills and experience in various professional fields[116](index=116&type=chunk) - The Board is responsible for formulating the Group's overall strategic development, overseeing the Group's management, administration, and operations, and regularly reviewing management to ensure their competence[118](index=118&type=chunk) 2019 Board Meeting Attendance | Director Name | Board Meetings | Audit Committee Meetings | Remuneration Committee Meetings | Nomination Committee Meetings | General Meetings | | :------------ | :------------- | :----------------------- | :------------------------------ | :---------------------------- | :--------------- | | Mr Liu Xiaolin | 20/20 | N/A | 3/3 | 2/2 | 1/1 | | Mr Yao Yi | 13/14 | N/A | N/A | N/A | N/A | | Mr He Xun | 20/20 | N/A | N/A | N/A | 1/1 | | Mr Huang Song | 18/20 | N/A | N/A | N/A | 0/1 | | Mr Liang Bo Hao | 20/20 | N/A | N/A | N/A | 1/1 | | Mr Wang Zheng | 20/20 | N/A | N/A | N/A | 1/1 | | Mr Yan Guoxiang | 20/20 | 5/5 | 3/3 | 2/2 | 1/1 | | Dr He Junjie | 18/20 | 4/5 | 3/3 | 2/2 | 0/1 | | Mr Qian Hongji | 18/20 | 5/5 | N/A | N/A | 0/1 | - All Independent Non-Executive Directors are appointed for a one-year term and are subject to re-election, and the company has received annual independence confirmations from each Independent Non-Executive Director[129](index=129&type=chunk)[130](index=130&type=chunk) [Board Committees](index=25&type=section&id=Board%20Committees) This section details the composition, primary responsibilities, and 2019 work overview of the company's Audit, Remuneration, and Nomination Committees, which play crucial roles in corporate governance by ensuring financial reporting integrity, fair remuneration policies, and diverse board composition - The Audit Committee comprises three Independent Non-Executive Directors: Mr Yan Guoxiang (Chairman), Dr He Junjie, and Mr Qian Hongji, responsible for reviewing the relationship with external auditors, monitoring financial statement integrity, and reviewing risk management and internal control systems[134](index=134&type=chunk)[135](index=135&type=chunk) - In 2019, the Audit Committee held five meetings, reviewing monthly unaudited consolidated financial statements, annual results, annual reports, interim reports, and quarterly reports, and reporting on compliance procedures, internal controls, and risk management[136](index=136&type=chunk) - The Remuneration Committee comprises two Independent Non-Executive Directors, Mr Yan Guoxiang (Chairman) and Dr He Junjie, and one Executive Director, Mr Liu Xiaolin, responsible for advising the Board on the company's remuneration policy and structure, and evaluating individual director performance[140](index=140&type=chunk)[141](index=141&type=chunk) - In 2019, the Remuneration Committee held three meetings, reviewing and recommending the remuneration policy and structure for directors, evaluating individual director performance, and reviewing directors' letters of appointment[142](index=142&type=chunk)[143](index=143&type=chunk) - The Nomination Committee comprises two Independent Non-Executive Directors, Mr Yan Guoxiang and Dr He Junjie, and one Executive Director, Mr Liu Xiaolin (Chairman), responsible for identifying individuals with suitable qualifications to serve as directors and assessing the independence of Independent Non-Executive Directors[147](index=147&type=chunk)[151](index=151&type=chunk) - In 2019, the Nomination Committee held two meetings, reviewing the Board's structure, size, composition, and diversity, assessing the independence of each Independent Non-Executive Director, and reviewing directors' letters of appointment[151](index=151&type=chunk) [Chairman and Chief Executive Officer and Company Secretary](index=29&type=section&id=Chairman%20and%20Chief%20Executive%20Officer%20and%20Company%20Secretary) This section clarifies the distinction between the roles of the company's Chairman and Chief Executive Officer, and introduces the responsibilities and professional development of the Company Secretary, emphasizing the company's efforts to ensure effective Board operations and information disclosure - The Chairman position is jointly held by Mr Liu Xiaolin and Mr Yao Yi, whose responsibilities include ensuring the effective operation of the Board and fulfillment of its duties, and timely discussion of important matters[153](index=153&type=chunk) - As of December 31, 2019, and the date of this report, the company had not appointed a Chief Executive Officer, with daily management duties handled jointly by the Executive Directors[153](index=153&type=chunk) - Ms Wang Miaochun, the Company Secretary, attended over **15 hours** of relevant professional training during 2019 to update her skills and knowledge, supporting Board operations and ensuring compliance[157](index=157&type=chunk) [Directors' Continuous Professional Development](index=30&type=section&id=Directors'%20Continuous%20Professional%20Development) This section emphasizes the company's commitment to directors' continuous professional development, ensuring they possess the necessary knowledge and skills to fulfill their duties through training and updated information, and encouraging their participation in ongoing professional development activities - The company provides necessary induction training and information to all newly appointed directors to ensure they have an adequate understanding of the company's operations, business, and relevant regulations[158](index=158&type=chunk) - During 2019, all directors participated in continuous professional development through attending training and reading materials on the latest developments in GEM Listing Rules and other applicable regulatory requirements[158](index=158&type=chunk) 2019 Director Training Activity Participation | Director Name | Seminars | Reading Materials | | :------------ | :------- | :---------------- | | Mr Liu Xiaolin | v | v | | Mr Yao Yi | v | v | | Mr He Xun | v | v | | Mr Huang Song | v | v | | Mr Liang Bo Hao | x | v | | Mr Wang Zheng | v | v | | Mr Yan Guoxiang | v | v | | Dr He Junjie | x | v | | Mr Qian Hongji | x | v | [Accountability and Audit](index=31&type=section&id=Accountability%20and%20Audit) This section outlines the company's accountability mechanisms and audit procedures for financial reporting, risk management, and internal controls, with the Board confirming its responsibility for