STAR PHARMACEUTICAL LIMITED Registration No W

Transcription

1 STAR PHARMACEUTICAL LIMITED Registration No W UNAUDITED FULL YEAR FINANCIAL STATEMENT AND DIVIDEND ANNOUNCEMENT FOR THE PERIOD ENDED 31 DECEMBER PART 1 INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3), HALF YEAR AND FULL YEAR RESULTS 1(a) An income statement (for the group) together with a comparative statement for the corresponding period of the immediately preceding financial year. 3 months ended RMB 000 (%) RMB 000 (%) 3 months ended Increase/ (decrease) +/( ) Increase/ (decrease) +/( ) (a) (b) (a) (b) (a) (b) (a) (b) (Unaudited) (Unaudited) (Unaudited) (Audited) Revenue 35,799 16, ,321 61, Cost of sales (10,339) (10,481) (1) (41,277) (40,273) 2 Gross Profit 25,460 6, ,044 21, Other operating income 1, ,619 2, Selling and distribution expenses (34,506) (1,954) 1666 (37,824) (5,853) 546 Administrative expenses (5,232) (4,487) 17 (16,535) (15,443) 7 Other operating expenses (21,067) 252 n.m. (24,545) (549) 4371 (Loss)/Profit from operations (34,169) 666 n.m. (24,241) 1,572 n.m. Financial income 586 2,463 (76) 639 3,874 (84) Financial expenses (4) (1,337) (100) (20) (1,656) (99) (Loss)/Profit before income tax (33,587) 1,792 n.m (23,622) 3,790 n.m. Income tax credit / (expense) 6,299 (652) n.m 4,126 (1,198) n.m. (Loss)/Profit for the period/year (27,288) 1,140 n.m (19,496) 2,592 n.m. Attributable to equity holders of the Company (27,288) 1,140 n.m (19,496) 2,592 n.m. (Loss) / Profit per share (RMB cents) - Basic (weighted average) (58.69) 2.44 (41.86) Fully diluted (58.69) 2.44 (41.86) 5.54 n.m not meaningful.

2 Consolidation Statement of Comprehensive Income for the year RMB 000 (%) RMB 000 (%) 3 months 3 months ended ended Increase/ Increase/ (decrease) (decrease) +/( ) +/( ) (Unaudited) (Unaudited) (Unaudited) (Audited) (Loss)/Profit for the period/year (27,288) 1,140 n.m (19,496) 2,592 n.m. Other comprehensive income: Exchange difference on consolidation Other comprehensive (loss) / income for the period/year, net of tax (27,288) 1,140 n.m (19,496) 2,592 n.m. Total comprehensive (loss) / income attributable to equity holders of the period/year (27,288) 1,140 n.m (19,496) 2,592 n.m. Notes to Income Statement: RMB 000 RMB months ended 3 months ended (Unaudited) (Unaudited) (Unaudited) (Audited) (Loss) / Profit before tax is arrived at after charging / (crediting) : Interest income ,756 Interest on borrowings Foreign exchange loss / (gain) 827 (1,672) 3,404 (2,117) Depreciation of property, plant and equipment 1,162 1,421 6,055 5,854 Depreciation of investment property Amortization of deferred development costs Amortization of lease prepayment Loss on disposal of property, plant and equipment Loss on disposal of available-for-sale financial assets ,562 Refundable deposits written off 20,583-20,583-2

