JILIN PROVINCE HUINAN CHANGLONG BIO-PHARMACY COMPANY LIMITED CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET ("GEM") OF THE STOCK EXCHANGE OF HONG KONG LIMITED (THE "STOCK EXCHANGE")
GEM has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.
Given the emerging of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the Main Board and no assurance is given that there will be a liquid market in the securities traded on GEM.
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this report, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this report.
This report, for which the directors of Jilin Province Huinan Changlong Bio-pharmacy Company Limited (the "Directors") collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM (the "GEM Listing Rules") for the purpose of giving information with regard to Jilin Province Huinan Changlong Bio-pharmacy Company Limited and its subsidiary ("the Group"). The directors, having made all reasonable enquiries, confirm that, to the best of their knowledge and belief: (1) the information contained in this report is accurate and complete in all material respects and not misleading; (2) there are no other matters the omission of which would make any statement in this report misleading; and (3) all opinions expressed in this report have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.
(P:jobs 5_ir20150939 Jilin 1QR 2015E_Jilin 3QR2015)1st Proof • 14 May 2014 • 16:19 14/05/2015 • 02C • Page 1
FIRST QUARTERLY REPORT (UNAUDITED)
FOR THE THREE MONTHS ENDED 31 MARCH 2015
CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED)
The Board of Directors (the "Board") of Jilin Province Huinan Changlong Bio-pharmacy Company Limited ("the Company") is pleased to announce the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the three months ended 31 March 2015 together with the comparative unaudited figures for the corresponding periods in 2014 as follows:
For the three months ended 31 March
2015 | 2014 | |
Notes | RMB'000 | RMB'000 |
Turnover 3 121,730 107,729
Cost of sales (19,621) (18,536)
Gross profit 102,109 89,193
Other revenue 869 1,132
Distribution and selling costs (80,143) (64,123) Administrative expenses (5,444) (11,684)
Profit from operations 17,391 14,518
Finance costs (75) (115)
Profit before taxation 17,316 14,403
Taxation 5 (2,597) (2,160)
Profit attributable to equity holders of the Company 14,719 12,243
Earnings per share - Basic 6 2.62 cents 2.18 cents
1 First Quarterly Report 2015
(P:jobs 5_ir20150939 Jilin 1QR 2015E_Jilin 3QR2015)1st Proof • 14 May 2014 • 16:19 14/05/2015 • 02C • Page 1
NOTES:
1. ORGANISATION AND OPERATIONS
The Company was established as a state-owned enterprise in the People's Republic of China (the "PRC") in 1989. On 29 December 1995, under the relevant provisions of the Company Law of the PRC, the Company was re-organized from a state-owned enterprise to a limited liability company. On 16 August 1996, with the approval of the Economic Restructuring Commission of Jilin Province, the Company was further converted into a joint stock limited company. On 20 April 1999, the Company made a bonus issue from capitalisation of retained profits at the proportion of one bonus share for every two existing shares. The Company's H shares were listed on the Growth Enterprise Market of the Stock Exchange of Hong Kong Limited on 24 May 2001.
The Group is principally engaged in the manufacture and distribution of biochemical medicines in the PRC under the brand names of Changlong and Shendi. There were no changes in the nature of the Group's principal activities during the period ended 31 March
2015.
2. BASIS OF PREPARATION
The unaudited consolidated results of the Group have been prepared under the historical cost convention as modified for the revaluation of financial instruments which have been measured at fair value, and in accordance with Hong Kong Financial Reporting Standards ("HKFRS") and Hong Kong Accounting Standards ("HKAS") (collectively "HKFRSs"), accounting principles generally accepted in Hong Kong, the disclosure requirements of the Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on the GEM of the Stock Exchange (the "GEM Listing Rules").
The accounting policies adopted in preparing the unaudited consolidated results for the three months ended 31 March 2015 are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2014.
The condensed consolidated results for the three months ended 31 March 2015 are unaudited and have been reviewed by the audit committee of the Company.
3. TURNOVER
The Group's turnover comprises the invoiced value of merchandise sold net of value-added tax and after allowances for returns and discounts.
