康哲药业(00867) - 2023 - 中期业绩

Interim Results Announcement Financial Highlights During the reporting period, CMS Pharma achieved steady growth in turnover and gross profit, with increased profit for the period and basic earnings per share, and declared an interim dividend, indicating a healthy financial position | Indicator | H1 2023 (RMB millions) | H1 2022 (RMB millions) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Turnover | 4,610.1 | 4,447.8 | 3.6% | | Turnover from Pharmaceutical Product Sales | 5,536.6 | 5,170.0 | 7.1% | | Gross Profit | 3,605.9 | 3,436.2 | 4.9% | | Gross Profit from Pharmaceutical Product Sales | 3,567.3 | 3,375.0 | 5.7% | | Profit for the Period | 1,916.0 | 1,796.3 | 6.7% | | Basic Earnings Per Share (RMB) | 0.7835 | 0.7325 | 7.0% | | Bank Balances and Cash (as of June 30, 2023) | 4,451.4 | - | - | | Readily Realizable Bank Acceptance Bills (as of June 30, 2023) | 254.9 | - | - | | Interim Dividend Per Share (RMB) | 0.3134 | 0.2930 | 7.0% | Business Highlights During the reporting period, CMS Pharma's operating performance continued to grow, with three innovative drugs approved for marketing in China, marking a harvest period for innovation and R&D - The Group's operating performance continued to grow during the reporting period, with three innovative drugs approved for marketing in China, marking a harvest cycle for innovation and R&D[4] - Independently operated dermatology and medical aesthetics, ophthalmology, and Southeast Asia business systems are maturing, safeguarding the Group's continuous high-quality development[4] - Diazepam Nasal Spray: China's first approved diazepam nasal spray, offering convenient administration and rapid onset for acute recurrent epileptic seizures[4] - Tildrakizumab Injection: A specific IL-23 targeting monoclonal antibody, with fewer injections and good long-term safety and tolerability, providing a better treatment option for moderate-to-severe psoriasis patients[4] - Methotrexate Injection (Psoriasis Indication): China's first subcutaneous MTX pre-filled syringe, meeting the basic treatment needs of psoriasis patients[4] - Methylene Blue Enteric-Coated Sustained-Release Tablets: China NDA is under CDE review, used to enhance diagnostic sensitivity for colorectal cancer or precancerous lesions[4] - Methotrexate Injection (RA Indication): China bridging trial has completed enrollment of all subjects[4] - Dedosertat Tablets: An innovative oral HIF-PHI, China Phase III clinical trial is steadily progressing, with enrollment of all subjects completed in August[4] - Dermatology and Medical Aesthetics "CMS Beauty": Tildrakizumab Injection approved for marketing, synergistically developing with existing products Hylatopic and Ansoxine; obtained exclusive China license for "Sculptra" (poly-L-lactic acid microsphere filler), a regenerative light medical aesthetic injectable product[4] - Ophthalmology "CMS Vision": Innovative medical device EyeOP1® Glaucoma Treatment System achieved market access in multiple provinces and cities; China clinical trial application for Class I innovative biologic VEGF+ANG2 tetravalent bispecific antibody approved[4] - Southeast Asia "CMS Health": Partnered with Junshi Biosciences to jointly promote the commercialization of Toripalimab in Southeast Asia[4] Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended June 30, 2023, CMS Pharma's turnover and gross profit increased, with profit for the period rising 6.7% year-on-year, and profit attributable to owners was RMB 1,921.1 million | Indicator (RMB thousands) | Six Months Ended June 30, 2023 (Unaudited) | Six Months Ended June 30, 2022 (Unaudited) | | :--- | :--- | :--- | | Turnover | 4,610,127 | 4,447,791 | | Cost of Sales | (1,004,237) | (1,011,641) | | Gross Profit | 3,605,890 | 3,436,150 | | Other Income | 133,710 | 108,793 | | Other Gains and Losses | 97,262 | 60,146 | | Selling Expenses | (1,339,620) | (1,278,460) | | Administrative Expenses | (317,984) | (279,676) | | Research and Development Expenses | (75,740) | (55,551) | | Finance Costs | (21,208) | (18,112) | | Share of Profits of Associates | 197,816 | 82,424 | | Share of Profits of Joint Ventures | 2,466 | - | | Profit Before Tax | 2,282,592 | 2,055,714 | | Income Tax Expense | (366,641) | (259,390) | | Profit for the Period | 1,915,951 | 1,796,324 | | Profit for the Period Attributable to Owners of the Company | 1,921,056 | 1,798,736 | | Profit for the Period Attributable to Non-controlling Interests | (5,105) | (2,412) | | Basic Earnings Per Share (RMB) | 0.7835 | 0.7325 | Condensed Consolidated Statement of Financial Position As of June 30, 2023, CMS Pharma's total assets increased from December 31, 2022, with a significant rise in net current assets and equity, reflecting strengthened financial position | Indicator (RMB thousands) | June 30, 2023 (Unaudited) | December 31, 2022 (Audited) | | :--- | :--- | :--- | | Non-current Assets | | | | Property, Plant and Equipment | 402,602 | 425,480 | | Interests in Associates | 3,220,405 | 3,044,818 | | Intangible Assets | 1,925,074 | 2,066,423 | | Goodwill | 1,547,903 | 1,665,993 | | Prepayments for Purchase of Intangible Assets | 1,388,911 | 1,285,415 | | Deferred Tax Assets | 48,918 | 39,007 | | Current Assets | | | | Inventories | 616,448 | 477,206 | | Financial Assets at Fair Value Through Profit or Loss | 1,629,112 | 1,491,336 | | Trade and Other Receivables and Prepayments | 1,950,952 | 2,043,944 | | Amounts Due from Associates | 493,550 | 328,072 | | Bank Balances and Cash | 4,451,367 | 4,376,376 | | Current Liabilities | | | | Trade and Other Payables | 496,082 | 563,194 | | Bank Borrowings | 1,281,485 | 1,783,337 | | Tax Liabilities | 400,000 | 327,819 | | Net Current Assets | 7,024,056 | 5,952,273 | | Equity and Reserves | | | | Equity Attributable to Owners of the Company | 15,984,136 | 14,589,067 | | Non-controlling Interests | 47,604 | 148,010 | | Non-current Liabilities | | | | Deferred Tax Liabilities | 107,878 | 124,959 | Notes to Condensed Consolidated Financial Statements This section outlines the basis of preparation, significant accounting policies, and revenue and segment information for the condensed consolidated financial statements, ensuring transparency and compliance Basis of Preparation These condensed consolidated financial statements are prepared in accordance with IAS 34 Interim Financial Reporting and relevant disclosure requirements of Appendix 16 of the Listing Rules - These condensed consolidated financial statements are prepared in accordance with International Accounting Standard 34 Interim Financial Reporting issued by the International Accounting Standards Board and the relevant disclosure requirements of Appendix 16 to the Listing Rules[8] Significant Accounting Policies These condensed consolidated financial statements are primarily prepared on a historical cost basis, adopting new or revised IFRSs effective during the period, with no material impact on presented amounts or disclosures - These condensed consolidated financial statements are prepared on the historical cost basis, except for certain