Financial Performance - Full-year sales revenue reached a record high of RMB 4.516 billion, a 14.3% increase compared to the previous year[8] - Net profit for the year was RMB 969.5 million, a 34.1% growth year-on-year[8] - The company achieved a record high sales revenue of RMB 4,516,538,000 in 2023, a 14.3% increase year-on-year, with net profit rising 34.1% to RMB 969,510,000[12] - Gross profit margin improved by 0.7 percentage points to 75.1%, and net profit margin increased from 18.3% to 21.5% in 2023[12] - Earnings per share grew by 33.3% to RMB 1.28, and the dividend payout ratio reached 42.2%[12] - Revenue for 2023 reached RMB 4,516,538 thousand, a 14.3% increase from RMB 3,950,636 thousand in 2022[164] - Gross profit for 2023 was RMB 3,394,119 thousand, up 15.5% from RMB 2,938,314 thousand in 2022[164] - Net profit for 2023 was RMB 969,510 thousand, a 34.1% increase from RMB 722,773 thousand in 2022[164] - Basic earnings per share for 2023 were RMB 128 cents, up from RMB 96 cents in 2022[164] - Profit before tax rose by 35.2% from RMB 917,025 thousand in 2022 to RMB 1,240,253 thousand in 2023[172] Dividend and Shareholder Returns - The company declared a total dividend of RMB 0.54 per share for the 2023 fiscal year, with a dividend payout ratio of 42.2%[8] - The company declared an interim dividend of RMB 0.43 per share for the fiscal year ending December 31, 2024, totaling RMB 324,822,000, payable on May 17, 2024[66] - The company's distributable reserves to shareholders as of December 31, 2023, were RMB 1,534,881,000, compared to RMB 1,023,848,000 in 2022[69] - Dividends paid increased by 31.3% from RMB 241,728 thousand in 2022 to RMB 317,268 thousand in 2023[170] Product Sales and Market Performance - Respiratory system drugs and exclusive oral products showed continuous sales growth, with traditional Chinese medicine formula granules also achieving record sales[8] - Injection products sales increased by 25.5%, driven by a 75.1% growth in Qingkailing Injection sales to RMB 850,751,000[14] - Oral products accounted for 60.5% of total sales, with an 8.0% year-on-year growth despite a slowdown in the second half of 2023[15] - Soft capsule product sales decreased by 3.6% year-on-year, with Wufu Xinnaoqing Soft Capsule sales dropping 24.5% to RMB 135,154,000[16] - Granule product sales increased by 10.1%, driven by exclusive oral products such as Huamoyan Granules, Qihuangtongmi Granules, and Shujintongluo Granules[16] - Sales of drugs listed in the National Essential Drugs Directory increased by 32.8% to RMB 1,743,820,000, accounting for 38.6% of the company's total sales[17] - Prescription drug sales rose by 14.6%, while OTC drug sales increased by 12.6% in 2023[18] - Respiratory system prescription drugs sales surged by 62.4% to RMB 1,102,257,000, accounting for 24.4% of total sales, with Qingkailing Injection sales up 75.1% to RMB 850,751,000[19][20] - Traditional Chinese medicine formula granules sales grew by 8.9% to RMB 1,201,664,000, representing 26.6% of total sales[21] - Cardiovascular Chinese medicine injection prescription drugs experienced a slight decline of 2.0% to RMB 822,845,000, with some products like Huangqi Injection and Xiangdan Injection showing significant growth[22] - Exclusive oral prescription products sales increased by 7.0% to RMB 445,150,000 in 2023, with specific products like Huamoyan Granules, Qihuang Tongmi Soft Capsules, Jiangzhi Tongluo Soft Capsules, and Shujin Tongluo Granules growing by 5.2%, 7.7%, 16.1%, and 40.8% respectively[24] - OTC drug sales grew by 12.6% to RMB 583,217,000 in 2023, with Huoxiang Zhengqi Soft Capsules increasing by 23.3% to RMB 187,249,000, while children's respiratory infection treatment granules saw a 1.0% decline[25] Research and Development - The company's 3.1-class new traditional Chinese medicine "Yiguanjian Granules" was approved for market launch[8] - Two innovative drugs, "Sailuotong Capsule" and "JC Capsule," are nearing completion of Phase III clinical trials[8] - The company's self-developed 1.1-class innovative drug "Yigongsan Granules" was approved for clinical trials, targeting chronic disease anemia treatment[8] - Three innovative drugs, including "Sailuotong Capsule," "Q-B-Q-F Concentrated Pill," and "JC Capsule," are