奥星生命科技(06118) - 2022 - 年度业绩

Annual Results Announcement Company Information Austar Lifesciences Limited was incorporated in the Cayman Islands on January 9, 2014, listed on the HKEX Main Board on November 7, 2014, and primarily provides integrated engineering solutions and manufactures pharmaceutical equipment and consumables in China - The Company was incorporated as an exempted company in the Cayman Islands on January 9, 2014[9] - The Company's shares have been listed on the Main Board of the Stock Exchange of Hong Kong since November 7, 2014[45] - The Group is primarily engaged in providing integrated engineering solutions to pharmaceutical manufacturers and research institutes, and manufacturing and distributing pharmaceutical equipment and consumables in the People's Republic of China[25] Key Financial Highlights For the year ended December 31, 2022, the company's revenue increased by 10.6% to RMB 2,228.6 million, but gross profit and profit attributable to owners significantly decreased, with gross margin falling from 23.8% to 20.8%, and basic earnings per share from RMB 0.54 to RMB 0.17 2022 vs 2021 Key Financial Data Comparison | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 2,228,644 | 2,015,028 | | Gross Profit | 462,669 | 479,008 | | Profit Before Income Tax | 86,485 | 319,225 | | Profit Attributable to Owners of the Company | 87,461 | 277,300 | | Total Assets | 2,388,763 | 2,044,777 | | Net Assets | 883,581 | 788,420 | | Gross Profit Margin | 20.8% | 23.8% | | Current Ratio | 1.3 | 1.5 | | Capital to Debt Ratio | 27.8% | 16.4% | | Net Debt to Equity Ratio | 23.4% | Net Cash | | Basic and Diluted Earnings Per Share | RMB 0.17 | RMB 0.54 | - The Company had no diluted ordinary shares for the years ended December 31, 2022 and 2021, thus basic and diluted earnings per share are the same[20] Consolidated Statement of Profit or Loss For the year ended December 31, 2022, the company's revenue grew by 10.6% to RMB 2,228.6 million, but cost of sales increased more, leading to a 3.4% decrease in gross profit, a 73.1% drop in operating profit to RMB 83.9 million, and a 75.1% decrease in profit for the year to RMB 67.7 million Key Data from Consolidated Statement of Profit or Loss | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Revenue | 2,228,644 | 2,015,028 | | Cost of Sales | (1,765,975) | (1,536,020) | | Gross Profit | 462,669 | 479,008 | | Selling and Marketing Expenses | (178,659) | (170,289) | | Administrative Expenses | (134,614) | (128,094) | | Research and Development Expenses | (70,163) | (65,598) | | Other (Losses) / Gains – Net | (9,630) | 196,804 | | Operating Profit | 83,978 | 311,918 | | Finance Costs – Net | (7,029) | (3,353) | | Profit Before Income Tax | 86,485 | 319,225 | | Profit for the Year | 67,744 | 272,624 | | Profit Attributable to Owners of the Company | 87,461 | 277,300 | | Profit Attributable to Non-controlling Interests | (19,717) | (4,676) | Consolidated Statement of Comprehensive Income For the year ended December 31, 2022, the company's total comprehensive income significantly decreased by 64.3% to RMB 94.3 million, mainly due to a reduction in profit for the year and a shift from foreign currency translation loss to gain Key Data from Consolidated Statement of Comprehensive Income | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Profit for the Year | 67,744 | 272,624 | | Other Comprehensive Income: | | | | Exchange Differences on Translation | 27,114 | (8,767) | | Share of Other Comprehensive Loss of Investments Accounted for Using the Equity Method | (515) | (11) | | Other Comprehensive Income / (Loss) for the Year, Net of Tax | 26,599 | (8,778) | | Total Comprehensive Income for the Year | 94,343 | 263,846 | | Total Comprehensive Income Attributable to Owners of the Company | 114,965 | 268,685 | | Total Comprehensive Income Attributable to Non-controlling Interests | (20,622) | (4,839) | Consolidated Statement of Financial Position As of December 31, 2022, the company's total assets increased by 16.8% to RMB 2,388.8 million, with growth in both non-current and current assets; total liabilities increased by 19.8% to RMB 1,505.2 million, driven by a larger increase in current liabilities; and total equity grew by 12.1% to RMB 883.6 million Key Data from Consolidated Statement of Financial Position | Indicator | December 31, 2022 (RMB thousands) | December 31, 2021 (RMB thousands) | | :--- | :--- | :--- | | ASSETS | | | | Total Non-current Assets | 587,756 | 381,536 | | Total Current Assets | 1,801,007 | 1,663,241 | | TOTAL ASSETS | 2,388,763 | 2,044,777 | | EQUITY | | | | Equity Attributable to Owners of the Company | 896,944 | 786,584 | | Non-controlling Interests | (13,363) | 1,836 | | TOTAL EQUITY | 883,581 | 788,420 | | LIABILITIES | | | | Total Non-current Liabilities | 145,417 | 120,161 | | Total Current Liabilities | 1,359,765 | 1,136,196 | | TOTAL LIABILITIES | 1,505,182 | 1,256,357 | | TOTAL EQUITY AND LIABILITIES | 2,388,763 | 2,044,777 | Notes to the Consolidated Financial Statements General Information This section outlines the company's and its subsidiaries' basic information, including registration, listing status, primary business activities, and ultimate holding company - The Company is an investment holding company, and its subsidiaries are primarily engaged in providing integrated engineering solutions to pharmaceutical manufacturers and research institutes, and manufacturing and distributing pharmaceutical equipment and consumables in the People's Republic of China[25] - The ultimate holding company of the Company is Kai Rui Holdings Limited, which is wholly owned by Mr. He Guoqiang, the Chairman and Chief Executive Officer of the Board[25] Summary of Significant Accounting Policies The Group's consolidated financial statements are prepared in accordance with International Financial Reporting Standards and the Hong Kong Companies Ordinance, using the historical cost basis, and have adopted amendments to IAS 16 and IAS 37, and Annual Improvements to IFRS 2018-2020 for the first time - The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and the requirements of the Hong Kong Companies Ordinance, and on a historical cost basis, except for certain financial assets measured at fair value[2] - The Group has adopted