financial instruments which are measured at their applicable fair values[9] - The adoption of new or revised International Financial Reporting Standards has no material impact on the amounts presented in these condensed consolidated financial statements and their disclosures[9] Revenue and Segment Information The Group's turnover primarily derives from selling pharmaceutical products to distributors and providing promotion services to manufacturers, with one reportable operating segment mainly within the PRC - The Group's turnover primarily comprises sales of pharmaceutical products to various distributors and provision of promotion services to certain pharmaceutical manufacturers[10] - During the reporting period, the Group had one reportable operating segment, namely the marketing, promotion, sales, and manufacturing of pharmaceutical products[10] | Source of Revenue (RMB thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Sales of Pharmaceutical Products | 3,278,537 | 3,330,644 | | Promotion Income | 1,331,590 | 1,117,147 | | Total Turnover | 4,610,127 | 4,447,791 | Notes to Condensed Consolidated Financial Statements (Continued) Income Tax Expense During the reporting period, the Group's income tax expense significantly increased by 41.3%, primarily due to higher withholding tax related to internal dividend distribution | Tax Category (RMB thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Current Tax | | | | PRC Enterprise Income Tax | 249,366 | 178,665 | | Hong Kong Profits Tax | 43,559 | 3,219 | | Macau Complementary Income Tax | 84,885 | 72,899 | | Deferred Tax | | | | Current Period | (11,169) | 4,607 | | Income Tax Expense for the Period | 366,641 | 259,390 | - Income tax expense for the period increased by 41.3%, primarily due to an increase in withholding tax related to the Group's internal dividend distribution[64] Profit for the Period Profit for the period was calculated considering factors such as depreciation, amortization, inventory costs, interest income, and exchange gains/losses, with net exchange gains positively impacting profit | Item (RMB thousands) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Depreciation of Property, Plant and Equipment | 22,495 | 21,477 | | Amortization of Intangible Assets (included in cost of sales) | 81,050 | 83,012 | | Inventory Costs Recognized as Expense | 918,741 | 923,913 | | Interest Income | (64,876) | (51,742) | | Net Exchange (Gains) Losses | (69,095) | 50,162 | Dividends The company paid a final dividend for 2022 during the reporting period and decided to declare an interim dividend for 2023 after the period, showing an increase from the prior year | Dividend Type | Amount Per Share (RMB) | Total (RMB thousands) | Comparison Period | | :--- | :--- | :--- | :--- | | 2022 Final Dividend | 0.2414 | 591,910 | Six Months Ended June 30, 2022 | | 2021 Final Dividend | 0.2269 | 557,594 | Six Months Ended June 30, 2022 | | 2023 Interim Dividend | 0.3134 | 768,453 | Post-reporting period decision | | 2022 Interim Dividend | 0.2930 | 718,645 | Post-reporting period decision | Earnings Per Share For the six months ended June 30, 2023, basic earnings per share attributable to owners of the company increased to RMB 0.7835 from the prior year | Indicator | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Earnings Used to Calculate Basic Earnings Per Share (Profit for the Period Attributable to Owners of the Company) (RMB thousands) | 1,921,056 | 1,798,736 | | Weighted Average Number of Ordinary Shares Used to Calculate Basic Earnings Per Share | 2,451,988,512 | 2,455,551,910 | | Basic Earnings Per Share (RMB) | 0.7835 | 0.7325 | - For the six months ended June 30, 2023 and 2022, the calculation of diluted earnings per share assumes that non-controlling shareholders of subsidiaries do not exercise their put options, as exercising them would result in an increase in earnings per share[15] Trade and Other Receivables and Prepayments As of June 30, 2023, the Group's trade receivables (net of credit loss allowance) decreased from year-end 2022, with most receivables within credit terms, indicating good management | Item (RMB thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Trade Receivables | 1,362,858 | 1,451,678 | | Less: Allowance for Credit Losses | (9,643) | (9,643) | | Net Trade Receivables | 1,353,215 | 1,442,035 | | Bills Receivable | 254,921 | 269,579 | | Prepayments for Purchases | 179,292 | 211,746 | | Other Receivables and Deposits | 163,524 | 120,584 | | Total | 1,950,952 | 2,043,944 | - The Group generally grants credit terms of 0 to 90 days to trade customers, which can be extended to four months for certain selected customers[16] | Ageing of Trade Receivables (RMB thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | 0 - 90 Days | 1,302,237 | 1,363,828 | | 91 - 365 Days | 35,949 | 57,802 | | Over 365 Days | 15,029 | 20,405 | | Total | 1,353,215 | 1,442,035 | Amounts Due from Associates As of June 30, 2023, amounts due from associates included non-trade exclusive distribution right deposits and trade-related promotion income, with a significant increase in trade-related amounts - As of June 30, 2023, an amount of approximately RMB 30,000,000 was non-trade in nature and non-interest bearing, representing a deposit for exclusive distribution rights paid to Tibet Pharmaceutical[18] - As of June 30, 2023, an amount of approximately RMB 493,550,000 was trade in nature and non-interest bearing, representing promotion income receivable from Tibet Pharmaceutical, an increase from RMB 328,072,000 at December 31, 2022[18] - The Group grants Tibet Pharmaceutical a credit period of 90 days, and the ageing of trade receivables as of June 30, 2023, was within three months[18] Trade and Other Payables As of June 30, 2023, the Group's trade payables increased from year-end 2022, while salaries and welfare payables, other tax payables, and accrued promotion expenses decreased | Item (RMB thousands) | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Trade Payables | | | | 0 - 90 Days | 242,229 | 164,837 | | 91 - 365 Days | 1,948 | 11,715 | | Over 365 Days | 933 | 1,457 | | Total Trade Payables | 245,110 | 178,009 | | Salaries and Welfare Payables | 133,100 | 200,360 | | Other Tax Payables | 28,906 | 61,318 | | Accrued Promotion Expenses | 50,482 | 71,273 | | Accrued Expenses | 24,710 | 34,743 | | Other Payables | 13,774 | 17,491 | | Total | 496,082 | 563,194 | - The credit period for goods purchased ranges from 0 to 120 days[18] Management Discussion and Analysis Company Overview CMS Pharma is an open platform company connecting pharmaceutical innovation with commercialization, managing product lifecycles, and has a strong commercialization capability in China, with a focus on R&D and investment - CMS Pharma is an open platform company that connects pharmaceutical innovation with commercialization and manages the entire product lifecycle, committed to providing competitive products and services to meet unmet medical needs[20] - The Group has been deeply rooted in the Chinese market for 31 years, possessing proven successful