TIDMCMSH
RNS Number : 4382W
China Medical Systems Holdings Ltd
29 July 2009
+------------------------------+--------------------------------------------+
| For Immediate Release | 29 July 2009 |
+------------------------------+--------------------------------------------+
China Medical System Holdings Ltd.
("CMS" or "the Company")
Interim Results Announcement
For the six months ended 30 June 2009
China Medical System Holdings Ltd. (AIM: CMSH), the profitable Chinese
pharmaceutical sales, marketing & research company, is pleased to announce its
interim results for the six months ended 30 June 2009.
Results are reported in US dollar currency unless otherwise stated.
Financial Highlights:
* Sales up 38.5% to $46.8 million (H1 2008: $33.8 million)
* Gross Profit up 38.8% to $29.7 million (H1 2008: $21.4million)
* Net Profit up 33.8% to $9.9 million (H1 2008: $7.4 million)
* Bank Balances and Cash up 20.9% to $24.3 million (2008: $20.1 million)
* Cash Resources (represented by Bills Receivable) of $4.8 million (2008:
$7.1 million)
* EPS up 31.3% to $0.21 per share (H1 2008: $0.16 per share)
* Dividend Paid of $0.10 per share
* Interim Dividend Proposed of $0.10 per share (H1 2008: $0.05 per share)
Operational Highlights
* Existing in-licensed products continued to perform well:
* Deanxit (Anti-depressant) : sales up 30.3% to $22.8 million
* Ursofalk Capsule (Chloretic) : sales up 35.4% to $13.4 million
* Stulln Mono (Eye Drops) : sales up 40.0% to $2.8 million
* GanFuLe Tablet (Primary Liver Cancer) : sales up 15.8% to $2.2 million
* Three newly introduced products:
* XinHuoSu (Heart Failure) : sales up 500.0% to $3.0 million
* Cystistat (Interstitial Cystitis):sales reached $0.2 million
* Salofalk (Ulcerative Colitis and Crohn's disease):sales reached $0.7 million
* Recruited 177 new staff (Total sales team of 830) to satisfy the need from
expanding portfolio and promotional activities
Post Review Period
* Intends to establish a Key Employee Benefit Scheme
Commenting on the results, Mr. Kong Lam, Chairman & CEO said:
CMS is well positioned in an environment with increasing consumer demand. With a
growing diversified product portfolio, a developed sales network covering most
major cities in China, CMS is a profitable cash-generative business with a
strong balance sheet, the board can look forward with optimism.
For further information, please contact:
+--------------------------------------------+---------------------------+
| China Medical System Holdings Ltd | + (852) 2369 3889 |
+--------------------------------------------+---------------------------+
| Vincent Hui | |
| | |
+--------------------------------------------+---------------------------+
| Seymour Pierce | + 44 (0)20 7107 8344 |
+--------------------------------------------+---------------------------+
| Chris Howard / Huaizheng Peng / | |
| Christopher Wren | |
+--------------------------------------------+---------------------------+
Notes for editors
China Medical System Holdings Limited
China Medical System Holdings Limited (CMS) is listed on AIM of the London Stock
Exchange with the ticker symbol "CMSH". It is an integrated and profitable
pharmaceutical company, which develops, manufactures, sells and markets
innovative prescription drugs and medical devices in China. For further
information, please visit www.chinamedicalsystem.com
CHAIRMAN'S STATEMENT
I am delighted to report on the strong operational results for the first half of
this year. As China's economy continues to show signs of recovery, CMS is well
positioned in an environment with increasing consumer demand. The Company's
performance has surpassed market expectations and this strong set of results
emphasizes our commitment and dedication to become a leading player in the
Chinese Healthcare sector. In the six months period ended 30 June 2009, turnover
was $46.8 million, an increase of 38.5% on the comparable period of last year
(H1 2008: $33.8 million), with net profit increased by 33.8% to $9.9 million (H1
2008: $7.4 million).
