Financial Highlights Financial Highlights In 2022, the Group achieved total revenue of $65.6 million, a 21.0% year-on-year increase, with operating profit surging 154.7% to $14.2 million and profit attributable to owners of the company soaring 852.0% to $8.6 million, driven by a significant improvement in profitability with gross margin rising from 63.5% to 67.6% and net margin from 1.7% to 13.1% 2022 Financial Highlights (Thousand USD) | Indicator | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Performance | | | | | Revenue | 65,558 | 54,180 | 21.0% | | Gross Profit | 44,295 | 34,409 | 28.7% | | Operating Profit | 14,158 | 5,558 | 154.7% | | Profit Attributable to Owners of the Company | 8,597 | 903 | 852.0% | | Profitability | | | | | Gross Margin | 67.6% | 63.5% | 4.1% | | Net Margin | 13.1% | 1.7% | 11.4% | | Basic Earnings Per Share (US cents) | 2.12 | 0.23 | 1.89 | | Financial Position | | | | | Total Assets | 183,958 | 172,312 | 6.8% | | Equity Attributable to Owners of the Company | 121,950 | 116,601 | 4.6% | | Total Liabilities | 62,008 | 55,711 | 11.3% | | Cash and Bank Balances | 76,305 | 48,489 | 57.4% | Chairman's Statement 2022 Review In 2022, the Group's business achieved recovery growth with total turnover of approximately $65.6 million, a 21.0% year-on-year increase, primarily driven by core products Pavlin and Xinsiquede, while the Group focused resources on core pharmaceutical and health businesses by expanding sales coverage, enhancing cost efficiency, and pausing new investments in the beauty segment - Total turnover in 2022 was approximately $65.6 million, a 21.0% year-on-year increase; operating profit was approximately $14.2 million, up 154.7% year-on-year; and net profit was approximately $8.6 million, up 852.0% year-on-year, primarily due to sales contributions from key products Pavlin and Xinsiquede, increased revenue, and improved gross margin from cost reduction and efficiency enhancement26 - The core strategy for the pharmaceutical business involves achieving full market and product coverage in sales, focusing on cost reduction and efficiency improvement in production, and expanding the product portfolio through R&D, resumption of production, and introduction of new products222200 - The health business, leveraging associate company Cuijian as a platform, develops two main segments: plant extracts and finished health products, mitigating challenges in raw material procurement and exports for plant extracts by expanding domestic sales2043010 - The Group decided to cease new resource investment in the beauty business, concentrating resources on the development of pharmaceutical and health businesses227187 2023 Outlook Looking ahead to 2023, the Group will seize post-pandemic opportunities by adhering to existing pharmaceutical and health business development strategies, including actively responding to national tiered diagnosis and treatment policies, continuously expanding market coverage, and strengthening the product portfolio through resumption of production, R&D, or M&A to drive sustained and stable business growth, all while enhancing cost efficiency - The Group will continue to adhere to its existing development strategies for the pharmaceutical and health businesses, adapting to industry transformation in the post-pandemic era206 - Future plans include further expanding full market and product coverage, continuously improving cost efficiency, and introducing new products through resumption of production, R&D, or mergers and acquisitions to strengthen the product portfolio and promote sustained and stable business growth32 Management Discussion and Analysis Business Review In 2022, the Group's business segments showed divergent performance, with the core pharmaceutical segment's revenue growing 23.8% to $63.6 million and segment profit increasing 39.9% due to successful "full market, full product coverage" strategy and increased hospital coverage, while the health business faced challenges with a 25.4% revenue decline due to international conditions, and the beauty business saw a 72.2% revenue drop, leading the Group to halt new investments and focus on existing inventory Revenue Performance by Business Segment (Million USD) | Business Segment | 2022 Revenue | 2021 Revenue | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Pharmaceutical | 63.6 | 51.4 | +23.8% | | Health Products | 1.9 | 2.6 | -25.4% | | Beauty Products | 0.1 | 0.2 | -72.2% | - By strengthening full market channel coverage, the number of target hospitals above Grade II with drug procurement increased by 3.3% to 2,597, and the number of grassroots target hospitals increased by 9.0% to 1,552117202 - Production operations reduced costs while maintaining quality by optimizing the supply chain, utilizing energy-saving equipment, and implementing lean production scheduling, effectively addressing rising raw material and energy prices137119 - During the year, the