中国生物科技服务(08037) - 2022 - 年度业绩

Company Information and Declarations This section provides an overview of the company's listing characteristics, disclaimer, corporate profile, holding structure, and the basis of financial statement preparation and accounting policies GEM Listing Characteristics and Disclaimer The company is listed on GEM of the HKEX, a market for SMEs with higher investment risks, requiring careful consideration from investors - GEM market positions itself as a listing platform for small and medium-sized companies, carrying relatively higher investment risks, with securities potentially subject to significant market fluctuations and no guarantee of high liquidity[67] - This announcement's information is published in compliance with the GEM Listing Rules, with the Board jointly and severally assuming full responsibility for its accuracy, completeness, and absence of misleading or fraudulent content[57] Company Profile and Holding Structure China Biotech Services Holdings Limited, incorporated in Cayman Islands and re-domiciled in Bermuda, is listed on GEM, primarily engaged in medical biological testing, oncology immunotherapy, healthcare product sales, and insurance brokerage services, with Mr. Liu Xiaolin as the ultimate controlling party - The Company was incorporated in the Cayman Islands, subsequently re-domiciled in Bermuda, and its shares are listed on GEM of The Stock Exchange of Hong Kong[89] - Principal businesses include medical biological laboratory testing and health check services in Hong Kong, oncology immunotherapy and health management services in China, sales of healthcare-related and pharmaceutical products in China and Hong Kong, and insurance brokerage services[77] - The ultimate holding company is Genius Earn Limited, and the ultimate controlling person is Mr. Liu Xiaolin[77] Basis of Preparation and Accounting Policies The consolidated financial statements are prepared in accordance with HKFRSs issued by the HKICPA and comply with GEM Listing Rules and Hong Kong Companies Ordinance disclosure requirements - The consolidated financial statements are prepared in accordance with all applicable Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and comply with the disclosure requirements of the GEM Listing Rules and the Hong Kong Companies Ordinance[90] - The Group first adopted several new and amended Hong Kong Financial Reporting Standards during the year, which did not result in changes to accounting policies or retrospective adjustments[78][91] - The Group has assessed new and revised HKFRSs issued but not yet effective, expecting their adoption is unlikely to have any significant impact on the consolidated financial statements[92][100] Financial Performance Overview This section presents a summary of the Group's consolidated financial performance, including the statement of profit or loss, financial position, and changes in equity for the reporting period Consolidated Statement of Profit or Loss and Other Comprehensive Income For the year ended December 31, 2022, the Group recorded significant financial growth, with substantial increases in revenue, gross profit, and profit for the year, primarily driven by surging demand for COVID-19 testing services Consolidated Statement of Profit or Loss and Other Comprehensive Income Key Data | Indicator | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | Change (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Total Proceeds | 1,851,601 | 623,761 | 1,227,840 | 196.85% | | Revenue | 1,851,532 | 623,761 | 1,227,771 | 196.83% | | Cost of Sales | (750,575) | (265,741) | (484,834) | 182.45% | | Gross Profit | 1,100,957 | 358,020 | 742,937 | 207.51% | | Operating Profit | 851,707 | 189,678 | 662,029 | 349.03% | | Profit Before Tax | 862,826 | 180,668 | 682,158 | 377.59% | | Profit for the Year | 705,568 | 132,572 | 572,996 | 432.22% | | Profit Attributable to Owners of the Company | 258,087 | 19,385 | 238,702 | 1231.46% | | Total Comprehensive Income for the Year | 654,250 | 164,138 | 490,112 | 298.60% | - The significant increase in profit for the year was primarily attributable to the immense demand for rapid antigen test kits and testing services during the fifth wave of the COVID-19 pandemic, and increased demand for testing services from cross-boundary travelers after border restrictions were eased[228] Consolidated Statement of Financial Position As of December 31, 2022, the Group's total assets and liabilities both increased significantly, with a higher gearing ratio but a healthy current ratio, driven by pledged bank deposits, prepayments, trade payables, and current tax liabilities Consolidated Statement of Financial Position Key Data | Indicator | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | Change (HK$ Thousand) | Change Rate | | :--- | :--- | :--- | :--- | :--- | | Total Assets | 1,470,491 | 706,782 | 763,709 | 108.05% | | Total Liabilities | 643,971 | 240,887 | 403,084 | 167.34% | | Total Equity | 826,520 | 465,895 | 360,625 | 77.40% | | Gearing Ratio | 43.79% | 34.08% | +9.71% | - | | Current Ratio | 1.61 times | 1.22 times | +0.39 times | - | | Cash and Bank Balances | 92,770 | 150,554 | (57,784) | -38.38% | - Cash and bank balances decreased by approximately HK$57,784,000, primarily used for dividend payments to non-controlling shareholders of subsidiaries and prepayments for Boron Neutron Capture Therapy equipment[10] - Trade and other receivables significantly increased from HK$105,939 thousand in 2021 to HK$765,547 thousand in 2022, mainly reflecting the growth in business volume[62] Consolidated Statement of Changes in Equity For the year ended December 31, 2022, both equity attributable to owners of the Company and non-controlling interests increased, driven by total comprehensive income for the year and contributions from non-controlling interests, while share purchases under the share award scheme and dividend payments also impacted equity Consolidated Statement of Changes in Equity Key Data | Indicator | January 1, 2022 (HK$ Thousand) | Total Comprehensive Income for the Year (HK$ Thousand) | Dividends Paid to Non-controlling Shareholders of Subsidiaries (HK$ Thousand) | December 31, 2022 (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Equity Attributable to Owners of the Company | 395,398 | 211,489 | - | 602,675 | | Non-controlling Interests | 70,497 | 442,761 | (300,000) | 223,845 | | Total Equity | 465,895 | 654,250 | (300,000) | 826,520 | - Total comprehensive income for the year was HK$654,250 thousand, with HK$211,489 thousand attributable to owners of the Company and HK$442,761 thousand attributable to non-controlling interests[72][88] - Under the Share Award Scheme, the trustee purchased a total of 2,325,000 shares of the Company at a total consideration of approximately HK$2,985,000[24][303] Notes to the Financial Statements This section provides detailed breakdowns and explanations for various financial statement line items, including revenue, other income, segment