Financial Performance - The company reported a net loss of RMB 676,034,000 for the year ended December 31, 2019, compared to a net loss of RMB 464,993,000 in 2018, representing a year-over-year increase of 45.3%[641] - Non-IFRS net loss for the year 2019 was RMB 280,207,000, up from RMB 201,717,000 in 2018, indicating a 38.8% increase[640] - The non-IFRS net loss per ordinary share for 2019 was RMB (2.24), compared to RMB (1.77) in 2018, reflecting a decline of 26.5%[642] - The company incurred share-based compensation expenses of RMB 35,884,000 in 2019, an increase from RMB 29,644,000 in 2018, marking a rise of 21.5%[641] - The fair value changes of financial instruments with preferred rights resulted in a loss of RMB 333,401,000 in 2019, compared to RMB 233,632,000 in 2018, representing an increase of 42.6%[641] Revenue Recognition - The company recognized revenue from diagnosis and monitoring services, which is generally around 1 to 2 weeks, and revenue is recognized when performance obligations are satisfied[651] - Revenue from development services is recognized over time when there is an enforceable right to payment for performance completed to date[654] Cash Flow and Financing - As of December 31, 2020, the company had cash and cash equivalents of RMB1,375.8 million (US$210.8 million), primarily held by its PRC subsidiaries[670] - The net cash used in operating activities was RMB300.9 million (US$46.1 million) in 2020, with a loss before income tax of RMB3,069.0 million (US$470.4 million)[676] - Net cash generated from financing activities was RMB1,744.5 million (US$267.4 million) in 2020, mainly from the issuance of ordinary shares totaling RMB1,676.8 million (US$257.0 million)[680] - The net cash used in investing activities was RMB84.7 million (US$13.0 million) in 2020, primarily due to the purchase of wealth management products[679] - The company expects to incur additional operating losses in the near future as it expands its sales organization and invests in new product development[669] - The company reported a net increase in cash and cash equivalents of RMB1,358.9 million (US$208.3 million) in 2020[675] - The company may require additional financing in the future due to changing business conditions or other developments, which could lead to dilution for existing shareholders[671] Taxation - The company is subject to a 25% enterprise income tax rate in China, with certain entities eligible for a preferential tax rate of 15% as High/New Technology Enterprises[645] - The company’s subsidiary in Hong Kong is subject to a two-tiered profits tax regime, with a reduced rate of 8.25% for the first HK$2 million of assessable profits[644] Capital Commitments and Obligations - The company has total capital commitments of $14,578 million, with all payments due within one year[691] - Operating leases amount to $73,899 million, with $22,288 million due within one year[691] - Short-term bank borrowings total $50,497 million, all due within one year[691] - Long-term borrowings stand at $15,971 million, with $10,192 million due within one year[691] - The total of all contractual obligations is $154,945 million, with $97,555 million due within one year[691] - The company has not entered into any financial guarantees or derivative contracts that would affect its financial statements[690] Corporate Governance - The company’s Board of Directors consists of eight directors, including three independent directors[724] - The company relies on "home country practice" exceptions for corporate governance, not having a majority of independent directors[724] - The audit committee is chaired by Wing Kee Lau, who qualifies as an "audit committee financial expert," overseeing the company's financial reporting processes[727] - The compensation committee, chaired by Sizhen Wang, is responsible for reviewing and approving executive compensation structures[729] - The nominating and corporate governance committee, also chaired by Sizhen Wang, assists in selecting qualified individuals for the board of directors[731] Employee and Shareholder Information - The company had 799 employees as of December 31, 2020, with the largest functions being Sales, Products, and Marketing (262 employees) and Research and Development (184 employees)[734] - The company offers competitive compensation packages and has maintained a stable core management team, contributing to its ability to attract and retain qualified personnel[735] - As of March 31, 2021, Sizhen Wang owned 106,898,800 ordinary shares, representing 24.1% of the total shares outstanding[739] - Hai Yan, Ph.D./M.D. held 33,332,000 ordinary shares, accounting for 7.5% of the total shares[739] - The company participates in various employee social security plans in China, including pension and medical insurance, and plans to continue granting share-based incentive awards[736] Shareholder Structure - As of March 31, 2021, a total of 444,358,600 ordinary shares were outstanding, with 42.3% owned by directors and executive officers collectively[740] - The FHP acting-in-concert group holds 79,065,280 ordinary shares, representing 17.8% of total shares[740] - CICC entities own 57,824,500 ordinary shares, accounting for 13.0% of total shares[740] - The company has 118,953,520 ordinary shares held by one record holder in the United States, representing approximately 26.8% of total outstanding shares[745] - Weiwu He, Ph.D., holds 25,949,300 ordinary shares, representing 5.8% ownership[740] - Vivo Capital Fund IX, L.P. holds 25,449,300 ordinary shares, contributing to the overall shareholder structure[744] Currency and Exchange Rate - Substantially all net revenues and expenses are denominated in Renminbi, limiting direct foreign exchange risk exposure[819] - The company anticipates that future interest income may be lower than expected due to changes in market interest rates[818] - The company may face reduced amounts from currency conversion if the Renminbi appreciates against the U.S. dollar[822] - The depositary may earn revenue from currency conversions based on the difference between exchange rates[827] - The company has not been materially affected by inflation since its inception, but future inflation rates in China remain uncertain[823] - The Renminbi joined the IMF's basket of currencies for Special Drawing Rights on October 1, 2016[820] - The company may experience changes in the exchange rate system in the future due to government policies[820] Miscellaneous - There are no significant trends or uncertainties expected to materially affect net revenues or profitability for the year ended December 31, 2020[689] - The company has not made any significant capital commitments or long-term obligations beyond those disclosed[692] - The company has not experienced any material labor disputes and none of its employees are represented by labor unions[736] - The company has not used any derivative financial instruments to manage interest rate risk exposure, which is primarily related to interest income from excess cash[818] - The depositary collects fees for services directly from investors or by deducting from distributions[825]
Genetron(GTH) - 2020 Q4 - Annual Report