the amendments to IAS 16, IAS 37, and Annual Improvements to IFRS 2018-2020 for the first time for the annual reporting period beginning on January 1, 2022[48] Segment Information The Group's business is divided into six reportable segments, with key operating decision-makers assessing performance based on gross profit; total revenue in 2022 was RMB 2,228.6 million, with mainland China contributing 93.0%, and segment revenue and gross profit performance varied, with Fluid and Bioprocess Systems and Life Science Consumables seeing gross profit declines, while Powder and Solid Systems and GMP Compliance Services experienced growth - Key operating decision-makers primarily consider the business from a product and service perspective, including six reportable segments: Fluid and Bioprocess Systems, Cleanroom and Automation Control and Monitoring Systems, Powder and Solid Systems, GMP Compliance Services, Life Science Consumables, and Pharmaceutical Equipment Distribution and Agency[49] 2022 Revenue and Gross Profit by Business Segment | Business Segment | Revenue (RMB thousands) | Gross Profit (RMB thousands) | | :--- | :--- | :--- | | Fluid and Bioprocess Systems | 950,341 | 114,377 | | Cleanroom and Automation Control and Monitoring Systems | 514,070 | 92,757 | | Powder and Solid Systems | 245,795 | 51,702 | | GMP Compliance Services | 94,349 | 43,028 | | Life Science Consumables | 388,264 | 146,668 | | Pharmaceutical Equipment Distribution and Agency | 35,825 | 14,137 | | Total | 2,228,644 | 462,669 | 2022 Revenue by Geographical Region | Region | Revenue (RMB thousands) | | :--- | :--- | | Mainland China | 2,073,560 | | Other Regions | 155,084 | | Total | 2,228,644 | Operating Segments The Group's six operating segments showed varied revenue and gross profit performance in 2022 and 2021; in 2022, Fluid and Bioprocess Systems had the highest revenue but decreased gross profit, Powder and Solid Systems saw significant growth in both revenue and gross profit, while Life Science Consumables experienced declines in both 2022 Segment Revenue and Gross Profit | Segment | Revenue (RMB thousands) | Gross Profit (RMB thousands) | | :--- | :--- | :--- | | Fluid and Bioprocess Systems | 950,341 | 114,377 | | Cleanroom and Automation Control and Monitoring Systems | 514,070 | 92,757 | | Powder and Solid Systems | 245,795 | 51,702 | | GMP Compliance Services | 94,349 | 43,028 | | Life Science Consumables | 388,264 | 146,668 | | Pharmaceutical Equipment Distribution and Agency | 35,825 | 14,137 | | Total | 2,228,644 | 462,669 | 2021 Segment Revenue and Gross Profit | Segment | Revenue (RMB thousands) | Gross Profit (RMB thousands) | | :--- | :--- | :--- | | Fluid and Bioprocess Systems | 882,953 | 143,745 | | Cleanroom and Automation Control and Monitoring Systems | 479,706 | 90,275 | | Powder and Solid Systems | 138,293 | 41,694 | | GMP Compliance Services | 66,114 | 28,381 | | Life Science Consumables | 421,070 | 163,044 | | Pharmaceutical Equipment Distribution and Agency | 26,892 | 11,869 | | Total | 2,015,028 | 479,008 | Segment Assets and Liabilities As of December 31, 2022, the Group's total segment assets were RMB 1,940.7 million, and total segment liabilities were RMB 1,080.7 million, with Fluid and Bioprocess Systems and Cleanroom and Automation Control and Monitoring Systems being the largest segments by asset size 2022 Total Segment Assets | Segment | Total Assets (RMB thousands) | | :--- | :--- | | Fluid and Bioprocess Systems | 1,034,779 | | Cleanroom and Automation Control and Monitoring Systems | 429,886 | | Powder and Solid Systems | 140,264 | | GMP Compliance Services | 48,626 | | Life Science Consumables | 277,240 | | Pharmaceutical Equipment Distribution and Agency | 9,866 | | Total Segment Assets | 1,940,661 | 2022 Total Segment Liabilities | Segment | Total Liabilities (RMB thousands) | | :--- | :--- | | Fluid and Bioprocess Systems | 510,217 | | Cleanroom and Automation Control and Monitoring Systems | 241,315 | | Powder and Solid Systems | 118,626 | | GMP Compliance Services | 44,224 | | Life Science Consumables | 142,989 | | Pharmaceutical Equipment Distribution and Agency | 23,310 | | Total Segment Liabilities | 1,080,681 | Geographical Information The Group's revenue primarily originates from mainland China, accounting for 93.0% of total revenue in 2022, with other regions contributing 7.0%; non-current assets are also mainly concentrated in mainland China 2022 Revenue and Non-current Assets by Geographical Region | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Revenue | | | | Mainland China | 2,073,560 | 1,890,654 | | Other Regions | 155,084 | 124,374 | | Non-current Assets | | | | Mainland China | 501,499 | 303,794 | | Other Regions | 73,474 | 68,827 | Finance Costs – Net Net finance costs increased from RMB 3.3 million in 2021 to RMB 7.0 million this year, primarily due to higher interest expenses on bank borrowings Finance Costs – Net | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Bank Borrowings | (7,155) | (2,381) | | Lease Liabilities | (3,092) | (2,021) | | Exchange Gains / (Losses) – Net | 945 | (422) | | Loans Provided to PALL-AUSTAR Lifesciences Limited | – | 92 | | Bank Deposits | 2,273 | 1,379 | | Total | (7,029) | (3,353) | Other (Losses) / Gains – Net The year recorded a net other loss of RMB 9.6 million, compared to a gain of RMB 196.8 million in 2021, mainly due to a one-off gain from the disposal of a joint venture equity in 2021, increased exchange losses, and contract termination compensation in 2022 Other (Losses) / Gains – Net | Indicator | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Gain on Disposal of Joint Venture | – | 198,988 | | Loss on Disposal of Property, Plant and Equipment | (297) | (716) | | Exchange Losses, Net | (6,117) | (3,322) | | Others | (3,216) | 1,854 | | Total | (9,630) | 196,804 | - The net other loss in 2022 was mainly due to an increase in exchange losses of approximately RMB 2.8 million and a one-off compensation of approximately RMB 3.7 million for contract termination[218] Expenses by Nature Total expenses for the year increased by 13.1% to RMB 2,149.4 million compared to 2021, with significant increases in raw materials used and on-site subcontracting fees, as well as higher staff costs Expenses