information, receivables, payables, and significant transactions Revenue Breakdown The Group's total revenue for 2022 reached HK$1,851,532 thousand, a significant increase from HK$623,761 thousand in 2021, primarily driven by medical biological laboratory testing services and health check services, as well as sales and distribution of healthcare-related and pharmaceutical products, with Hong Kong contributing the vast majority of revenue Revenue by Product Category and Geographical Region | Product/Service Category | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Provision of medical biological laboratory testing services and health check services | 1,619,568 | 607,776 | | Sales and distribution of healthcare-related and pharmaceutical products | 217,179 | 107 | | Provision of insurance brokerage services | 6,933 | 7,922 | | Money lending business | 35 | 1,244 | | Provision of logistics services | 7,817 | 6,712 | | Total | 1,851,532 | 623,761 | | Major Geographical Market (Hong Kong) | 1,851,331 | 623,761 | - In terms of revenue recognition timing, the majority of revenue (HK$1,843,715 thousand) was transferred over time, while a portion (HK$7,817 thousand) was transferred at a point in time[94] Other Income, Gains/(Losses) The Group's net other income and gains for 2022 amounted to HK$4,639 thousand, a significant increase from HK$225 thousand in 2021, primarily due to government grants and gains from disposal of property, plant and equipment Other Income, Gains/(Losses) Details | Item | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Interest income | 153 | 12 | | Government grants | 3,361 | – | | Gain on disposal of property, plant and equipment | 1,082 | – | | Loss on write-off of property, plant and equipment | (4) | – | | Net exchange losses | (869) | (525) | | COVID-19 related rent concessions | 195 | 156 | | Gain on early termination of leases | – | 11 | | Others | 721 | 571 | | Total | 4,639 | 225 | - Government grants of HK$3,361 thousand were recognized in 2022, of which HK$3,228 thousand related to the Hong Kong Government's "Employment Support Scheme"[85] Segment Information The Group operates six main segments: medical biological laboratory testing and health check services, immunotherapy, pharmaceutical products, securities, insurance brokerage, and Boron Neutron Capture Therapy, along with other businesses (money lending and logistics services) - The Group has six operating segments: medical biological laboratory testing and health check services, immunotherapy, pharmaceutical products, securities, insurance brokerage, Boron Neutron Capture Therapy, and others (money lending business and logistics services)[96][103] - Inter-segment sales and transfers are accounted for at current market prices, and segment profit or loss excludes other income, unallocated administrative expenses, finance costs, etc[97][106] 2022 Segment Performance In 2022, the medical biological laboratory testing services segment significantly outperformed other segments in both revenue and profit, while the immunotherapy and BNCT segments remained in investment and development phases, recording losses 2022 Segment Revenue and Profit | Segment | Revenue from External Customers (HK$ Thousand) | Segment Profit/(Loss) (HK$ Thousand) | | :--- | :--- | :--- | | Medical biological laboratory testing services and health check services | 1,619,568 | 861,298 | | Immunotherapy | - | (40,008) | | Pharmaceutical products | 217,179 | 75,468 | | Securities | - | 1,958 | | Insurance brokerage | 6,933 | (3,258) | | Boron Neutron Capture Therapy | - | (2,779) | | Others | 7,852 | 2,181 | | Total | 1,851,532 | 894,860 | - The medical biological laboratory testing services segment contributed the vast majority of the year's revenue and segment profit, reflecting its dominant market position[109] 2021 Segment Performance In 2021, the medical biological laboratory testing services segment was also the primary source of revenue and profit, though on a much smaller scale than in 2022, with immunotherapy and pharmaceutical products segments also recording losses 2021 Segment Revenue and Profit | Segment | Revenue from External Customers (HK$ Thousand) | Segment Profit/(Loss) (HK$ Thousand) | | :--- | :--- | :--- | | Medical biological laboratory testing services and health check services | 607,776 | 266,305 | | Immunotherapy | - | (42,393) | | Pharmaceutical products | 107 | (1,088) | | Securities | - | (3,163) | | Insurance brokerage | 7,922 | (66) | | Boron Neutron Capture Therapy | - | - | | Others | 7,956 | 1,257 | | Total | 623,761 | 220,852 | Other Segment Information (Capital Expenditure, Depreciation, etc.) In 2022, the Group's total capital expenditure was HK$56,404 thousand, mainly concentrated in medical biological laboratory testing services and BNCT segments, with intangible asset amortization primarily from immunotherapy and depreciation distributed across segments 2022 Other Segment Information | Item | Medical Biological Laboratory Testing Services (HK$ Thousand) | Immunotherapy (HK$ Thousand) | Pharmaceutical Products (HK$ Thousand) | Boron Neutron Capture Therapy (HK$ Thousand) | Others (HK$ Thousand) | Total (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | :--- | | Capital expenditure | 48,793 | 1,436 | 6 | 6,068 | 101 | 56,404 | | Amortisation of intangible assets | - | 8,689 | - | - | - | 8,689 | | Depreciation of property, plant and equipment | 45,552 | 1,181 | 2 | - | 257 | 47,034 | | Depreciation of right-of-use assets | 7,060 | 35 | 201 | 155 | 2,991 | 10,678 | | Impairment loss on goodwill | - | - | - | - | - | 1,716 | | Impairment loss allowance for financial assets | 3,895 | - | - | - | (2,181) | 1,714 | 2021 Other Segment Information | Item | Medical Biological Laboratory Testing Services (HK$ Thousand) | Immunotherapy (HK$ Thousand) | Pharmaceutical Products (HK$ Thousand) | Others (HK$ Thousand) | Total (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Capital expenditure | 12,072 | 120 | - | 24 | 12,216 | | Amortisation of intangible assets | - | 8,994 | - | - | 8,994 | | Depreciation of property, plant and equipment | 44,720 | 1,178 | - | 447 | 46,422 | | Depreciation of right-of-use assets | 7,710 | 343 | 48 | 4,303 | 12,696 | | Impairment loss allowance for financial assets | 426 | - | 90 | (265) | 251 | | Write-down of inventories | 2,630 | - | 569 | - | 3,199 | Geographical Information and Major Customers The Group's revenue is primarily derived from Hong Kong, which contributed HK$1,851,331 thousand in 2022, with non-current assets mainly located in Hong Kong and mainland China, and several major customers contributing over 10% of total revenue, indicating high business concentration Revenue and Non-current Assets by Operating Location | Region | 2022 Revenue (HK$ Thousand) | 2021 Revenue (HK$ Thousand) | 2022 Non-current Assets (HK$ Thousand) | 2021 Non-current Assets (HK$ Thousand) | | :--- | :--- | :--- | :--- | :--- | | Hong Kong | 1,851,331 | 623,761 | 126,168 | 125,241 | | China (excluding Hong Kong) | 201 | – | 231,848 | 181,746 | | Total | 1,851,532 | 623,761 | 358,016 | 306,987 | Revenue from Major Customers (Over 10% of Total Revenue) | Customer | Segment | 2022 Revenue (HK$ Thousand) | 2021 Revenue (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Customer A | Provision of medical biological laboratory testing services and health check services | 900,235 | 127,817 | | Customer B | Provision of medical biological laboratory testing services and health check services | 524,324 | 310,226 | | Customer A | Sales and distribution of healthcare-related and pharmaceutical products | 206,858 | – | | Customer B | Sales and distribution of healthcare-related and pharmaceutical products | 3,816 | – | | Customer B | Provision of logistics services | 7,782 | – | Finance Costs The Group's finance costs for 2022 were HK$3,495 thousand, a significant decrease from HK$6,543 thousand in 2021, primarily due to reduced finance costs from convertible bonds following a partial redemption in 2021 Finance Costs Details | Item | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Interest on lease liabilities | 751 | 697 | | Interest on other borrowings | – | 504 | | Effective interest on convertible bonds | 2,744 | 5,342 | | Total | 3,495 | 6,543 | - The decrease in finance costs was mainly due to the reduction in finance costs arising from convertible bonds, which decreased following the partial redemption of the principal amount of convertible bonds on May 11, 2021[227] Income Tax Expense The Group's income tax expense for 2022 was HK$157,258 thousand, a substantial increase from HK$48,096 thousand in 2021, with Hong Kong profits tax levied under a two-tiered system and a Chinese subsidiary enjoying a 15% corporate income tax rate as a high-tech enterprise Income Tax Expense Details | Item | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Current tax: Hong Kong profits tax | 158,353 | 49,465 | | Current tax: Under/(over) provision in prior years | 208 | (20) | | Deferred tax | (1,303) | (1,349) | | Total | 157,258 | 48,096 | - Hong Kong profits tax is levied under a two-tiered system, with the first HK$2,000,000 of assessable profits taxed at 8.25% and the remainder at 16.5%[146] - One of the Group's PRC subsidiaries is recognized as a high and new technology enterprise, enjoying a corporate income tax rate of 15%[147] Profit for the Year and Dividends The Group's profit for 2022 was HK$705,568 thousand, and the Board recommended a final dividend of HK$0.01 per share, totaling approximately HK$9,632 thousand, subject to shareholders' approval Profit for the Year Key Items | Item | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Amortisation of intangible assets | 8,689 | 8,994 | | Depreciation of property, plant and equipment | 47,034 | 46,422 | | Depreciation of right-of-use assets | 10,678 | 12,696 | | Staff costs (including Directors' emoluments) | 166,735 | 99,354 | | Research and development costs | 27,760 | 28,677 | | Auditor's remuneration | 3,350 | 1,100 | | Cost of inventories sold | 351,487 | 56,712 | | Impairment loss allowance for financial assets, net | 1,714 | 251 | - The Board recommended a final dividend of HK$0.01 per share for the year ended December 31, 2022, totaling approximately HK$9,632,000, subject to shareholders' approval[119] Earnings Per Share The Group's basic and diluted earnings per share for 2022 significantly increased to 26.8 HK cents from 2.0 HK cents in 2021, with no assumption of exercise for share options or convertible bonds in diluted EPS calculation due to higher exercise prices or anti-dilutive effects Earnings Per Share Calculation Basis | Indicator | 2022 | 2021 | | :--- | :--- | :--- | | Basic and diluted earnings per share (cents) | 26.8 | 2.0 | | Profit for the year used in basic/diluted EPS calculation (HK$ Thousand) | 258,087 | 19,385 | | Weighted average number of ordinary shares used in basic/diluted EPS calculation (Thousand shares) | 963,231 | 964,714 | - The exercise of outstanding share options was not assumed in the calculation of diluted earnings per share because their exercise price was higher than the average market price of the shares[151] - The conversion of convertible bonds was not assumed in the calculation of diluted earnings per share because their exercise would have an anti-dilutive effect, leading to an increase in earnings per share[151] Trade and Other Receivables The Group's total trade and other receivables significantly increased to HK$817,312 thousand in 2022 from HK$105,939 thousand in 2021, with trade receivables generally having a 90-day credit period and approximately HK$202,643 thousand overdue but not impaired at year-end 2022 Total Trade and Other Receivables | Item | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Trade receivables (net of allowance) | 751,899 | 92,130 | | Rental and other deposits | 7,142 | 5,851 | | Other receivables (net of allowance) | 1,753 | 2,976 | | Prepayments | 56,515 | 1,570 | | Proceeds from disposal of an associate | – | 1,268 | | Cash held in stock brokerage securities trading accounts | 3 | 2,144 | | Total | 817,312 | 105,939 | Ageing Analysis of Trade Receivables (Net of Allowance) | Ageing | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :--- | :--- | | 0 to 90 days | 549,256 | 80,062 | | 91 to 180 days | 200,680 | 10,490 | | 181 to 365 days | 1,771 | 1,325 | | Over 365 days | 192 | 253 | | Total | 751,899 | 92,130 | - As of December 31, 2022, approximately HK$202,643,000 of trade receivables were overdue but not impaired, relating to independent customers with no recent history of default[136][153] Convertible Bonds The Group undertook significant modifications and new issuances of convertible bonds in 2022, including extending the maturity of the 2020 convertible bonds, which was treated as a significant modification, and subsequently issuing new 2022 convertible bonds partially paid by cancelling 2020 bonds and partially by cash, impacting financial position through fair value changes and interest expenses - The maturity date of the 2020 convertible bonds was extended by two years from May 10, 2022, to May 10, 2024; this modification was treated as a significant modification, leading to derecognition of the original bonds and recognition of the amended bonds, with a recognized loss of HK$2,027,000[2][155][156] - On December 20, 2022, the Company issued US$10,000,000 (approximately HK$77,800,000) in 2022 convertible bonds, with an initial conversion price of HK$1.45 per share, an annual interest rate of 8.25%, and a maturity date two years from the issue date[157][268] - Of the total subscription for the 2022 convertible bonds, US$5,000,000 was paid by cancelling 2020 convertible bonds, and the remaining US$4,965,000 was paid in cash; the net proceeds will be used for investment in the Boron Neutron Capture Therapy project (US$3,000,000) and R&D costs and general working capital (US$1,944,000)[158][268] Changes in Convertible Bond Liability Component | Item | Amount (HK$ Thousand) | | :--- | :--- | | Liability component at January 1, 2021 | 76,292 | | Partial redemption of 2020 convertible bonds | (39,689) | | Liability component at December 31, 2021 | 38,651 | | Extension of 2020 convertible bonds | 3,317 | | Redemption of 2020 convertible bonds | (41,619) | | Issuance of 2022 convertible bonds | 105,492 | | Loss deferred on issue | (26,992) | | Liability component at December 31, 2022 | 55,796 | Changes in Convertible Bond Derivative Component | Item | Assets (HK$ Thousand) | Liabilities (HK$ Thousand) | Total (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Derivative component at January 1, 2021 | (14,234) | 8,597 | (5,637) | | Partial redemption | 6,442 | (4,253) | 2,189 | | Fair value loss/(gain) for the year | 4,230 | (2,309) | 1,921 | | Derivative component at December 31, 2021 | (3,562) | 2,035 | (1,527) | | Extension and redemption of 2020 convertible bonds | (7,618) | 8,008 | 390 | | Fair value loss/(gain) for the year | 11,180 | (10,043) | 1,137 | | Derivative component on issue of 2022 convertible bonds | – | 22,252 | 22,252 | | Derivative component at December 31, 2022 | – | 22,252 | 22,252 | Contingent Consideration The Group's contingent consideration is primarily linked to the performance targets of the acquisitions of Shanghai Longyao and Fushi, with a fair value gain of HK$23,658 thousand recognized in 2022, as both companies failed to meet their performance targets, resulting in the contingent consideration being adjusted to zero - The change in fair value of contingent consideration liabilities resulted in a gain of HK$23,658,000 recognized in the consolidated statement of profit or loss and other comprehensive income for 2022[181] - Shanghai Longyao's contingent consideration was tied to revenue and net profit targets, and due to non-achievement, the right to related additional award shares has lapsed[161][201] - Fushi's contingent consideration was linked to cumulative net profit targets, and since the actual cumulative profit was negative, the second tranche of consideration was adjusted to zero[185][232] Trade and Other Payables The Group's total trade and other payables significantly increased to HK$290,045 thousand in 2022 from HK$54,927 thousand in 2021, with the majority of trade payables having an ageing within 90 days Trade and Other Payables Details | Item | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :--- | :--- | | Trade payables | 206,441 | 16,149 | | Accrued expenses | 77,161 | 28,189 | | Receipts in advance | 377 | 281 | | Other payables | 6,066 | 10,308 | | Total | 290,045 | 54,927 | Ageing Analysis of Trade Payables | Ageing | 2022 (HK$ Thousand) | 2021 (HK$ Thousand) | | :--- | :--- | :--- | | 0 to 90 days | 143,915 | 16,147 | | 91 to 180 days | 27,234 | – | | 181 to 365 days | 35,292 | – | | Total | 206,441 | 16,149 | Disposal of Subsidiaries In 2022, the Group disposed of its entire equity interests in Mingzhu Group and Chaozheng Group, generating gains of HK$590 thousand and HK$1,106 thousand respectively, with the aim of reallocating resources to higher growth potential businesses and saving administrative costs - On April 4, 2022, the Company disposed of its entire equity interest in Mingzhu Group for a cash consideration of HK$6,400,000, generating a gain of HK$590,000[168][189][216][271] - On May 31, 2022, the Company disposed of its entire equity interest in Chaozheng Group for a cash consideration of HK$50,000, generating a gain of HK$1,106,000[170][190][213][218] - The disposal of Mingzhu Group aimed to reallocate resources to businesses with higher growth potential, while the disposal of Chaozheng Group aimed to save administrative costs[213][271] Management Discussion and Analysis This section provides a comprehensive review of the Group's business operations, financial performance, significant developments, and strategic outlook for the reporting period Business Overview The Group's principal businesses in 2022 included medical biological laboratory testing and health check services in Hong Kong, oncology immunotherapy and health management services in China, sales and distribution of healthcare-related and pharmaceutical products in China and Hong Kong, and insurance brokerage services - The Group's principal businesses cover medical biological laboratory testing, health check, oncology immunotherapy, health management, sales of healthcare and pharmaceutical products, and insurance brokerage services[172] Operating Segment Performance In 2022, the Group's operating segments showed varied performance, with medical biological laboratory testing services and healthcare product sales experiencing significant revenue growth due to surging COVID-19 testing demand, while insurance brokerage services declined due to travel restrictions, and logistics services grew from increased testing supply demand Medical Biological Laboratory Testing Services and Health Check Services This segment's turnover reached HK$1,619,568 thousand in 2022, a 1.66-fold year-on-year increase, primarily driven by immense demand for nucleic acid testing services during the fifth wave of the COVID-19 pandemic and its role as a designated service provider at border checkpoints and community testing centers Medical Biological Laboratory Testing Services and Health Check Services Turnover | Year | Turnover (HK$ Thousand) | Year-on-Year Growth | | :--- | :--- | :--- | | 2022 | 1,619,568 | 1.66 times | | 2021 | 607,776 | - | - The significant increase in turnover was mainly due to the surging demand for nucleic acid testing services during the fifth wave of the COVID-19 pandemic and its role as a designated service provider at Shenzhen Bay Port, Hong Kong-Zhuhai-Macao Bridge Hong Kong Port, and community testing centers[40][221] Sales and Distribution of Healthcare-related and Pharmaceutical Products This segment's turnover dramatically increased from HK$107 thousand in 2021 to HK$217,179 thousand in 2022, a 2,028.71-fold growth, primarily driven by the immense market demand for rapid antigen test kits during the fifth wave of the COVID-19 pandemic Sales and Distribution of Healthcare-related and Pharmaceutical Products Turnover | Year | Turnover (HK$ Thousand) | Year-on-Year Growth | | :--- | :--- | :--- | | 2022 | 217,179 | 2,028.71 times | | 2021 | 107 | - | - The significant increase in turnover was mainly due to the severe fifth wave of the COVID-19 pandemic in 2022, leading to immense market demand for rapid antigen test kits[29] Insurance Brokerage Services This segment's turnover decreased by 12.48% to HK$6,933 thousand in 2022, primarily due to strict travel restrictions imposed on mainland Chinese customers visiting Hong Kong during the fifth wave of the COVID-19 pandemic Insurance Brokerage Services Turnover | Year | Turnover (HK$ Thousand) | Year-on-Year Change | | :--- | :--- | :--- | | 2022 | 6,933 | -12.48% | | 2021 | 7,922 | - | - The decrease in turnover was mainly affected by strict travel restrictions