Group achieved its targets for resuming production of products such as Fukan Granules and Sanqi Capsules, and actively sought to introduce market-valuable products to strengthen its product portfolio139122 Financial Review For fiscal year 2022, the Group demonstrated strong overall financial performance with total revenue growing 21.0% to $65.6 million and gross profit increasing 28.7% to $44.3 million, driven by an improved gross margin from 63.5% to 67.6% primarily due to cost efficiency in pharmaceutical products, while effective expense control was evident as selling and administrative expenses decreased as a percentage of total revenue, resulting in a robust financial position with $51.3 million in cash and cash equivalents and a current ratio of 2.2 at year-end, further bolstered by a new share placement raising approximately $7.6 million in net proceeds during the year Key Financial Indicators Changes | Item | 2022 (Million USD) | 2021 (Million USD) | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Revenue | 65.6 | 54.2 | +21.0% | | Gross Profit | 44.3 | 34.4 | +28.7% | | Gross Margin | 67.6% | 63.5% | +4.1 p.p. | | Selling and Distribution Expenses | 19.5 | 17.4 | +12.0% | | Administrative Expenses | 9.6 | 9.5 | +1.0% | | Research and Development Costs | 2.1 | 2.7 | -20.6% | | Profit Attributable to Shareholders | 8.6 | 0.9 | +852.0% | - Liquidity remained strong, with cash and cash equivalents of approximately $51.3 million, net current assets of approximately $72.5 million, and a current ratio of 2.2 as of December 31, 2022178158 - In April 2022, the Group completed a placement of 49,520,000 new shares at HK$1.20 per share, raising net proceeds of approximately $7.6 million for potential acquisitions and working capital replenishment156157 - As of December 31, 2022, the Group's borrowings were approximately $18.2 million, a decrease from $24.7 million in the prior year159 Consolidated Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended December 31, 2022, the Group's revenue was $65.6 million, a 21.0% year-on-year increase, with gross profit at $44.3 million, up 28.7%, and operating profit significantly increasing 154.7% to $14.2 million due to revenue growth and effective cost control, resulting in a profit for the year of $8.6 million, an 852.0% increase from $0.9 million last year, and basic earnings per share of 2.12 US cents Consolidated Statement of Profit or Loss (Thousand USD) | Item | 2022 | 2021 | | :--- | :--- | :--- | | Revenue | 65,558 | 54,180 | | Cost of Sales | (21,263) | (19,771) | | Gross Profit | 44,295 | 34,409 | | Other Income | 1,193 | 722 | | Selling and Distribution Expenses | (19,458) | (17,366) | | Administrative Expenses | (9,630) | (9,538) | | Research and Development Costs | (2,132) | (2,686) | | Operating Profit | 14,158 | 5,558 | | Profit Before Income Tax | 9,915 | 2,404 | | Income Tax Expense | (1,318) | (1,501) | | Profit for the Year | 8,597 | 903 | | Profit Attributable to Owners of the Company | 8,597 | 903 | | Basic Earnings Per Share (US cents) | 2.12 | 0.23 | Consolidated Statement of Financial Position As of December 31, 2022, the Group's total assets were $184.0 million, a 6.8% increase from the previous year, with total liabilities at $62.0 million, up 11.3% year-on-year, and equity attributable to owners of the company at $122.0 million, a 4.6% increase, while net current assets rose from $61.1 million to $72.5 million, indicating enhanced short-term solvency Consolidated Statement of Financial Position Summary (Thousand USD) | Item | 2022 | 2021 | | :--- | :--- | :--- | | Assets | | | | Non-current Assets | 51,515 | 57,689 | | Current Assets | 132,443 | 114,623 | | Total Assets | 183,958 | 172,312 | | Equity and Liabilities | | | | Equity Attributable to Owners of the Company | 121,950 | 116,601 | | Total Equity | 121,950 | 116,601 | | Non-current Liabilities | 2,043 | 2,236 | | Current Liabilities | 59,965 | 53,475 | | Total Liabilities | 62,008 | 55,711 | | Total Equity and Liabilities | 183,958 | 172,312 | Notes to the Consolidated Financial Statements Segment Information The Group's business is divided into three segments: pharmaceutical, beauty products, and health products, with the pharmaceutical segment being the primary source of revenue and profit in 2022, contributing $63.6 million in revenue and $24.7 million in segment profit, representing the vast majority of total segment profit, while health and beauty product segments contributed relatively less, and geographically, the vast majority of revenue, 97.5% of total, originated from the Chinese mainland market 2022 Segment Performance (Thousand USD) | Item | Pharmaceutical | Beauty Products | Health Products | Total | | :--- | :--- | :--- | :--- | :--- | | Reportable Segment Revenue | 63,571 | 70 | 1,917 | 65,558 | | Reportable Segment Profit | 24,671 | 58 | 108 | 24,837 | 2021 Segment Performance (Thousand USD) | Item | Pharmaceutical | Beauty Products | Health Products | Total | | :--- | :--- | :--- | :--- | :--- | | Reportable Segment Revenue | 51,359 | 252 | 2,569 | 54,180 | | Reportable Segment Profit | 17,641 | (812) | 214 | 17,043 | Revenue by Major Geographic Market (Thousand USD) | Region | 2022 | 2021 | | :--- | :--- | :--- | | China (Resident) | 63,899 | 52,037 | | Hong Kong | 1,659 | 2,143 | | Total | 65,558 | 54,180 | Dividends The Board has resolved to declare an interim dividend of 5.0 HK cents per share for the year ended December 31, 2022, payable entirely by way of an allotment of new shares under a scrip dividend scheme, with no cash option for shareholders, and this dividend, not yet accounted for in the 2022 financial statements, will be reflected in 2023, contrasting with a special dividend of HK$1.55 per share paid in 2021 - The Board declared an interim dividend of 5.0 HK cents per share (approximately 0.64 US cents) for the year ended December 31, 2022, totaling approximately $2.6 million55 - This interim dividend will be paid entirely by way of an allotment of fully paid shares (the "Scrip Dividend Scheme"), with no cash option offered255 - For comparison, for the year ended December 31, 2021, the company paid a special dividend of HK$1.55 per share, totaling approximately $76.9 million5479 Earnings Per Share For the year ended December 31, 2022, basic earnings per share significantly increased to 2.12 US cents from 0.23 US cents in 2021, primarily driven by the rise in consolidated profit attributable to owners of the company from $903,000 to $8,597,000, with the weighted average number of ordinary shares outstanding used for calculation being 406,331,000 shares, and no potential dilutive shares existed in either year Basic Earnings Per Share Calculation | Item | 2022 | 2021 | | :--- | :--- | :--- | | Consolidated Profit Attributable to Owners of the Company (Thousand USD) | 8,597 | 903 | | Weighted Average Number of Ordinary Shares Outstanding (Thousand Shares) | 406,331 | 389,748 | | Basic Earnings Per Share (US cents) | 2.12 | 0.23 | - The Group had no potential dilutive shares in either year82 Other Information Interim Dividend and Scrip Dividend Scheme The company declared an interim dividend of 5.0 HK cents per share for the year ended December 31, 2022, to be fully distributed via a scrip dividend scheme where shareholders will receive newly issued interim dividend shares based on their holdings, calculated at a reference price of HK$1.406 (average closing price over five consecutive trading days), with the scheme subject to approval for listing and trading of the shares by the Stock Exchange - An interim dividend of 5.0 HK cents per share was declared, payable via a scrip dividend scheme2 - The reference price for calculating the number of interim dividend shares is HK$1.406 per share129130 - The implementation of the scrip dividend scheme is subject to the approval by the Listing Committee of the Stock Exchange for the listing and trading of the interim dividend shares102 Purchases, Sales or Redemptions of Listed Securities For the year ended December 31, 2022, the company repurchased a total of 18,478,000 of its own shares on the Stock Exchange for a total consideration of approximately HK$28.5 million, and additionally, completed a placement in April 2022, issuing 49,520,000 new shares at HK$1.20 per share 2022 Share Repurchase Details | Month | Number of Shares | Total Price Paid (HKD) | | :--- | :--- | :--- | | June 2022 | 6,400,000 | 10,062,570 | | September 2022 | 441,000 | 558,280 | | October 2022 | 7,620,000 | 11,909,900 | | November 2022 | 3,005,000 | 4,470,590 | | December 2022 | 1,012,000 | 1,502,910 | | Total | 18,478,000 | 28,504,250 | - In April 2022, the company completed a placement of 49,520,000 shares at HK$1.20 per share107 Corporate Governance and Compliance The company largely complied with the Corporate Governance Code provisions during 2022, with a brief deviation from January 1 to March 23 due to the absence of a nomination committee, while the audit committee, comprising three independent non-executive directors, reviewed the annual results, all directors confirmed compliance with the standard code for securities transactions, and the auditor reconciled the financial data in the preliminary results announcement with the audited consolidated financial statements - The company consistently complied with the Corporate Governance Code during the year, with a deviation from Code Provision B.3.1 only between January 1 and March 23, 2022, due to the non-establishment of a nomination committee108 - The Audit Committee, composed of three independent non-executive directors, has reviewed the audited consolidated annual results for the current year111 - The auditor, BDO Limited, has reconciled the financial data in the preliminary results announcement with the audited consolidated financial statements for the year36
朗生医药(00503) - 2022 - 年度业绩