by Nature | Expense Item | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Raw Materials Used | 1,242,546 | 1,202,876 | | On-site Subcontracting Fees | 196,329 | 67,864 | | Staff Costs (Including Directors' Emoluments) | 486,403 | 414,432 | | Depreciation – Property, Plant and Equipment | 13,586 | 11,936 | | Depreciation – Right-of-use Assets | 20,861 | 15,964 | | Amortization | 5,293 | 3,675 | | Travel Expenses | 30,890 | 34,693 | | Freight and Port Charges | 28,711 | 28,153 | | Professional Fees | 22,659 | 17,929 | | Technical Service Fees | 17,198 | 13,055 | | Business Taxes and Surcharges | 11,365 | 10,439 | | After-sales Service Provision | 11,060 | 9,521 | | Office Expenses | 8,421 | 7,931 | | Business Entertainment Expenses | 7,290 | 12,561 | | Impairment of Inventories | 7,017 | 6,544 | | Promotion Expenses | 5,927 | 12,764 | | Auditor's Remuneration – Audit Services | 3,450 | 3,450 | | Auditor's Remuneration – Other Auditors | 448 | 149 | | Auditor's Remuneration – Non-audit Services | 85 | 725 | | Auditor's Remuneration – Other Auditors | 29 | – | | Repair and Maintenance Expenses | 1,941 | 2,186 | | Human Resources Management Fees | 1,633 | 1,356 | | Labor Production Costs | 1,451 | 681 | | Bank Charges | 1,224 | 1,920 | | Communication Expenses | 1,035 | 1,879 | | Renovation Expenses | 490 | 198 | | Conference Fees | 437 | 674 | | Property Management Fees | 59 | 429 | | Impairment of Goodwill | – | 1,091 | | Other Operating Expenses | 21,573 | 14,926 | | Total | 2,149,411 | 1,900,001 | Staff Costs Staff costs, including directors' emoluments, increased by 17.4% to RMB 486.4 million this year, primarily due to higher salaries and bonuses, and increased pension and social responsibility expenses Staff Costs (Including Directors' Emoluments) | Item | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Salaries and Bonuses | 377,758 | 318,805 | | Pension and Social Responsibility | 108,645 | 95,627 | | Total | 486,403 | 414,432 | Income Tax Expense Income tax expense decreased by 59.9% to RMB 18.7 million this year, mainly due to a reduction in profit before income tax; Chinese subsidiaries enjoy preferential tax rates as high-tech enterprises Income Tax Expense | Item | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Current Income Tax Expense | 15,688 | 33,836 | | Deferred Income Tax Expense | 3,053 | 12,765 | | Total | 18,741 | 46,601 | - Shanghai Austar, Austar Shijiazhuang, and Austar Hengxun, as high-tech enterprises, enjoy a preferential corporate income tax rate of 15% when meeting relevant tax law requirements[62] Earnings Per Share Basic earnings per share for the year significantly decreased to RMB 0.17 from RMB 0.54 in 2021, primarily due to a reduction in profit attributable to owners of the Company; diluted earnings per share are the same as basic earnings per share due to the absence of potential ordinary shares Earnings Per Share | Item | 2022 | 2021 | | :--- | :--- | :--- | | Profit Attributable to Owners of the Company (RMB thousands) | 87,461 | 277,300 | | Weighted Average Number of Ordinary Shares in Issue (in thousands) | 512,582 | 512,582 | | Basic Earnings Per Share (RMB) | 0.17 | 0.54 | - As the Company had no potential ordinary shares for the years ended December 31, 2022 and 2021, diluted earnings per share are the same as basic earnings per share[87] Dividends The Board does not recommend a final dividend for the year ended December 31, 2022, consistent with 2021 - The Board does not recommend a final dividend for the year ended December 31, 2022 (2021: nil)[65][277] Trade and Bills Receivables As of December 31, 2022, total trade and bills receivables were RMB 416.5 million, a 40.6% increase from 2021; most trade receivables are due within 90 days, and bills receivables are primarily bank acceptance bills due within six months Trade and Bills Receivables | Item | December 31, 2022 (RMB thousands) | December 31, 2021 (RMB thousands) | | :--- | :--- | :--- | | Trade Receivables | 413,202 | 302,930 | | Bills Receivables | 33,432 | 24,746 | | Less: Impairment Allowance | (30,121) | (31,377) | | Total | 416,513 | 296,299 | - The majority of trade receivables are due within 90 days according to sales contracts[89] - The majority of bills receivables are bank acceptance bills due within six months[66] Assets and Liabilities Related to Contracts with Customers As of December 31, 2022, total contract assets were RMB 585.4 million, a significant increase from 2021, while contract liabilities were RMB 382.7 million, a decrease from 2021 Assets and Liabilities Related to Contracts with Customers | Item | December 31, 2022 (RMB thousands) | December 31, 2021 (RMB thousands) | | :--- | :--- | :--- | | Contract Assets | 591,660 | 386,482 | | Less: Loss Allowance | (7,767) | (9,951) | | Costs to Obtain Contracts | 1,471 | 1,406 | | Total Contract Assets | 585,364 | 377,937 | | Contract Liabilities | (382,707) | (466,689) | Trade and Other Payables As of December 31, 2022, total trade and other payables were RMB 739.6 million, a 23.5% increase from 2021, with trade payables being the largest component and most due within six months Trade and Other Payables | Item | December 31, 2022 (RMB thousands) | December 31, 2021 (RMB thousands) | | :--- | :--- | :--- | | Trade Payables | 426,204 | 350,846 | | Accrued Wages and Welfare | 126,830 | 98,623 | | Accrued Expenses | 34,031 | 40,119 | | Payables for Construction, Machinery and Equipment to Suppliers | 21,001 | 23,714 | | Indirect Taxes Payable | 17,690 | 13,410 | | Warranty Provision | 16,499 | 13,517 | | Amounts Due to Employees | 2,378 | 3,208 | | Loans from Non-controlling Shareholders of a Subsidiary | 1,299 | 1,263 | | Bills Payable | – | 1,500 | | Others | 93,671 | 52,792 | | Total | 739,603 | 598,992 | Ageing Analysis of Trade Payables | Ageing | December 31, 2022 (RMB thousands) | December 31, 2021 (RMB thousands) | | :--- | :--- | :--- | | Within 6 Months | 348,478 | 326,305 | | 6 Months to 1 Year | 55,297 | 7,335 | | 1 to 2 Years | 7,997 | 4,419 | | 2 to 3 Years | 4,014 | 5,546 | | Over 3 Years | 10,418 | 7,241 | | Total | 426,204 | 350,846 | Long-term Borrowings As of December 31, 2022, net long-term borrowings were RMB 40.1 million, a decrease from 2021; secured long-term bank borrowings are