preparing true and fair financial statements and regularly reviewing the effectiveness of risk management and internal control systems, while also disclosing auditor's remuneration - The Board confirms its responsibility for preparing financial statements for each financial year that give a true and fair view of the Group's affairs, and for preparing them on a going concern basis[164](index=164&type=chunk) - Management is responsible for maintaining appropriate and effective risk management and internal control systems, with the Board and Audit Committee continuously reviewing and monitoring their effectiveness annually[165](index=165&type=chunk) - The company has established an internal control system compliant with the COSO framework, aiming to achieve operational effectiveness and efficiency, financial reporting reliability, and compliance with applicable laws and regulations[170](index=170&type=chunk) - The company engages an independent professional firm to perform internal audit functions, reviewing risk management and internal control systems through annual interviews, walk-throughs, and testing of operational effectiveness[177](index=177&type=chunk) - Auditor's remuneration for 2019: **HK$980,000** for audit services, and approximately **HK$1.1 million** for non-audit services (including acting as reporting accountant for major transactions)[179](index=179&type=chunk) [Investor Relations and Communication with Shareholders](index=33&type=section&id=Investor%20Relations%20and%20Communication%20with%20Shareholders) This section emphasizes the company's commitment to maintaining high transparency by publicly and timely disclosing company information to shareholders and investors through various channels, and encouraging shareholder participation in general meetings to facilitate direct communication between the Board and shareholders - The company updates shareholders on its latest business developments and financial performance through corporate communications such as annual reports, interim reports, quarterly reports, notices, announcements, and circulars[180](index=180&type=chunk) - The company website provides a communication platform for the public and shareholders, and shareholders are encouraged to attend annual general meetings and other general meetings to provide opportunities for direct communication[180](index=180&type=chunk)[181](index=181&type=chunk) - Shareholders holding not less than one-tenth of the paid-up capital may request the Board to convene an extraordinary general meeting in accordance with Article 58 of the company's articles of association[184](index=184&type=chunk) - Shareholders may mail inquiries and opinions to the Company Secretary, who is responsible for forwarding them to the Board or relevant departments for handling[185](index=185&type=chunk) [Dividend Policy](index=34&type=section&id=Dividend%20Policy) This section outlines the company's dividend policy adopted in 2019, aiming to balance shareholders' profit sharing with the company's liquidity and future growth opportunities, and lists key factors the Board will consider when deciding on dividend distribution - The Board approved and adopted a dividend policy on March 25, 2019, aiming to allow shareholders to share in the company's profits while retaining liquidity to seize future growth opportunities[187](index=187&type=chunk) - Factors the Board will consider before proposing and declaring dividends include: the Group's operating and financial performance, capital requirements and future funding needs, liquidity position, reserve status, restrictions on dividend payments, general economic conditions, and other internal and external factors[187](index=187&type=chunk) [Environmental, Social and Governance Report](index=35&type=section&id=Environmental,%20Social%20and%20Governance%20Report) [Reporting Scope and Stakeholder Engagement](index=35&type=section&id=Reporting%20Scope%20and%20Stakeholder%20Engagement) This section describes the scope of the company's 2019 Environmental, Social and Governance (ESG) report, covering key business segments and operating locations, emphasizing the company's commitment to environmental protection and social responsibility, and identifying and assessing the materiality of ESG issues through extensive communication with internal and external stakeholders - The ESG report covers the Group's main business segments: oncology immuno-cell therapy, immune cell storage and health management services; healthcare-related and pharmaceutical product manufacturing, R&D, sales and distribution; medical laboratory testing services and health check-up services; insurance brokerage services; and securities trading[190](index=190&type=chunk) - The reporting scope covers the Group's business operations, including the Hong Kong head office, and the Group's subsidiaries operating in Hong Kong and Shanghai (i.e., Shanghai Longyao Biotechnology Co Ltd)[192](index=192&type=chunk) - The reporting period covers January 1, 2019, to December 31, 2019[193](index=193&type=chunk) - The Group communicates with stakeholders through various channels including training, performance reviews, internal announcements, suggestion boxes, press releases, annual general meetings, annual/interim/quarterly reports, company website, after-sales service, customer feedback, site visits, supplier feedback, government supervision, community activities, and charitable donations[198](index=198&type=chunk) [Environmental Performance](index=38&type=section&id=Environmental%20Performance) This section details the company's environmental performance in 2019, including resource consumption (energy, water, paper), gas emissions, greenhouse gas emissions, and waste management, demonstrating the company's commitment to implementing environmental policies, promoting a "green office" culture, and strictly complying with relevant environmental regulations to minimize operational environmental impact - The Group has formulated several environmental policies to ensure compliance with all applicable laws and regulations in China and Hong Kong, and is committed to monitoring environmental compliance, fostering an environmental culture among employees, improving resource utilization efficiency, and adopting "green office measures"[206](index=206&type=chunk) - The Group implements energy-saving measures, including