福森药业(01652) - 2025 - 中期业绩

Important Notices and Company Information Disclaimer Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited are not responsible for the content of this announcement, make no statement as to its accuracy or completeness, and expressly disclaim liability for any loss arising from its contents - Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited assume no responsibility for the content of this announcement, nor do they guarantee its accuracy or completeness[1] Company Overview Fusen Pharmaceutical Co., Ltd. announces its unaudited interim results for the six months ended June 30, 2025, with comparative data for the same period in 2024 - Fusen Pharmaceutical Co., Ltd. (Stock Code: 1652) announces its unaudited interim results for the six months ended June 30, 2025[2] Financial Highlights In the first half of 2025, the company experienced a significant decline in revenue and gross profit, but the loss attributable to equity holders of the Company narrowed 2025 H1 vs 2024 H1 Financial Highlights Comparison | Indicator | 2025 H1 (RMB million) | 2024 H1 (RMB million) | Change Rate | | :--- | :---: | :---: | :---: | | Revenue | 113.3 | 196.3 | -43.3% | | Gross Profit | 43.0 | 105.9 | -59.4% | | Loss attributable to equity holders of the Company | (23.1) | (36.9) | -37.4% (Loss narrowed) | Financial Statements Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2025, the company's revenue decreased by 43.3% year-on-year to RMB 111.3 million, gross profit decreased by 59.4% to RMB 43.0 million, and loss for the period narrowed to RMB 23.1 million Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data (RMB thousand) | Indicator | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :---: | :---: | | Revenue | 111,286 | 196,322 | | Cost of Sales | (68,296) | (90,450) | | Gross Profit | 42,990 | 105,872 | | Operating Loss | (20,194) | (36,539) | | Loss before tax | (22,725) | (45,325) | | Loss for the period | (23,136) | (36,949) | | Loss for the period attributable to equity holders of the Company | (23,136) | (36,941) | | Basic loss per share (RMB cents) | (3) | (5) | Consolidated Statement of Financial Position As of June 30, 2025, the company's total non-current assets slightly increased, total current assets slightly decreased, and net current liabilities expanded, leading to a reduction in net assets and total equity Consolidated Statement of Financial Position Key Data (RMB thousand) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :---: | :---: | | Non-current assets | 784,226 | 778,549 | | Current assets | 448,451 | 459,612 | | Current liabilities | 789,389 | 772,445 | | Net current liabilities | (340,938) | (312,833) | | Net assets | 345,241 | 368,362 | | Total equity attributable to equity holders of the Company | 346,550 | 369,671 | Notes to Financial Statements 1 Organisation and Principal Activities The Group is incorporated in the Cayman Islands and primarily engaged in the manufacturing and sale of pharmaceutical products - The Company was incorporated in the Cayman Islands as an exempted company with limited liability on January 18, 2013[7] - The Group is principally engaged in the manufacturing and sale of pharmaceutical products[8] 2 Basis of Preparation The interim financial report is prepared in accordance with the HKEX Listing Rules and IAS 34, authorized for issue on August 29, 2025, noting significant going concern uncertainties, but the Board has taken measures to mitigate liquidity pressure and considers the going concern basis appropriate - The interim financial report is prepared in accordance with the Listing Rules of the Stock Exchange and International Accounting Standard 34, and was authorized for issue on August 29, 2025[9] - Affected by market demand and intense competition, the Group's revenue significantly decreased, resulting in operating losses, and as of June 30, 2025, net current liabilities amounted to RMB 340,938,000, indicating significant uncertainty about its ability to continue as a going concern[11] - The Board has adopted several measures, including negotiating new loans, collecting receivables, disposing of idle assets, restructuring debts, and obtaining financial support from the ultimate controlling party, to alleviate liquidity pressure and considers the preparation of financial statements on a going concern basis to be appropriate[11][13] 3 Changes in Accounting Policies The Group has applied the amendments to IAS 21, which have no significant impact on this interim report, and has not applied any new standards or interpretations not yet effective for the current accounting period - The Group has applied the amendments to International Accounting Standard 21 "The Effects of Changes in Foreign Exchange Rates—Lack of Exchangeability", but they have no