中国生物科技服务(08037) - 2023 Q1 - 季度业绩

Report Overview and Disclaimer Characteristics of the GEM Market and Disclaimer The report highlights the high volatility and uncertain liquidity of GEM market securities, advising investor caution - GEM-listed companies are generally small to medium-sized, and their securities may experience significant market volatility with no guarantee of high liquidity[2] - Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement and disclaim any liability for any loss arising therefrom[12] Directors' Responsibility Statement The company's directors collectively and individually accept full responsibility for this announcement's accuracy and completeness - The company's directors confirm that the information contained in this announcement is accurate and complete in all material respects, not misleading or deceptive, and contains no omissions[3] Unaudited Condensed Consolidated Financial Statements Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the three months ended March 31, 2023, the Group shifted from a profit to a loss, driven by a sharp decline in revenue and a lower gross profit margin Summary of Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income (For the three months ended March 31): | Metric | 2023 (HK$'000) | 2022 (HK$'000) | Change (HK$'000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total proceeds | 130,561 | 384,157 | (253,596) | -66.01% | | Revenue | 130,561 | 384,088 | (253,527) | -66.01% | | Cost of sales | (81,400) | (194,356) | 112,956 | -58.12% | | Gross profit | 49,161 | 189,732 | (140,571) | -74.09% | | Operating (loss)/profit | (1,091) | 133,261 | (134,352) | -100.82% | | (Loss)/profit before tax | (3,960) | 132,044 | (136,004) | -103.00% | | (Loss)/profit for the period | (7,781) | 106,585 | (114,366) | -107.31% | | (Loss)/profit for the period attributable to owners of the Company | (15,375) | 34,938 | (50,313) | -144.00% | Condensed Consolidated Statement of Changes in Equity As of March 31, 2023, total comprehensive loss attributable to owners was HK$16,500 thousand, a reversal from last year's total comprehensive income of HK$6,046 thousand Summary of Condensed Consolidated Statement of Changes in Equity (For the three months ended March 31): | Metric | 2023 (HK$'000) | 2022 (HK$'000) | | :--- | :--- | :--- | | Total equity at January 1 (audited) | 826,520 | 465,895 | | Total comprehensive (loss)/income for the period | (8,817) | 75,030 | | Total comprehensive (loss)/income attributable to owners of the Company | (16,500) | 6,046 | | Total comprehensive (loss)/income attributable to non-controlling interests | 7,683 | 68,984 | | Total equity at March 31 (unaudited) | 824,061 | 540,925 | Notes to the Financial Statements General Information The company, an investment holding company incorporated in the Cayman Islands and continued in Bermuda, operates in medical testing, immunotherapy, healthcare products, and insurance brokerage - The Company is an investment holding company, and its subsidiaries are principally engaged in medical laboratory and health check services in Hong Kong, oncologic immunocellular therapy and health management in China, sales of healthcare and pharmaceutical products in China and Hong Kong, and insurance brokerage services[45] - The Company's issued shares have been listed on the GEM of the Stock Exchange since June 17, 2004[20] Basis of Preparation and Principal Accounting Policies The unaudited first-quarter results were prepared under the historical cost basis and in accordance with Hong Kong Financial Reporting Standards, with no material impact from new standards - The results were prepared under the historical cost basis and in accordance with Hong Kong Financial Reporting Standards, and the adoption of new and revised HKFRSs did not have a material financial impact on the operating results and financial position[21][46][47] Revenue First-quarter 2023 revenue declined sharply due to reduced income from medical testing, healthcare products, insurance brokerage, and logistics services Revenue Breakdown (For the three months ended March 31): | Service Category | 2023 (HK$'000) | 2022 (HK$'000) | Change (HK$'000) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Medical laboratory and health check services | 129,065 | 162,662 | (33,597) | -20.65% | | Sales of healthcare and pharmaceutical products | 302 | 214,752 | (214,450) | -99.86% | | Insurance brokerage services | 1,192 | 3,460 | (2,268) | -65.55% | | Logistics services | 2 | 3,199 | (3,197) | -99.94% | | Money lending business | – | 15 | (15) | -100.00% | | Total Revenue | 130,561 | 384,088 | (253,527) | -66.01% | Other Income and Gains/(Losses) Other income and gains recorded a net loss of HK$1,815 thousand in Q1 2023, a significant increase from the prior year's loss, mainly due to