purchasing energy-efficient equipment, setting air conditioning to **25.5 degrees Celsius**, and turning off idle electronic devices; it also promotes paper-saving measures such as using electronic document platforms and double-sided printing[207](index=207&type=chunk)[210](index=210&type=chunk) 2019 Resource Consumption | Resource | 2019 Consumption | 2018 Consumption | 2019 Consumption Intensity / HK$1,000 Revenue | 2018 Consumption Intensity / HK$1,000 Revenue | | :------- | :--------------- | :--------------- | :-------------------------------------------- | :-------------------------------------------- | | Electricity (kWh) | 681,363 | 656,491 | 11.51 | 9.34 | | Water (cubic meters) | 1,272 | 3,652 | 0.021 | 0.052 | - In 2019, the Group's gas emissions included **5.1 kg** of nitrogen oxides, **0.16 kg** of sulfur oxides, and **0.38 kg** of particulate matter, primarily from private vehicle operations[212](index=212&type=chunk) - The Group's total greenhouse gas emissions in 2019 were estimated at **2,837 tonnes of CO2 equivalent**, with Scope 2 (indirect energy emissions) accounting for **86%**[217](index=217&type=chunk)[218](index=218&type=chunk) - The Group recorded no incidents of non-compliance with any environmental laws and regulations in 2019[217](index=217&type=chunk) - The Group has established strict medical waste management policies to ensure compliance with the Waste Disposal Ordinance, engaging licensed contractors for collection and disposal, generating **1.4 tonnes** of hazardous waste in 2019 (2018: 6.6 tonnes), and maintaining a zero-violation record[220](index=220&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk) - The Group promotes a paperless work environment, with total paper consumption of approximately **4 tonnes** in 2019; laboratory operations consumed and disposed of **9,000** masks, **128,800** gloves, and **70** bags of cotton balls[225](index=225&type=chunk) [Social Performance](index=43&type=section&id=Social%20Performance) This section details the company's social performance in 2019, including employment policies, health and safety measures, training and development programs, equal opportunity and anti-discrimination policies, and employee demographic data, demonstrating the company's commitment to providing competitive remuneration, a safe working environment, and fostering employee growth and career development - The Group has established a Remuneration Committee to attract, retain, and motivate talented employees, regularly reviewing employee remuneration and implementing objective performance appraisals[235](index=235&type=chunk) - The Group strictly complies with the Occupational Safety and Health Ordinance, and has formulated safety manuals and laboratory conduct guidelines to ensure a safe working environment, recording no work-related injuries or lost workdays in 2019[239](index=239&type=chunk)[240](index=240&type=chunk) - Shanghai Longyao has established procedures for handling biological waste, including classification, disinfection, limiting container fill volume, and setting up temporary storage points to reduce the risk of exposure to hazardous substances[243](index=243&type=chunk) - The Group has formulated specialized training policies for employees to ensure they acquire necessary knowledge and skills, promoting personal growth and career development[248](index=248&type=chunk) - In 2019, **10** employees in China received a total of **116 hours** of training (topics included clinical trials, cell therapy, production processes, and quality management), while Hong Kong office staff received a total of **7.5 hours** of training[248](index=248&type=chunk) - The Group implements an equal employment opportunity policy, prohibiting discrimination based on gender, marital status, disability, age, race, etc, and strictly complies with relevant laws such as the Sex Discrimination Ordinance[252](index=252&type=chunk) - The Group has zero tolerance for forced labor and child labor, with employment policies requiring applicants to be at least **18 years old** and undergoing background checks[254](index=254&type=chunk) 2019 Employee Demographic Data | Indicator | Quantity | Percentage | | :-------------------------- | :------- | :--------- | | **Total Employees** | 143 | - | | Hong Kong Full-time | 121 | - | | Hong Kong Part-time | 32 | - | | China Full-time | 22 | - | | China Part-time | 1 | - | | **Overall Turnover Rate** | - | 29% | | **Age Distribution** | | | | Under 30 years old | 36 | 20% | | 31-40 years old | 52 | 30% | | 41-50 years old | 39 | 22% | | Over 50 years old | 49 | 28% | | **Gender Distribution** | | | | Male | 53 | 30% | | Female | 123 | 70% | | **Education Level Distribution (Full-time Employees)** | | | | Bachelor's Degree and above | 66 | 46% | | Other | 77 | 54% | [Governance Performance](index=48&type=section&id=Governance%20Performance) This section outlines the company's governance performance in 2019, including supplier management, quality assurance, data protection, anti-corruption policy, and community investment, demonstrating the company's commitment to establishing a strict supplier evaluation system, ensuring product and service quality, protecting customer data, firmly opposing corruption, and actively participating in community welfare activities - The Group has strict policies for supplier procurement in Hong Kong, purchasing chemicals and equipment only from ISO-certified, reputable, cost-effective, and responsive suppliers providing reliable and safe services, with annual review and re-evaluation of the supplier list[264](index=264&type=chunk) - Shanghai Longyao uses an evaluation matrix to assess supplier suitability, covering supplier surveys, product quality agreements, quality standards, quality analysis, and various certifications (including GMP certificates)[264](index=264&type=chunk) - The Group conducts comprehensive internal audits in Hong Kong regularly to assess the quality management system, reporting results to senior management for continuous improvement[268](index=268&type=chunk) - Shanghai Longyao has developed a "Quality Risk Management Procedure," employing systematic risk assessment tools (such as FMECA, FTA, HAZOP) to identify, estimate, and mitigate product quality risks[269](index=269&type=chunk) - The Group strictly complies with Hong Kong's Personal Data (Privacy) Ordinance, with