commercialization capabilities, and has formed an innovation research strategy centered on "joint R&D and investment"[20] - Approximately 30 innovative products with differentiated competitive advantages for short, medium, and long terms have been strategically deployed, with 3 of them successfully approved for marketing in China in the first half of this year[20] - The Group is deeply engaged in specialized disease areas such as cardiovascular, digestive, central nervous system, dermatology, ophthalmology, and pediatrics, and independently operates "CMS Beauty" (dermatology and medical aesthetics), "CMS Vision" (ophthalmology), and Southeast Asia businesses[20] Business Review In H1 2023, CMS Pharma executed its innovation strategy, achieving continuous growth in operating performance with three innovative drugs approved and enhanced sales and profit from existing exclusive/branded drugs - During the reporting period, CMS Pharma steadfastly executed its innovation development strategy guided by actual clinical needs, steadily entering a harvest cycle for innovation, with three innovative drugs with differentiated advantages approved for marketing in China[21] - The Group continued to leverage the academic differentiation advantages of its existing exclusive/branded drugs, and with the combined support of a specialized business structure and compliant, refined internal controls, achieved continuous growth in operating performance[21] | Indicator | H1 2023 (RMB millions) | H1 2022 (RMB millions) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Sales Revenue | 4,610.1 | 4,447.8 | 3.6% | | Turnover from Pharmaceutical Product Sales | 5,536.6 | 5,170.0 | 7.1% | | Profit for the Period | 1,916.0 | 1,796.3 | 6.7% | Innovation Research CMS Pharma leverages an open innovation platform to develop differentiated products in key therapeutic areas, efficiently advancing clinical development and commercialization, while enhancing R&D systems and digital management - The Group is based on an open innovation product incubation platform, deeply connecting global original innovation resources, targeting real clinical needs, and strategically deploying innovative products with differentiated advantages in advantageous specialized fields[22][23] - Continuously improving the product R&D system that covers the entire lifecycle of innovative products, deepening the integration of "industry, academia, and research," and strengthening the ability to verify innovative technologies such as basic research and target analysis[23] - Promoting the digitalization and standardization of the entire product management process, comprehensively enhancing the organizational capability and execution efficiency of product value assessment, medical development, clinical operations, and registration management[23] Innovation Transformation Entering Harvest Period CMS Pharma achieved significant milestones in innovation, with three differentiated innovative products approved in China in H1 2023, enriching its commercial product matrix and advancing other pipeline developments - In the first half of 2023, the Group successfully obtained approval for three innovative products with differentiated advantages in China: Diazepam Nasal Spray, Tildrakizumab Injection, and Methotrexate Injection (Psoriasis indication)[24] - Methylene Blue Enteric-Coated Sustained-Release Tablets are currently under review for China New Drug Application (NDA); bridging trials for Methotrexate Injection (RA indication) and Dedosertat Tablets are progressing smoothly[24] Three Innovative Products Approved in China In H1 2023, CMS Pharma successfully obtained approval for three innovative drugs in China: Diazepam Nasal Spray, Tildrakizumab Injection, and Methotrexate Injection, all offering significant clinical advantages and market potential - Diazepam Nasal Spray: China's first approved drug for cluster epileptic seizures, suitable for children aged 6 and above and adults, offering differentiated advantages of convenient administration and rapid onset, expected to meet the treatment needs of nearly 500,000 patients with cluster epileptic seizures in China[25] - Tildrakizumab Injection (Ilumya): A specific IL-23 targeting monoclonal antibody for adult patients with moderate-to-severe plaque psoriasis suitable for systemic therapy or phototherapy. Its China Phase III clinical trial showed high response rates and good long-term safety, requiring only 4 doses per year during the maintenance phase, which is expected to improve patient compliance and serve over 7 million psoriasis patients in China[26] - Methotrexate Injection: China's first subcutaneous MTX pre-filled syringe for severe, stubborn, and disabling psoriasis. Compared to oral MTX, it has lower gastrointestinal side effects, improving patient compliance, and comes in various small-volume specifications for convenient self-administration at home[27] Progress of Clinical Development of Key Innovative Products in China CMS Pharma's key innovative products, including Methylene Blue Enteric-Coated Sustained-Release Tablets, Dedosertat Tablets, Ruxolitinib Cream, and PLENITY, are making steady progress in China's clinical development, addressing unmet medical needs - Methylene Blue Enteric-Coated Sustained-Release Tablets: China NDA is currently under review by the Center for Drug Evaluation (CDE), and Phase III clinical trial results showed a significant increase in the detection rate of non-polypoid colorectal lesions[28] - Dedosertat Tablets: China Phase III clinical trial is steadily progressing, with enrollment of all 152 subjects completed in August, expected to address unmet treatment needs in chronic kidney disease (CKD) anemia[29] - Ruxolitinib Cream: Actively preparing for China clinical development and has signed a strategic cooperation agreement, expected to accelerate the product's clinical application in China for non-segmental vitiligo and mild-to-moderate atopic dermatitis[30][31] - PLENITY: The marketing application based on US approval data has been withdrawn, and the company is actively preparing to conduct supplementary clinical trials in China for weight management in adults with a Body Mass Index (BMI) of 25-40 kg/m2[32][33] - The China bridging trial for Methotrexate Injection for adult rheumatoid arthritis (RA) has completed enrollment of all subjects, expected to become China's first subcutaneous pre-filled methotrexate injection for RA[27] Innovative Pipeline List CMS Pharma's innovative pipeline spans multiple therapeutic areas, including marketed/under review products and R&D stage products, showcasing a rich product reserve and diversified innovation strategy China/Overseas Marketed or Under Review Products | Product | Rights Region | Indication | | :--- | :--- | :--- | | Diazepam Nasal Spray | China | Acute treatment of cluster epileptic seizures/acute recurrent epileptic seizures in children aged six and above and adults with epilepsy | | Tildrakizumab Injection (Biologic) | China | Adult patients with moderate-to-severe plaque psoriasis suitable for systemic therapy or phototherapy | | Methotrexate Injection | China | Severe, stubborn, disabling psoriasis in adults unresponsive to other treatments; adult rheumatoid arthritis | | Methylene Blue Enteric-Coated Sustained-Release Tablets | China | As a diagnostic agent, to enhance visualization of colorectal lesions in adult patients undergoing screening or colonoscopy surveillance | | Dedosertat Tablets | China | Anemia in patients with chronic kidney disease | | 0.09% Cyclosporine Ophthalmic Emulsion | China | To increase tear production in patients with dry eye disease (keratoconjunctivitis sicca) | | PLENITY | China | For weight management in adults with BMI of 25-40 kg/m2, in conjunction with diet and exercise | | Latanoprost Ophthalmic Solution | China | To reduce elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension | | Ruxolitinib Cream | China/Eleven Southeast Asian Countries | Topical treatment for non-segmental vitiligo in adults and children aged 12 and above; topical short-term and non-continuous chronic treatment for mild-to-moderate AD patients | | Levetiracetam Extended-Release Tablets | China | Adjunctive therapy for focal onset seizures in epilepsy | | BCG for Bladder Instillation (Biologic) | China | Curative treatment and prophylactic treatment for recurrence of non-invasive urothelial bladder cancer | | PoNS | China | Chronic balance deficit caused by mild-to-moderate traumatic brain injury | Products in R&D Stage | Product | Rights Region | Indication | Preclinical | CTA Approved | Phase I | Phase II | Phase III | NDA | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | SDN-037 | Global | Pain and inflammation after cataract surgery | | | | | | | | PDP-716 | Global | To reduce elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension | | | | | | | | CF101 | Global | Psoriasis | | | | | | | | ACT017 (Biologic) | Global | Acute ischemic stroke | | | | | | | | CF102 | Global | Hepatocellular carcinoma; non-alcoholic fatty liver disease/non-alcoholic steatohepatitis | | | | | | | | XF-73 | Global | Prevention of postoperative Staphylococcus aureus infection; infectious diseases | | | | | | | | Y-3 Injection * | Mainland China, Hong Kong, Macau | To improve neurological symptoms, activities of daily living, and functional impairment caused by acute ischemic stroke | | | | | | | | BB2603 | Global | Onychomycosis and tinea pedis | | | | | | | | VXM01 (Biologic) | Global | Recurrent glioblastoma | | | | | | | | VEGF+ANG2 Tetravalent Bispecific Antibody (Biologic) | China | Intended for neovascular eye diseases | | | | | | | | Nearly 10 Self-Customized Innovative Drugs | Global | Including small molecules, mAbs, bispecific antibodies, siRNAs, etc | | | | | | | Commercialization System CMS Pharma has established a compliant, efficient, and resource-sharing commercialization platform with a strong promotion team and extensive channel coverage, accelerating the commercialization of innovative products - The Group has established a compliant, efficient, and resource-sharing open commercialization platform, possessing a highly capable and professional promotion team, extensive channel coverage, and expert resources across multiple specialized therapeutic areas[36] - By deeply exploring the differentiated academic advantages of products, precise product positioning, actively promoting academic clinical guidelines and expert consensus recommendations, the Group accelerates the brand building of innovative products[36] - As of June 30, 2023, the Group's promotion network covered over 50,000 hospitals and medical institutions and over 200,000 retail pharmacies nationwide[37] On-Market Products CMS Pharma's on-market products cover cardiovascular, digestive, ophthalmology, dermatology, and medical aesthetics, with many holding leading positions or unique advantages in their respective markets | Product Line | Product | Indication / Function | Product Advantage | | :--- | :--- | :--- | :--- | | Cardiovascular Line | XinHuoSu (Recombinant Human Brain Natriuretic Peptide for Injection) | Acute decompensated heart failure | China's only recombinant human brain natriuretic peptide (rhBNP) on the market | | | Poiyidin (Felodipine Extended-Release Tablets) | Hypertension and stable angina pectoris | High cardio-cerebral protection and vascular selectivity, a calcium channel blocker (CCB) suitable for Chinese patients | | | Deanxit (Flupentixol and Melitracen Tablets) | Mild-to-moderate depression, anxiety, and psychosomatic disorders | According to IQVIA 2022 data, this product is the number one antidepressant in the Chinese market | | Digestive Line | Ursodeoxycholic Acid Capsules (Ursofalk) | Gallbladder cholesterol stones, cholestatic liver disease, and bile reflux gastritis | According to IQVIA 2022 data, this product consistently ranks first in market share for choleretic drugs in China | | | Salofalk (Mesalazine) | Ulcerative colitis, including acute exacerbation and maintenance treatment to prevent recurrence, and treatment of acute exacerbation of Crohn's disease | According to IQVIA 2022 data, this product ranks first in market share for aminosalicylates, a first-line drug for inflammatory bowel disease in China | | | Enterol (Saccharomyces boulardii powder) | Diarrhea in adults and children and diarrheal symptoms caused by intestinal flora imbalance | A probiotic pharmaceutical preparation with sufficient evidence-based medicine and high-level recommendations from domestic and international authoritative guidelines | | | Combizym (Aspergillus oryzae and Pancreatin Tablets) | Indigestion caused by reduced digestive enzymes | Gastrointestinal dual-action, a recommended digestive enzyme preparation for pancreatic exocrine insufficiency enzyme replacement therapy | | Ophthalmology Line | Stulln Eye Drops (Aescin and Digitalis Glycosides Eye Drops) | Macular degeneration and various types of visual fatigue | A representative drug for professional anti-visual fatigue, a safe and convenient choice for treating macular degeneration | | | EyeOP1 ® Glaucoma Treatment System | Glaucoma where intraocular pressure cannot be controlled by medication and surgery | Applies focused ultrasound technology, scalpel-free micro-invasive, precise focusing, easy to operate, an innovative, safe, and effective glaucoma treatment technology | | Dermatology Line | Hylatopic (Mucopolysaccharide Polysulphate Cream) | Blunt trauma with and without hematoma formation and superficial phlebitis not treatable by compression | A multi-functional skin barrier repair agent | | | Ansoxine (Polidocanol Injection) | Various specifications for sclerotherapy of various varicose veins | A German original brand for varicose vein sclerotherapy with many years of clinical application | | Dermocosmetics | Hylatopic Soothing Product Series (including three products) | Moisturizing and soothing, combining cleansing and moisturizing, suitable for sensitive skin | Four core ingredients, moisturizing and soothing, gently repairing the skin barrier | | Light Medical Aesthetics Products | Vmonalisa (Modified Sodium Hyaluronate Gel for Injection) | For