imposed on mainland Chinese customers visiting Hong Kong during the fifth wave of the COVID-19 pandemic[223] Securities Trading In 2022, the securities trading segment recorded a net gain of approximately HK$2,707 thousand from financial assets at fair value through profit or loss, an increase from HK$489 thousand in 2021, primarily due to the disposal of certain marketable shares and fair value changes in the investment portfolio Securities Trading Segment Net Gain | Year | Net Gain (HK$ Thousand) | | :--- | :--- | | 2022 | 2,707 | | 2021 | 489 | - The increase in gain was mainly due to the disposal of certain marketable shares and fair value changes in the investment portfolio[224] Logistics Services The logistics services segment's turnover increased by 16.46% to HK$7,817 thousand in 2022, primarily due to increased demand for logistics services for testing supplies and samples Logistics Services Turnover | Year | Turnover (HK$ Thousand) | Year-on-Year Growth | | :--- | :--- | :--- | | 2022 | 7,817 | 16.46% | | 2021 | 6,712 | - | - The increase in turnover was mainly due to increased demand for logistics services for testing supplies and samples[225] Financial Performance Analysis In 2022, the Group's gross profit and gross margin improved, selling and distribution expenses increased due to aggressive marketing, administrative expenses surged from business expansion and corporate activities, finance costs decreased due to convertible bond redemption, and ultimately, profit attributable to owners of the Company significantly increased Gross Profit and Gross Margin Gross profit for 2022 was approximately HK$1,100,957 thousand, an increase of HK$742,937 thousand from 2021, with the gross margin slightly rising by 2.06 percentage points to 59.46%, maintaining a stable level Gross Profit and Gross Margin | Indicator | 2022 | 2021 | Change | | :--- | :--- | :--- | :--- | | Gross Profit (HK$ Thousand) | 1,100,957 | 358,020 | +742,937 | | Gross Margin | 59.46% | 57.40% | +2.06% | Selling and Distribution Expenses Selling and distribution expenses for 2022 were approximately HK$13,726 thousand, a 17.08% year-on-year increase, primarily due to more aggressive strategic marketing and promotional activities for healthcare-related products Selling and Distribution Expenses | Year | Amount (HK$ Thousand) | Year-on-Year Growth | | :--- | :--- | :--- | | 2022 | 13,726 | 17.08% | | 2021 | 11,724 | - | - The increase in expenses was mainly due to more aggressive strategic marketing and promotional activities undertaken in 2022 for the promotion and sale of healthcare-related products[30] Administrative Expenses Administrative expenses for 2022 were approximately HK$241,156 thousand, a 53.52% year-on-year increase, primarily due to increased staff costs from the expansion of the medical biological laboratory testing services and health check services segment, as well as higher corporate activities and listing expenses Administrative Expenses | Year | Amount (HK$ Thousand) | Year-on-Year Growth | | :--- | :--- | :--- | | 2022 | 241,156 | 53.52% | | 2021 | 157,081 | - | - The increase in administrative expenses was mainly due to an increase in staff costs of approximately HK$67,381 thousand resulting from the expansion of the medical biological laboratory testing services and health check services segment, as well as an increase in legal and professional fees of approximately HK$2,700 thousand and listing expenses of approximately HK$8,734 thousand[227] Finance Costs Finance costs for 2022 were approximately HK$3,495 thousand, a decrease from HK$6,543 thousand in 2021, primarily due to reduced finance costs from convertible bonds following a partial redemption Finance Costs | Year | Amount (HK$ Thousand) | Year-on-Year Change | | :--- | :--- | :--- | | 2022 | 3,495 | -46.58% | | 2021 | 6,543 | - | - The decrease in finance costs was mainly due to the reduction in finance costs arising from convertible bonds, which decreased following the partial redemption of the principal amount of convertible bonds on May 11, 2021[227] Profit for the Year Net profit attributable to owners of the Company for 2022 was approximately HK$258,087 thousand, a significant increase from HK$19,385 thousand in 2021, primarily driven by surging demand for COVID-19 testing services and eased border restrictions Net Profit Attributable to Owners of the Company | Year | Amount (HK$ Thousand) | Year-on-Year Growth | | :--- | :--- | :--- | | 2022 | 258,087 | 1231.46% | | 2021 | 19,385 | - | - The increase in net profit was mainly due to the immense demand for rapid antigen test kits and testing services during the fifth wave of the COVID-19 pandemic in Hong Kong, and increased demand for testing services from cross-boundary travelers after border restrictions were eased[228] Significant Business Developments and Strategies In 2022, the Group implemented several significant business developments and strategic adjustments, including the failure to meet acquisition performance targets for Shanghai Longyao and Fushi, signing an equity investment term sheet with an industrial investor, revising annual caps for continuing connected transactions, actively advancing the Boron Neutron Capture Therapy cancer treatment project, signing a strategic cooperation letter of intent with a leading pharmaceutical group, establishing a joint venture, extending convertible bond maturity and issuing new bonds, and assessing a possible transfer of listing Failure to Achieve Acquisition Targets/Profit Guarantees (Shanghai Longyao and Fushi) Shanghai Longyao failed to meet its audited annual revenue and net profit targets, resulting in the lapse of rights to additional award shares, while Fushi's actual cumulative profit was negative, leading to the second tranche of contingent consideration being zero, confirming both acquisitions' performance targets were not met - Shanghai Longyao failed to achieve its revenue (RMB150,000,000) and net profit (RMB30,000,000) targets by December 31, 2022, resulting in the lapse of rights to aggregate additional award shares[201] - Fushi's actual cumulative profit was negative, thus the second tranche of contingent consideration (HK$6,120,000) was adjusted to zero[232] - The Board confirmed that the target/profit guarantee obligations for both the acquisitions of Shanghai Longyao and Fushi were not met[233] Incidental Disclosure Matters (GEM Listing Rules) The Company has no options or other rights as described in Rule 19.36B(2)(c) of the GEM Listing Rules regarding the failure to achieve acquisition targets/profit guarantee obligations - The Company has no options or other rights as described in Rule 19.36B(2)(c) of the GEM Listing Rules regarding the failure to achieve the target/profit guarantee obligations for the acquisitions[43] Associated Company Enters into Equity Investment Term Sheet with Industrial Investor Shanghai Longyao signed a non-legally binding term sheet with Qianhai Derun Capital Management (Shenzhen) Co., Ltd., where