laboratory operations adopting a confidentiality policy to ensure personal data of tested individuals is handled discreetly and properly stored, not to be released to third parties without authorization[270](index=270&type=chunk)[271](index=271&type=chunk) - The Group strictly complies with all anti-corruption legal requirements, prohibits all forms of illegal activities, establishes whistleblowing channels, and regularly organizes internal anti-corruption training, with no known non-compliance with relevant laws and regulations in 2019[275](index=275&type=chunk)[276](index=276&type=chunk) - In 2019, the Group donated **RMB300,000** (approximately **HK$329,000**) to the Nanjing Medical University Education Development Fund to support educational development[277](index=277&type=chunk) [Directors' Report](index=51&type=section&id=Directors'%20Report) [Company Profile and Principal Risks](index=51&type=section&id=Company%20Profile%20and%20Principal%20Risks) This section introduces the company's registration information, principal businesses, and key risks and uncertainties faced in 2019, including market competition, financial risks, technology reliance, macroeconomic environment, employee turnover, and regulatory compliance risks, with the company having established policies to identify, monitor, and manage these risks - The company was incorporated in the Cayman Islands and continued in Bermuda, with its principal business being investment holding[282](index=282&type=chunk)[295](index=295&type=chunk) - The Group faces principal risks including: intense industry competition, financial risks such as credit/interest rate/liquidity, reliance on information technology systems and networks, macroeconomic environment (e.g., US-China trade conflict, social unrest in Hong Kong, COVID-19 outbreak), key employee turnover risk, and regulatory and operational compliance risks from multiple regulations (e.g., China National Medical Products Administration, Hong Kong Competition Ordinance, Insurance Ordinance, and GEM Listing Rules)[284](index=284&type=chunk)[286](index=286&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk)[292](index=292&type=chunk)[293](index=293&type=chunk) - The company has established policies to continuously identify, report, monitor, and manage significant risks that may adversely affect the Group[284](index=284&type=chunk) [Financial Performance and Share Capital Movements](index=53&type=section&id=Financial%20Performance%20and%20Share%20Capital%20Movements) This section reports the company's financial performance for 2019, confirming a recorded loss and no proposed dividend, detailing share capital movements including changes due to subsidiary acquisitions, share subscriptions, and share repurchases, as well as specifics of share-linked agreements - The Group recorded a loss for the year 2019, and the Board does not recommend paying a dividend for the year[296](index=296&type=chunk) - In 2019, the Group made charitable donations of approximately **HK$329,000** (2018: HK$1 million)[296](index=296&type=chunk) 2019 Key Customer and Supplier Ratios | Indicator | Percentage | | :----------------------- | :--------- | | Largest Customer as % of Revenue | 21.38% | | Top Five Customers as % of Revenue | 39.46% | | Largest Supplier as % of Purchases | 27.38% | | Top Five Suppliers as % of Purchases | 62.81% | - Share capital movements in 2019 included: issuance of **27,509,400** consideration shares for the acquisition of Shanghai Longyao; subscription of **5,800,000** new shares; issuance of **1,530,000** consideration shares for the acquisition of Richstone; and repurchase and cancellation of **380,000** shares[300](index=300&type=chunk)[301](index=301&type=chunk)[305](index=305&type=chunk)[31](index=31&type=chunk) - Pursuant to the share-linked agreement with Shanghai Longyao, if Shanghai Longyao achieves its performance targets, the company will issue a total of **29,100,000** new shares at **HK$2.00** per share as contingent consideration[301](index=301&type=chunk) - The company adopted a share option scheme on May 29, 2014, and granted share options to subscribe for **25,420,000** shares on August 20, 2019[305](index=305&type=chunk) [Environmental, Social and Governance Commitments](index=56&type=section&id=Environmental,%20Social%20and%20Governance%20Commitments) This section reiterates the company's commitments to environmental, social, and governance aspects, emphasizing the importance of sound environmental management, the necessity of complying with laws and regulations, and efforts to build and maintain good relationships with key stakeholders - The Group recognizes the importance of sound environmental management, implements green policies, enhances energy efficiency, and reduces energy consumption[313](index=313&type=chunk) - The Group has implemented systems and allocated human resources to ensure continuous compliance with relevant laws and regulations in Hong Kong and China that significantly impact the Group[314](index=314&type=chunk) - The Group is committed to operating sustainably, balancing the interests of various stakeholders including employees, customers, suppliers, and the community[317](index=317&type=chunk) - The Group values its employees, invests resources in staff training and development, provides a work environment free from all forms of discrimination, and ensures competitive remuneration packages[318](index=318&type=chunk) - The Group is committed to providing safe and high-quality products and services to customers, and has a customer complaint handling mechanism to improve service and product quality[319](index=319&type=chunk) - The Group carefully selects suppliers, requiring them to meet conditions such as track record, financial strength, reputation, and timely delivery capability, and evaluates supplier performance annually[320](index=320&type=chunk) - The company will continue to contribute to society, participate in public service activities, and work together to build a harmonious society[321](index=321&type=chunk) [Directors' and Major Shareholders' Interests](index=58&type=section&id=Directors'%20and%20Major%20Shareholders'%20Interests) This section details the long and short positions of the company's directors, chief executive, and major shareholders in the company's shares and related shares, along with specifics of the