significant impact on this interim report[14] - The Group has not applied any new standards or interpretations that are not yet effective for the current accounting period[15] 4 Revenue and Segment Information The Group's principal business is the manufacturing and sale of pharmaceutical products, with revenue primarily from Shuanghuanglian Oral Liquid, Shuanghuanglian Injection, and other products, all recognized at a point in time, and operates as a single reportable segment with main business and assets located in China 4(a) Revenue - The Group's principal business is the manufacturing and sale of pharmaceutical products[16] Major Revenue Categories for the Period (RMB thousand) | Product Category | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :---: | :---: | | Shuanghuanglian Oral Liquid | 56,119 | 83,900 | | Shuanghuanglian Injection | 16,159 | 54,836 | | Other Manufactured Products | 39,008 | 53,328 | | Subtotal (Manufactured Products) | 111,286 | 192,064 | | Third-party Products | – | 4,258 | | Total | 111,286 | 196,322 | - For the six months ended June 30, 2025, transactions with one customer exceeded 10% of total revenue, with sales amounting to RMB 12,048,000[19] 4(b) Segment Information - The Group has only one reportable segment, with revenue primarily derived from sales of Shuanghuanglian Oral Liquid, Shuanghuanglian Injection, and other pharmaceutical products to customers in China[20] - The Group's operating assets and non-current assets are primarily located in China, thus no geographical and asset segment analysis is provided[20] 5 Income Tax Expense Income tax expense for the first half of 2025 was RMB 411 thousand, compared to a tax credit of RMB 8,376 thousand in the same period of 2024, with certain Chinese subsidiaries enjoying a preferential 15% income tax rate as high-tech enterprises Income Tax Expense (RMB thousand) | Indicator | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :---: | :---: | | Current tax — China corporate income tax | (29) | – | | Deferred tax | 440 | (8,376) | | Total | 411 | (8,376) | - Henan Fusen and Zhuhai Hengqin are certified as high-tech enterprises, enjoying a preferential income tax rate of 15%[22] 6 Loss Per Share For the six months ended June 30, 2025, basic loss per share was RMB 3 cents, narrowing from RMB 5 cents in the same period of 2024, with basic and diluted loss per share being the same due to the anti-dilutive effect of all potential dilutive ordinary shares 6(a) Basic Loss Per Share - Basic loss per share was RMB 3 cents (2024 H1: RMB 5 cents), calculated based on a loss attributable to equity holders of the Company of RMB 23,136,000 and a weighted average of 739,301,000 ordinary shares outstanding[23] 6(b) Diluted Loss Per Share - Basic and diluted loss per share were the same for the six months ended June 30, 2025 and 2024, as all potential dilutive ordinary shares had an anti-dilutive effect[24] 7 Trade Receivables As of June 30, 2025, total trade receivables were RMB 104,701 thousand, a decrease from the end of 2024, primarily due to a reduction in accounts receivable, with bills receivable mainly comprising bank acceptance bills due within 6 to 12 months Trade Receivables (RMB thousand) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :---: | :---: | | Bills receivable | 57,197 | 52,617 | | Accounts receivable (net of allowance for credit losses) | 47,504 | 61,261 | | Total | 104,701 | 113,878 | - Bills receivable are bank acceptance bills received from customers, with maturity dates within 6 to 12 months[26] - Accounts receivable are due within 1 to 6 months from the invoice date and are non-interest bearing[26] 8 Prepayments and Other Receivables As of June 30, 2025, total prepayments and other receivables amounted to RMB 154,071 thousand, a decrease from RMB 187,596 thousand at the end of 2024, mainly due to a significant decline in other receivables from government-related entities Prepayments and Other Receivables (RMB thousand) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :---: | :---: | | Receivables related to compensation from local government for relocation of production facilities | 40,607 | 40,607 | | Prepayments for raw materials and services | 13,243 | 16,264 | | Deductible input VAT | 15,385 | 17,388 | | Prepayments to related parties | 24,851 | 8,556 | | Other receivables from government-related entities | 28,500 | 81,223 | | Others | 31,485 | 23,558 | | Total | 154,071 | 187,596 | 9 Trade Payables and Bills Payable As of June 30, 2025, total trade payables and bills payable increased to RMB 136,846 thousand from the end of 2024, with all amounts expected to be settled within one year Ageing Analysis of Trade Payables and Bills Payable (RMB thousand) | Ageing | June 30, 2025 | December 31, 2024 | | :--- | :---: | :---: | | Current to three months | 52,056 | 56,377 | | Four to six months | 14,525 | 8,298 | | Seven to twelve months | 21,294 | 19,198 | | Over twelve months | 48,971 | 39,593 | | Total | 136,846 | 123,466 | - All trade payables are expected to be settled within one year[28] 10 Share Capital As of June 30, 2025, the number of authorized and issued and fully paid ordinary shares remained largely consistent with the end of 2024, with a par value of HK$0.01 per share Share Capital Information (RMB thousand) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :---: | :---: | | Authorized ordinary shares (number) | 2,000,000,000 | 2,000,000,000 | | Authorized ordinary shares (amount) | 16,354 | 16,354 | | Issued and fully paid ordinary shares (number) | 739,301,000 | 749,956,000 | | Issued and fully paid ordinary shares (amount) | 6,179 | 6,310 | - Holders of ordinary shares are entitled to receive dividends and have the right to vote at company meetings on a one-vote-per-share basis, with all ordinary shares ranking pari passu[29] 11 Dividends The Board does not recommend the payment of any dividends for the six months ended June 30, 2025, consistent with the same period in 2024 - The Board does not recommend the payment of any dividends for the six months ended June 30, 2025 (2024 H1: nil)[30] Management Discussion and Analysis Business Review and Future Outlook In the first half of 2025, the Group experienced a decline in operating revenue and gross profit, but the net loss attributable to shareholders narrowed, with significant improvement in joint venture profitability, and the company remains cautiously optimistic about the second half due to core product procurement wins, R&D pipeline optimization, cost control, and new product launches - Operating revenue for the first half of 2025 was approximately RMB 111.3 million, a year-on-year decrease of 43.3%; net loss attributable to equity holders of the Company was approximately RMB 23.1 million, narrowing by 37.4% year-on-year[31] - Gross profit margin was 38.6%, a decrease of 15.3 percentage points from 53.9% in the first half of 2024, mainly due to increased product promotion and sales discounts[31] - Jiangxi Yongfeng Kangde Pharmaceutical Co., Ltd., a joint venture, recorded a profit of approximately RMB 26.3 million in the first half of 2025, with the Company's share of profit being approximately RMB 9.4 million, a significant improvement from a loss in the first half of 2024[31] - The company's core products, Shuanghuanglian Oral Liquid and Shuanghuanglian Injection, have won bids in the third batch of national centralized procurement for traditional Chinese medicines, with positive impacts expected to gradually materialize in the second half of the year[32] - The Group is improving cash flow by streamlining its R&D pipeline, focusing on core products, reducing non-core R&D expenses, controlling management and promotion costs, and seeking to dispose of idle assets[33] - Zhuhai Hengqin R&D platform has 44 projects under development, with 15 currently under review, expecting at least 20 new products to be launched in the next three years, covering anti-infective viruses, cardiovascular, and cerebrovascular fields[34] - The company maintains a cautiously optimistic outlook on its operating performance for the second half of the year, anticipating a gradual recovery in revenue and gross profit margin, with continued improvement in operating results[35] Financial Review This section provides a detailed review of the financial performance for the first half of 2025, including a significant decline in sales, lower gross margin, controlled expenses, and a notable improvement in joint venture profitability, alongside disclosures on capital structure, liquidity, gearing ratio, foreign exchange risk, human resources, commitments, contingent liabilities, and pledged assets Sales Performance Product Sales Revenue Comparison (RMB thousand) | Product Category | 2025 H1 Revenue | 2025 H1 Share | 2024 H1 Revenue | 2024 H1 Share | Growth Rate | | :--- | :---: | :---: | :---: | :---: | :---: | | Shuanghuanglian Oral Liquid | 56,119 | 50.4% | 83,900 | 42.7% | -33.1% | | Shuanghuanglian Injection | 16,159 | 14.5% | 54,836 | 27.9% | -70.5% | | Nicardipine Hydrochloride Injection | 2,603 | 2.4% | 12,877 | 6.6% | -79.8% | | Qingrejiedu Oral Liquid | 5,253 | 4.7% | 8,796 | 4.5% | -40.3% | | Other Products | 31,152 | 28.0% | 31,655 | 16.1% | -1.6% | | Subtotal (Manufactured Products) | 111,286 | 100.0% | 192,064 | 97.8% | -42.1% | | Third-party Products | – | 0.0% | 4,258 | 2.2% | -100.0% | | Total | 111,286 | 100.0% | 196,322 | 100.0% | -43.3% | - Total revenue decreased by 43.3% year-on-year to RMB 111.3 million, primarily due to reduced product sales, a weak market, and insufficient demand[36] - Sales revenue