mid-to-deep dermal injection to correct moderate-to-severe nasolabial folds (medium-to-large molecules); for deep dermal to subcutaneous injection to correct moderate-to-severe nasolabial folds (small molecules) | Korean light luxury hyaluronic acid with anesthetic, safe, natural, and youthful, featuring dual-particle hyaluronic acid with various molecular sizes to meet diverse anti-aging needs | | | ScarAway / Strataderm (Self-drying Silicone Gel for Scar Care) | Prevention and improvement of hypertrophic scar tissue | An effective silicone gel widely used for improving new and old scars and preventing hyperplasia in various populations | | | Mesoestetic - Mesohyal Product Series (including five products) | Enhancing skin firmness, moisturizing skin, increasing skin elasticity, etc | Formula-based therapy providing personalized medical aesthetic solutions for beauty seekers | | | Novellina Hyaluronic Acid Product Series * (including four products) | Superficial and deep skin filling, long-lasting hydration | Based on unique SMART cross-linking technology and PEG cross-linking, with excellent rheological ratio, high biocompatibility, and good bio-integration | Sales Data by Product Line During the reporting period, CMS Pharma's major product lines performed well, with significant growth in dermatology and medical aesthetics and ophthalmology, while cardiovascular and digestive lines remained stable - Cardiovascular Line: Achieved revenue of RMB 2,131.4 million, a decrease of 0.5% year-on-year; if calculated entirely based on pharmaceutical product sales revenue, it increased by 5.9% to RMB 3,096.2 million, accounting for 55.9% of the Group's pharmaceutical product sales turnover[40] - Digestive Line: Achieved revenue of RMB 1,779.9 million, an increase of 4.2% year-on-year, accounting for 32.1% of the Group's pharmaceutical product sales turnover[40] - Dermatology and Medical Aesthetics Line: Achieved revenue of RMB 245.7 million, an increase of 27.4% year-on-year, accounting for 4.4% of the Group's pharmaceutical product sales turnover[41] - Ophthalmology Line: Achieved revenue of RMB 245.6 million, an increase of 29.6% year-on-year, accounting for 4.4% of the Group's pharmaceutical product sales turnover[41] - Other Products: Achieved revenue of RMB 207.5 million, a decrease of 4.0% year-on-year; if calculated entirely based on pharmaceutical product sales revenue, it increased by 8.8% to RMB 169.2 million, accounting for 3.1% of the Group's pharmaceutical product sales turnover[42] Dermatology and Medical Aesthetics Business CMS Pharma's dermatology and medical aesthetics business "CMS Beauty" has established three divisions and an "one body, two wings" product strategy, covering nearly 10,000 hospitals and medical institutions in China - CMS Beauty has formed a business structure with three major divisions: dermatology prescription, medical aesthetics products, and new retail, and has established an "one body" (dermatology prescription products) and "two wings" (dermocosmetics and light medical aesthetics products) product layout strategy[43] - By consolidating the expert network for dermatology prescription products, leveraging rich dermatological academic resources, promoting through new media platforms, and leading the development of differentiated aesthetic solutions, CMS Beauty fosters positive communication and long-term cooperation with institutional clients[43] - As of June 30, 2023, CMS Beauty covered nearly 10,000 hospitals and medical institutions in China[43] Breakthrough in Dermatology Prescription Product Layout CMS Beauty achieved a breakthrough in dermatology prescription products with the approval of Tildrakizumab Injection, synergistic with existing products, and is preparing for Ruxolitinib Cream's China development - The innovative biologic Tildrakizumab Injection, targeting the IL-23 p19 subunit (for moderate-to-severe plaque psoriasis), has been successfully approved for marketing in China[44] - Relying on the academic platform accumulated from existing dermatology products Hylatopic and Ansoxine, CMS Beauty is rapidly advancing the brand building and proactive academic promotion of Tildrakizumab Injection[44] - Preparatory work for the China development, registration, and clinical application of Ruxolitinib Cream is being carried out in an orderly manner[44] Expanding Portfolio of Dermocosmetics and Light Medical Aesthetics Products CMS Beauty continues to expand its dermocosmetics and light medical aesthetics portfolio, launching the Hylatopic soothing series, approving a small molecule hyaluronic acid, and securing exclusive China rights for "Sculptra" - "Hylatopic," CMS Beauty's dermocosmetics R&D platform, has successfully developed and launched three cleansing and moisturizing soothing series products[45] - In the light medical aesthetics field, building on the existing Korean hyaluronic acid Vmonalisa, a small molecule hyaluronic acid of the same brand was approved for marketing in China during the reporting period[45] - An exclusive license agreement was signed with Jiangsu Xihong Biomedical Co., Ltd. for poly-L-lactic acid microsphere filler for injection ("Sculptra") in mainland China, Hong Kong, Macau, and Taiwan, filling a gap in the regenerative medical aesthetics product portfolio[45] Orderly Progress in R&D of Focused Ultrasound Technology Medical Aesthetic Devices CMS Beauty's "Carnation" focused ultrasound technology R&D platform is making orderly progress in energy-based medical aesthetic devices, with the FUBA5200 focused ultrasound body sculpting device completing Phase III enrollment - "Carnation," CMS Beauty's focused ultrasound technology R&D platform, has three energy-based series products in its pipeline: FUBA focused ultrasound fat reduction device series, LITU focused ultrasound skin treatment device series, and MEBA ultrasound introduction device series[46] - The China Phase III clinical trial for the main R&D product, FUBA5200 focused ultrasound body sculpting device, is steadily progressing, with enrollment of all 144 subjects completed in August[46] Ophthalmology Business CMS Pharma's "CMS Vision" ophthalmology business has a complete structure and professional team, aiming to be a leading ophthalmic drug and device company in China, covering nearly 10,000 hospitals - CMS Vision has established a relatively complete business structure and built a professional ophthalmic team that understands products, markets, and possesses high expertise, aiming to become a leading ophthalmic drug and device company in China[47] - It possesses the innovative medical device EyeOP1® Glaucoma Treatment System and the main on-market exclusive drug Stulln Eye Drops, both approved for marketing in China[47] - The China clinical trial application for the Class I innovative biologic VEGF+ANG2 tetravalent bispecific antibody, used for treating neovascular eye diseases, has been approved by the NMPA[48] - As of June 30, 2023, CMS Vision covered nearly 10,000 hospitals and medical institutions in China[48] Southeast Asia Business CMS Pharma established "CMS Health" for its Southeast Asia business, headquartered in Singapore, to introduce quality products and partner with Junshi Biosciences for Toripalimab's commercialization in the region - The Group established "CMS Health," a platform-based and systematic Southeast Asia business company, headquartered in Singapore, with a business network radiating to Malaysia, Indonesia, Thailand, the Philippines, and other regions[49] - Actively preparing and promoting product commercialization, as well as the scaled construction of academic platforms and sales networks, to rapidly introduce high-quality products from Europe, America, Japan, and China[49] - In March this year, CMS Health partnered with Junshi Biosciences to jointly promote the cooperative development and commercialization of Toripalimab in nine Southeast Asian countries through a joint venture[49] - Toripalimab is China's first domestically produced PD-1 approved for marketing and the first to submit a marketing application in the United States, having received multiple FDA Breakthrough Therapy Designations in various fields and currently undergoing review by the US FDA, EMA, and MHRA[49][50] Post-Reporting Period Events Post-reporting period, CMS Pharma secured permanent exclusive promotion rights for Y-3 Injection, a Class 1 new drug for ischemic stroke, in mainland China, Hong Kong, and Macau, currently in Phase II clinical trials - On August 24, 2023, the Group signed a cooperation agreement with Nanjing Ningdan New Drug Technology Co., Ltd., obtaining permanent exclusive promotion rights for Y-3 Injection, a Class 1 new drug brain cell protective agent for anti-ischemic stroke, in mainland China, Hong Kong Special Administrative Region, and Macau Special Administrative Region[51] - Y-3 Injection is a Class 1 new small molecule compound drug, used to improve neurological symptoms, activities of daily living, and functional impairment caused by acute ischemic stroke, with a clear mechanism of action, expected to become the first novel neuroprotective agent that simultaneously addresses stroke and post-stroke depression[51] - Y-3 Injection completed its Phase I clinical study in China in January 2023, with results showing good overall safety, and is currently in the China Phase II clinical trial stage[51] Impact of Major Industry Policies In H1 2023, China's "cost control and innovation encouragement" policies continued, with national volume-based procurement impacting CMS Pharma's products, but the company mitigated effects through brand building and growth in non-VBP and innovative products - In the first half of 2023, the main policy tone of China's pharmaceutical industry remained "cost control and price reduction, encouraging innovation," with national volume-based procurement (VBP) still being the most influential industry policy[52] - Deanxit (flupentixol and melitracen oral immediate-release formulation) was included in the seventh batch of national VBP catalog[52] - Poiyidin (felodipine extended-release/controlled-release formulation) and Ursofalk (ursodeoxycholic acid oral immediate-release formulation) were included in the eighth batch of national VBP catalog[52] - None of the above three products were selected in the national VBP[52] - The Group effectively mitigated the negative impact of national VBP on its performance by continuously building the brand power of VBP products and achieving steady sales growth of existing exclusive drugs, dermatology and medical aesthetics, and ophthalmology products[52] - In the first half of this year, three innovative products were successfully approved for marketing in China, and multiple innovative pipeline products are in clinical development and registration stages, laying a solid foundation for stable future performance growth[52] Future Outlook CMS Pharma will adhere to its "CMS-featured" innovation strategy, accelerate new drug clinical applications, continuously develop differentiated products, deepen specialized business segments, and expand its international presence in Southeast Asia - Steadfastly maintaining the "CMS-featured" innovation strategy, the three new drugs launched this year will accelerate towards scaled clinical application, which will in turn feed back into innovation research[53][54] - Adhering to open-mindedness to gather original scientific research forces, cultivating an innovative environment with a long-term perspective, establishing a "laboratory without walls," and incubating sustainable innovative driving forces[54] - Deepening innovation investment and organizational reform, continuing to strategically deploy "three good" products with differentiated academic value, a favorable competitive landscape, and promising commercial prospects, and continuously upgrading the full lifecycle management capabilities of innovative products[54] - Continuing to base on a "specialty-focused" business structure, vigorously promoting the in-depth development of the three major business segments: cardiovascular and digestive, dermatology and medical aesthetics, and ophthalmology, in related fields[54] - Focusing on the Southeast Asian market, charting an international business map, building a win-win and mutually beneficial biopharmaceutical ecosystem in Southeast Asia, and precisely empowering the rapid industrialization of high-quality pharmaceutical products in the Southeast Asian market[54] Financial Review Revenue During the reporting period, CMS Pharma's turnover grew 3.6% to RMB 4,610.1 million, or 7.1% to RMB 5,536.6 million based on pharmaceutical product sales, driven by increased sales of non-VBP products | Indicator | H1 2023 (RMB millions) | H1 2022 (RMB millions) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Turnover | 4,610.1 | 4,447.8 | 3.6% | | Turnover from Pharmaceutical Product Sales | 5,536.6 | 5,170.0 | 7.1% | - The increase in turnover was primarily due to increased sales of non-VBP products, offsetting the decrease in sales of Deanxit, a product included in the seventh batch of VBP[55] Gross Profit and Gross Margin Gross profit increased by 4.9% to RMB 3,605.9 million, with a gross margin of 78.2%, up 0.9 percentage points, while pharmaceutical product sales gross margin decreased due to VBP product price reductions | Indicator | H1 2023 (RMB millions) | H1 2022 (RMB millions) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Gross Profit | 3,605.9 | 3,436.2 | 4.9% | | Gross Profit from Pharmaceutical Product Sales | 3,567.3 | 3,375.0 | 5.7% | | Gross Margin | 78.2% | 77.3% | +0.9 percentage points | | Gross Margin from Pharmaceutical Product Sales | 64.4% | 65.3% | -0.9 percentage points | - The decrease in gross margin was mainly due to the reduced selling price of Deanxit, a VBP product, and changes in product sales weighting[56] Selling Expenses Selling expenses increased by 4.8% to RMB 1,339.6 million, representing 29.1% of turnover, reflecting business expansion | Indicator | H1 2023 (RMB millions) | H1 2022 (RMB millions) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Selling Expenses | 1,339.6 | 1,278.5 | 4.8% | | Selling