share option scheme, including reasons for granting options to consultants, and reports on the company's repurchases and cancellations of listed securities during the year - All directors have entered into one-year service contracts with the company and are subject to retirement by rotation and re-election at annual general meetings[328](index=328&type=chunk) - During 2019, no director or their associates held any interest in any business that competes or is likely to compete directly or indirectly with the Group's business[333](index=333&type=chunk) 2019 December 31 Directors' and Chief Executive's Long Positions in Company Shares | Director Name | Capacity and Nature of Interest | Number of Shares Held | Approximate Percentage | | :------------ | :------------------------------ | :-------------------- | :--------------------- | | Mr Liu Xiaolin | Interest in controlled corporation | 529,500,546 | 54.60% | | Mr Liu Xiaolin | Person acting in concert | 128,300,000 | 13.23% | | Mr He Xun | Beneficial owner | 10,000,000 | 1.03% | | **Total** | | **667,800,546** | **68.86%** | 2019 December 31 Directors' and Chief Executive's Short Positions in Company Shares | Director Name | Capacity and Nature of Interest | Number of Shares Held | Approximate Percentage | | :------------ | :------------------------------ | :-------------------- | :--------------------- | | Mr Liu Xiaolin | Person acting in concert | 20,000,000 | 2.06% | 2019 December 31 Major Shareholders' Long Positions in Shares and Related Shares | Shareholder Name | Capacity and Nature of Interest | Number of Shares Held | Approximate Percentage | | :--------------- | :------------------------------ | :-------------------- | :--------------------- | | Genius Earn | Interest in controlled corporation | 529,500,546 | 54.60% | | Genius Lead | Beneficial owner | 529,500,546 | 54.60% | | Yao Xin Venture Capital Co Ltd | Beneficial owner | 128,300,000 | 13.23% | | Yao Xin Venture Capital Co Ltd | Person acting in concert | 529,500,546 | 54.60% | | Qiu Yongyao | Beneficial owner | 7,720,000 | 0.80% | | Qiu Yongyao | Interest in controlled corporation | 657,800,546 | 67.83% | 2019 December 31 Major Shareholders' Short Positions in Shares and Related Shares | Shareholder Name | Capacity and Nature of Interest | Number of Shares Held | Approximate Percentage | | :--------------- | :------------------------------ | :-------------------- | :--------------------- | | Yao Xin Venture Capital Co Ltd | Beneficial owner | 20,000,000 | 2.06% | | Qiu Yongyao | Interest in controlled corporation | 20,000,000 | 2.06% | - During 2019, the company repurchased and cancelled **380,000** company shares on the Stock Exchange for a total consideration of approximately **HK$508,800**, which the directors believe reflects the company's confidence in its long-term business prospects[377](index=377&type=chunk)[378](index=378&type=chunk) - The company granted share options to consultants to reward and acknowledge their contributions to the company's business and future development, aligning with the share option scheme's purpose without adversely affecting cash flow[375](index=375&type=chunk) [Other Disclosures](index=68&type=section&id=Other%20Disclosures) This section covers other significant disclosures for the company in 2019, including major acquisitions and disposals, related party transactions, corporate governance practices, retirement benefit schemes, independence confirmations, public float, and changes in independent auditors - Apart from the acquisitions and disposals of subsidiaries disclosed in the Management Discussion and Analysis, the Group did not undertake any other significant acquisitions or disposals of subsidiaries and associates during 2019[382](index=382&type=chunk) - During 2019, the company did not enter into any connected transactions requiring disclosure under the GEM Listing Rules, but disclosed related party transactions (e.g., payment of loan interest expenses to the ultimate controlling party)[383](index=383&type=chunk)[446](index=446&type=chunk) - The company has received annual independence confirmations from each Independent Non-Executive Director, and the Board considers all Independent Non-Executive Directors to be independent[386](index=386&type=chunk) - As of December 31, 2019, the company maintained the public float (31.4%) as specified under the GEM Listing Rules[387](index=387&type=chunk)[763](index=763&type=chunk) - RSM Hong Kong was the Group's independent auditor for 2019, will retire by rotation, and is eligible and willing to be re-appointed[392](index=392&type=chunk) [Independent Auditor's Report](index=70&type=section&id=Independent%20Auditor's%20Report) [Auditor's Opinion and Key Audit Matters](index=70&type=section&id=Auditor's%20Opinion%20and%20Key%20Audit%20Matters) Independent auditor RSM Hong Kong issued an unmodified opinion on the company's 2019 consolidated financial statements, deeming them to present a true and fair view of the financial position, performance, and cash flows, in compliance with Hong Kong Financial Reporting Standards and the Hong Kong Companies Ordinance, highlighting key audit matters including the accounting treatment for the acquisitions of Shanghai Longyao and Richstone, and impairment assessments of goodwill and intangible assets for medical biochemical testing, oncology immuno-cell therapy, and insurance brokerage segments, which involve significant judgment and valuation - The auditor issued an unmodified opinion on the consolidated financial statements of China Biotech Services Holdings Limited and its subsidiaries for the year ended December 31, 2019[396](index=396&type=chunk) - Key audit matters include: accounting treatment for the acquisition of approximately **67%** equity interest in Shanghai Longyao Biotechnology Co Ltd, and accounting treatment for the acquisition of **51%** equity interest in Richstone International (Hong Kong) Limited[401](index=401&type=chunk) - Key audit matters also include impairment assessments of goodwill, intangible assets, right-of-use assets, and property, plant and equipment for the medical laboratory testing and health check-up services segment, the oncology immuno-cell therapy/immune cell storage and health management services segment, and the insurance brokerage services segment[405](index=405&type=chunk)[412](index=412&type=chunk)[415](index=415&type=chunk) - These