4. SEGMENTAL INFORMATION
The Group has only one business segment which is in the manufacture and distribution of biochemical medicines in the PRC. During the period ended 31 March 2015, turnover of the Group is generated entirely from sales in the PRC and all identifiable assets of the Group are located in PRC. Accordingly, no business or geographical segmental analysis is presented.
(P:jobs 5_ir20150939 Jilin 1QR 2015E_Jilin 3QR2015)1st Proof • 14 May 2014 • 16:19 14/05/2015 • 02C • Page 2
First Quarterly Report 2015 2
5. TAXATION
Unaudited
For the three months ended 31 March
2015 2014
RMB'000 RMB'000
The charge comprises
PRC income tax 2,597 2,160
The PRC income tax is computed according to the relevant laws and regulations in the PRC. On 12 March, 2012, the Company was accredited as a "National New and High-tech Enterprise" by the Jilin Provincial Science and Technology Bureau (5t�4��l�) and is entitled to a reduced PRC Enterprise Income tax rate of 15% for the three months ended
31 March 2015 (2014: 15%).
6. EARNINGS PER SHARE
The calculation of basic earnings per share for the three months ended 31 March
2015 is based on the unaudited profit attributable to equity holders of the Company of approximately RMB14,719,000 (2014: RMB12,243,000) and the weighted average of
560,250,000 shares (2014: 560,250,000 shares).
Diluted earnings per share is not presented as there were no dilutive potential shares in existence during the periods ended 31 March 2015 and 2014.
7. DIVIDENDS
The Board does not recommend the payment of an interim dividend for the three months ended 31 March 2015. (2014: Nil).
8. RESERVES
Other than as disclosed below, there was no movement in reserves of the Group for the three months ended 31 March 2015 and 31 March 2014.
Retained Profits RMB'000
As at 1 January 2014 (Audited) 333,167
Net profit for the three months ended 31 March 2014 (Unaudited) 12,243
As at 31 March 2014 (Unaudited) 345,410
As at 1 January 2015 (Audited) 465,952
Net profit for the three months ended 31 March 2015 (Unaudited) 14,719
As at 31 March 2015 (Unaudited) 480,671
3 First Quarterly Report 2015
(P:jobs 5_ir20150939 Jilin 1QR 2015E_Jilin 3QR2015)1st Proof • 14 May 2014 • 16:19 14/05/2015 • 02C • Page 3
BUSINESS REVIEW AND PROSPECTS OPERATING RESULTS
For the three months ended 31 March 2015, the Group reported a turnover of approximately RMB121,730,000, representing an increase of approximately RMB14,001,000 as compared with the same period last year. Profit attributable to equity holders of the Company for the three months ended 31 March 2015 was RMB14,719,000, representing an increase of 20.2% from RMB12,243,000 for the corresponding period in 2014. Basic earning per share was RMB2.62 cents.
Turnover increased for approximately RMB14,001,000 as compared with the same period last year mainly contributed by the increase in the sale of Hai Kun Shen Xi and Fu Fang Huo Nao Shu capsule.
The gross profit margin for the three months ended 31 March 2015 was approximately 83.8%, representing a 1% increase as compared to that of 82.8% for the period ended 31 March 2014. The Board believes that there were no significant fluctuation for the production and material cost.
The distribution and selling costs as a percentage of turnover was 65.8% in 2015. This represented a 6.3% increase from 59.5% when compared to the same period last year. Administrative expenses decrease from RMB11,684,000 for the three months ended 31 March 2014 to RMB5,444,000 for the same period in 2015. This increase in distribution and selling costs and decrease in administrative expenses did not exceed the Group's monthly budget and were in line with the Group's expectation during the strategic planning for 2015.
Production Facilities
In 2013, the addition of the construction in progress included acquisition of a plot of land of approximately 50,000 sq.m., which will be the third phase of our new production line developments, while the lands acquired in the year 2012 represented the first and second development phase.
