复锐医疗科技(01696) - 2024 - 中期业绩

Financial Highlights The company reported a slight revenue decrease in H1 2024, with improved gross margin, increased direct sales, and a decline in adjusted net profit Financial Highlights For the six months ended June 30, 2024, revenue slightly decreased by 1.7% to USD 168.7 million, gross margin improved to 62.4%, direct sales share rose to 86.1%, and adjusted net profit declined by 19.4% to USD 16.7 million, with no interim dividend declared Key Financial Indicators for H1 2024 | Indicator | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | USD 168.7 million | USD 171.6 million | -1.7% | | Gross Margin | 62.4% | 61.4% | +1.0 percentage points | | Adjusted Net Profit | USD 16.7 million | USD 20.7 million | -19.4% | | Direct Sales Revenue Share | 86.1% | 72.1% | +14.0 percentage points | - The Board resolved not to declare any interim dividend for the six months ended June 30, 2024[1] Consolidated Financial Statements This section presents the interim condensed consolidated financial statements, including profit or loss, comprehensive income, and financial position Interim Condensed Consolidated Statement of Profit or Loss In H1 2024, revenue slightly decreased by 1.7% to USD 168.7 million, while profit before tax and profit for the period significantly declined due to increased expenses Key Profit or Loss Data (For the six months ended June 30) | Item (USD thousand) | 2024 (Unaudited) | 2023 (Unaudited) | YoY Change | | :--- | :--- | :--- | :--- | | Revenue | 168,730 | 171,621 | -1.7% | | Gross Profit | 105,311 | 105,298 | +0.01% | | Profit Before Tax | 14,723 | 20,732 | -29.0% | | Profit for the Period | 13,202 | 18,783 | -29.7% | | Profit Attributable to Owners of the Parent | 10,952 | 18,899 | -42.0% | | Basic Earnings Per Share (US cents) | 2.34 | 4.04 | -42.1% | Interim Condensed Consolidated Statement of Comprehensive Income Total comprehensive income for the period significantly decreased to USD 11.84 million, primarily due to lower profit for the period and a negative shift in other comprehensive income from exchange differences Key Comprehensive Income Data (For the six months ended June 30) | Item (USD thousand) | 2024 (Unaudited) | 2023 (Unaudited) | | :--- | :--- | :--- | | Profit for the Period | 13,202 | 18,783 | | Other Comprehensive (Loss)/Income, Net | (1,360) | 15 | | Total Comprehensive Income for the Period | 11,842 | 18,857 | Interim Condensed Consolidated Statement of Financial Position As of June 30, 2024, total assets were USD 626.8 million and net assets were USD 472.5 million, remaining stable compared to year-end 2023, despite increases in current assets and liabilities Key Financial Position Data | Item (USD thousand) | June 30, 2024 (Unaudited) | December 31, 2023 (Audited) | | :--- | :--- | :--- | | Total Non-Current Assets | 357,420 | 356,153 | | Total Current Assets | 269,388 | 257,349 | | Total Current Liabilities | 102,843 | 88,250 | | Total Non-Current Liabilities | 51,434 | 55,727 | | Net Assets | 472,531 | 469,525 | Notes to the Interim Condensed Consolidated Financial Statements This section details the basis of financial statement preparation, accounting policy changes, and provides breakdowns for revenue, tax, dividends, earnings per share, balance sheet items, and commitments Revenue Total revenue for the period was USD 168.7 million, a slight 1.7% decrease, with product sales dominating, and strong growth in Asia Pacific offsetting a decline in North America Revenue by Type of Goods or Services (USD thousand) | Type | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Product Sales | 156,669 | 157,587 | | Services Rendered | 12,061 | 14,034 | | Total | 168,730 | 171,621 | Revenue by Geographical Segment (USD thousand) | Region | H1 2024 | H1 2023 | | :--- | :--- | :--- | | North America | 67,023 | 79,502 | | Asia Pacific | 55,953 | 48,447 | | Europe | 24,029 | 21,851 | | Middle East & Africa | 15,408 | 13,893 | | Latin America | 6,317 | 7,928 | | Total | 168,730 | 171,621 | Income Tax The Group's effective tax rate for the period was approximately 10.3%, with key operating subsidiary Alma Lasers Ltd. benefiting from a 6% preferential tax rate in Israel as a 'Special Preferred Technology Enterprise' - Key operating subsidiary Alma Lasers Ltd. enjoys a 6% preferential effective tax rate in Israel as a 'Special Preferred