exchange losses Other Income and Gains/(Losses) (For the three months ended March 31): | Metric | 2023 (HK$'000) | 2022 (HK$'000) | | :--- | :--- | :--- | | Interest income | 700 | 12 | | Government subsidies | 23 | – | | Sundry income | 130 | 142 | | Exchange loss, net | (1,209) | (255) | | Loss on write-off of property, plant and equipment | (1,459) | (99) | | Total | (1,815) | (200) | Finance Costs Finance costs for the first quarter of 2023 increased to HK$1,353 thousand, primarily due to higher effective interest on convertible bonds Finance Costs (For the three months ended March 31): | Metric | 2023 (HK$'000) | 2022 (HK$'000) | | :--- | :--- | :--- | | Other borrowings | – | 138 | | Effective interest on convertible bonds | 1,100 | 950 | | Lease liabilities | 253 | 129 | | Total | 1,353 | 1,217 | Income Tax Expense First-quarter 2023 income tax expense decreased significantly to HK$3,821 thousand from HK$25,459 thousand last year, mainly due to lower Hong Kong Profits Tax Income Tax Expense (For the three months ended March 31): | Metric | 2023 (HK$'000) | 2022 (HK$'000) | | :--- | :--- | :--- | | Hong Kong Profits Tax | 4,141 | 25,803 | | Deferred tax (for the period) | (320) | (344) | | Total | 3,821 | 25,459 | - China Enterprise Income Tax is calculated at a rate of 25%, with high-tech enterprises enjoying a preferential rate of 15%[29][53] Dividend The Board does not recommend the payment of any dividend for the three months ended March 31, 2023, consistent with the prior year period - The Board does not recommend the payment of any dividend for the three months ended March 31, 2023[31][54] (Loss)/Earnings Per Share Basic and diluted loss per share for Q1 2023 was HK$0.016, compared to earnings per share of HK$0.036 in the prior year period, driven by the net loss attributable to owners (Loss)/Earnings Per Share (For the three months ended March 31): | Metric | 2023 (HK$'000) | 2022 (HK$'000) | | :--- | :--- | :--- | | (Loss)/profit for the period attributable to owners of the Company | (15,375) | 34,938 | | Weighted average number of ordinary shares ('000) | 963,231 | 963,231 | | Basic and diluted (loss)/earnings per share (HK$) | (0.016) | 0.036 | - Diluted loss per share for Q1 2023 was the same as basic loss per share due to the anti-dilutive effect of outstanding share options[79] Financial Review Overall Revenue Analysis Q1 2023 revenue fell 66.01% to HK$130,561 thousand, primarily due to reduced demand for nucleic acid testing and antigen test kits following relaxed quarantine measures - In the first quarter of 2023, revenue was HK$130,561 thousand, a significant decrease of 66.01% from HK$384,088 thousand in the same period of 2022[59] - The decline was mainly attributable to the negative impact of rapid changes in the COVID-19 pandemic and the relaxation of quarantine measures by the Hong Kong government on demand for nucleic acid testing services and rapid antigen test kits[59] Segment Revenue Analysis All major business segments experienced significant revenue declines, with healthcare products and logistics services showing the largest drops due to policy changes and market competition - All segments saw a sharp decline in revenue, with sales of healthcare and pharmaceutical products down 99.86%, logistics services down 99.94%, insurance brokerage services down 65.55%, and medical laboratory and health check services down 20.65%[60][62][39][64] Medical Laboratory and Health Check Services This segment's revenue decreased by 20.65% to HK$129,065 thousand, mainly due to reduced demand for nucleic acid testing services at border control points - Revenue from medical laboratory and health check services decreased by 20.65% from HK$162,662 thousand to HK$129,065 thousand, primarily due to a decline in demand for COVID-19 nucleic acid testing services at border control points[60] Oncologic Immunocellular Therapy Services This segment generated no revenue in Q1 2023, but the Phase I clinical trial for its LY007 CAR-T cell injection is proceeding as planned - The oncologic immunocellular therapy services segment did not generate any revenue during the first quarter of 2023[38] - The Phase I clinical trial for LY007 cell injection, China's first CD20-targeted CAR-T therapy product, commenced in January 2022, with the first cohort of four patients having completed cell infusion[38] Sales of Healthcare and Pharmaceutical Products This segment's revenue plummeted 99.86% to HK$302 thousand due to a drop in demand for rapid antigen test kits after quarantine rules were relaxed - Revenue from sales of healthcare and pharmaceutical products decreased sharply by 99.86% from HK$214,752 thousand to HK$302 thousand, mainly due to a decline in demand for rapid antigen test kits[62] - To strengthen this segment, the Group entered into a