of Shuanghuanglian Oral Liquid decreased by 33.1%, and Shuanghuanglian Injection sales revenue decreased by 70.5%, mainly due to insufficient market demand and customers reducing inventory[37] Gross Profit and Gross Margin - Gross profit decreased by 59.4% from approximately RMB 105.9 million in the first half of 2024 to approximately RMB 43.0 million in the first half of 2025[38] - Gross profit margin decreased by 15.3 percentage points to approximately 38.6% (2024 H1: approximately 53.9%), mainly due to increased product promotion and sales discounts[38] Other (Losses)/Income, Net - The increase in net other losses was primarily due to a decrease in government grants[39] Selling and Distribution Expenses - Selling and distribution expenses decreased from approximately RMB 52.2 million in the first half of 2024 to approximately RMB 30.6 million in the first half of 2025, consistent with the decrease in revenue[40] - Selling and distribution expenses as a percentage of revenue were 26.6% (2024) and 27.5% (2025), respectively[40] General and Administrative Expenses - General and administrative expenses decreased from approximately RMB 36.2 million in the first half of 2024 to approximately RMB 14.7 million in the first half of 2025, primarily due to a reduction in credit losses on trade and other receivables[41] Research and Development Expenses - Research and development expenses decreased from approximately RMB 57.1 million in the first half of 2024 to approximately RMB 14.9 million in the first half of 2025, mainly due to reduced investment in non-core product projects and the termination of some non-core R&D projects[42] Net Finance Costs - Net finance costs increased from approximately RMB 7.4 million in the first half of 2024 to approximately RMB 7.8 million in the first half of 2025, primarily due to a decrease in net exchange gains[43] Share of Profit/(Loss) of a Joint Venture - The Group's share of profit from a joint venture increased from a loss of approximately RMB 0.4 million in the first half of 2024 to a profit of approximately RMB 9.4 million in the first half of 2025, mainly due to the significant improvement in Jiangxi Yongfeng Kangde's operating performance through its cooperation with Huakui Pharmaceutical Group[44] Income Tax Expense - Income tax expense increased from a tax credit of approximately RMB 8.4 million in the first half of 2024 to a tax expense of approximately RMB 0.4 million in the first half of 2025, primarily due to a decrease in deferred tax[45] Capital Expenditure - Total capital expenditure for the first half of 2025 was approximately RMB 7.3 million, a significant decrease from RMB 46.0 million in the first half of 2024[46] - Capital expenditure was primarily used for lease payments for land use rights, improvements to energy equipment in existing production processes, and obtaining licenses for drugs under development[46] Capital Structure - As of June 30, 2025, the Group's total equity attributable to shareholders was approximately RMB 346.6 million (December 31, 2024: approximately RMB 369.7 million), and total liabilities were approximately RMB 887.4 million (December 31, 2024: approximately RMB 869.8 million)[47] Liquidity and Financial Resources - As of June 30, 2025, the Group had net current liabilities of approximately RMB 340.9 million (December 31, 2024: approximately RMB 312.8 million)[48] - Cash and cash equivalents were approximately RMB 76.0 million (December 31, 2024: approximately RMB 21.1 million), and short-term bank and other loans were approximately RMB 283.4 million (December 31, 2024: approximately RMB 303.5 million)[48] - The Directors have confirmed that the Group possesses sufficient financial resources to meet its financial obligations as they fall due in the foreseeable future[49] Gearing Ratio - As of June 30, 2025, the Group's gearing ratio (calculated as total bank and other loans divided by total equity) increased to 105.4% from 103.9% as of December 31, 2024[50] Foreign Exchange Risk - The Group primarily operates in China, with most transactions denominated and settled in RMB, and regularly monitors foreign exchange risk, considering hedging strategies[51] Human Resources - As of June 30, 2025, the Group had 1,045 employees (December 31, 2024: 1,131 employees), with total staff costs of approximately RMB 31.0 million (2024 H1: RMB 41.4 million)[52] - The Group offers competitive remuneration packages, including mandatory provident funds, insurance, and medical coverage, and grants discretionary bonuses and share options based on performance[52] Commitments Capital Commitments (RMB thousand) | Category | June 30, 2025 | December 31, 2024 | | :--- | :---: | :---: | | Contracted | 275,450 | 352,328 | Contingent Liabilities - As of June 30, 2025, the Group had