Technology Enterprise'[14][15] - The Group's corporate income tax rates in other major regions are 21% in the US, approximately 32% (including trade tax) in Germany, and 25% in Mainland China[16][17][21] Dividends The Board resolved not to declare any interim dividend for the six months ended June 30, 2024 - The Board resolved not to declare any interim dividend for the six months ended June 30, 2024 (six months ended June 30, 2023: nil)[24] Earnings per share attributable to ordinary equity holders of the parent Basic earnings per share for the period was 2.34 US cents, a significant decrease from 4.04 US cents in the prior year, primarily due to lower profit attributable to owners of the parent Earnings per Share Calculation | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Profit Attributable to Ordinary Equity Holders of the Parent (USD thousand) | 10,952 | 18,899 | | Weighted Average Number of Ordinary Shares in Issue (shares) | 468,343,092 | 467,292,609 | | Basic Earnings Per Share (US cents) | 2.34 | 4.04 | Trade receivables & 12. Trade payables Net trade receivables increased to USD 109.9 million as of period-end, with 35.8% over three months old, while trade payables significantly rose to USD 17.11 million, primarily due within three months Trade Receivables Aging Analysis (USD thousand) | Aging | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Within 1 month | 63,684 | 51,522 | | 1 to 3 months | 6,875 | 8,896 | | Over 3 months | 39,388 | 35,947 | | Total | 109,947 | 96,365 | Trade Payables Aging Analysis (USD thousand) | Aging | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Within 1 month | 6,041 | 5,365 | | 1 to 3 months | 9,418 | 630 | | Over 3 months | 1,648 | 2,003 | | Total | 17,107 | 7,998 | Commitments The Group secured commercialization rights for Daxxify in China, involving potential future milestone payments, and had no significant capital commitments as of the reporting period end - The Group may be required to pay USD 15 million in regulatory milestone payments (upon NMPA approval in China) and up to USD 172.5 million in sales milestone payments for the Daxxify product sub-licensing agreement[33] Management Discussion and Analysis This section provides an overview of the Group's business performance, strategic initiatives, financial results, liquidity, and risk management for the reporting period Business Review In H1 2024, total revenue slightly decreased, but the company's direct sales strategy significantly improved gross margin, while strategic investments in new products and partnerships yielded positive market responses Business Review of the First Half of 2024 Total revenue for the period decreased by 1.7% to USD 168.7 million, primarily due to the North American market, yet successful direct sales transformation boosted gross margin to 62.4%, despite a 19.4% decline in adjusted net profit to USD 16.7 million H1 2024 Performance Summary | Indicator | Amount | YoY Change | | :--- | :--- | :--- | | Revenue | USD 168.7 million | -1.7% | | Gross Profit | USD 105.3 million | 0% | | Gross Margin | 62.4% | +1.0 percentage points | | Profit Before Tax | USD 14.7 million | -29.0% | | Adjusted Net Profit | USD 16.7 million | -19.4% | - Successful execution of the direct sales strategy increased the proportion of direct sales revenue from 72.1% to 86.1% compared to the prior year, which was the primary driver for the gross margin increase[36] R&D R&D expenditure was USD 8.1 million, leading to the successful launch of three new products and significant progress in intellectual property and EU MDR certification - R&D expenditure amounted to USD 8.1 million[39] - Three new products, Alma Harmony™, Soprano Titanium™ Special Edition, and Alma IQ™, were successfully launched with high market acceptance[39] - The quality control system successfully passed the audit and complied with the new EU Medical Device Regulation (MDR) requirements, marking a significant milestone[40] Sales & Marketing The company expanded its direct sales network globally through new offices and acquisitions, transitioned to a B2B2C model, and enhanced brand influence via a global campaign reaching over 300 million people - Expansion of the direct sales network through new offices (UK, UAE, Japan) and acquisitions (China) aligns perfectly with the strategy to increase direct sales[41] - The