key audit matters were identified as most significant to the audit of the consolidated financial statements because determining whether business combinations fall within the scope of HKFRS 3 and measuring the fair value of assets requires significant judgment[402](index=402&type=chunk) [Directors' and Auditor's Responsibilities](index=76&type=section&id=Directors'%20and%20Auditor's%20Responsibilities) This section clarifies the respective responsibilities of directors and the auditor regarding the consolidated financial statements, with directors responsible for preparing true and fair statements and maintaining internal controls, while the auditor's objective is to obtain reasonable assurance that the statements as a whole are free from material misstatement, exercising professional judgment and skepticism in performing audit procedures - Directors are responsible for preparing consolidated financial statements that give a true and fair view in accordance with Hong Kong Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance, and for internal controls necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error[420](index=420&type=chunk) - The auditor's objective is to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes an opinion[422](index=422&type=chunk) - The auditor exercises professional judgment, maintains professional skepticism, identifies and assesses risks of material misstatement, and obtains sufficient and appropriate audit evidence during the audit process[425](index=425&type=chunk) [Consolidated Statement of Profit or Loss and Other Comprehensive Income](index=77&type=section&id=Consolidated%20Statement%20of%20Profit%20or%20Loss%20and%20Other%20Comprehensive%20Income) [2019 Annual Profit or Loss and Comprehensive Income Overview](index=77&type=section&id=2019%20Annual%20Profit%20or%20Loss%20and%20Comprehensive%20Income%20Overview) In fiscal year 2019, the company's revenue was **HK$59.214 million**, a **15.77%** year-on-year decrease, with gross profit at **HK$22.373 million**, down **20.26%** year-on-year, and due to increased administrative expenses and impairment losses on goodwill and intangible assets, the loss for the year expanded to **HK$107.5 million**, with loss attributable to owners of the company at **HK$98.845 million**, and basic and diluted loss per share at **10.3 HK cents** 2019 Annual Profit or Loss and Comprehensive Income Key Data | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | Year-on-Year Change (HK$ thousand) | Year-on-Year Change (%) | | :-------------------------------------------------- | :------------------ | :------------------ | :--------------------------------- | :---------------------- | | Revenue | 59,214 | 70,304 | (11,090) | (15.77%) | | Cost of Sales | (36,841) | (42,220) | 5,379 | (12.74%) | | Gross Profit | 22,373 | 28,084 | (5,711) | (20.34%) | | Net Loss on Financial Assets at Fair Value Through Profit or Loss | (1,252) | (397) | (855) | 215.37% | | Other Income, Gains/(Losses) | (959) | 2,430 | (3,389) | (139.46%) | | Impairment Loss Provision for Financial Assets, Net | (2,996) | (3,724) | 728 | (19.55%) | | Selling and Distribution Expenses | (12,379) | (16,966) | 4,587 | (27.04%) | | Administrative Expenses | (94,111) | (78,988) | (15,123) | 19.15% | | Operating Loss | (89,324) | (69,561) | (19,763) | 28.41% | | Finance Costs | (1,692) | (3,472) | 1,780 | (51.27%) | | Share of Loss of Associates | (1,390) | (460) | (930) | 202.17% | | Gain on Remeasurement of Previously Held Equity Interest in an Associate | 8,096 | 0 | 8,096 | N/A | | Gain on Fair Value Change of Contingent Consideration | 8,038 | 0 | 8,038 | N/A | | (Loss)/Gain on Disposal of Subsidiaries | (316) | 4,249 | (4,565) | (107.44%) | | Impairment Loss on Goodwill | (264) | 0 | (264) | N/A | | Impairment Loss on Intangible Assets | (28,838) | 0 | (28,838) | N/A | | Impairment Loss on Investment in an Associate | (3,903) | 0 | (3,903) | N/A | | Loss Before Tax | (109,593) | (69,244) | (40,349) | 58.27% | | Income Tax Credit/(Expense) | 2,110 | (189) | 2,299 | (1216.40%) | | Loss for the Year | (107,483) | (69,433) | (38,050) | 54.80% | | **Loss Attributable to:** | | | | | | Owners of the Company | (98,845) | (64,250) | (34,595) | 53.85% | | Non-controlling Interests | (8,638) | (5,183) | (3,455) | 66.66% | | **Other Comprehensive Loss for the Year, Net of Tax** | (6,173) | (308) | (5,865) | 1904.22% | | **Total Comprehensive Loss for the Year** | (113,656) | (69,741) | (43,915) | 62.97% | | **Loss Per Share (Basic and Diluted) (HK cents)** | 10.3 | 7.3 | 3.0 | 41.10% | [Consolidated Statement of Financial Position](index=79&type=section&id=Consolidated%20Statement%20of%20Financial%20Position) [2019 December 31 Financial Position Overview](index=79&type=section&id=2019%20December%2031%20Financial%20Position%20Overview) As of December 31, 2019, the company's total assets were **HK$416.6 million**, a **23.35%** increase from 2018, with non-current assets significantly rising primarily due to growth in goodwill and intangible assets, while total liabilities increased to **HK$103.2 million**, leading to a higher gearing ratio, and equity attributable to owners of the company was **HK$289.2 million**, a **10.76%** year-on-year decrease 2019 December 31 Consolidated Statement of Financial Position Key Data | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | Year-on-Year Change (HK$ thousand) | Year-on-Year Change (%) | | :------------------------------------------------ | :------------------ | :------------------ | :--------------------------------- | :---------------------- | | **Assets** | | | | | | Non-current Assets | 330,141 | 119,779 | 210,362 | 175.63% | | Property, Plant and Equipment | 23,783 | 22,954 | 829 | 3.61% | | Right-of-Use Assets | 13,135 | 0 | 13,135 | N/A | | Goodwill | 115,343 | 264 | 115,079 | 43590.53% | | Intangible Assets | 95,258 | 43,436 | 51,822 | 119.30% | | Investment in an Associate | 0 | 4,828 | (4,828) | (100.00%) | | Financial Assets at Fair Value Through Other Comprehensive Income | 82,622 | 48,297 | 34,349 | 71.12% | | Current Assets | 86,443 | 217,982 | (131,539) | (60.34%) | | Inventories | 3,426 | 3,488 | (62) | (1.78%) | | Trade and Other Receivables | 19,891 | 32,830 | (12,939) | (39.41%) | | Loans and Interest Receivables | 15,952 | 24,186 | (8,234) | (34.04%) | | Securities