collateralized by buildings, construction in progress, and land use rights, bearing interest at annual rates ranging from 4.45% to 4.65% Long-term Borrowings | Item | December 31, 2022 (RMB thousands) | December 31, 2021 (RMB thousands) | | :--- | :--- | :--- | | Secured Bank Borrowings | 85,737 | 54,271 | | Less: Long-term Borrowings Due Within One Year | (45,670) | – | | Total | 40,067 | 54,271 | - Secured long-term bank borrowings are denominated in RMB and collateralized by the Group's buildings, construction in progress, and land use rights[5] - For the year ended December 31, 2022, secured long-term bank borrowings bore interest at annual rates ranging from 4.45% to 4.65%[5] Short-term Borrowings As of December 31, 2022, total short-term borrowings significantly increased to RMB 172.3 million, with both secured and guaranteed bank borrowings rising and an expanded interest rate range Short-term Borrowings | Item | December 31, 2022 (RMB thousands) | December 31, 2021 (RMB thousands) | | :--- | :--- | :--- | | Secured Bank Borrowings | 21,464 | 20,000 | | Guaranteed Bank Borrowings | 150,790 | 34,830 | | Total | 172,254 | 54,830 | - Secured short-term bank borrowings are guaranteed by the Group's buildings and right-of-use assets, bearing interest at annual rates ranging from 4.00% to 4.52%[70] - Guaranteed short-term bank borrowings are guaranteed by subsidiaries, bearing interest at annual rates ranging from 3.80% to 7.00%[94] Management Discussion and Analysis Market Review The 2022 market was impacted by the COVID-19 pandemic, but with adjusted prevention policies, new pharmaceutical projects are expected to increase; growing investments in cell therapy, antibody-drug conjugates, and radiopharmaceuticals, along with China's NMPA aligning with international drug supervision, create new opportunities and development momentum for the pharmaceutical industry - The COVID-19 pandemic negatively impacted supply chains and normal business operations, but with adjusted prevention policies, the number of new pharmaceutical projects is expected to increase[124] - Increasing investments in cell therapy products, antibody-drug conjugates, and radiopharmaceuticals will create opportunities for new projects and service providers[95] - China's NMPA applying to join PIC/S will promote China's alignment with international drug supervision systems, facilitating overseas new drug applications and accelerating the upgrading of the pharmaceutical industry[96] - The release of EU GMP Annex 1 "Manufacture of Sterile Medicinal Products" will bring business opportunities for engineering projects, sterile pharmaceutical equipment, contamination control, and compliance consulting services[97] Business Review Despite pandemic impacts, the Group's 2022 revenue grew by 10.6%, though order intake decreased by 11.5%; the company actively responded to market changes through the acquisition of BOSTA business, expansion of service offerings, product line restructuring, and technology investments, with Powder and Solid Systems and GMP Compliance Services showing the fastest revenue growth, while Life Science Consumables revenue declined due to reduced COVID-19 vaccine-related business - The Group's revenue for the year increased by approximately 10.6% compared to the same period in 2021, but order intake decreased by approximately 11.5%, mainly due to COVID-19 pandemic lockdowns[98] - The Group successfully acquired the BOSTA business, further enriching its integrated business portfolio for filling line systems and lyophilizer systems[99] - The Group believes that building world-class technological capabilities requires continuous resource investment, which will enhance competitiveness in the long run[7] - Service business volume continues to increase, and a new business brand has been established, which is expected to become a new significant revenue source and a higher-margin business[100] Revenue Total revenue for the year was RMB 2,228.6 million, a 10.6% year-on-year increase; all business segments except Life Science Consumables achieved revenue growth, with Powder and Solid Systems and GMP Compliance Services growing fastest; mainland China remains the primary revenue source, accounting for 93.0% of total revenue - The Group's total revenue was approximately RMB 2,228.6 million, an increase of approximately 10.6% compared to 2021[202] - All business segments achieved revenue growth, except for a slight decline in Life Science Consumables, with Powder and Solid Systems and GMP Compliance Services segments growing the fastest[202] Cost of Sales Cost of sales increased by 15.0% to RMB 1,766.0 million this year, primarily due to increased revenue, higher operating losses from a non-wholly owned European subsidiary, and increased manufacturing overhead during manufacturing facility shutdowns caused by the pandemic - Cost of sales increased by approximately RMB 230.0 million or 15.0% from approximately RMB 1,536.0 million in 2021 to approximately RMB 1,766.0 million for the current year[189] - The increase in costs was mainly due to increased revenue, higher operating losses from a non-wholly owned European subsidiary, and the negative impact of the COVID-19 pandemic on operations, especially the shutdown of manufacturing facilities in Shanghai and Shijiazhuang[189] Gross Profit and Gross Profit Margin Gross profit slightly decreased by 3.4% to RMB 462.7 million this year, with the gross profit margin falling from 23.8% to 20.8%, mainly affected by losses from a European subsidiary and production shutdowns due to the pandemic; gross profit margins varied across business segments, with GMP Compliance Services increasing, while Fluid and Bioprocess Systems and Powder and Solid Systems decreased Gross Profit and Gross Profit Margin by Business Segment | Business Segment | 2022 Gross Profit (RMB thousands) | 2022 Gross Profit Margin | 2021 Gross Profit (RMB thousands) | 2021 Gross Profit Margin | | :--- | :--- | :--- | :--- | :--- | | Fluid and Bioprocess Systems | 114,377 | 12.0% | 143,745 | 16.3% | | Cleanroom and Automation Control and Monitoring Systems | 92,757 | 18.0% | 90,275 | 18.8% | | Powder and Solid Systems | 51,702 | 21.0% | 41,694 | 30.1% | | GMP Compliance Services | 43,028 | 45.6% | 28,381 | 42.9% | | Life