Expenses as % of Turnover | 29.1% | 28.7% | +0.4 percentage points | | Selling Expenses as % of Turnover from Pharmaceutical Product Sales | 23.5% | 23.5% | Flat | - The increase in selling expenses primarily reflects the scale development of the business[57] Administrative Expenses Administrative expenses increased by 13.7% to RMB 318.0 million, representing 6.9% of turnover, primarily due to increased human resource and maintenance costs for new business development | Indicator | H1 2023 (RMB millions) | H1 2022 (RMB millions) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Administrative Expenses | 318.0 | 279.7 | 13.7% | | Administrative Expenses as % of Turnover | 6.9% | 6.3% | +0.6 percentage points | | Administrative Expenses as % of Turnover from Pharmaceutical Product Sales | 5.7% | 5.4% | +0.3 percentage points | - The increase in administrative expenses was mainly due to increased human resource costs and maintenance expenses required for new business development[58] Research and Development Expenses Total R&D expenses significantly increased by 89.6% to RMB 238.9 million, primarily due to increased equity and rights investments related to innovative pipeline products, with both expensed and capitalized R&D growing | Indicator | H1 2023 (RMB millions) | H1 2022 (RMB millions) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Total R&D Expenses | 238.9 | 126.0 | 89.6% | | Total R&D Expenses as % of Turnover | 5.2% | 2.8% | +2.4 percentage points | | Total R&D Expenses as % of Turnover from Pharmaceutical Product Sales | 4.3% | 2.4% | +1.9 percentage points | | Expensed R&D Expenses | 75.7 | 55.6 | 36.3% | | Expensed R&D Expenses as % of Turnover | 1.6% | 1.2% | +0.4 percentage points | | Capital Expenditure (Equity investment in R&D companies, product rights acquisition, and clinical trial expenses) | 163.2 | 70.5 | 131.6% | | Capital Expenditure as % of Turnover | 3.5% | 1.6% | +1.9 percentage points | - The increase in total R&D expenses was mainly due to increased equity investments and rights investments related to innovative pipeline products[59] | Capital Expenditure Item (RMB thousands) | H1 2023 | H1 2022 | | :--- | :--- | :--- | | Equity Investment in R&D Companies | 58,203 | 1,440 | | Product Rights Acquisition and Development Expenses | 104,971 | 69,023 | | Total | 163,174 | 70,463 | Other Income Other income increased by 22.9% to RMB 133.7 million, primarily reflecting higher interest income and government subsidies | Indicator | H1 2023 (RMB millions) | H1 2022 (RMB millions) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Other Income | 133.7 | 108.8 | 22.9% | - The increase in other income primarily reflects higher interest income and government subsidies[61] Other Gains and Losses Other gains and losses increased by 61.7% to RMB 97.3 million, primarily due to higher exchange gains | Indicator | H1 2023 (RMB millions) | H1 2022 (RMB millions) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Other Gains and Losses | 97.3 (Gain) | 60.1 (Gain) | 61.7% | - The increase in other gains and losses was mainly due to higher exchange gains[62] Share of Profits of Associates Share of profits of associates significantly increased by 140.0% to RMB 197.8 million, primarily reflecting higher profitability from associate Tibet Pharmaceutical | Indicator | H1 2023 (RMB millions) | H1 2022 (RMB millions) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Share of Profits of Associates | 197.8 | 82.4 | 140.0% | - The increase in share of profits of associates primarily reflects higher profitability from associate Tibet Pharmaceutical[63] Finance Costs Finance costs increased by 17.1% to RMB 21.2 million, primarily due to higher borrowing interest rates | Indicator | H1 2023 (RMB millions) | H1 2022 (RMB millions) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Finance Costs | 21.2 | 18.1 | 17.1% | - The increase in finance costs was mainly due to higher borrowing interest rates[64] Income Tax Expense_2 Income tax expense increased by 41.3% to RMB 366.6 million, primarily due to higher withholding tax related to internal dividend distribution | Indicator | H1 2023 (RMB millions) | H1 2022 (RMB millions) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Income Tax Expense | 366.6 | 259.4 | 41.3% | - The increase in income tax expense was mainly due to an increase in withholding tax related to the Group's internal dividend distribution[64] Profit for the Period_2 Profit for the period increased by 6.7% to RMB 1,916.0 million, primarily driven by continuous growth in turnover | Indicator | H1 2023 (RMB millions) | H1 2022 (RMB millions) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | Profit for the Period | 1,916.0 | 1,796.3 | 6.7% | - The increase in profit for the period was primarily driven by continuous growth in turnover[65] Inventories At the end of the reporting period, inventories increased by 29.2% to RMB 616.4 million, with average inventory turnover days at 100, reflecting fluctuations in safety stock levels | Indicator | June 30, 2023 (RMB millions) | December 31, 2022 (RMB millions) | Change (%) | | :--- | :--- | :--- | :--- | | Inventories | 616.4 | 477.2 | 29.2% | | Average Inventory Turnover Days | 100 days | - | +4 days (vs H1 2022) | - The increase in inventories primarily reflects fluctuations in the Group's safety stock levels[65] Trade Receivables At the end of the reporting period, trade receivables decreased by 6.2% to RMB 1,353.2 million, with average trade receivable turnover days at 72, reflecting improved management | Indicator | June 30, 2023 (RMB millions) | December 31, 2022 (RMB millions) | Change (%) | | :--- | :--- | :--- | :--- | | Trade Receivables | 1,353.2 | 1,442.0 | -6.2% | | Average Trade Receivable Turnover Days | 72 days | - | -2 days (vs H1 2022) | - The decrease in trade receivables primarily reflects improved management levels[66] Trade Payables At the end of the reporting period, trade payables increased by 37.7% to RMB 245.1 million, with average trade payable turnover days at 39, reflecting differences in settlement timing with suppliers | Indicator | June 30, 2023 (RMB millions) | December 31, 2022 (RMB millions) | Change (%) | | :--- | :--- | :--- | :--- | | Trade Payables | 245.1 | 178.0 | 37.7% | | Average Trade Payable Turnover Days | 39 days | - | +14 days (vs H1 2022) | - The increase in trade payables primarily reflects the impact of differences in settlement timing with suppliers[68] Liquidity, Financial Resources, Capital Structure and Gearing Ratio As of June 30, 2023, the Group had ample bank balances and cash, reduced bank borrowings, and a gearing ratio of 7.0%, indicating good liquidity and a stable financial structure | Indicator | June 30, 2023 (RMB millions) | December 31, 2022 (RMB millions) | | :--- | :--- | :--- | | Bank Balances and Cash | 4,451.4 | 4,376.4 | | Readily Realizable Bank Acceptance Bills | 254.9 | 269.6 | | Bank Borrowings | 1,281.5 | 1,783.3 | | Weighted Average Annual Interest Rate on Borrowings | Approximately 2.8% | - | | Gearing Ratio | Approximately 7.0% | Approximately 