Held for Trading | 1,317 | 2,569 | (1,252) | (48.73%) | | Bank and Cash Balances | 45,518 | 154,479 | (108,961) | (70.54%) | | **Total Assets** | **416,584** | **337,761** | **78,823** | **23.34%** | | **Equity and Liabilities** | | | | | | Share Capital | 96,981 | 93,535 | 3,446 | 3.68% | | Other Reserves | 192,211 | 230,542 | (38,331) | (16.63%) | | Equity Attributable to Owners of the Company | 289,192 | 324,077 | (34,885) | (10.76%) | | Non-controlling Interests | 24,171 | (5,162) | 29,333 | (568.22%) | | **Total Equity** | **313,363** | **318,915** | **(5,552)** | **(1.74%)** | | **Liabilities** | | | | | | Non-current Liabilities | 49,462 | 3,009 | 46,453 | 1543.80% | | Lease Liabilities | 6,085 | 0 | 6,085 | N/A | | Contingent Consideration | 31,293 | 0 | 31,293 | N/A | | Deferred Tax Liabilities | 12,084 | 1,406 | 10,678 | 759.46% | | Current Liabilities | 53,759 | 15,837 | 37,922 | 239.46% | | Trade and Other Payables | 17,328 | 12,551 | 4,777 | 38.06% | | Borrowings | 23,911 | 0 | 23,911 | N/A | | **Total Liabilities** | **103,221** | **18,846** | **84,375** | **447.72%** | [Consolidated Statement of Changes in Equity](index=80&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity) [2019 Annual Changes in Equity Overview](index=80&type=section&id=2019%20Annual%20Changes%20in%20Equity%20Overview) In fiscal year 2019, the company's total equity decreased from **HK$318.9 million** in 2018 to **HK$313.4 million**, with equity attributable to owners of the company decreasing primarily due to the loss for the year, while share capital increased from shares allotted for subsidiary acquisitions and share subscriptions, partially offset by repurchased and cancelled shares, and share-based payment reserves and foreign currency translation reserves also changed 2019 Annual Consolidated Equity Changes Key Data | Indicator | 2019 January 1 (HK$ thousand) | 2019 December 31 (HK$ thousand) | Change (HK$ thousand) | | :-------------------------------------------------- | :---------------------------- | :------------------------------ | :-------------------- | | Share Capital | 93,535 | 96,981 | 3,446 | | Share Premium | 443,140 | 498,852 | 55,712 | | Share-based Payment Reserve | 12,258 | 22,793 | 10,535 | | Special Reserve | 212,948 | 212,948 | 0 | | Other Reserves | 0 | 0 | 0 | | Financial Assets at Fair Value Through Other Comprehensive Income Reserve | 48,297 | 82,622 | 34,325 | | Foreign Currency Translation Reserve | (308) | (1,290) | (982) | | Accumulated Losses | (468,465) | (556,329) | (87,864) | | Equity Attributable to Owners of the Company | 324,077 | 289,192 | (34,885) | | Non-controlling Interests | (5,162) | 24,171 | 29,333 | | **Total Equity** | **318,915** | **313,363** | **(5,552)** | - The total comprehensive loss for the year was **HK$113,656 thousand**, of which **HK$104,578 thousand** was attributable to owners of the company and **HK$9,078 thousand** to non-controlling interests[436](index=436&type=chunk) - The increase in share capital was mainly due to shares allotted for the acquisition of subsidiaries (**HK$45,163 thousand**) and subscription of shares (**HK$11,020 thousand**), partially offset by repurchased and cancelled shares (**HK$471 thousand**)[445](index=445&type=chunk)[770](index=770&type=chunk) [Consolidated Statement of Cash Flows](index=81&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) [2019 Annual Cash Flow Overview](index=81&type=section&id=2019%20Annual%20Cash%20Flow%20Overview) In fiscal year 2019, net cash used in operating activities was **HK$30.306 million**, net cash used in investing activities was **HK$100.2 million**, and net cash generated from financing activities was **HK$23.074 million**, resulting in a net decrease in cash and cash equivalents of **HK$107.5 million**, with an ending balance of **HK$45.518 million** 2019 Annual Consolidated Cash Flow Key Data | Indicator | 2019 (HK$ thousand) | 2018 (HK$ thousand) | Year-on-Year Change (HK$ thousand) | | :------------------------------------------ | :------------------ | :------------------ | :--------------------------------- | | Net Cash Used in Operating Activities | (30,306) | (14,759) | (15,547) | | Net Cash Used in Investing Activities | (100,237) | (36,535) | (63,702) | | Net Cash Generated from Financing Activities | 23,074 | 132,636 | (109,562) | | Net (Decrease)/Increase in Cash and Cash Equivalents | (107,469) | 81,342 | (188,811) | | Cash and Cash Equivalents at January 1 | 154,479 | 73,181 | 81,298 | | Cash and Cash Equivalents at December 31 | 45,518 | 154,479 | (108,961) | - Cash outflow from investing activities significantly increased, mainly due to the purchase of financial assets at fair value through other comprehensive income (**HK$39,208 thousand**), capital contribution to investments in associates (**HK$46,276 thousand**), and net cash outflow from acquisition of subsidiaries (**HK$8,407 thousand**)[451](index=451&type=chunk) - Net cash generated from financing activities significantly decreased, mainly because borrowings raised (**HK$23,968 thousand**) and proceeds from share subscriptions (**HK$11,600 thousand**) were insufficient to offset other financing activities[451](index=451&type=chunk) [Notes to the Consolidated Financial Statements](index=83&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) [General Information and Basis of Preparation](index=83&type=section&id=General%20Information%20and%20Basis%20of%20Preparation) This section provides the company's basic registration information, principal businesses, and clarifies the basis of preparation for the consolidated financial statements, including compliance with Hong Kong Financial Reporting Standards and the Hong Kong Companies Ordinance, as well as the initial application of new accounting standards (e.g., HKFRS 16) and their impact on the financial statements - China Biotech Services Holdings Limited was incorporated in the Cayman Islands and continued in Bermud