3 1(b)(i) Statement of Financial Position (for the issuer and group), together with a comparative statement as at the end of the immediately preceding financial year. Company 31 Dec 31 Dec 31 Dec 31 Dec Note RMB 000 RMB 000 RMB 000 RMB 000 (Unaudited) (Audited) (Unaudited) (Audited) Non-current assets Property, plant and equipment 42,521 54,003-6,596 Investment property 12,293 2,365 10,160 - Investment in subsidiary ,607 76,607 Lease prepayments Intangible assets (a) 5,433 6, Refundable deposits 13,273 22, Deferred tax assets 6,770 1, ,906 86,580 86,767 83,203 Current assets Inventories 27,412 22, Trade and bills receivables 8,995 2, Other receivables, prepayments and deposits 5,516 10, Income tax recoverable 1, Due from subsidiary (non-trade) ,000 18,000 Available-for-sale financial assets Cash and bank balances 68,961 69,670 55,910 65, , ,895 73,954 83,974 Total assets 192, , , ,177 Equity Share capital 144, , , ,975 Treasury Shares (293) (170) (293) (170) Statutory reserves 22,669 21, Accumulated (losses) / profits (31,292) (11,033) 14,210 21,263 Total equity 136, , , ,068 Non-current liabilities Deferred tax liabilities Current liabilities Trade and other payables 56,763 23,755 1,829 1,109 Short-term borrowing - 12, ,763 35,755 1,829 1,109 Total liabilities 56,763 35,797 1,829 1,109 Total equity and liabilities 192, , , ,177 3

4 Notes: (a) Intangible assets comprise mainly of Product Development in Progress of RMB5,433,000 (31/12/: RMB 6,128,000). 1(b)(ii) Aggregate amount of group s borrowings and debt securities. (a) Amount repayable in one year or less, or on demand As at As at Secured Unsecured Secured Unsecured RMB 000 RMB 000 RMB 000 RMB 000 (Unaudited) (Unaudited) (Audited) (Audited) ,000 * (b) Amount repayable after one year * No borrowing of the at ( : RMB12,000,000). 1(c) Consolidated Statement of Cash Flows (for the ), together with a comparative statement for the corresponding period of the immediately preceding financial year. Consolidated Cash Flow statement for the period ended 3 months ended RMB months ended RMB 000 Cash flow from operating activities (Loss)/Profit before income tax (33,587) 1,792 (23,622) 3,790 Adjustments for: Amortisation of lease prepayments Depreciation of property, plant and equipment 1,162 1,421 6,055 5,854 Depreciation of investment property Loss on disposal of property, plant and equipment Loss on disposal of available-for-sale financial assets ,562 Refundable deposits written off 20,583-20,583 - Interest expense Interest income (624) (7) (639) (1,756) Foreign exchange gain (3,288) (2,022) (3,288) (2,841) Operating profit before working capital changes (15,591) 1,321 (518) 6,986 Changes in working capital: Inventories (6,652) (2,567) (5,090) (6,294) Trade and bills receivables (5,021) 527 (6,797) 6,321 Other receivables, prepayments and deposits 1,147 (482) 7,524 2,570 4

5 Trade and other payables 32,295 3,340 30,225 (1,578) Cash generated from operations 6,178 2,139 25,344 8,005 Income tax paid (2,513) - (2,513) - Net cash generated from operating activities 3,665 2,139 22,831 8,005 Cash flows from investing activities Purchase of property, plant and equipment (195) (1,607) (4,829) (5,438) Prepayment for plant and equipment (913) Advances for product manufacturing rights and technical know-how (19,825) (285) (19,825) (7,285) Proceeds from disposal of property, plant and equipment Refund of deposit from potential investments 4,300-9,300 7,000 Purchase of available-for-sale financial assets (19,000) - (31,000) (52,500) Proceeds from redemption of available-for-sale financial assets 31,000-31,000 94,612 Interest received ,756 Net cash (used in) / generated from investing activities (3,086) (1,651) (14,705) 37,243 Cash flows from financing activities Proceeds from borrowing - 12,000 (12,000) 12,000 Purchase of treasury shares - (159) (123) (170) Interest paid - (56) - (56) Net cash generated from / (used in) financing activities - 11,785 (12,123) 11,774 Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period/year Effects of exchange rate changes in cash and cash equivalents Cash and cash equivalents at end of the period/year ,273 (3,997) 57,022 65,094 55,375 69,670 9,807 3,288 2,022 3,288 2,841 68,961 69,670 68,961 69,670 5