Science Consumables | 146,668 | 37.8% | 163,044 | 38.7% | | Pharmaceutical Equipment Distribution and Agency | 14,137 | 39.5% | 11,869 | 44.1% | | Total | 462,669 | 20.8% | 479,008 | 23.8% | - The decrease in gross profit margin was mainly due to increased operating losses from a non-wholly owned subsidiary established in Europe, and the negative impact of the COVID-19 pandemic on operations, especially the shutdown of manufacturing facilities in Shanghai and Shijiazhuang[189] Order Intake Total order intake decreased by 11.5% to RMB 2,356.4 million this year, primarily affected by the COVID-19 pandemic and related control measures; Fluid and Bioprocess Systems saw a significant drop in order intake, while Cleanroom and Automation Control and Monitoring Systems, Powder and Solid Systems, and Pharmaceutical Equipment Distribution and Agency experienced growth Order Intake by Business Segment | Business Segment | 2022 (RMB thousands) | 2022 Share | 2021 (RMB thousands) | 2021 Share | Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Fluid and Bioprocess Systems | 777,428 | 33.0% | 1,207,477 | 45.4% | –35.6% | | Cleanroom and Automation Control and Monitoring Systems | 647,892 | 27.5% | 524,786 | 19.7% | 23.5% | | Powder and Solid Systems | 328,414 | 13.9% | 226,225 | 8.5% | 45.2% | | GMP Compliance Services | 108,255 | 4.6% | 117,673 | 4.4% | –8.0% | | Life Science Consumables | 426,165 | 18.1% | 548,875 | 20.6% | –22.4% | | Pharmaceutical Equipment Distribution and Agency | 68,286 | 2.9% | 37,923 | 1.4% | 80.1% | | Total | 2,356,440 | 100.0% | 2,662,959 | 100.0% | –11.5% | - Total order intake decreased by approximately RMB 306.6 million or 11.5%, mainly due to difficulties in traveling and communicating for new business acquisitions and project suspensions caused by the COVID-19 pandemic and related control measures[103] - Order intake for the Life Science Consumables business decreased by 22.4% due to COVID-19 prevention and control measures and reduced business volume related to COVID-19 vaccine production[19] Other Income Other income increased by 76.4% to RMB 11.2 million this year, primarily due to increased subsidies granted by local government authorities in China - Other income increased by approximately RMB 4.9 million or 76.4% from approximately RMB 6.3 million in 2021 to approximately RMB 11.2 million for the current year[235] - This was mainly due to an increase in subsidies granted by local government authorities in China during the current year[235] Other (Losses) / Gains – Net The year recorded a net other loss of RMB 9.6 million, primarily due to increased exchange losses and a one-off compensation for contract termination - For the current year, the Group recorded a net other loss of approximately RMB 9.6 million, mainly due to an increase in exchange losses of approximately RMB 2.8 million and a one-off compensation payment of approximately RMB 3.7 million to a customer for contract termination by mutual agreement[218] Selling and Marketing Expenses Selling and marketing expenses slightly increased by 4.9% to RMB 178.7 million, mainly due to increased expenses for strengthening the sales team, partially offset by reduced marketing activity expenses - Selling and marketing expenses slightly increased by approximately RMB 8.4 million or 4.9% from approximately RMB 170.3 million in 2021 to approximately RMB 178.7 million for the current year[218] - This increase was a combined result of a decrease in marketing activity expenses of approximately RMB 6.8 million and an increase in expenses for strengthening the sales team[218] Administrative Expenses Administrative expenses slightly increased by 5.1% to RMB 134.6 million, primarily due to increased rent from opening multiple new offices in China to meet business development needs - Administrative expenses slightly increased by approximately RMB 6.5 million or 5.1% from approximately RMB 128.1 million in 2021 to approximately RMB 134.6 million for the current year[219] - This increase was due to increased rent from opening multiple new offices in China to meet business development needs[219] Research and Development Expenses Research and development expenses increased by 7.0% to RMB 70.2 million, primarily due to increased R&D expenses for new products and technologies, with R&D personnel accounting for approximately 2.9% of total employees - Research and development expenses increased by approximately RMB 4.6 million or 7.0% from approximately RMB 65.6 million in 2021 to approximately RMB 70.2 million for the current year, mainly due to increased R&D expenses for new products and technologies[219] - As of December 31, 2022, the Group added new R&D talents, bringing the total number of R&D personnel to approximately 2.9% of the Group's total employees[219] Finance Costs – Net Net finance costs increased from RMB 3.3 million in 2021 to RMB 7.0 million this year, primarily due to increased interest expenses from new borrowings - Finance costs – net increased from approximately RMB 3.3 million in 2021 to approximately RMB 7.0 million for the current year, mainly due to increased interest expenses from new borrowings during the year[220] Share of Net Profit of Investments Accounted for Using the Equity Method Share of net profit of investments accounted for using the equity method decreased by 11.2% to RMB 9.5 million, primarily due to reduced profit contributions from associates ROTA Verpackungstechnik GmbH & Co.KG and ROTA Verpackungstechnik Verwaltungsgesellschaft GmbH - Share of net profit of investments accounted for using the equity method decreased by approximately RMB 1.2 million from approximately RMB 10.7 million in 2021 to approximately RMB 9.5 million for the current year[242] - This was mainly due to reduced profit contributions from associates ROTA Verpackungstechnik GmbH & Co.KG and ROTA Verpackungstechnik Verwaltungsgesellschaft GmbH[242] Profit Before Income Tax Profit before income tax significantly decreased by 72.9% to RMB 86.5 million, primarily due to the combined impact of increased expenses and reduced gains mentioned above - Profit before income tax decreased by approximately RMB 232.7 million from approximately RMB 319.2 million in 2021 to approximately RMB 86.5 million for the current