The first and second development phase represented an area of approximately 12,000 sq.m., which houses six production lines and two workshops for producing five medicaments under two Good Manufacturing Practice Certificates; and an area of approximately 20,000 sq.m., which houses six production lines and three workshops for producing six medicaments under two Good
1st Proof • 14 May 2014 • 16:19 14/05/2015 • 02C • Page 4
First Quarterly Report 2015 4
Manufacturing Practice Certificates, respectively. The first development phase has been completed and in use since 2012, while the second phase has been completed in 2013 and commenced operation in February 2014. The third phase is currently under construction as we have completed the construction of a workshop and obtained the GMP certification in December 2014. With the official commencement of operation of the third phrase at the middle of 2015, we believe the production capacity of the Group will be further enhanced.
LIQUIDITY AND FINANCIAL RESOURCES
The Group has maintained a sound financial position during this period. As at 31 March 2015, the Group had cash and bank balances amounted to RMB156,096,000 (2014: RMB95,903,000). As at 31 March 2015, the Group had unaudited consolidated net asset value of approximately RMB621,036,000 (2014: RMB485,775,000).
For the three months ended 31 March 2015 and 2014, the Group generated revenue and incurred costs mainly in Hong Kong dollars and Renminbi. The Directors consider the impact on foreign exchange exposure of the Group is minimal.
GEARING RATIO
The Group's gearing ratio as at 31 March 2015 was 1.42% (as at 31 March 2014: 1.82%), which was calculated by dividing the amount of bank borrowings of the Group as at 31 March
2015 by total assets as at 31 March 2015 and then multiplied by 100%.
5 First Quarterly Report 2015
(P:jobs 5_ir20150939 Jilin 1QR 2015E_Jilin 3QR2015)1st Proof • 14 May 2014 • 16:19 14/05/2015 • 02C • Page 5
DIRECTORS' AND SUPERVISORS' INTERESTS IN SHARES
As at 31 March 2015, the interests and short positions of the Directors, supervisors and chief executives of the Company in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the "SFO")) as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange of Hong Kong Limited (the "Stock Exchange") pursuant to the minimum standards of dealing by directors as referred to in Rule 5.46 to 5.67 of the GEM Listing Rules were as follows:
Long positions in shares
Percentage of | Percentage of | ||||
Director | Type of Interests | Capacity | Number of Domestic Shares | Domestic Shares | total registered Share Capital |
Zhang Hong | Personal | Beneficial owner | 101,937,000 | 26.29 | 18.19 |
Zhang Xiao Guang | Personal | Beneficial owner | 42,315,000 | 10.91 | 7.55 |
Wu Guo Wen | Personal | Beneficial owner | 900,000 | 0.232 | 0.161 |
Save as disclosed above, as at 31 March 2015, none of the Directors, supervisors and chief executives of the Company has any interests and short positions in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the minimum standards of dealing by directors as referred to in Rule 5.46 to 5.67 of the GEM Listing Rules.
DIRECTORS' RIGHTS TO ACQUIRE SHARES
Apart from as disclosed under the headings "Directors' and Supervisors' interests in shares" above, at no time during the period were rights to acquire benefits by means of the acquisition of shares in or debentures of the Company granted to any director, supervisor and chief executives or their respective spouses or children under 18 years of age, or were any such rights exercised by them; or was the Company, its holding company, or any of its subsidiaries a party to any arrangement to enable the directors, supervisors and chief executives to acquire such rights in any other body corporate.
First Quarterly Report 2015 6
(P:jobs 5_ir20150939 Jilin 1QR 2015E_Jilin 3QR2015)1st Proof • 14 May 2014 • 16:19 14/05/2015 • 02C • Page 6
INTERESTS DISCLOSEABLE UNDER THE SFO AND SUBSTANTIAL SHAREHOLDERS
As at 31 March 2015, the following persons (other than the Directors, supervisors and chief executives of the Company) had interests and short positions in the shares and underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO.
Long positions in shares
Percentage of | Percentage of | |||
Name of | Capacity/ | Number of | Domestic | total registered |
shareholder Huinan County SAB (Note) | Nature of Interest Beneficial owner | Domestic Shares 81,975,000 | Shares 21.14 | share capital 14.63 |
Note: Apart from the equity interest in the Company, Huinan County SAB does not have any direct or indirect interest in the Company, including representation in the Board of Directors.
