Financial Performance - In the first half of 2021, the company's revenue and gross profit were approximately RMB 214.2 million and RMB 118.2 million, representing a decrease of about 13.5% and 11.0% compared to the same period in 2020[37]. - The decrease in revenue was primarily due to a reduction in sales of the product Shuanghuanglian Oral Liquid, which saw a decline in market demand compared to the surge during the COVID-19 outbreak in 2020[37]. - The gross margin slightly increased from approximately 53.7% in the same period of 2020 to about 55.2% in the first half of 2021, despite the decrease in revenue[37]. - The company's revenue decreased by approximately 13.5% from RMB 247.5 million in the first half of 2020 to RMB 214.2 million in the first half of 2021, primarily due to a decline in sales volume[42]. - Sales revenue from the Double Huanglian Oral Liquid (10ml) dropped by about 20.5% to RMB 89.5 million in the first half of 2021, compared to RMB 112.6 million in the same period of 2020[43]. - Gross profit decreased by approximately 11.0% from RMB 132.8 million in the first half of 2020 to RMB 118.2 million in the first half of 2021, consistent with the revenue decline[47]. - Operating profit increased to RMB 46,848 thousand, compared to RMB 33,680 thousand in the previous year, reflecting a growth of 39.0%[139]. - Profit before tax rose to RMB 50,797 thousand, up from RMB 41,877 thousand, marking an increase of 21.5%[139]. - Net profit for the period was RMB 43,809 thousand, compared to RMB 33,430 thousand in 2020, representing a growth of 30.9%[139]. - Basic earnings per share increased to RMB 6, compared to RMB 4 in the same period last year, reflecting a 50.0% increase[143]. Expenses and Cost Management - Selling and distribution expenses for the first half of 2021 were approximately RMB 50.9 million, a decrease from about RMB 56.4 million in the same period of 2020[37]. - General and administrative expenses were approximately RMB 31.5 million in the first half of 2021, down from about RMB 47.8 million in 2020, mainly due to the financial impact of the deferral of stock options granted to grantees[37]. - The total employee cost for the first half of 2021 was approximately RMB 43.8 million, slightly up from RMB 43.1 million for the same period in 2020[74]. - The group incurred research and development costs of RMB 6,070,000, a decrease from RMB 7,321,000 in the previous year[192]. Investments and Acquisitions - The company continues to invest in R&D, particularly in drug indications and clinical efficacy, and is enhancing collaboration with academic institutions and external R&D organizations[29]. - The company has participated in a pharmaceutical company, acquiring nearly 20 marketable pharmaceutical products, which prepares for long-term development[29]. - The company acquired a 34% stake in Weihai Ren Shun Cai Ye Group Co., Ltd., indirectly obtaining nearly 20 exclusive national traditional Chinese medicine approvals, enriching its product lineup[38]. - The group completed the acquisition of a 34% stake in Weihai Ren Sheng Pharmaceutical Group in May 2021, enhancing its product supply capabilities in traditional Chinese medicine[72]. - The group plans to leverage its capital platform for potential acquisitions, focusing on essential clinical products and over-the-counter items, although no formal acquisition agreements have been signed during the reporting period[81]. Cash Flow and Liquidity - Cash generated from operating activities was RMB 35,801 thousand, down from RMB 105,771 thousand in the same period last year, indicating a decrease of approximately 66.1%[165]. - The company incurred a net cash outflow from investing activities of RMB 254,374 thousand, compared to an inflow of RMB 6,746 thousand in the previous year, representing a substantial change in investment strategy[165]. - As of June 30, 2021, cash and cash equivalents decreased to RMB 53,802 thousand from RMB 402,629 thousand at the beginning of the year, indicating a significant liquidity contraction[165]. - The group’s current liabilities exceeded current assets by RMB 90,122,000 as of June 30, 2021, indicating potential liquidity concerns[179]. - The group maintained a cash flow from operating activities, which management believes is sufficient to meet its operational commitments and expected capital expenditures[179]. Taxation and Financial Ratios - The effective tax rate decreased from 20.2% in the first half of 2020 to 13.8% in the first half of 2021, mainly due to the impact of non-deductible expenses related to stock options[55]. - The effective tax rate for the group’s Chinese subsidiaries was 25% for the six months ended June 30, 2021, consistent with the previous year[197]. - The group's debt-to-equity ratio decreased from 30.2% as of December 31, 2020, to 22.1% as of June 30, 2021, primarily due to a reduction in bank loans during the period[65]. Corporate Governance and Compliance - The company has complied with all applicable code provisions of the corporate governance code during the reporting period, except for the company secretary's appointment[113]. - The audit committee consists of three independent non-executive directors and has reviewed the interim financial report for the six months ended June 30, 2021[114]. - The interim financial report for the six months ended June 30, 2021, has been reviewed by KPMG without any modification[115]. Future Outlook - The management is confident in addressing market challenges and achieving good performance while enhancing product categories and strengthening brand building[33]. - The company plans to continue expanding its market presence and investing in new product development to drive future growth[161]. - Future guidance indicates a cautious outlook due to market volatility and potential supply chain disruptions[161].
福森药业(01652) - 2021 - 中期财报