no significant contingent liabilities[54] Pledge of Assets - As of June 30, 2025, certain bank borrowings of the Group were secured by property, plant and equipment, investment properties, land use rights, and inventories with a total carrying amount of approximately RMB 145.9 million (December 31, 2024: approximately RMB 213.6 million)[55] Corporate Governance and Other Information Corporate Governance The Company has adopted the Corporate Governance Code set out in Appendix C1 of the Listing Rules and complied with all applicable code provisions during the reporting period, with the exceptions of the non-segregation of Chairman and CEO roles and the external appointment of the Company Secretary, which the Board believes are in the Company's best interests with sufficient checks and balances Compliance with Corporate Governance Code - The Company has adopted the Corporate Governance Code set out in Appendix C1 of the Listing Rules and complied with all applicable code provisions during the period from January 1, 2025, to June 30, 2025, except for code provisions C.2.1 and C.6.1[56] Chairman and Chief Executive Officer Roles - Mr. Cao Zhiming holds both the roles of Chairman of the Board and Chief Executive Officer, deviating from code provision C.2.1 (which states that the roles of chairman and chief executive officer should be separate)[57] - The Board believes this arrangement is in the best interests of the Group, ensuring consistent leadership and efficient strategic planning, and that the composition of the Board provides sufficient independent elements and adequate checks and balances[59] Company Secretary - Mr. Yeung Yuk Hong is an external service provider and not an employee of the Company, deviating from code provision C.6.1 (which states that the company secretary should be an employee of the company)[60] - The Company has appointed its Chief Financial Officer as the primary contact person for Mr. Yeung, and the Board believes that Mr. Yeung's professional knowledge and experience are beneficial to the Group's compliance with relevant procedures, laws, and regulations[60] Audit Committee - The Audit Committee comprises three independent non-executive Directors, with primary responsibilities including providing independent opinions on financial reporting processes, internal control, and risk management systems, and overseeing the audit process[61] Review of Interim Results The Audit Committee has reviewed the unaudited condensed interim financial report for the six months ended June 30, 2025, and advises investors to exercise caution when trading securities, as the disclosed data is for reference only - The Audit Committee has reviewed the unaudited condensed interim financial report for the six months ended June 30, 2025[62] - Investors should exercise caution when trading the Company's securities and should not overly rely on the data disclosed in this interim report, professional advice is recommended[62] Standard Code for Securities Transactions by Directors The Company has adopted the Standard Code set out in Appendix C3 of the Listing Rules, and all Directors confirmed compliance with the code during the reporting period - The Company has adopted the Standard Code set out in Appendix C3 of the Listing Rules, and all Directors confirmed compliance with the code during the reporting period[63] Purchase, Sale or Redemption of the Company's Listed Securities Neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities during the reporting period and up to the date of this announcement - Neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities during the six months ended June 30, 2025, and up to the date of this announcement[64] Interim Dividends The Board does not recommend the declaration of any dividends for the six months ended June 30, 2025, consistent with the same period in 2024 - The Board does not recommend the declaration of any dividends for the six months ended June 30, 2025 (2024 H1: RMB nil)[65] Events After Reporting Period No significant events severely affecting the Group's operations and financial performance occurred after June 30, 2025, and up to the date of this announcement - No significant events severely affecting the Group's operations and financial performance occurred after June 30, 2025, and up to the date of this announcement[66] Publication of Interim Report The Company's interim report for the six months ended June 30, 2025, will be dispatched to shareholders before September 2025 and will be available on the HKEX and company websites - The Company's interim report for the six months ended June 30, 2025, will be dispatched to shareholders before September 2025 and will be available on the HKEX website www.hkexnews.hk and the Company's website www.fusenyy.com[67](index=67&type=chunk)