雅各臣科研制药(02633) - 2022 - 中期财报

Financial Highlights This section provides a concise overview of the company's financial performance and position for the six months ended September 30, 2021 Summary of Results for the Six Months Ended September 30, 2021 | Indicator | For the Six Months Ended September 30, 2021 (Thousand HKD) | For the Six Months Ended September 30, 2020 (Thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | 750,413 | 695,425 | +7.9% | | - Generics | 562,177 | 503,795 | +11.6% | | - Branded Healthcare | 188,236 | 191,630 | -1.8% | | Gross Profit | 272,842 | 266,257 | +2.5% | | Gross Margin | 36.4% | 38.3% | -1.9pp | | Profit Attributable to Owners of the Company | 80,039 | 102,513 | -21.9% | | Adjusted EBITDA | 203,856 | 233,391 | -12.7% | Summary of Financial Position | Indicator | As at September 30, 2021 (Thousand HKD) | As at March 31, 2021 (Thousand HKD) | Change (%) | | :--- | :--- | :--- | :--- | | Total Assets | 4,838,009 | 4,867,150 | -0.6% | | Total Liabilities | 1,931,556 | 2,007,041 | -3.8% | | Total Equity | 2,906,453 | 2,860,109 | +1.6% | Company Overview This section outlines the company's strategic vision, mission, and core competitive advantages in the pharmaceutical and healthcare sectors Corporate Vision and Mission The company aims to be a leading enterprise in essential medicines and consumer health solutions in Asia, creating sustainable value through R&D investment, guided by a core culture of "Dare to Challenge, Stay Connected, Keep Promises" - The company's vision is to be a leading enterprise in essential medicines and consumer health solutions in Asia[12] - The three core elements of the company's culture are: Dare to Challenge, Stay Connected, Keep Promises[12] Company Profile and Competitive Advantages Jacobson Pharma is a leading Hong Kong pharmaceutical company with vertically integrated operations in R&D, manufacturing, sales, and distribution of generics, specialty drugs, and branded healthcare products. Its core competitive advantages include market leadership, strong R&D capabilities, a comprehensive sales network, and a portfolio of well-known brands managed by its subsidiary, JBM (Healthcare) Limited - The Group is a major generics supplier in Hong Kong with an extensive sales and distribution network covering public and private markets, operating 10 licensed generics manufacturing facilities and 2 GMP-certified branded Chinese medicine manufacturing facilities in Hong Kong[15] - Competitive advantages include: leadership in various drug categories, leading R&D capabilities, a comprehensive sales and distribution network, and well-known household and international brands supplied by subsidiary JBM (Healthcare) Limited (e.g., Po Chai Pills, Ho Chai Kung, Contractubex Gel)[16][17][18][19] Management Discussion and Analysis This section provides an in-depth review of the Group's business and financial performance, strategic initiatives, and key risks Business Review Amidst a stabilizing pandemic situation in Hong Kong, the Group's business demonstrated resilience, with generics growing 11.6% due to recovering public and private sector demand, while branded healthcare slightly declined 1.8% due to a weak consumer market. The decrease in profit for the period was primarily due to a high base effect from one-off government subsidies in the prior year, with significant growth observed when excluding this factor. The company made progress in various therapeutic areas, successfully distributed Fosun BioNTech vaccines, and actively pursued new product, R&D, and business development opportunities Performance Overview During the reporting period, total revenue increased by 7.9% to HKD 750.4 million, primarily driven by an 11.6% growth in the generics business. However, total profit for the period decreased by 26.3% to HKD 82.9 million, mainly due to a high comparative base from approximately HKD 55.8 million in one-off government Employment Support Scheme subsidies received in the prior year. Excluding this impact, profit on a like-for-like basis grew by approximately 46.2%. The company's financial position remained robust, with the net gearing ratio decreasing from 38.4% to 27.7% Performance Overview for the Reporting Period | Indicator | Amount (Million HKD) | Year-on-Year Change | | :--- | :--- | :--- | | Total Revenue | 750.4 | +7.9% | | - Generics | N/A | +11.6% | | - Branded Healthcare | N/A | -1.8% | | Total Gross Profit | 272.8 | +2.5% | | Total Profit for the Period | 82.9 | -26.3% | - The decrease in profit for the period was mainly due to the base effect of approximately HKD 55.8 million in one-off government Employment Support Scheme subsidies received in the interim period of FY2021. Excluding this subsidy, profit for the period on a like-for-like basis increased by approximately 46.2%[23] - Financial position remained robust, with the net gearing ratio significantly decreasing from 38.4% to 27.7%, and cash balance at period-end was HKD 537.1 million[24] Operating Performance The Group achieved significant growth in cardiovascular, psoriasis, and ADHD drug categories, leveraging