6 1d(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) change in equity other than those arising from capitalization issues and distributions to shareholders, together with a comparative statement for the corresponding period of the immediate preceding financial year. Consolidated Statement of Changes in Shareholders Equity for the year ended 31 December Share capital Treasury Shares Statutory reserves Accumulated losses Total equity RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 At 1 January 144,975-21,314 (13,033) 153,256 Total comprehensive income for the year ,592 2,592 Purchase of treasury shares - (170) - - (170) Transfer (592) - At 144,975 (170) 21,906 (11,033) 155,678 At 1 January 144,975 (170) 21,906 (11,033) 155,678 Total comprehensive loss for the year (19,496) (19,496) Purchase of treasury shares - (123) - - (123) Transfer (763) - At 144,975 (293) 22,669 (31,292) 136,059 Company Share capital Treasury Shares Accumulated (losses) / profits Total RMB'000 RMB'000 RMB'000 RMB'000 At 1 January 144,975 - (15,933) 129,042 Total comprehensive income for the year ,196 37,196 Purchase of treasury shares - (170) - (170) At 144,975 (170) 21, ,068 At 1 January 144,975 (170) 21, ,068 Total comprehensive loss for the year - - (7,053) (7,053) Purchase of treasury shares - (123) - (123) At 144,975 (293) 14, ,892 6

7 1(d)(ii) Details of any changes in the Company s share capital arising from rights issue, bonus issue, share buy-backs, exercise of share options or warrants, conversion of other issues of equity securities, issue of shares for cash or as consideration for acquisition or for any other purpose since the end of the previous period reported on. State also the number of shares that may be issued on conversion of all the outstanding convertibles, as well as the number of shares held as treasury shares, if any, against the total number of issued shares excluding treasury shares of the issuer, as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. State also the number of shares held as treasury shares and the number of subsidiary holdings, if any, and the percentage of the aggregate number of treasury shares and subsidiary holdings held against the total number of shares outstanding in a class that is listed as at the end of the current financial period reported on and as at the end of the corresponding period of the immediately preceding financial year. The number of issued ordinary shares (excluding treasury shares) of the Company was as follows: Issued and Paid-Up Capital Number of Shares As at (audited) 46,610,499 As at (unaudited) 46,491,699 Movements in the Company s issued share capital (excluding treasury shares) during the year ended was as follows: Number of shares Balance as at 1 January 46,610,499 Shares buy back and held as treasury shares (118,800) Balance as at 46,491,699 During the financial year ended, the Company purchased a total of 118,800 ( : 214,500) of its ordinary shares by way of on-market purchase. These shares were held as treasury shares and presented as a component within shareholders' equity Save as disclosed above, there have been no bonus or other issues of shares during the year. 7

8 1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current financial period and as at the end of the immediately preceding year. Total number of issued shares excluding treasury shares 46,491,699 46,610,499 1(d)(iv) A statement showing all sales, transfer, disposal, cancellation and/or use of the treasury shares at the end of the current financial period reported on. The Company acquired 118,800 of its own shares in the open market during the current financial year. These shares are held as treasury shares. Movements in the Company's treasury shares during the financial year ended 31 December were as follows: and Company Number of Shares Balance as at 1 January 214,500 Shares buy back on 31 August 92,400 Shares buy back on 4 September 20,000 Shares buy back on 5 September 6,400 Balance as at 333,300 1(d)(v) A statement showing all sales, transfer, cancellation and/or use of subsidiary holdings as at the end of the current financial period reported on. During the financial year, there was no transaction pertaining to subsidiary holdings. 2. Whether the figures have been audited or reviewed and in accordance with which auditing standard or practice. The figures have neither been audited nor reviewed by the s auditors. 3. Where the figures have been audited or reviewed, the auditors report (including any qualifications or emphasis of a matter). Not applicable. 8