year, due to the factors mentioned in this section[243] Income Tax Expense Income tax expense decreased by 59.9% to RMB 18.7 million, primarily due to a reduction in profit before income tax - Income tax expense decreased by approximately RMB 27.9 million from approximately RMB 46.6 million in 2021 to approximately RMB 18.7 million for the current year, mainly due to a reduction in profit before income tax[244] Profit for the Year Profit for the year significantly decreased by 75.2% to RMB 67.7 million, primarily due to the reduction in profit before income tax - Profit for the year decreased by approximately RMB 204.9 million from approximately RMB 272.6 million in 2021 to approximately RMB 67.7 million for the current year, mainly due to the factors mentioned in this section[245] Production, Execution and Organization The Group's new production bases in Shijiazhuang and Shanghai are completed and will be fully operational in early 2023 to enhance production volume and capacity; the AUSTAR UK factory maintains ISO 9001 and 14001 certifications and plans to lease additional space for order growth; the Project Execution Center overcame pandemic challenges to ensure successful project execution and continues to advance its informatized project management platform - Two new production bases in Shijiazhuang and Shanghai have been completed and will be fully operational in early 2023 to meet growth demands for the next five years[140] - The AUSTAR UK factory passed ISO 9001 certification in early 2021 and maintained ISO 9001 and 14001 certifications this year, with arrangements being made to lease additional space to increase production volume and capacity[109] - The Group's Project Execution Center made every effort to overcome the impact of the pandemic, ensuring successful project execution in 2022, and will continue to implement operational excellence management concepts and an informatized project management platform[161] Sales and Marketing The Group enhances sales efficiency and customer satisfaction through an internal sales collaboration model, a closed-loop customer service response system, global team expansion, and digital marketing; in 2022, it actively participated in 47 global events, launched a new brand image, and promoted its brand through social media and an online resource center - The Group's internal sales collaboration model aims to encourage sales teams from different departments and product lines to support each other, providing more tailored solutions[111] - A closed-loop customer service response system was developed in 2022 and is expected to be fully implemented in 2023 to enhance customer satisfaction and loyalty[111] - The Company has recruited European and Southeast Asian teams to directly handle relevant sales opportunities and introduced more agents in Southeast Asia, the Middle East, and North Africa to expand global markets[112] - In 2022, the Group published over 310 news and articles through 17 social media accounts and participated in 47 global events, achieving good brand exposure[113][143] Research and Development The Group in 2022 obtained 76 registered patents and made R&D progress in various areas, including utility and process automation reporting systems, full-process material control systems, HVAC dynamic airflow control systems, OSD granulation and coating equipment upgrades, large-scale stainless steel bioreactor production, WAVE single-use bioreactors, cell preparation isolators, and cell culture systems, to enhance technological capabilities and product portfolio - As of December 31, 2022, the Group had obtained 384 patents, with 76 registered patents obtained during the current year[144] - Developed a utility and process automation reporting system based on the Siemens software platform, which can improve automated system functions and shorten project R&D cycles[114] - Completed the development of a full-process material control system, achieving automatic weighing, unpacking, and feeding signal interaction for materials, assisting customers in achieving full-process unmanned resource allocation[115] - Collaborated with Tianjin University to develop an HVAC dynamic airflow control system, which has been used in Class C clean environments of newly constructed facilities, resulting in 3 invention patents and 7 utility model patents[116] - Completed the development of cell preparation isolators and cell culture systems by the end of 2022, complementing capabilities in cell therapy process systems and services[148] Outlook The Group is optimistic about future development, anticipating cell and gene therapy, continuous manufacturing, digital transformation, high-potency/high-active drug production, and service businesses to be key growth drivers; the company will continue to invest in R&D, expand global markets, and enhance competitiveness through technological innovation and service expansion - Cell and gene therapy technologies and processes are still in early development, with significant room for service providers to launch new businesses, products, and services around these projects[151] - Continuous manufacturing shows economic benefits in the biopharmaceutical industry, and the Group is prepared to collaborate with academic institutions and component wholesalers to further invest in developing related technologies[153] - Digital transformation is increasingly recognized in the biopharmaceutical industry, and the Group provides solutions through its REMOIIS platform, with significant growth potential expected for this business[174][200] - Demand for high-potency/high-active drugs continues to increase, and the Group can support this trend with its knowledge and experience, strengthening its powder and solid systems engineering business through automated equipment[175][198] - Service businesses require less working capital, rely on fixed human capital and streamlined processes, and gain brand recognition from long-term customer loyalty and satisfaction, with a more significant contribution to gross profit margin expected[157][176] Liquidity and Financial Resources Net cash used in operating activities was RMB 37.9 million, net cash used in investing activities was RMB 153.1 million, and net cash from financing activities was RMB 125.3 