its strong product portfolio. As the exclusive distributor of Fosun BioNTech vaccines in Hong Kong and Macau, 6.9 million doses were supplied during the period. The company continued to supply anti-epidemic products, launched several new drugs, and progressed its R&D pipeline with 171 products under development, while steadily improving production efficiency to meet market recovery - Sales of angiotensin II antagonists and lipid-lowering products in cardiovascular drugs recorded significant growth of 34.4% and 27.7% respectively[25] - Psoriasis formulations and ADHD drug treatment categories recorded strong growth of 328.1% and 88.8% respectively[26] - As the exclusive distributor of Fosun BioNTech Comirnaty vaccine in Hong Kong and Macau, a total of 6.9 million doses were supplied as of the end of the reporting period[27] - Several new products were launched during the reporting period, with 10 products completing development and submitted for registration approval. As of period-end, 171 products were under development[30][31] Business Development The Group adopted an in-licensing strategy, signing exclusive agreements for four European specialty drugs in central nervous system and immunomodulatory fields. To address online shopping trends, the company is accelerating the expansion of its e-commerce platform to enhance customer service and management efficiency. Additionally, the Group is actively seizing policy opportunities in the Greater Bay Area, seeking strategic partners to expand its market presence - In-licensing is a key strategy to strengthen the specialty drug portfolio, with exclusive licensing agreements signed for four European specialty drugs in central nervous system and immunomodulatory categories during the reporting period[33][34] - The company is accelerating the expansion of its Customer Relationship Management (CRM) system to an e-commerce platform, facilitating product browsing, inquiries, and ordering for healthcare professionals[38] - The Group is actively seizing business opportunities arising from the Greater Bay Area's innovative regulatory scheme for pharmaceuticals and medical devices, seeking potential strategic partners to consolidate its market position[39] Outlook The Group remains optimistic about the future prospects of the healthcare industry and the growth momentum of the generics market. Driven by an aging population and the prevalence of chronic diseases, especially with increased government healthcare spending, demand for generics is expected to continue rising. The company will focus on enhancing its product portfolio and expanding into strategic Asian markets. Concurrently, the consumer healthcare market is also expected to maintain growth momentum in the post-pandemic era and with e-commerce development, benefiting the branded healthcare business - The Hong Kong government's healthcare expenditure budget for FY2021-2022 increased by nearly 18.0% to HKD 115.8 billion, benefiting the healthcare industry[40] - Driven by an aging population and increasing prevalence of chronic diseases, generics consumption shows an upward trend, especially in the public sector. The expiry of patents for various blockbuster drugs will further enhance growth momentum[40] - Future strategic priorities include: leveraging product category opportunities, enhancing the product portfolio through in-licensing and internal R&D, and expanding strategic market presence in Asia[41] Financial Review This financial review details the Group's revenue, costs, profits, and asset-liability position. Total revenue grew 7.9%, primarily driven by the generics business. Cost of sales increased 11.3% due to higher sales and a decline in higher-margin product sales. Both operating profit and profit for the period decreased due to the high base effect of substantial government subsidies in the prior year, but showed growth when excluding this factor. Asset-wise, inventory management improved; liability-wise, bank borrowings decreased Revenue During the reporting period, total revenue increased by 7.9% year-on-year to HKD 750.4 million. By segment, generics business grew 11.6%, accounting for 75% of total revenue; branded healthcare business slightly decreased by 1.8%. By geography, Hong Kong remained the primary market, contributing 90% of total revenue; revenue from Mainland China and Macau markets also recorded significant growth Revenue by Operating Segment (Million HKD) | Segment | Interim Period FY2022 | % of Total | Interim Period FY2021 (Restated) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Generics | 562.2 | 75% | 503.8 | 72% | | Branded Healthcare | 188.2 | 25% | 191.6 | 28% | | Total | 750.4 | 100% | 695.4 | 100% | Revenue by Geographical Region (Million HKD) | Region | Interim Period FY2022 | % of Total | Interim Period FY2021 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Hong Kong | 676.2 | 90% | 652.6 | 94% | | China | 26.8 | 4% | 8.5 | 1% | | Macau | 33.2 | 4% | 20.1 | 3% | | Others | 14.2 | 2% | 14.2 | 2% | | Total | 750.4 | 100% | 695.4 | 100% | Cost of Sales Cost of sales increased