Save as disclosed above, as at 31 March 2015, the Directors were not aware of any other person (other than the Directors, supervisors and chief executives of the Company) who had interests and short positions in the shares and underlying shares of the Company as recorded in the register required to be kept under Section 336 of the SFO.
Long positions in H shares
Name of
shareholder Capacity
Number of
H Shares
Percentage of
H Shares
Percentage of total registered Share Capital
Chen Jingwei Beneficial owner 29,520,000 17.11% 5.269%
Shen Qianzhen Beneficial owner 13,996,000 8.11% 2.498%
COMPETING INTEREST
During the period under review, none of the Directors or the management shareholders, significant shareholders or substantial shareholders (as defined in the GEM Listing Rules) of the Company had any interest in any business, which competes or may compete with the business of the Group.
7 First Quarterly Report 2015
(P:jobs 5_ir20150939 Jilin 1QR 2015E_Jilin 3QR2015)1st Proof • 14 May 2014 • 16:19 14/05/2015 • 02C • Page 7
CODE OF CONDUCT REGARDING SECURITIES TRANSACTIONS BY DIRECTORS
During the period ended 31 March 2015, the Company has adopted a code of conduct regarding securities transactions by directors on terms no less than the required standard of dealings as set out in rules 5.48 to 5.67 of the GEM Listing Rules. The Company has also made specific enquiry of all Directors and the Company was not aware of any non-compliance with the required standard of dealings and its code of conduct regarding securities transactions by Directors.
COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE PRACTICES
In the opinion of the Board, the Company has complied with Corporate Governance Code as set out in the Appendix 15 of the GEM Listing Rules throughout the period ended 31 March 2015 subject to the deviations disclosed hereof.
BOARD OF DIRECTORS
Under the code provision A.2.1, the roles of chairman and chief executive officer should be separate and should not be performed by the same individual. Mr. Zhang Hong assumes the role of both the chairman and the chief executive officer of the Company. The Board is of the view that this has not compromised accountability and independent decision making for the following reasons:
- the Audit Committee composes exclusively of independent non-executive directors;
- the independent non-executive directors have free and direct access to the Company's external auditors and independent professional advice when considered necessary.
Mr. Zhang Hong, the chairman, is a substantial shareholder of the Company and has considerable industry experience. He is motivated to contribute to the growth and profitability of the Group. The Board is of the view that it is in the best interests of the Group to have an executive chairman so that the Board can have the benefit of a chairman who is knowledgeable about the business of the Group and is most capable to guide discussions and brief the Board in a timely manner on pertinent issues and developments to facilitate open dialogue between the Board and the management.
1st Proof • 14 May 2014 • 16:19 14/05/2015 • 02C • Page 8
First Quarterly Report 2015 8
AUDIT COMMITTEE
The Company set up an audit committee (the "Committee") on 24 May 2001 with written terms of reference in compliance with the requirements as set out in Rules 5.28 and 5.29 of the GEM Listing Rules. The primary duties of the Committee are to review and provide supervision over the financial reporting procedures and internal control system of the Group.
The committee has reviewed with the management the accounting principles and practices adopted by the Group and discussed internal controls and financial reporting matters, including a review of the unaudited results of the Group for the period ended 31 March 2015.
PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES
During the three months ended 31 March 2015, neither the Company nor its subsidiaries purchased, sold or redeemed any of the Company's listed shares.
By order of the Board Zhang Hong Chairman
Jilin, the PRC
14 May 2015
As at the date hereof, the executive directors of the Company are Mr. Zhang Hong, Mr. Zhang Xiao Guang, Mr. Wu Guo Wen and Mr. Zhao Bao Gang; the independent non-executive directors of the Company are Mr. Gao Yong Cai.
9 First Quarterly Report 2015
(P:jobs 5_ir20150939 Jilin 1QR 2015E_Jilin 3QR2015)1st Proof • 14 May 2014 • 16:19 14/05/2015 • 02C • Page 9
|
distributed by
|