10.0% | - The Company will combine cash flows generated from operating activities, long-term bank borrowings, and other financing instruments to meet the Group's liquidity needs[69] Exchange Rate and Interest Rate Risk The Group faces currency risks primarily from USD, EUR, GBP, CHF, and HKD, actively monitors exchange rate fluctuations, reviews hedging strategies, and uses forward contracts, while also monitoring interest rate changes - The Group is primarily exposed to currency risks from USD, EUR, GBP, CHF, and HKD, and the conversion of RMB to foreign currencies is subject to foreign exchange laws and regulations promulgated by the government of the People's Republic of China[70] - The Group closely monitors exchange rate fluctuations and periodically reviews its foreign exchange risk management strategy; when appropriate, management will consider hedging foreign exchange exposures and has entered into certain foreign exchange forward contracts[70] - The Group will closely monitor interest rate changes to mitigate expected interest rate risk[70] Pledge of Assets As of June 30, 2023, the Group had no pledged assets - As of June 30, 2023, the Group had no pledged assets[71] Contingent Liabilities As of June 30, 2023, the Group had no significant contingent liabilities - As of June 30, 2023, the Group had no significant contingent liabilities[71] Acquisition and Disposal of Subsidiaries, Associates and Joint Ventures On February 2, 2023, the Group disposed of Hebei Xinglong Xili Pharmaceutical Co., Ltd., which became a joint venture, with no other acquisition or disposal activities during the reporting period - On February 2, 2023, the Group disposed of its subsidiary Hebei Xinglong Xili Pharmaceutical Co., Ltd. to focus more on its core business, and on the same day, it became a joint venture of the Group[71] - Save as disclosed above, the Group had no other acquisitions or disposals of subsidiaries, associates, or joint ventures during the six months ended June 30, 2023[72] Loan Agreements Containing Conditions Relating to Specific Obligations of Controlling Shareholder The company had loan agreements requiring controlling shareholder Mr. Lin Gang to maintain specific shareholding and majority status, with non-compliance allowing immediate loan repayment, but these loans were fully repaid by June 30, 2023 - Pursuant to the Standard Chartered Loan Agreement and the DBS Loan Agreement, Mr. Lin Gang was required to maintain direct or indirect ownership of more than 30% of the Company's total issued shares and remain the single largest shareholder[72] - If the above conditions were not met, the lending banks could cancel the committed amounts and declare all outstanding loans and accrued interest immediately due and payable[72] - As of June 30, 2023, Mr. Lin Gang (directly and indirectly) held approximately 46.39% of the Company's total issued ordinary shares, and both the Standard Chartered Loan and DBS Loan were fully repaid during the reporting period[72] Other Information Share Option Scheme The company has no active share option scheme, and as of June 30, 2023, there were no outstanding share options - The Company has no active share option scheme. As of June 30, 2023, the Company had no outstanding share options[73] Interim Dividend The Board resolved to declare an interim dividend of RMB 0.3134 (equivalent to HKD 0.342) per share for the six months ended June 30, 2023, expected to be paid on September 20, 2023 | Dividend Type | Amount Per Share (RMB) | Amount Per Share (HKD) | Record Date | Payment Date | | :--- | :--- | :--- | :--- | :--- | | 2023 Interim Dividend | 0.3134 | 0.342 | September 13, 2023 | September 20, 2023 (Expected) | Suspension of Share Transfer Registration To qualify for the interim dividend, the company will suspend share transfer registration on September 13, 2023, requiring all transfer documents to be submitted by 4:30 p.m. on September 12, 2023 - The Company will suspend share transfer registration on Wednesday, September 13, 2023[74] - To qualify for the interim dividend, all share transfer documents, accompanied by the relevant share certificates, must be lodged with the Company's Hong Kong Share Registrar by 4:30 p.m. on Tuesday, September 12, 2023[74] Purchase, Sale or Redemption of the Company’s Listed Securities During the reporting period, neither the company nor its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the reporting period, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[75] Audit Committee The Audit Committee, comprising three independent non-executive directors, reviews financial reporting, internal controls, and risk management, and has reviewed and recommended the interim results announcement for Board approval - The Audit Committee currently comprises three independent non-executive directors: Mr. Feng Zheng (Chairman), Mr. Leung Chong Shun, and Ms. Luo Ying[75] - Its primary duties are to provide independent review to the Board on the financial reporting process, the effectiveness of the Group's internal control and risk management systems, to oversee the audit process, and to perform other duties assigned by the Board[75] - The Company's interim results announcement and interim report for the six months ended June 30, 2023, have been reviewed by the Company's Audit Committee and recommended to the Board for approval[75] Corporate Governance Practices The company complied with the Corporate Governance Code during the reporting period, except for the combined roles of Chairman and CEO, an arrangement deemed beneficial for strategy execution and operational efficiency - The Company has complied with the principles and code provisions of the Corporate Governance Code set out in Appendix 14 to the Listing Rules during the reporting period, save for the deviation from the code provision that the roles of chairman and chief executive should be separate and should not be performed by the same individual[76] - Mr. Lin Gang currently holds both the positions of Chairman and Chief Executive Officer of the Company, and the Board believes that having the same individual serve as both Chairman and Chief Executive Officer is beneficial for executing the Group's business strategies and maximizing the Group's operational efficiency[76] - The Company provides each director with monthly reports of the Company and developments and changes in relevant laws and the regulatory environment, and all directors participate in continuous professional development[77] Directors’ Securities Transactions The company adopted a written guideline for directors' securities transactions, confirming compliance by all directors and no employee violations during the reporting period - The Company has adopted a "Written Guideline for Securities Transactions by Directors and Relevant Employees" with terms no less exacting than 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 directors' securities transactions[78] - The Company confirms that all directors have complied with the standards for directors' securities transactions stipulated in the written guideline