Financial Performance - Total revenue for Q3 2019 was HKD 14,151,000, a decrease of 19.3% from HKD 17,590,000 in Q3 2018[8] - Gross profit for Q3 2019 was HKD 5,307,000, down 13.1% from HKD 6,109,000 in Q3 2018[8] - Operating loss for Q3 2019 was HKD 23,335,000, compared to an operating loss of HKD 18,573,000 in Q3 2018, representing a 25.0% increase in losses[8] - Net loss for Q3 2019 was HKD 23,976,000, compared to a net loss of HKD 19,521,000 in Q3 2018, indicating a 22.8% increase in losses[8] - Total revenue for the nine months ended September 30, 2019, was HKD 42,721,000, down 16.6% from HKD 51,361,000 in the same period of 2018[8] - Gross profit for the nine months ended September 30, 2019, was HKD 15,689,000, a decrease of 21.2% from HKD 19,929,000 in the same period of 2018[8] - Operating loss for the nine months ended September 30, 2019, was HKD 59,135,000, compared to an operating loss of HKD 45,132,000 in the same period of 2018, reflecting a 31.1% increase in losses[8] - The company reported a total comprehensive loss of HKD 24,485,000 for Q3 2019, compared to HKD 19,233,000 in Q3 2018, marking a 27.3% increase in comprehensive losses[14] - Basic and diluted loss per share for Q3 2019 was HKD 0.023, compared to HKD 0.020 in Q3 2018[14] Administrative and Operating Expenses - The company experienced a significant increase in administrative expenses, totaling HKD 24,591,000 in Q3 2019, compared to HKD 22,250,000 in Q3 2018, representing a 10.5% increase[8] - Administrative expenses for Q3 2019 were approximately HKD 64,456,000, an increase of about HKD 9,334,000 or 16.93% compared to Q3 2018[56] - Interest expenses for Q3 2019 were approximately HKD 772,000, a decrease from HKD 2,571,000 in Q3 2018[58] - The group recorded a loss of approximately HKD 60,294,000 in Q3 2019, compared to a loss of HKD 47,866,000 in Q3 2018, primarily due to decreased revenue and increased administrative expenses[59] Revenue Breakdown - Revenue from tumor immunotherapy services was HKD 77,000 for the three months ended September 30, 2019, with no prior year comparison available[30] - Revenue from the manufacturing and sale of health-related and pharmaceutical products was HKD 398,000, down 85.7% from HKD 2,791,000 in the same period of 2018[30] - The segment for manufacturing and sales of health-related and pharmaceutical products saw a significant revenue drop from approximately HKD 7,259,000 in 2018 to HKD 1,192,000 in 2019, a decrease of HKD 6,067,000[49] Equity and Capital Structure - The company's total equity as of September 30, 2019, was HKD 251,308,000, down from HKD 254,674,000 at the beginning of the year[18] - The company has issued shares amounting to HKD 133,560,000 during the period, contributing to its capital structure[18] Strategic Focus and Future Plans - The company is focused on expanding its services in tumor immunotherapy and health management in China[21] - The company plans to enhance its research and development efforts in health-related and pharmaceutical products[21] - The company aims to improve its medical laboratory testing services in Hong Kong[21] - The company is exploring potential mergers and acquisitions to strengthen its market position[21] - The company is optimistic about the favorable policies for biotech innovation in China, which will create good development opportunities for its future biotech platform[82] Acquisitions and Collaborations - The company completed the acquisition of 67% equity interest in Shanghai Longyao Biotechnology Co., which contributed approximately HKD 138,000 in revenue from tumor immune cell therapy services for the three months ended September 30, 2019[48] - The acquisition of approximately 67% equity in Shanghai Longyao was completed on March 29, 2019, with an investment of RMB 40,000,000 (approximately HKD 46,400,000)[60] - The maximum consideration for the acquisition was approximately RMB 225,494,776 (approximately HKD 261,573,940), with various payments made in cash and through share issuance[64] - The acquisition of 51% of Fushi's issued shares was agreed upon for a consideration of HKD 12,240,000, with HKD 3,060,000 paid in cash and HKD 3,060,000 through share issuance[68] - The acquisition of Fushi is viewed as an opportunity to extend products and services into the insurance industry, enhancing competitiveness and expanding the customer base[69] - The company has entered into a collaboration with Pillar to establish a joint venture focused on cancer patient gene testing in Hong Kong, aiming to enhance cancer detection capabilities[80] Employee and Shareholder Information - The total number of full-time employees as of September 30, 2019, was 136, a decrease from 171 employees as of September 30, 2018[85] - The total employee cost for the third quarter of 2019 was approximately HKD 34,895,000, compared to HKD 33,839,000 in the same period of 2018, reflecting an increase of about 3.12%[85] - The group made contributions of approximately HKD 1,524,000 to the retirement benefit plans during the third quarter of 2019, up from HKD 1,330,000 in the same period of 2018, representing an increase of about 14.56%[86] - As of September 30, 2019, the total number of shares held by the directors and senior management amounted to 667,800,546 shares, which is approximately 68.96% of the total issued shares of 968,276,150[88] - Liu Xiaolin held 529,500,546 shares, representing 54.68% of the company's shares[88] - The company has granted options to eligible participants for a total of up to 25,420,000 shares at a par value of HKD 0.10 each[77] Corporate Governance and Compliance - The company is committed to adhering to the Hong Kong Financial Reporting Standards in its financial reporting[22] - The company has adopted new accounting standards that may impact its financial performance moving forward[23] - The audit committee, consisting of three independent non-executive directors, reviewed the financial reporting procedures and internal controls during the third quarter[127] - The company confirmed that all directors complied with the trading standards and code of conduct during the third quarter[122] - The company has implemented corporate governance measures to ensure transparency and accountability to shareholders[125] Share Repurchase and Options - The company repurchased a total of 380,000 shares during the third quarter of 2019, with a total cost of HKD 508,800[121] - The highest repurchase price per share was HKD 1.38, while the lowest was HKD 1.30[121] - The board believes that the share repurchase reflects confidence in the company's long-term business prospects and will ultimately benefit shareholders[121] - The company reported a total of 4,500,000 share options granted to employees at a price of HKD 1.68 during the third quarter of 2019[112]