five-year license and distribution agreement with a Japanese supplier for NMN powder products for exclusive distribution in Hong Kong and Macau[62] Insurance Brokerage Services This segment's revenue decreased by 65.55% to HK$1,192 thousand, impacted by intense market competition and the time needed for economic recovery - Revenue from insurance brokerage services decreased by 65.55% from HK$3,460 thousand to HK$1,192 thousand, due to intense market competition and the time required for economic recovery[39] Logistics Services and Money Lending Business Logistics services revenue fell 99.94% to HK$2 thousand due to market competition and reduced demand, while the money lending business recorded no interest income - Revenue from logistics services decreased by 99.94% from HK$3,199 thousand to HK$2 thousand, mainly due to intense market competition and reduced demand[64] - The money lending business recorded no interest income during the first quarter of 2023, and no new loans were granted[64] Gross Profit and Gross Profit Margin Q1 2023 gross profit decreased by HK$140,571 thousand to HK$49,161 thousand, with the gross margin falling 11.75 percentage points to 37.65% - Gross profit for the first quarter of 2023 was HK$49,161 thousand, a decrease of HK$140,571 thousand from HK$189,732 thousand in the same period last year[65] - The gross profit margin decreased by 11.75 percentage points from 49.40% to 37.65%, mainly due to lower revenue from medical testing services and reduced sales of rapid antigen test kits[65] Selling and Distribution Expenses Selling and distribution expenses decreased slightly by 4.74% to HK$3,720 thousand, remaining at a stable level - Selling and distribution expenses decreased slightly by 4.74% to HK$3,720 thousand, maintaining a stable level[65] Administrative Expenses Administrative expenses decreased by 17.71% to HK$44,717 thousand, primarily due to lower R&D costs in the immunotherapy segment and reduced staff costs in medical testing - Administrative expenses decreased by 17.71% to HK$44,717 thousand, mainly due to a HK$7,188 thousand reduction in R&D costs for oncologic immunocellular therapy services and a HK$6,902 thousand decrease in staff and recruitment costs for medical testing services[90] Finance Costs Finance costs increased to HK$1,353 thousand, mainly resulting from the convertible bonds issued in December 2022 - Finance costs increased to HK$1,353 thousand, primarily attributable to the convertible bonds issued in December 2022[90] Loss for the Period The net loss attributable to owners was HK$15,375 thousand, a reversal from last year's net profit, driven by decreased demand for COVID-19 related services and products - The net loss attributable to owners of the Company was HK$15,375 thousand, a reversal from a net profit of HK$34,938 thousand in the same period last year[91] - The loss was mainly due to the decline in demand for nucleic acid testing services and rapid antigen test kits following the relaxation of COVID-19 quarantine regulations[91] Business Review and Future Prospects Business Review This quarter's business review covers the renewal of a supply agreement with BGI, a purchase contract for BNCT equipment, and the grant of share options Continuing Connected Transactions Sunrise Diagnostic Centre renewed its master supply agreement with BGI for equipment and reagents, with a 2023 annual cap of HK$120,000,000 - Sunrise Diagnostic Centre renewed its master supply agreement with BGI to purchase equipment, consumables, and reagents, with an annual cap of HK$120,000,000 for 2023[67] Purchase of Boron Neutron Capture Therapy Equipment The company contracted with Sumitomo to purchase Boron Neutron Capture Therapy components (approx HK$26,502 thousand) and related maintenance services (approx HK$21,919 thousand) - The company entered into a contract with Sumitomo to purchase Boron Neutron Capture Therapy components for an initial sales price of approximately HK$26,502 thousand[94] - Concurrently, it procured maintenance services for the BNCT equipment for a consideration of approximately HK$21,919 thousand[94] Grant of Share Options The company granted share options for 5,000,000 shares, representing approximately 0.52% of issued shares, to eligible participants with a three-year vesting period - The company granted share options for a total of 5,000,000 shares to eligible participants, representing approximately 0.52% of the total issued shares, with a three-year vesting period[94] Future Prospects The company plans to capitalize on post-pandemic demand for private healthcare, expand in the Greater Bay Area, and accelerate CAR-T trials and BNCT center construction Expansion of Healthcare Services Demand for health checks in Hong Kong is expected to grow, and the company is expanding into