9 4. Whether the same accounting policies and methods of computation as in the issuer s most recently audited annual financial statements have been applied. The accounting policies and methods of computation applied in the financial statements for the current financial year are consistent with those of the audited financial statements for the year ended. 5. If there are any changes in the accounting policies and methods of computation, including any required by an accounting standard, what has changed as well as the reasons for, and the effect of, the change. The adoption of certain new/revised accounting standards effected on 1 January have no significant impact on the s result of operations. 6. Earnings per ordinary share of the group for the current financial period reported on and the corresponding period of the immediately preceding financial year, after deducting any provision for preference dividends. 3 months ended 3 months ended Net amount attributable to equity shareholders for the period/year (RMB 000) No. of ordinary shares used in calculation of basic (loss) / profit per share (Loss) / Profit per ordinary share of the group, based on net (loss) / profit attributable to the shareholders of the Company (in RMB cents): (a) Based on weighted average number of ordinary share on issue: and (in RMB cents) (b) On a fully diluted basis (in RMB cents) (27,288) 1,140 (19,496) 2,592 46,491,699 46,764,629 46,570,772 46,782,468 (58.69) 2.44 (41.86) 5.54 (58.69) 2.44 (41.86)

10 7. Net asset value (for the issuer and group) per ordinary share based on issued share capital of the issuer at the end of the:- (a) current financial year reported on ; and (b) immediate preceding financial year. Company Net asset value per ordinary share capital at the end of the year (in RMB cents) Number of shares (in issued) 46,491,699 46,610,499 46,491,699 46,610, A review of the performance of the group, to the extent necessary for a reasonable understanding of the group s business. It must include a discussion of the following:- (a) any significant factors that affected the turnover, costs, and earnings of the group for current financial period reported on, including ( where applicable) seasonal or cyclical factors; and (b) any material factors that affected the cash flow, working capital, assets or liabilities of the group during the current financial period reported on. Overview As announced on 15 February 2018, the recorded a significant drop in its profit in 4Q and FY. During 4Q, the faced great challenges from the change of policies by implemented by the China central government. This new policy effectively changed the traditional multi-level distribution chain to a flatter one. As the distribution chain could only contain only one distributor and one customer, this has indirectly impacted the sales prices of the s medical products resulted in higher profit margin. However, the selling and distribution expenses increased drastically as the had to change it s way of distribution channel and networks in order to accommodate the change effected by the new policy. In early December, a new policy of Generic drugs (injections) called Consistency evaluation announced by China central government which had affected certain Research and Development ( R&D ) projects of the. After comprehensive compliance assessments of the success rate, the future costs to be invested, the profitability and the future market conditions, the terminated some R&D projects and recorded RMB20.6 million impairment loss during 4Q. In FY the recorded RMB19.5 million in net loss attributable to equity holders and revenue obtained of RMB93.3 million. 10

11 Revenue revenue increased 51% from RMB61.7 million in FY to RMB93.3 million in FY due to the higher selling price of drugs under Two-Invoice System. 3 months ended 3 months ended Change Change RMB 000 RMB 000 % RMB 000 RMB 000 RMB 000 % RMB 000 Antibiotics 7,829 4, ,290 24,051 20, ,952 Cardiovascular drugs and cerebrovascular drugs 1, ,731 2, Other specialized drugs 26,685 11, ,371 65,538 38, ,927 Total 35,799 16, ,199 93,321 61, ,643 Antibiotics drugs revenue increased 20% to RMB24.1 million in FY due to increase in the revenue of Azithromycin Aspartate for Injection, Clindamycin Hydrochloride Injection and Sultamicrillin Tosilate Tablets which partially offset with the decrease of sales of Cefepime hydrochloride for Injection. Antibiotics accounted for 26% of revenue in FY, making it the second largest revenue of the. Cardiovascular drugs and cerebrovascular drugs revenue increased 26% to RMB3.7 million in FY. This is mainly due to increase in the selling price of Vinpocetine for Injection. Cardiovascular drugs and cerebrovascular drugs represented 4% of revenue in FY. Other specialized drugs revenue increased 70% to RMB65.5 million in FY due to increase in revenue of Potassium Sodium Dehydroandrographolide Succinate for Injection, Amoxicillin and Dicloxacillin Sodium Tablets and Cobamamide for Injection. Other specialized drugs remained the largest revenue contributor constituting 70% of revenue in FY. Profitability Gross profit increased 143% to RMB52.0 million in FY owing to higher selling price of drugs under Two-Invoice system. Other operating income increased 30% from RMB2.0 million in FY to RMB2.6 million in FY caused by increase of subcontracting service income, government grants and rental income. Selling and distribution expenses increased by 5.5 times to RMB37.8 million in FY from RMB5.9 million in FY caused mainly by the selling and marketing expenses to those distributors that taken active roles to assist the to facilitate the sales to hospitals. 11