in Phase III clinical trials, targeting vascular dementia, pediatric mycoplasma pneumonia, and upper respiratory infections respectively[28][29] - The company received approval from the National Medical Products Administration to conduct clinical trials for "Yigong San Granules," a new traditional Chinese medicine for chronic disease anemia[30] - The company launched "Yiguan Jian Granules," a 3.1 class traditional Chinese medicine, in December 2023, marking the first approval for this ancient classic formula[31] - Research and development costs decreased to RMB 110,462 thousand in 2023 from RMB 117,454 thousand in 2022[164] Financial Position and Assets - Total assets increased to RMB 9.574 billion in 2023, up from RMB 8.232 billion in 2022[5] - Total liabilities rose to RMB 2.539 billion in 2023, compared to RMB 1.849 billion in the previous year[5] - Shareholders' equity grew to RMB 7.035 billion in 2023, a significant increase from RMB 6.383 billion in 2022[5] - Total assets as of December 31, 2023, were RMB 7,140,275 thousand, compared to RMB 6,566,268 thousand in 2022[165] - Cash and bank balances increased to RMB 5,888,776 thousand in 2023 from RMB 5,026,265 thousand in 2022[165] - Inventory rose to RMB 897,709 thousand in 2023 from RMB 657,659 thousand in 2022[165] - Trade receivables increased to RMB 758,205 thousand in 2023 from RMB 673,380 thousand in 2022[165] - Bank borrowings stood at RMB 300,000 thousand in 2023, compared to none in 2022[165] - Non-current liabilities decreased from RMB 183,742 thousand in 2022 to RMB 105,507 thousand in 2023, primarily due to reductions in lease liabilities and deferred income[166] - Net assets increased by 10.2% from RMB 6,382,526 thousand in 2022 to RMB 7,034,768 thousand in 2023[166] Cash Flow and Investments - Free cash flow for 2023 was RMB 788,310,000, equivalent to RMB 0.95 per share[12] - The company's bank balance and cash totaled RMB 5,888,776,000, with bank debt of RMB 300,000,000 as of December 31, 2023[12] - Operating cash flow before working capital changes increased by 32.9% from RMB 976,388 thousand in 2022 to RMB 1,297,464 thousand in 2023[172] - Net cash from operating activities decreased by 16% from RMB 1,109,676 thousand in 2022 to RMB 932,635 thousand in 2023[172] - Cash and cash equivalents grew by 17.2% from RMB 5,026,265 thousand in 2022 to RMB 5,888,776 thousand in 2023[173] - The company raised new borrowings of RMB 300,000 thousand in 2023, compared to none in 2022[173] - Investment in financial products increased by 66.7% from RMB 300,000 thousand in 2022 to RMB 500,000 thousand in 2023[173] Corporate Governance and Board Structure - The Board of Directors consists of three executive directors, three independent non-executive directors, and one non-executive director as of December 31, 2023[110] - The Board has established mechanisms to ensure independence, with three out of seven directors being independent non-executive directors[111] - The Board of Directors held six meetings and one annual general meeting during the year, with all executive directors attending all meetings[113] - The company's internal audit department regularly reviews the effectiveness of the internal control system and reports key findings to the Board and Audit Committee[114] - The Chairman and CEO roles are combined, with Li Zhenjiang serving as both, which the Board believes is beneficial for executing the company's business strategy[116] - All directors participated in continuous professional development, including training courses and reading updated regulatory materials[117][118] - The company updated its whistleblowing policy in November 2022 to provide guidance and channels for reporting suspected misconduct[120] - The company adopted an Anti-Fraud and Anti-Corruption Policy on November 30, 2022, outlining guidelines and minimum standards of conduct to prevent fraud and corruption[121] - The Remuneration Committee held three meetings in 2023 to evaluate executive directors' performance and discuss contract renewals[123] - The Remuneration Committee's attendance rate for 2023 was 100% for all members except for Ms. Wang Guihua, who attended 1 out of 1 meeting as the newly appointed chair[124] - The company's remuneration policy for directors