million this year; net current assets decreased by 16.3% to RMB 441.2 million, and the capital to debt ratio increased to 27.8% Consolidated Cash Flow Statement Summary | Item | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (37,926) | (103,451) | | Net Cash (Used in) / From Investing Activities | (153,143) | 65,022 | | Net Cash From Financing Activities | 125,301 | 59,349 | | Net (Decrease) / Increase in Cash and Cash Equivalents | (65,768) | 20,920 | - Net cash used in operating activities was mainly due to profit before income tax, depreciation and amortization, and an increase in trade and other payables, partially offset by an increase in contract assets, a decrease in contract liabilities, and an increase in trade and other receivables[223][246] - Net cash used in investing activities was mainly due to the acquisition of property, plant, equipment, and intangible assets, as well as the acquisition of associates[223] - Net cash from financing activities was mainly due to proceeds from borrowings, partially used for repayment of borrowings, lease payments, and interest paid[247] Cash Flow Net cash used in operating activities was RMB 37.9 million, net cash used in investing activities was RMB 153.1 million, and net cash from financing activities was RMB 125.3 million this year, resulting in a net decrease in cash and cash equivalents of RMB 65.8 million Consolidated Cash Flow Statement Summary | Item | 2022 (RMB thousands) | 2021 (RMB thousands) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | (37,926) | (103,451) | | Net Cash (Used in) / From Investing Activities | (153,143) | 65,022 | | Net Cash From Financing Activities | 125,301 | 59,349 | | Net (Decrease) / Increase in Cash and Cash Equivalents | (65,768) | 20,920 | Net Current Assets The Group's net current assets decreased by 16.3% to RMB 441.2 million, primarily due to more effective utilization of external funding resources and management of supplier payment terms, leading to an increase in current liabilities - The Group's net current assets decreased by approximately RMB 85.8 million or 16.3% from approximately RMB 527.0 million as of December 31, 2021, to approximately RMB 441.2 million as of December 31, 2022[249] - Total current liabilities increased by approximately RMB 223.6 million to RMB 1,359.8 million[269] Borrowings and Capital to Debt Ratio As of December 31, 2022, total short-term interest-bearing bank borrowings were RMB 172.3 million, and long-term bank borrowings were RMB 85.7 million; the capital to debt ratio increased to 27.8% - As of December 31, 2022, total short-term interest-bearing bank borrowings were RMB 172.3 million, and long-term bank borrowings were RMB 85.7 million[227] - The capital to debt ratio was approximately 27.8% (December 31, 2021: 16.4%)[270] Pledged Assets As of December 31, 2022, the Group's buildings, right-of-use assets, and construction in progress were pledged as collateral for short-term and long-term bank borrowings - As of December 31, 2022, the Group's buildings and right-of-use assets with total carrying amounts of approximately RMB 4.1 million and approximately RMB 68.8 million respectively (December 31, 2021: approximately RMB 5.0 million and approximately RMB 71.1 million respectively), and construction in progress with a carrying amount of approximately RMB 124.4 million (December 31, 2021: approximately RMB 85.0 million) were pledged as collateral for short-term and long-term bank borrowings with carrying amounts of approximately RMB 107.2 million (December 31, 2021: approximately RMB 74.3 million)[228] Contingent Liabilities As of December 31, 2022, the Group provided bank guarantees for two irrevocable letters of credit totaling EUR 887,000 utilized by ROTA KG - As of December 31, 2022, the Group provided bank guarantees for two irrevocable letters of credit totaling EUR 887,000 (approximately RMB 6,584,000) utilized by ROTA KG[229] Capital Commitments As of December 31, 2022, capital expenditures contracted but not yet incurred for property, plant, equipment, and intangible assets amounted to approximately RMB 54.5 million, primarily arising from construction contracts for new facilities in Shanghai and Shijiazhuang - As of December 31, 2022, capital expenditures contracted but not yet incurred for property, plant, equipment, and intangible assets amounted to approximately RMB 54.5 million, primarily arising from construction contracts for new facilities in Shanghai and Shijiazhuang that were contracted but only partially executed[232] Significant Investment Matters, Significant Acquisitions and Disposals of Subsidiaries, Associates and Joint Ventures The Group had no significant investment matters, significant acquisitions, or disposals of subsidiaries, associates, or joint ventures during the current year - The Group had no significant investment matters, significant acquisitions, or disposals of subsidiaries, associates, or joint ventures during the current year[256] Foreign Exchange Risk The Group faces foreign exchange risk from various currencies, primarily EUR, USD, and HKD, but the directors consider the risk not significant and therefore do not use financial instruments for hedging - The Group primarily operates in China and faces foreign exchange risk from various currencies, mainly involving EUR, USD, and HKD[233] - The directors consider foreign exchange rate risk not significant to the Group and therefore do not use any financial instruments, such as forward foreign exchange contracts, to hedge the risk[233] Human Resources As of December 31, 2022, the Group had 1,913 full-time employees, an increase of 331 from 2021; employee costs increased by 17.4% to RMB 486.4 million, mainly due to increased headcount and enhanced compensation attractiveness; the company has established comprehensive welfare programs and training systems, believing that continuous investment in top talent will strengthen long-term competitiveness - As of December 31, 2022, the Group had 1,913 full-time employees, an increase of 331 from 2021[253] - Employee costs (including directors' emoluments) for the current year were approximately RMB 486.4 million, an increase of approximately 17.4% compared to 2021[253] - The Group has established various welfare programs, including