the investor intends to invest RMB20,000,000 in Shanghai Longyao, but no legally binding agreement has been entered into as of the announcement date - Shanghai Longyao signed a non-legally binding term sheet with an investor, who intends to invest RMB20,000,000 in Shanghai Longyao[205] - As of the announcement date, no legally binding formal agreement has been entered into between the parties[205] Revision of Annual Caps for Continuing Connected Transactions Hua Sheng Diagnostic Centre and BGI Gene Health Technology (Hong Kong) Co., Limited revised their master supply agreement, increasing the 2022 annual cap for continuing connected transactions from HK$80,000,000 to HK$400,000,000, explicitly covering COVID-19 rapid antigen test kit supply, and subsequently, the 2022 referral services agreement cap was further increased to HK$550,000,000 - Hua Sheng Diagnostic Centre and BGI Gene revised their master supply agreement, increasing the 2022 annual cap for continuing connected transactions from HK$80,000,000 to HK$400,000,000, covering the supply of COVID-19 rapid antigen test kits[32] - The annual cap for continuing connected transactions under the 2022 referral services agreement was further increased to HK$550,000,000[210] Progress of Boron Neutron Capture Therapy (BNCT) Cancer Treatment Project The Company's indirect wholly-owned subsidiaries, Pengbo (Hong Kong) Neutron Cancer Treatment Centre Limited and Pengbo (Hainan) Boron Neutron Medical Technology Co., Ltd., signed an investment agreement with the Hainan Boao Lecheng International Medical Tourism Pilot Zone Administration to invest in and construct a Boron Neutron Capture Therapy cancer treatment center - The Company's subsidiaries signed an investment agreement with the Hainan Boao Lecheng International Medical Tourism Pilot Zone Administration to invest in and construct a Boron Neutron Capture Therapy cancer treatment center[207][235] Strategic Cooperation Letter of Intent with Leading Pharmaceutical Group The Company signed a non-legally binding letter of intent with CSPC Pharmaceutical Group Limited to explore strategic equity investment cooperation in the Company's ongoing projects, including CSPC's proposed direct equity investment of 10% to 20% in the Company, but the letter of intent expired on March 22, 2023, with no legally binding agreement entered into as of the announcement date - The Company signed a non-legally binding letter of intent with CSPC Pharmaceutical Group Limited to seek strategic equity investment cooperation, with CSPC proposing a direct equity investment of 10% to 20% in the Company[1][208] - The letter of intent expired on March 22, 2023, and no legally binding agreement has been entered into as of the announcement date[208] Subsidiary Establishes Joint Venture with Healthcare Group Hua Sheng Diagnostic Centre, a subsidiary of the Company, entered into a joint venture agreement with Sure Metro Limited, a wholly-owned subsidiary of Town Health International Medical Group Limited, to establish Hong Kong Medical Biological Testing Centre Limited, with Hua Sheng Diagnostic Centre holding a 51% equity interest, to operate a medical biological laboratory in Hong Kong - The Company's subsidiary, Hua Sheng Diagnostic Centre, established a joint venture, Hong Kong Medical Biological Testing Centre Limited, with Sure Metro Limited, a wholly-owned subsidiary of Town Health International Medical Group Limited[50][236] - Hua Sheng Diagnostic Centre holds a 51% equity interest in the joint venture, which operates a medical biological laboratory in Hong Kong[236] Extension of Convertible Bond Maturity and Issuance of New Bonds The Company entered into an amendment agreement with Guoyuan Securities Investment (Hong Kong) Limited to extend the maturity date of the 2020 convertible bonds by two years to May 10, 2024, and subsequently issued new 2022 convertible bonds, partially paid by cancelling 2020 bonds and partially by cash, with proceeds allocated to the Boron Neutron Capture Therapy project, R&D, and working capital - On May 10, 2022, the Company entered into an amendment agreement with Guoyuan Securities Investment (Hong Kong) Limited to extend the maturity date of the 2020 convertible bonds by two years to May 10, 2024[2][267] - On December 20, 2022, the Company issued US$10,000,000 in 2022 convertible bonds, with US$5,000,000 paid by cancelling 2020 bonds and the remainder paid in cash[268] - The net proceeds will be used for investment in the Boron Neutron Capture Therapy project (US$3,000,000) and R&D costs and general working capital (US$1,944,000)[268] BNCT Equipment Procurement and Land Use Rights Pengbo Hainan successfully acquired a 50-year land use right for a state-owned construction land in Boao Pilot Zone to construct and operate a Boron Neutron Capture Therapy center, and the Company signed sales, memorandum of understanding, and service agreements with Sumitomo for the procurement of BNCT equipment, components, and technical advisory services - Pengbo Hainan successfully acquired a 50-year land use right for a state-owned construction land of 6,171.03 square meters in Boao Pilot Zone for the construction and operation of a Boron Neutron Capture Therapy center[33][239] - The Company signed agreements with Sumitomo, whereby Pengbo Hainan will purchase Boron Neutron Capture Therapy equipment and components from Sumitomo and receive technical advisory services for equipment installation and commissioning[4][211] - On January 17, 2023, Pengbo Hainan agreed to purchase Boron Neutron Capture Therapy components, with an initial sales contract price of JPY436,000,000, and procure related maintenance services for a consideration of JPY360,600,000[240] Disposal of Subsidiaries (Mingzhu Group and Chaozheng Group) The Group disposed of its entire equity interests in Mingzhu Group and Chaozheng Group in 2022, aiming to reallocate resources to higher growth potential businesses and save administrative costs, respectively - The disposal of Mingzhu Group was completed on April 4, 2022, aiming to free up resources and reallocate them to businesses with higher growth potential[51][241][271] - The disposal of Chaozheng Group was completed on May 31, 2022, aiming to save administrative costs[5][213] Share Award Scheme and Grant of Share Options In 2022, the Company's trustee purchased a total of 2,325,000 shares on the Stock Exchange under the Share Award Scheme for approximately HK$2,985,000, with no award shares granted to selected participants as of the announcement date, and in January 2023, the Company granted share options to eligible participants to subscribe for up to 5,000,000 shares - In 2022, the trustee purchased a total of 2,325,000 shares of the Company on the Stock Exchange under the Share Award Scheme, at a consideration of approximately HK$2,985,000[6][214] - As of the announcement date, no award shares have been granted to any selected participants under the Share Award Scheme[214] - On January 6, 2023, the