the Greater Bay Area and launching new tests like HPV DNA and colorectal cancer DNA - Demand for health checks and related medical services in Hong Kong is expected to continue growing, and the company is actively seeking collaborations to expand its business in the Greater Bay Area[71][72] - New tests such as HPV DNA, colorectal cancer DNA, and cPassTM have been launched, and service agreements have been signed with operators of eight District Health Centres[72][95] - The high-standard molecular biology laboratory now offers NGS-based cancer companion diagnostic tests and is preparing for FDA test product validation[97] Progress in Oncologic Immunocellular Therapy The Phase I clinical trial for the CAR-T drug LY007 is on schedule, with the first cohort of four patients having completed cell infusion - The Phase I clinical trial for its CAR-T drug, LY007 cell injection, is proceeding as planned, with the first cohort of four patients having completed cell infusion[73] - The company is confident that a sufficient number of patients will be enrolled in the trial by the end of 2023[73] Construction of Boron Neutron Capture Therapy Center The BNCT center in the Boao Lecheng Pilot Zone has obtained its medical institution practice license, targeting completion and trial operation by late 2024 or early 2025 - Construction of the Boron Neutron Capture Therapy Center in the Boao Lecheng Pilot Zone is progressing, having obtained its medical institution practice license[74] - The target for completing construction, decoration, and equipment installation for trial operation is late 2024 or early 2025[74] - The company aims to become the first provider of BNCT cancer treatment services in the Greater China region[98] Overall Strategy The company will continue to enhance its diagnostic services, accelerate clinical trials and BNCT center construction, and develop innovative solutions using biomedical technology - The company will continue to offer tailored services to enrich its diagnostic and health check business[75] - It will strive to accelerate the construction of the trial and BNCT centers and develop innovative solutions by leveraging the latest advancements in biomedical research and technology[75] Material Acquisitions and Disposals During the first quarter of 2023, the Group did not conduct any other material acquisitions or disposals of subsidiaries, associates, or joint ventures - During the first quarter of 2023, the Group did not conduct any other material acquisitions or disposals of subsidiaries, associates, or joint ventures[76][100] Shareholder and Corporate Governance Information Directors' and Chief Executive's Interests As of March 31, 2023, Mr Liu Xiaolin held a 54.97% interest through a controlled corporation, and several directors held a total of 11,760,000 share options Directors' and Chief Executive's Long Positions in Shares (As at March 31, 2023): | Director's Name | Capacity and Nature of Interest | Number of Shares | Approximate Percentage | | :--- | :--- | :--- | :--- | | Mr Liu Xiaolin | Interest in a controlled corporation | 529,500,546 | 54.97% | Directors' Long Positions in Share Options Granted by the Company (As at March 31, 2023): | Director's Name | Date of Grant | Exercise Price per Share (HK$) | Total Long Position in Underlying Shares | Approximate Percentage | | :--- | :--- | :--- | :--- | :--- | | Mr Liu Xiaolin | August 20, 2019 | 1.68 | 320,000 | 0.03% | | Mr He Xun | September 2, 2020 | 2.00 | 6,440,000 | 0.67% | | Ms Xu Haiyin | January 5, 2023 | 1.45 | 5,000,000 | 0.52% | | Total | | | 11,760,000 | 1.22% | Substantial Shareholders' Interests As of March 31, 2023, Genius Earn and its subsidiary held 54.97% of the company, while Guoyuan Securities and its affiliates held a combined 25.13% Discloseable Interests of Substantial Shareholders in Shares and Underlying Shares (As at March 31, 2023): | Shareholder Name | Capacity and Nature of Interest | Number of Ordinary Shares | Approximate Percentage | | :--- | :--- | :--- | :--- | | Genius Earn | Interest in a controlled corporation | 529,500,546 | 54.97% | | Genius Lead | Beneficial owner | 529,500,546 | 54.97% | | Guoyuan Securities Investment (Hong Kong) Limited | Beneficial owner | 54,137,931 | 5.62% | | Guoyuan International Holdings Limited | Interest in a controlled corporation | 242,041,736 | 25.13% | | Guoyuan Securities Company Limited | Interest in a controlled corporation | 242,041,736 | 25.13% | | Richlane Ventures Limited | Beneficial owner | 58,000,000 | 6.02% | | Mr Ko Chun Shun | Interest in a controlled corporation | 95,545,000 | 9.92% | Share Option Scheme The company's share option scheme, adopted in 2014, had 19,515,000 options outstanding as of March 31, 2023, with 5,000,000 granted during the quarter - The Share Option Scheme was