business model is shifting from product-driven (B2B) to clinic-centric (B2B2C), adding high-value products to create an end-to-end customer experience[41] - The global brand campaign with Hollywood star Kate Hudson has cumulatively reached over 300 million people worldwide, with over 350,000 social media engagements[42] Business Development The company established a strategic partnership with Prollenium® for dermal filler distribution, secured approval for PROFHILO® in Hainan, and completed the acquisition of a Chinese distributor, exceeding first-year performance targets - A strategic partnership was established with Canadian Prollenium® to expand the injectable filler product portfolio[43] - PROFHILO® (Pufiluo), a new generation hyaluronic acid complex, was approved as a licensed medical device in Hainan in April 2024[43] Operations The Group improved service processes and operational efficiency, vertically integrated manufacturing for key product lines to boost gross margin, and maintains normal production in Israel with sufficient global inventory - Manufacturing processes for leading product lines (e.g., Soprano) have been vertically integrated to further expand the company's profit margins[44] - As of the announcement date, the company's production lines in Israel are operating normally, and global inventory levels are sufficient to meet customer demand[44] Outlook for the Second Half of 2024 The company forecasts stronger revenue and net income in H2 2024 compared to H1, driven by increased new orders, with strategic priorities including market consolidation, ecosystem expansion, Daxxify launch preparation, and new product approvals - The company forecasts stronger performance in terms of revenue and net income in the second half of 2024 compared to the first half, primarily due to year-on-year growth in new orders[45] - H2 plans include preparing for Daxxify® commercialization in Mainland China, advancing regulatory approvals for energy-based aesthetic medical devices and injectable fillers, integrating Alma China into core operations, and exploring new direct sales offices in Asia Pacific[45] - The company will continue to strengthen R&D capabilities, product portfolio, and distribution channels through M&A initiatives, leveraging Fosun Pharma's resources in China to increase market penetration[46] Financial Review This section provides a detailed analysis of H1 2024 financial performance, highlighting a slight revenue decrease, improved gross margin, and a decline in profit for the period and adjusted net profit due to increased operating expenses Revenue Total revenue was USD 168.7 million, a 1.7% decrease, with core medical aesthetics revenue growing by 1.3% to USD 149.3 million, while North American revenue declined by 15.7% due to high interest rates, partially offset by strong growth in Asia Pacific (+15.5%) and Europe (+10.0%) Revenue by Major Product Line (USD thousand) | Product Line | H1 2024 | Share of Total Revenue % | H1 2023 | Share of Total Revenue % | YoY Change % | | :--- | :--- | :--- | :--- | :--- | :--- | | Medical Aesthetics | 149,328 | 88.5% | 147,380 | 85.9% | +1.3% | | Dental | 2,822 | 1.7% | 5,320 | 3.1% | -47.0% | | Injectables | 4,519 | 2.7% | 4,887 | 2.8% | -7.5% | | Services and Others | 12,061 | 7.1% | 14,034 | 8.2% | -14.1% | | Total | 168,730 | 100.0% | 171,621 | 100.0% | -1.7% | Revenue by Geographical Segment (USD thousand) | Region | H1 2024 | Share of Total Revenue % | H1 2023 | Share of Total Revenue % | YoY Change % | | :--- | :--- | :--- | :--- | :--- | :--- | | North America | 67,023 | 39.7% | 79,502 | 46.3% | -15.7% | | Asia Pacific | 55,953 | 33.3% | 48,447 | 28.2% | +15.5% | | Europe | 24,029 | 14.2% | 21,851 | 12.8% | +10.0% | | Middle East & Africa | 15,408 | 9.1% | 13,893 | 8.1% | +10.9% | | Latin America | 6,317 | 3.7% | 7,928 | 4.6% | -20.3% | | Total | 168,730 | 100.0% | 171,621 | 100.0% | -1.7% | Gross profit and gross profit margin Gross profit remained stable at USD 105.3 million, while gross profit margin increased from 61.4% to 62.4%, primarily driven by the higher proportion of direct sales, which yield better margins - Gross profit remained stable at USD 105.3 million compared to the same period in 2023[53] - Gross profit margin increased from 61.4% in the same period of 2023 to 62.4% in the reporting period, primarily attributable