12 Administrative expenses increased 7% to RMB16.5 million in FY from RMB15.4 million in FY mainly due to general increase of operating costs in China. Other expenses increased by 43.7 times to RMB24.5 million in FY mainly were the result from RMB20.6 million impairment loss of R&D projects in FY together with RMB3.4 million foreign exchange losses in various currencies against RMB during this year. Finance income decreased 84% to RMB0.6 million caused by lower interest income from available-for-sale financial assets of RMB1.6 million and no exchange gain of RMB2.1 million that earned in FY. Finance expenses down 99% to RMB0.02 million in FY as there was no loss incurred on redemption of available-for-sale financial assets that recorded in FY. Tax expenses decreased from RMB1.2 million in FY to tax credit of RMB4.1 million in FY. This was mainly due to net increase of deferred tax assets of RMB5.5 million in FY which were the unutilized tax benefit of a China subsidiary. Overall, the recorded a net loss attributable to equity holders RMB19.5 million in FY. Financial Position ( vs. ) Non-current assets decreased from RMB86.6 million to RMB80.9 million. Property, plant and equipment dropped from RMB54.0 million to RMB42.5 million due to transfer of.construction in progress assets amounting to RMB 6.6 million to Investment property after the property completion in Singapore and the depreciation for the year that offset by the additional equipment purchased during the year. Investment property increased from RMB2.4 million to RMB12.3 million as the property purchased in Singapore has completed its construction in 4Q. Intangible assets reduced from RMB6.1 million to RMB5.4 million caused by impairment loss of deferred development cost. Refundable deposits reduced to RMB13.3 million in FY due to impairment loss of RMB13.9 million, refunded RMB7.7 million from third party vendors to the and new prepayment of RMB12.7 million to third party R&D vendors to develop new drugs during the year. Current assets increased from RMB104.9 million to RMB111.9 million. Inventories rose from RMB22.3 million to RMB27.4 million due to the increase of work-in progress and finished goods level at the end of FY. Trade and bills receivables increased from RMB2.2 million to RMB9.0 million due to longer credit terms given to the customers. Other receivables, prepayments and deposits decreased from RMB10.7 million to RMB5.5 million due to the receipt of RMB7.0 million of refundable deposits which partially offset with the general increase of other receivables during the year. Cash and bank balances decreased slightly from RMB69.7 million to RMB69.0 million. Non-current liabilities comprising deferred tax liabilities was fully expensed on FY. 12

13 Current liabilities rose from RMB35.8 million to RMB56.8 million. Trade payables increased from RMB10.5 million to RMB12.5 million the purchase of raw materials. Other payables increased from RMB13.3 million to RMB44.3 million was mainly caused by the amount due to distributors for selling and distribution expenses under the Twoinvoice system. Short term borrowing was fully settled in FY. Cash Flow Statement The s net cash inflow from operating activities was RMB22.8 million in FY and RMB3.7 million in 4Q. This was mainly caused by the increase of amounts payable to the distributors for providing marketing services to the. Net cash used in investing activities in FY amounted to RMB14.7 million and in 4Q amounted to RMB3.1 million. These were due to purchase of available-for-sale financial assets and advances for products development to third party vendors but was partially offset by the proceeds from the redemption of available-for-sale financial assets upon maturity. The s net cash used in financing activities in FY amounted to RMB12.1 million. This was primarily due to the repayment of short-term borrowing of RMB12 million during the year. As a result, the net cash outflow in FY amounted to RMB4.0 million and net inflow in 4Q was RMB0.6 million. 9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results. No forecast or prospect statement had been previously issued for the financial period under review. 10. A commentary at the date of the announcement of the significant trends and competitive conditions of the industry in which the group operates and any known factors or events that may affect the group in the next reporting period and the next 12 months. For the pharmaceutical industry in China, the main operating pressures came from policy changes such as lower price tender trend, control over medical insurance premium, the change in proportion of drugs hospitals can directly control, the cancellation of mark-up of sales prices of drugs to hospitals and the Two-Invoice System that have affected and changed the pattern of sales. Facing the change in these policies, the expects business conditions remain challenging in The will actively cope with these changes by adjusting the sales and marketing system. For business growth, the will continue to invest in R&D efforts to roll out new products. 13