emphasizes performance-based compensation, including fixed salary, allowances, performance bonuses, and stock options[127] - The Nomination Committee reviewed the board's structure, size, and composition to ensure a balance of expertise, skills, and experience suitable for the company's business needs[130] - The company achieved its board diversity policy targets, including having at least three independent non-executive directors and one with professional qualifications in accounting or financial management[130] - The board currently consists of 5 male and 2 female directors, reflecting diversity in gender, educational background, professional expertise, and industry experience[130] - The company's diversity policy aims to enhance board performance by considering factors such as gender, age, cultural and educational background, race, professional experience, skills, knowledge, and tenure[132] - The company has 2 female directors and aims to maintain at least this level, with plans to gradually increase female representation when suitable candidates are found[134] - As of December 31, 2023, the company has 3,436 employees (including senior management), with a gender ratio of 48.05% male and 51.95% female, achieving a near 1:1 gender balance[134] - One-third of the board members (including executive and independent non-executive directors) must retire annually, with retiring directors eligible for re-election[135] - The audit committee held 4 meetings in 2023, with all members achieving 100% attendance except for one member who attended 3 out of 3 meetings[137] - The Corporate Social Responsibility and Sustainability Committee held 2 meetings in 2023 to formulate and review the group's sustainability policies[138] - The Corporate Social Responsibility and Sustainability Committee members achieved 100% attendance in 2023, except for one member who had no meetings to attend[139] - The board reviewed and adopted several corporate governance policies in 2023, including anti-fraud, anti-corruption, shareholder communication, and revised whistleblowing policies[136][140] - The company's risk management and internal control system is effective and sufficient, with no significant deficiencies identified[142] - The total remuneration for senior management is distributed across 5 individuals, with 1 earning between 0 – 1,000,000 and 4 earning between 1,000,001 – 2,000,000[143] - The external auditor, Deloitte Touche Tohmatsu, was paid HKD 2,250,000 for statutory audit services and HKD 648,000 for other services, including interim financial statement reviews and tax advisory services[144] - The company maintains regular communication with shareholders and investors through meetings, conference calls, and site visits, and publishes detailed company information in annual reports, interim reports, and announcements[146] - The company has adopted a shareholder communication policy to ensure shareholders and potential investors have convenient, equal, and timely access to company information[147] - Shareholders holding at least one-tenth of the company's paid-up share capital with voting rights can request the board to convene an extraordinary general meeting[149] - The company's goodwill related to the manufacturing and trading of pharmaceutical products was valued at RMB 165,956,000 as of December 31, 2023, with no impairment recognized during the year[158] - The company's audit committee held four formal meetings during the year, reviewing internal controls, risk management systems, and financial statements[154] - The company's financial statements for 2023 were prepared in accordance with International Financial Reporting Standards (IFRS) and Hong Kong Company Ordinance disclosure requirements[155] - The company's audit committee recommended the reappointment of Deloitte Touche Tohmatsu as the external auditor for the 2023 fiscal year[154] - The company's cash-generating units' recoverable amount was determined using the discounted cash flow method, involving significant judgments and assumptions[158] - The company's management conducted sensitivity analysis on growth rates and discount rates to assess the impact on the recoverable amount of cash-generating units[158] - The company's audit committee reviewed the