basic medical insurance, unemployment insurance, and other related insurances, and makes statutory contributions for overseas employees[273] - The Group believes that building world-class technological capabilities requires continuous resource investment, and while recruiting top talents and consultants may reduce profits in the short term, it will enhance our competitiveness in the long run[274] Events After the Reporting Period As of the date of this announcement, neither the Company nor the Group has undertaken any significant events after the reporting period - Subsequent to December 31, 2022, and up to the date of this announcement, neither the Company nor the Group has undertaken any significant events after the reporting period[276] Corporate Governance and Other Information Closure of Register of Members To determine eligibility for attending and voting at the 2023 Annual General Meeting, the Company will suspend its share transfer registration from May 25 to May 31, 2023 - The Company will suspend its share transfer registration from Thursday, May 25, 2023, to Wednesday, May 31, 2023 (both dates inclusive), during which no share transfers will be registered[259] Corporate Governance Practices The Company has adopted and is committed to implementing the code provisions of the Corporate Governance Code set out in Appendix 14 of the Listing Rules; despite the Chairman and CEO being the same person, the Board believes this arrangement benefits consistent leadership, and the balanced board composition provides sufficient safeguards - The Company has adopted and is committed to implementing the code provisions of the Corporate Governance Code set out in Part 2 of Appendix 14 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited[259] - Mr. He Guoqiang serves as both the Chairman of the Board and the Chief Executive Officer of the Company, and the Board believes this arrangement is beneficial for ensuring consistent leadership of the Group and enhancing the effectiveness and efficiency of the Group's overall strategic planning[260] Directors' Compliance with Model Code The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 of the Listing Rules, and all directors confirmed compliance with the code during the current year - The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers set out in Appendix 10 to the Listing Rules as the code of conduct for securities transactions by its directors[282] - All directors confirmed that they have complied with the required standards set out in the Model Code during the current year[282] Purchase, Sale or Redemption of Listed Securities Neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities during the current year - Neither the Company nor any of its subsidiaries purchased, redeemed, or sold any of the Company's listed securities during the current year[283] Audit Committee The Audit Committee, established on October 21, 2014, is primarily responsible for reviewing interim and annual results, overseeing financial reporting processes and internal control systems, and communicating with external auditors; the committee has reviewed the consolidated financial statements for the current year - The Board established the Audit Committee on October 21, 2014, and adopted written terms of reference in accordance with Rules 3.21 to 3.23 of the Listing Rules and the Corporate Governance Code[283] - The primary responsibilities of the Audit Committee are to review the Company's interim and annual results and to oversee the Group's financial reporting process and internal control systems[263] - The Audit Committee has reviewed the Company's consolidated financial statements for the current year[284] Scope of Work of PricewaterhouseCoopers PricewaterhouseCoopers has reconciled the figures in the Group's preliminary results announcement with the audited consolidated financial statements, but their work does not constitute an assurance engagement, thus no opinion or assurance conclusion has been issued on the preliminary results announcement - PricewaterhouseCoopers has reconciled the figures in the Group's preliminary results announcement regarding the consolidated statement of financial position, consolidated statement of profit or loss, consolidated statement of comprehensive income, and related notes for the current year with the figures presented in the Group's audited consolidated financial statements for the current year[265] - The work performed by PricewaterhouseCoopers in this regard does not constitute an assurance engagement, and therefore no opinion or assurance conclusion has been issued on this preliminary results announcement[265] Publication of Annual Results and Annual Report This annual results announcement will be published on the HKEX website and the Company's website, and the Company's annual report, containing all information required by the Listing Rules, will be dispatched to shareholders and published on the websites in due course - This annual results announcement will be published on the HKEX website (www.hkexnews.hk) and the Company's website (www.austar.com.hk)[266](index=266&type=chunk) - The Company's annual report for the current year, containing all information required by the Listing Rules, will be dispatched to shareholders and published on the respective websites of the HKEX and the Company in due course[266] Acknowledgement The Company expresses gratitude to all shareholders and stakeholders for their continuous support and thanks all employees for their efforts and commitment to the Group - The Company takes this opportunity to thank all shareholders and stakeholders for their continuous support[267] - At the same time, the Company expresses its deep gratitude to all employees for their efforts and commitment to the Group[267] Board Composition As of the date of this announcement, the Board comprises four executive directors, one non-executive director, and three independent non-executive directors - As of the date of this announcement, the Board comprises four executive directors, Mr. He Guoqiang, Mr. He Jianhong, Mr. Chen Yuewu, and Ms. Zhou Ning; one non-executive director, Ms. Ji Lingling; and three independent non-executive directors, Mr. Cheung Lap Kei, Ms. Zhao Kaishan, and Mr. Leung Hoi Kin[268]