by 11.3% year-on-year to HKD 477.6 million, primarily in line with revenue growth. Material costs were the main component, accounting for 51% of total costs, and significantly increased by 22.6% year-on-year, mainly due to increased sales of lower-margin third-party medicated oil products. Staff costs and other production costs remained relatively stable Cost of Sales Components (Million HKD) | Cost Item | Interim Period FY2022 | % of Total | Interim Period FY2021 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Material Costs | 244.8 | 51% | 199.7 | 47% | | Staff Costs | 124.7 | 26% | 126.0 | 29% | | Other Production Costs | 108.1 | 23% | 103.5 | 24% | | Total | 477.6 | 100% | 429.2 | 100% | Operating Profit and Finance Costs Operating profit decreased by 20.4% year-on-year to HKD 116.9 million, primarily due to the recognition of HKD 55.8 million in one-off government Employment Support Scheme subsidies in the prior year. Excluding the impact of this subsidy, operating profit actually increased by 28.5%. Finance costs decreased due to partial repayment of bank borrowings - Operating profit decreased from HKD 146.8 million to HKD 116.9 million, a year-on-year decrease of 20.4%[65][66] - Excluding the one-off government subsidy of HKD 55.8 million in the prior year, operating profit actually increased by 28.5%[67] Profit for the Period Profit for the period decreased by 26.3% year-on-year to HKD 82.9 million. This decrease was also affected by the high base effect of one-off government subsidies in the prior year. Excluding this factor, profit for the period actually increased by 46.2% - Profit for the period decreased from HKD 112.5 million to HKD 82.9 million, a year-on-year decrease of 26.3%[73][74] - Excluding the one-off government subsidy of HKD 55.8 million in the prior year, profit for the period actually increased by 46.2%[75] Assets and Liabilities Analysis On the asset side, investment properties and other property, plant and equipment increased due to additions, while intangible assets decreased due to amortization. Inventory decreased by 10.3% due to strict management measures and sales recovery. On the liability side, bank borrowings decreased due to partial repayment during the period - Inventory decreased by HKD 36.6 million or 10.3%, primarily due to strict inventory management and a recovery in generics business sales[78] - Bank borrowings decreased, mainly due to partial repayment of bank borrowings during the reporting period[81] Use of Proceeds The company detailed the use of proceeds from its Initial Public Offering (IPO) and the issuance of new shares to Yunnan Baiyao. As of the reporting period end, HKD 26.14 million of the net IPO proceeds of HKD 695.5 million remained unutilized, primarily for expanding bioequivalence clinical studies, expected to be fully utilized by March 31, 2023. The HKD 411.7 million from the share issuance to Yunnan Baiyao has been fully utilized as planned Use of Proceeds from Initial Public Offering (Thousand HKD) | Item | Proposed Use | Utilized as at September 30, 2021 | Unutilized as at September 30, 2021 | | :--- | :--- | :--- | :--- | | Total | 695,540 | 669,400 | 26,140 | - The net proceeds of HKD 411,658,000 from the share issuance to Yunnan Baiyao have been fully utilized as planned[83][86] Liquidity, Capital Resources and Share Capital Structure The Group maintains a conservative capital management strategy with a robust financial position. Cash is primarily used for working capital and capital expenditures, funded by operating cash flow and bank borrowings. The net gearing ratio significantly decreased from 38.4% at the beginning of the period to 27.7% at period-end due to partial repayment of bank borrowings - The Group's net gearing ratio decreased from 38.4% as at March 31, 2021, to 27.7% as at September 30, 2021[90] - The Group primarily funds its cash requirements through cash generated from operations and bank borrowings[88] Principal Risks and Uncertainties The Group faces principal risks including non-compliance with pharmaceutical regulations, M&A integration risks, new product development delays, and product liability for defective products. The company manages these risks through measures such as establishing quality control teams, conducting due diligence, investing in R&D, and purchasing product liability insurance - Principal risks include: - Regulatory Risk: Failure to comply with pharmaceutical regulations may restrict business operations - M&A Risk: Inability to successfully identify, complete, and integrate acquisitions - R&D Risk: Inability to develop and launch new products on time - Product Liability Risk: Defective products may lead to liability claims and reputational damage[96] Other Information This section covers corporate governance practices, dividend policy, and details on directors' and major shareholders' interests Corporate Governance Summary The company is committed to maintaining a high standard of corporate governance. During the reporting period, the company complied with all code provisions of the Corporate Governance