adopted on May 29, 2014, to reward eligible participants for their contributions to the Group's success[114][132] - On January 6, 2023, 5,000,000 share options were granted to Ms Xu Haiyin at an exercise price of HK$1.45, with no performance targets or clawback mechanisms[94][137] Details of Share Option Movements (For the three months ended March 31, 2023): | Category of Grantee | Balance at January 1, 2023 | Granted during the period | Balance at March 31, 2023 | | :--- | :--- | :--- | :--- | | Directors | 6,760,000 | 5,000,000 | 11,760,000 | | Participants of connected entities | 3,240,000 | – | 3,240,000 | | Consultants | 3,335,000 | – | 3,335,000 | | Employees | 1,180,000 | – | 1,180,000 | | Total | 14,515,000 | 5,000,000 | 19,515,000 | Share Award Scheme The company's share award scheme, adopted in 2021, allows for the granting of up to 10% of issued shares, with a 1% cap per participant - The Share Award Scheme was adopted on August 18, 2021, to recognize the contributions of eligible participants to the Group's success[119][139] - As of the date of this announcement, the total number of shares available for award is 96,323,115, representing 10% of the issued shares[120][139] - The maximum entitlement for any one participant under the scheme shall not exceed 1% of the total number of issued shares of the Company[121][140] - The Share Award Scheme is valid for a period of 10 years and will expire on August 17, 2031[143] Directors' Rights to Acquire Shares and Debentures No arrangements were made to enable directors to acquire benefits by means of the acquisition of shares in or debentures of the company, other than the granted share options - Apart from the share options granted to three directors, no arrangements were entered into by the Company to enable directors to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate[143] Pre-emptive Rights The company's Bye-laws contain no provisions for pre-emptive rights, and there are no such restrictions under Bermuda law - There are no provisions for pre-emptive rights in the Company's Bye-laws or restrictions on such rights under Bermuda law[144] Purchase, Sale or Redemption of Listed Securities During the first quarter of 2023, neither the company nor any of its subsidiaries purchased, sold, or redeemed any of the company's listed securities - During the first quarter of 2023, neither the Company nor any of its subsidiaries purchased, sold, or redeemed any of the Company's listed securities[145] Compliance with the Code of Conduct for Directors' Securities Transactions The company confirmed that all directors have complied with the required standard of dealings and the code of conduct for directors' securities transactions during Q1 2023 - All directors have complied with the required standard of dealings and the code of conduct for directors' securities transactions throughout the first quarter of 2023[145] Corporate Governance Code During the first quarter of 2023, the company has complied with the code provisions of the Corporate Governance Code as set out in the GEM Listing Rules - During the first quarter of 2023, the Company has complied with the code provisions of the Corporate Governance Code set out in Appendix 15 to the GEM Listing Rules[146] Competing Interests and Conflicts of Interest During Q1 2023, no director or controlling shareholder had any interest in a business that competes with the Group, nor were there any conflicts of interest - During the first quarter of 2023, no director, controlling shareholder, or their respective close associates had any interest in any business that competes or may compete with the Group's business, nor were there any conflicts of interest[146] Audit Committee The Audit Committee, comprising three independent non-executive directors, has reviewed the Group's unaudited first-quarter results and discussed internal control matters - The Audit Committee, consisting of three independent non-executive directors, has reviewed the Group's unaudited condensed consolidated first-quarter results[147][150] Sufficiency of Public Float As of the date of this announcement, the company has maintained the public float as specified under the GEM Listing Rules - As of the date of this announcement, the Company has maintained the public float as specified under the GEM Listing Rules[151] Conclusion Conclusion The Board of Directors thanks all shareholders for their support and has provided a list of its members and announcement publication channels - The Board of Directors thanks all shareholders for their support of the Company[152] - The Board of Directors comprises four executive directors and three independent non-executive directors[103] - This announcement will be published on the websites of The Stock Exchange of Hong Kong Limited and the Company[103]