to the higher proportion of direct sales, which have higher profit margins than distribution[53] Selling and distribution expenses & D. Administrative expenses & E. R&D expenses Selling and distribution expenses increased by 5.6% to USD 63.2 million, administrative expenses rose by 16.2% to USD 16.3 million due to new office operations, while R&D expenses decreased by 11.9% to USD 8.1 million due to strict cost control Operating Expenses Overview (USD thousand) | Expense Item | H1 2024 | H1 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Selling and Distribution Expenses | 63,233 | 59,855 | +5.6% | | Administrative Expenses | 16,297 | 14,028 | +16.2% | | R&D Expenses | 8,069 | 9,159 | -11.9% | Profit for the period & I. Adjusted net profit and adjusted net profit margin Profit for the period decreased by 29.7% to USD 13.2 million with a net profit margin of 7.8% due to increased expenses, while adjusted net profit (excluding non-operating items) was USD 16.7 million, a 19.4% decrease, with an adjusted net profit margin of 9.9% Adjusted Net Profit Reconciliation (USD thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Profit for the Period | 13,202 | 18,783 | | Add: Amortization of Intangible Assets Related to Acquisitions | 3,877 | 2,602 | | Add: Restricted Share Unit Expenses | 405 | 825 | | Less: Deferred Tax Arising from Other Intangible Assets | (826) | (529) | | Less: One-off VAT Adjustment | – | (1,010) | | Adjusted Net Profit | 16,658 | 20,671 | | Adjusted Net Profit Margin | 9.9% | 12.0% | Indebtedness Structure, Liquidity and Capital Resources The Group maintains a robust financial position with no gearing ratio as cash and cash equivalents exceed total debt, an interest coverage ratio of 13.5x, and period-end cash and bank balances of USD 70.2 million Gearing ratio & F. Maturity profile of outstanding debt As of the reporting period end, the Group had no gearing ratio as cash and cash equivalents exceeded total debt, with total interest-bearing bank and other borrowings of USD 5.4 million, all fixed-rate and due within one year at 4.10% - The Group presents no gearing ratio as cash and cash equivalents exceed total debt[63] - As of June 30, 2024, total interest-bearing bank and other borrowings amounted to USD 5.4 million, all fixed-rate and due within one year[66][67] Cash Flow Net cash inflow from operating activities was USD 4.0 million, a 50.5% decrease, while net cash inflow from investing activities was USD 9.2 million (compared to a net outflow of USD 24.2 million in the prior year), resulting in period-end cash and bank balances of USD 70.2 million Cash Flow Statement Summary (USD thousand) | Item | H1 2024 | H1 2023 | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | 3,961 | 8,008 | | Net Cash Flow from/(Used in) Investing Activities | 9,226 | (24,227) | | Net Cash Flow Used in Financing Activities | (2,766) | (4,954) | | Cash and Bank Balances at End of Period | 70,246 | 62,579 | Risk Management The Group primarily faces financial risks from foreign exchange and interest rate fluctuations, managed through hedging structures, forward contracts, and a strategy of utilizing both fixed and floating rate debt - The primary risk is foreign exchange rate fluctuation, as the company's functional currency is USD, but revenue is generated in multiple currencies (especially EUR), while costs are primarily incurred in Israeli New Shekels; the company manages this through forward contracts and other hedging arrangements[80] - The Group's exposure to interest rate fluctuation risk primarily relates to floating rate debt obligations, managed by employing a strategy of utilizing both fixed and floating rate debt[81] Employees and Remuneration Policies As of June 30, 2024, the Group had 1,026 employees, a 5.0% decrease from year-end 2023, with sales and marketing personnel comprising the largest segment, and remuneration policies including basic salary and performance-linked bonuses Number of Employees by Function (As of June 30, 2024) | Function | Number of Employees | | :--- | :--- | | Operations | 270 | | R&D | 88 | | Sales and Marketing | 520 | | General and Administrative | 148 | | Total | 1,026 | - Compared to December 31, 2023, the number of employees at the end of the reporting period decreased by 5.0%, primarily due to the Group's efforts to streamline operations[82]