independence and scope of the external auditor's work, as well as management's responses to audit recommendations[154] - The company's financial statements were audited in accordance with Hong Kong Standards on Auditing, ensuring compliance with professional ethical responsibilities[156] - The company's board of directors is responsible for assessing the group's ability to continue as a going concern and ensuring the financial statements are free from material misstatement[160] - The company's audit committee evaluated the appropriateness of the valuation method used for goodwill impairment testing, including the discount rate applied[158] Sustainability and Social Responsibility - The company and its subsidiaries contributed 858 hours and RMB 820,000 to charitable activities in 2023[105] - The company emphasizes innovation, social responsibility, and sustainable development as part of its core values and business strategy[108] - The Corporate Social Responsibility and Sustainability Committee held 2 meetings in 2023 to formulate and review the group's sustainability policies[138] - The Corporate Social Responsibility and Sustainability Committee members achieved 100% attendance in 2023, except for one member who had no meetings to attend[139] Risk Management and Compliance - The company faces risks related to product liability claims due to the lack of mandatory product liability insurance in China, which could harm its reputation and operations[63] - The company is closely monitoring China's ongoing healthcare reform, as regulatory changes could negatively impact its business and reputation[64] - The company participates in government-led bidding processes, and failure to win bids in certain provinces could adversely affect market share, revenue, and profitability[65] - The company's risk management and internal control system is effective and sufficient, with no significant deficiencies identified[142] - The company updated its whistleblowing policy in November 2022 to provide guidance and channels for reporting suspected misconduct[120] - The company adopted an Anti-Fraud and Anti-Corruption Policy on November 30, 2022, outlining guidelines and minimum standards of conduct to prevent fraud and corruption[121] Connected Transactions and Contracts - Shenwei Pharmaceutical signed a technical service contract with Shenwei Pharmaceutical Technology for RMB 14,000,000 from November 5, 2019, to November 4, 2024[88] - Shenwei Pharmaceutical Group leased 49,276 square meters of land from Shenwei Pharmaceutical Technology for an annual rent of RMB 1,600,000 from January 1, 2021, to December 31, 2023, with the contract renewed until December 31, 2026[89][90] - Hebei Shenwei leased 20,986 square meters of land from Shenwei (Sanhe) Real Estate Development for an annual rent of RMB 1,200,000 from January 1, 2021, to December 31, 2023, with the contract renewed until December 31, 2026[91] - Shenwei Pharmaceutical Group signed a hotel service contract with Shenwei Pharmaceutical Technology for an annual rent of RMB 1,368,000 from January 1, 2023, to December 31, 2023, with the contract renewed until December 31, 2026[92] - Shenwei Pharmaceutical leased equipment from Shenwei Pharmaceutical Technology for an annual rent of RMB 2,100,000 from January 1, 2021, to December 31, 2023, with the contract renewed at an annual rent of RMB 3,012,000 until December 31, 2026[93] - Shenwei Pharmaceutical leased vehicles from Shenwei Pharmaceutical Technology for an annual rent of RMB 1,284,000 from January 1, 2021, to December 31, 2023, with the contract renewed at an annual rent of RMB 1,304,000 until December 31, 2026[94] - Shenwei Pharmaceutical signed a general service contract with Shenwei Pharmaceutical Technology for property management and catering services, with a transaction amount of RMB 11,050,000 and an annual cap of RMB 12,500,000 for the year ending December 31, 2023, and the contract renewed with an annual cap of RMB 12,500,000 until December 31, 2026[95] - The general service contract between Hebei Shenwei and Shenwei (Sanhe) Real Estate Development Co., Ltd. has been renewed for three years from January 1, 2024, to December 31, 2026, with a proposed annual cap of RMB 3,500,000[96] -
神威药业(02877) - 2023 - 年度财报