14 11. Dividend (a) Current Financial Period Reported On Any dividend declared for the current financial period reported on? Ordinary Shares: No. (b) Corresponding Period of the immediately preceding financial year Any dividend declared for the corresponding period of the immediately preceding financial year? Ordinary Shares: No. (c) Date payable Ordinary Shares: Not applicable. (d) Book Closure Date Ordinary Shares: Not applicable. 12. If no dividend has been declared/recommend, a statement to that effect. No dividend has been declared or recommended for the current period reported on. 14

15 13. If the has obtained a general mandate from shareholders for IPTs, the aggregate value of such transactions as required under Rule 920(1)(a)(ii). If no IPT mandate has been obtained, a statement to that effect. Name of interested person Hainan Selection Pharmaceutical Co., Ltd. Aggregate value of all interested person transactions during the financial year under review (excluding transactions less than S$100,000 and transactions conducted under shareholders mandate pursuant to Rule 920) RMB1,940,000 Aggregate value of all interested person transactions conducted under shareholders mandate pursuant to Rule 920 (excluding transactions less than S$100,000) Nil The value of IPT of the is below 3% of the s latest net tangible assets as at. The Company has not obtained a general mandate from shareholders for interested person transactions. 14. Confirmation that the issuer has procured undertakings from all its directors and executive officers (in the format set out in Appendix 7.7) under Rule 720(1). The Company hereby confirms that it has procured undertakings from all its directors and executive officers under Rule 720(1) of the Listing Manual. 15

16 PART II ADDITIONAL INFORMATION REQUIRED FOR FULL YEAR ANNOUNCEMENT (This part is not applicable to Q1, Q2, Q3 or Half Year Results) 15. Segmented revenue and results for business or geographical segments (of the group) in the form presented in the issuer s most recently audited annual financial statements, with comparative information for the immediately preceding year. The s main businesses are those relating to the manufacturing and sales of pharmaceutical products and it operates mainly in the China. Accordingly, the is not subjected to different risks and returns in its activities and geographical regions in which it operates. 16. In the review of performance, the factors leading to any material changes in contributions to turnover and earnings by the business or geographical segments. Please refer to Note 8 for the review of performance by business. 17. A breakdown of sales. Revenue for first half of the year Operating profit after tax for the first half of the year Revenue for second half of the year Operating profit / (loss) after tax for the second half of the year FY FY Increases/(Decreases) RMB 000 RMB 000 RMB 000 % 37,461 29,302 8, , , ,860 32,376 23, (24,736) 1,792 (26,528) n.m. 16

17 18. A breakdown of the total annual dividend (in dollar value) for the issuer s latest full year and its previous full year. FY RMB 000 FY RMB 000 Ordinary Shares - - Preference Shares - - Total Disclosure of person occupying a managerial position in the issuer or any of its principal subsidiaries who is a relative of a director or chief executive officer or substantial shareholder of the issuer pursuant to Rule 704(13) in the format below. If there are no such persons, the issuer must make an appropriate negative statement. Name Age Family relationship with any director and/or substantial shareholder NIL Current position and duties, and the year the position was held Details of changes in duties and position held, if any, during the year By Order of the Board Xu Zhi Bin Executive Chairman 28 February