Company granted share options to eligible participants under the Share Option Scheme to subscribe for up to 5,000,000 shares, with a vesting period of three years[45][273] Assessment of Possible Transfer of Listing The Company announced on September 1, 2022, that it had appointed professionals to assess the feasibility of transferring its securities from GEM to the Main Board of the Stock Exchange - The Company has appointed professionals to assess the possibility of transferring its securities from GEM to the Main Board of the Stock Exchange[272] Future Outlook The Group plans to continue developing medical biological laboratory testing and health check services, expand into the Greater Bay Area, launch new testing items, accelerate clinical trials for anti-tumor cell therapy products (CAR-T), and advance the construction of the Boron Neutron Capture Therapy center, aiming to provide personalized precision health and precision medicine services - The Group will continue to strengthen collaboration with district health center operators to expand high-throughput health screening services to Hong Kong communities and launch new tests such as HPV DNA testing, colorectal cancer DNA testing, and cPassTM testing[244][274] - The Phase I clinical trial for its CAR-T drug, LY007 cell injection, is proceeding as planned, with a target of enrolling sufficient patients by the end of 2023[245] - Progress is being made on the Boron Neutron Capture Therapy center in Boao Pilot Zone, with main construction and interior decoration expected to be completed in the first and second halves of 2023, respectively, targeting equipment installation and trial operation by the end of 2024 or early 2025[9][276] - The Group aims to become the first service provider to offer Boron Neutron Capture Therapy cancer treatment in Greater China, introducing and enhancing this advanced oncology radiotherapy for advanced cancer patients in mainland China, Hong Kong, and Macau[9] - The Group has become a distributor of Japanese-made NMN powder and Japanese health product "Chisei" to strengthen sales and expand the product portfolio of its healthcare-related and pharmaceutical products segment[275] Financial Resources and Capital Structure This section details the Group's liquidity, financial resources, and capital structure, including cash balances, gearing, current ratios, issued share capital, convertible bonds, regulatory capital requirements, significant investments, and various financial commitments and risks Liquidity, Financial Resources and Capital Structure Overview The Group primarily funds its operations and capital expenditures through internal resources and other borrowings. As of year-end 2022, cash and bank balances were approximately HK$92,770 thousand, a year-on-year decrease of HK$57,784 thousand, mainly used for dividend payments and BNCT equipment prepayments. The gearing ratio increased to 43.79%, and the current ratio rose to 1.61 times - The Group funds its operations and capital expenditures through internally generated resources and other borrowings[277] Liquidity and Financial Resources Overview | Indicator | December 31, 2022 (HK$ Thousand) | December 31, 2021 (HK$ Thousand) | Change (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Cash and Bank Balances | 92,770 | 150,554 | (57,784) | | Total Assets | 1,470,491 | 706,782 | 763,709 | | Total Liabilities | 643,971 | 240,887 | 403,084 | | Gearing Ratio | 43.79% | 34.08% | +9.71% | | Current Ratio | 1.61 times | 1.22 times | +0.39 times | - The decrease in cash and bank balances was mainly due to payments for dividends to non-controlling shareholders of subsidiaries and prepayments for the purchase of Boron Neutron Capture Therapy equipment in 2022[10] - Unsecured other borrowings amounted to approximately HK$5,641 thousand, bearing interest at a fixed rate of 10% per annum, repayable within one year[46] Issued Share Capital and Convertible Bonds As of year-end 2022, the Company's total issued share capital was HK$96,323,115, comprising 963,231,150 ordinary shares. The Group held outstanding convertible bonds with a principal amount of US$10,000,000, a carrying amount of approximately HK$55,796 thousand, bearing 8.25% annual interest, and maturing on December 30, 2024. The net proceeds from the newly issued convertible bonds will be used for the Boron Neutron Capture Therapy project, R&D, and working capital Issued Share Capital | Indicator | December 31, 2022 | December 31, 2021 | | :--- | :--- | | Total Issued Share Capital (HK$ Thousand) | 96,323 | 96,323 | | Number of Ordinary Shares | 963,231,150 | 963,231,150 | Outstanding Convertible Bonds | Indicator | December 31, 2022 | December 31, 2021 | | :--- | :--- | | Principal Amount | US$10,000,000 | US$5,000,000 | | Carrying Amount (HK$ Thousand) | 55,796 | 38,651 | | Annual Interest Rate | 8.25% | 8.5% | | Maturity Date | December 30, 2024 | May 11, 2022 | Use of Net Proceeds from 2022 Convertible Bonds | Intended Use | Net Proceeds (HK$ Thousand) | Utilized as of December 31, 2022 (HK$ Thousand) | Balance as of December 31, 2022 (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Investment in Boron Neutron Capture Therapy project | 23,340 | Nil | 23,340 | | R&D costs and general working capital | 15,124 | Nil | 15,124 | Fushi Capital and Net Asset Requirements Fushi, as an insurance brokerage company, must comply with the minimum net asset value of HK$500,000 and minimum paid-up share capital requirements under the Insurance Ordinance. As of year-end 2022, Fushi had complied with these capital and net asset regulations - Fushi is required to maintain a minimum net asset value of HK$500,000 and minimum paid-up share capital at all times[249] - As of December 31, 2022, Fushi had complied with the capital and net asset requirements[249] Significant Investments Held and Performance (Pillar, Kunbo) The Group holds equity interests in Pillar Biosciences, Inc. and Broncus Medical Inc. as long-term strategic investments. In 2022, the Pillar investment yielded a fair value gain of approximately HK$1,330 thousand, while the Broncus Medical investment recorded a fair value loss of approximately HK$39,358 thousand. These investments aim to create synergies and enter the precision diagnostics and treatment industries Significant Investments Overview | Investee | Shareholding as of December 31, 2022 | Fair Value as of December 31, 2022 (HK$ Thousand) | Fair Value Gain/(Loss) for 2022 (HK$ Thousand) | | :--- | :--- | :--- | :--- | | Pillar Biosciences, Inc. | 3.11% | 69,270 | 1,330 | | Broncus Medical Inc. | 1.13% | 13,672 | (39,358) | - The Group's investment in Pillar aims to create synergies with the Group's medical biological laboratory testing services and health check services[14] - The investment in Broncus Medical allows the Group to strategically allocate resources in precision diagnostics, enter the precision treatment industry, and explore cooperation opportunities[252] - The Group did not hold any other