Code, with the only deviation being the non-segregation of the roles of Chairman and Chief Executive Officer, both held by Mr. Sum Kwong Yip, the founder. The Board believes this arrangement benefits the Group's strategic planning and decision-making efficiency - The company complied with most provisions of the Corporate Governance Code, with one deviation: the roles of Chairman and Chief Executive Officer are not segregated, both held by Mr. Sum Kwong Yip[104] Interim Dividend The Board recommended an interim dividend of HKD 1.2 cents per ordinary share for the six months ended September 30, 2021, totaling approximately HKD 23.2 million, an increase compared to HKD 0.8 cents per share in the prior year Interim Dividend Details | Item | For the Six Months Ended September 30, 2021 | For the Six Months Ended September 30, 2020 | | :--- | :--- | :--- | | Interim Dividend Per Share | 1.2 HK cents | 0.8 HK cents | | Total Dividend Amount | Approx. 23.2 Million HKD | N/A | Directors' and Major Shareholders' Interests The report discloses the interests of directors, chief executives, and major shareholders in the company's shares as of September 30, 2021. Chairman Mr. Sum Kwong Yip collectively held approximately 58.95% of the company's shares through beneficial ownership, controlled corporations, and trusts. Other major shareholders include Yunnan Baiyao Group (10.34%) and Longjin Investments Limited (8.11%) - Chairman and CEO Mr. Sum is deemed to have an interest in 1,140,276,000 shares, representing approximately 58.95% of the issued share capital[119] - Major shareholders include Yunnan Baiyao Group, holding 200,000,000 shares, representing approximately 10.34%[126][128] Share Option and Share Award Schemes The company has a share option scheme and a share award scheme to incentivize employees. During the reporting period, no new share options were granted, exercised, or cancelled, and no outstanding share options existed at period-end. Under the share award scheme, the trustee held 18,544,000 company shares, but no share awards were granted to any participants during the reporting period - During the reporting period, no share options were granted, exercised, lapsed, forfeited, or cancelled under the share option scheme. At period-end, there were no outstanding share options[132] - As of the end of the reporting period, the trustee had purchased 18,544,000 company shares in the market under the share award scheme, but no share awards were granted during the period[137] Financial Statements and Notes This section presents the unaudited consolidated financial statements and their accompanying notes, providing detailed financial disclosures Review Report to the Board of Directors KPMG, the auditor, has reviewed this interim financial report and concluded that nothing has come to their attention that causes them to believe the report is not prepared, in all material respects, in accordance with Hong Kong Accounting Standard 34 "Interim Financial Reporting" - The auditor, KPMG, concluded that they found no instances where the interim financial report was not prepared in all material respects in accordance with Hong Kong Accounting Standard 34[143] Unaudited Consolidated Financial Statements This section includes the Group's unaudited consolidated statement of profit or loss and other comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity, and condensed consolidated statement of cash flows for the six months ended September 30, 2021, comprehensively reflecting the financial performance, financial position, and cash flow during the reporting period - Profit attributable to owners of the company was HKD 80,039 thousand, compared to HKD 102,513 thousand in the prior corresponding period[145] - As at September 30, 2021, the Group's net assets were HKD 2,906,453 thousand, an increase from HKD 2,860,109 thousand at the beginning of the period[150] - Net cash generated from operating activities during the reporting period was HKD 311,501 thousand, compared to HKD 230,608 thousand in the prior corresponding period[158] Notes to the Unaudited Interim Financial Report The notes to the financial report provide detailed explanations of the financial statements, covering key information such as company information, basis of preparation, changes in accounting policies, revenue and segment reporting, taxation, earnings per share, dividends, detailed composition of assets and liabilities, fair value measurement of financial instruments, and related party transactions - Note 4 provides detailed disclosure on revenue and segment reporting, categorizing business into two main reportable segments: generics and branded healthcare[170][171] - Note 5 discloses that other net income for the six months ended September 30, 2020, included HKD 55.8 million in government Employment Support Scheme subsidies, which is key to understanding the period's profit changes[188] - Note 16 details the loss of control over Hon Ning Hong Limited (wholesale and retail business) due to its disposal in 2020, which is presented as a discontinued operation in this report[219]