significant investments with a market value exceeding 5% of the Group's total audited assets as of December 31, 2022[283] Operating Lease Commitments As of December 31, 2022, the Group's operating lease commitments for short-term office leases amounted to approximately HK$1,192 thousand, an increase from HK$400 thousand in 2021 Operating Lease Commitments | Year | Amount (HK$ Thousand) | | :--- | :--- | | December 31, 2022 | 1,192 | | December 31, 2021 | 400 | Capital Commitments As of the reporting period end, the Group's total contracted but unprovided capital commitments amounted to HK$237,541 thousand, primarily for Boron Neutron Capture Therapy equipment procurement and treatment center construction Contracted but Unprovided Capital Commitments | Item | Amount (HK$ Thousand) | | :--- | :--- | | Boron Neutron Capture Therapy equipment | 148,875 | | Boron Neutron Capture Therapy center construction | 88,666 | | Total | 237,541 | - An initial payment of JPY900,000,000 (approximately HK$51,765,000), representing 30% of the contract price, has been paid to Sumitomo for Boron Neutron Capture Therapy equipment[254] - Agreements have been entered into with contractors and suppliers for the construction of the Boron Neutron Capture Therapy center, totaling approximately HK$94,006,000, of which HK$5,340,000 has been paid[255] - Agreements have been signed with Sumitomo, where Sumitomo agreed to provide technical advisory services to Pengbo Hainan for the installation and commissioning of Boron Neutron Capture Therapy equipment, with a service fee of JPY400,000,000 (approximately HK$23,820,000)[286] Pledged Assets As of December 31, 2022, the Group held approximately HK$128,556 thousand in pledged bank deposits, including RMB-denominated deposits of HK$4,400 thousand as collateral for the Boao Pilot Zone BNCT center construction or operation, and JPY-denominated deposits of HK$124,156 thousand as collateral for an irrevocable letter of credit issued to Sumitomo, the BNCT system supplier Pledged Bank Deposits | Item | Amount (HK$ Thousand) | | :--- | :--- | | Total Pledged Bank Deposits | 128,556 | | RMB-denominated restricted bank deposits (Boao Pilot Zone) | 4,400 | | JPY-denominated restricted bank deposits (Sumitomo L/C) | 124,156 | - Pledged bank deposits are primarily used as collateral for the construction or operation of the Boron Neutron Capture Therapy center in Boao Pilot Zone and for an irrevocable letter of credit issued to Sumitomo, the Boron Neutron Capture Therapy system supplier[287] Treasury Policy, Foreign Exchange and Interest Rate Risks The Group's business activities are primarily denominated in HKD and RMB, currently facing no significant exchange rate risk and not using financial instruments for hedging. The Board will continue to manage cash balances prudently and maintain strong liquidity to seize growth opportunities, considering hedging instruments when interest rates or exchange rates are uncertain or volatile - The Group's business activities are primarily denominated in Hong Kong Dollars and Renminbi, and it does not face any significant exchange rate risk nor does it use financial instruments for hedging purposes[17] - The Directors will continue to follow a prudent policy in managing cash balances and maintaining strong liquidity to ensure the Group is prepared to seize business growth opportunities[258] - The Group will use hedging instruments, including interest rate swaps and foreign currency forward contracts, to manage risks when interest rates or exchange rates are uncertain or volatile[17] Contingent Liabilities As of December 31, 2022, and 2021, the Group had no significant contingent liabilities - As of December 31, 2022, and 2021, the Group had no significant contingent liabilities[257] Other Information This section covers the Group's human resources, post-reporting period events, corporate governance practices, audit committee activities, auditor's scope of work, share transactions, public float sufficiency, and board composition Employees and Remuneration Policy As of year-end 2022, the Group employed 253 full-time employees, with total staff costs of approximately HK$166,735 thousand. Remuneration is determined by performance, experience, and market rates, with benefits including MPF, occupational retirement schemes, insurance, medical, training, share option schemes, and share award schemes Employees and Remuneration Overview | Indicator | 2022 | 2021 | | :--- | :--- | :--- | | Number of Full-time Employees | 253 | 211 | | Total Staff Costs (HK$ Thousand) | 166,735 | 99,354 | | Contributions to Retirement Benefit Schemes (HK$ Thousand) | 3,271 | 2,089 | - Remuneration is determined based on employee performance, experience, and prevailing market rates, with benefits including discretionary bonuses, Mandatory Provident Fund, occupational retirement schemes, insurance, medical, training, share option schemes, and share award schemes[290] Events After Reporting Period There have been no significant events occurring from the end of the reporting period up to the date of this announcement - There have been no significant events from the end of the reporting period up to the date of this announcement[261][291] Corporate Governance Practices The Company is committed to maintaining high standards of corporate governance and has adopted the principles and code provisions of the Corporate Governance Code in Appendix 15 to the GEM Listing Rules. The Board has adopted a code of conduct for directors' securities transactions no less exacting than required by the GEM Listing Rules and confirmed compliance by all directors during 2022 - The Board is committed to maintaining high standards of corporate governance and has adopted the principles and code provisions of the Corporate Governance Code in Appendix 15 to the GEM Listing Rules[20][292] - The Company has adopted a code of conduct for directors' securities transactions no less exacting than required by the GEM Listing Rules and confirmed that all Directors have complied with the said code during the year 2022[262][300] Audit Committee The Audit Committee, comprising three independent non-executive directors, is responsible for reviewing financial controls, risk management, and internal control systems, and for reviewing the company's financial results and annual reports. In 2022, the Audit Committee held five meetings, fulfilled its primary duties, and met with external auditors twice without disagreement - The Audit Committee comprises three independent non-executive Directors: Mr. Yan Guoxiang (Chairman), Dr. Ho Chun Kit, and Mr. Qian Hongji[293] - Its principal duties include reviewing financial controls, risk management, and internal control systems, and reviewing the Company's quarterly, interim, and annual results and reports[22][38][301] - In 2022, the Audit Committee held five meetings and met with the external auditors twice, with no disagreements regarding the re-appointment of the external auditors[23](index=23&