The Company's strategy remained the same; to in-license on an exclusive basis,
high quality pharmaceutical products with market potential, for the purpose of
broadening and diversifying our product portfolio. Using the profit generated
from the sales and marketing business to advance our in-house developed novel
compounds through clinical testing. The board believes that the strategy will
ensure sustainable profitability and a stable future, guaranteeing the interest
of shareholder in the longer term.
In line with our strategy, we have implemented in 2009 a series of in-depth
evaluation programmes to identify target products that meet our strict screening
criteria. We continue to develop policies that are appropriate to our expanding
size and maturing business model with the aim of enlarging the market share of
existing products while emphasizing the promotion of newly introduced products.
We have continued our preparation for further clinical trials of CMS024 (primary
liver cancer) and CMS024-02 (non-small cell lung cancer) in accordance with the
requirement of SFDA.
Dividend Declaration
CMS has always shared the fruits of our achievements with the shareholders; this
is demonstrated by our dividend policy of distributing 25% to 50% of net profit.
Following the 2008 final dividend of $0.10 per share paid on 19 June 2009, I am
pleased to report that the Board has declared an interim dividend of US$0.10 per
share, equating to 47.6% of earnings per share for the half year ended 30 June
2009. The interim dividend will be paid on 18 September 2009, with an
ex-dividend date of 19 August 2009 and a Record Date of 21 August 2009.
Financial Review
The results for the six months ended 30 June 2009 indicated that the Company has
continued to grow rapidly.
Sales increased 38.5% to $46.8 million (H1 2008: $33.8 million). Sales of
Deanxit and Ursofalk in growth stage increased 32.1% to $36.2 million (H1 2008:
$27.4 million) and accounted for 77.4% of total sales (H1 2008: 81.1%). Sales of
GanFuLe, Stulln, XinHuoSu, Cystistat and Salofalk in introduction stage
increased 102.3% to $8.9 million (H1 2008: $4.4 million). Sales of Jinerlun in
decline stage decreased 17.6% to $1.4 million (H1 2008: $1.7 million).
Net profit increased 33.8% to $9.9 million (H1 2008: $7.4 million). Net margin
on sales decreased to 21.2% (H1 2008: 21.9%), due to the decrease of other
income and the increase of income tax.
Gross profit increased 38.8% to $29.7 million (H1 2008: $21.4 million). Gross
profit margin increased to 63.5% (H1 2008: 63.3%), as the change of product mix.
Selling expenses amounted to $11.4 million (H1 2008: $9.3 million) and the sales
expense ratio was 24.4% (H1 2008: 27.5%). The sales expense ratio decreased 3.1%
due to the relatively fixed selling network maintenance expenses and wages, did
not change in proportion with sales. In addition, the increase of market
promotion expenses of products in growth stage was far less than the increase of
the sales.
Administrative expenses amounted to $4.2 million (H1 2008: $3.6 million) and the
administrative expense ratio was 9.0% (H1 2008: 10.7%). The administrative
expense ratio decreased 1.7% due to the relative stability of managerial &
administrative expenses, which decreased against an increase of sales.
Research and development costs amounted to $1.1 million (H1 2008: $1.2 million)
and the R&D expenses ratio was 2.4% (H1 2008: 3.6%).
Income tax charge was $3.2 million (H1 2008: $2.0 million). The increase of $1.2
million was mainly due to (A) the increase of pre-tax profit, (B) the income tax
rate for year 2009 in Shenzhen, the Company's primary income source, raised to
20% from 18% for year 2008, pursuant to the Enterprise Income Tax Law of PRC,
and (C) the withholding income tax of 5% for the net profit of Shenzhen Kangzhe
Pharmaceutical Co., Ltd.
At the period end, the Company maintained a healthy cash position. Bank balances
and cash amounted to $24.3 million (31 December 2008: $20.1 million, 30 June
2008: $14.5 million) after paying a cash dividend of $4.7 million for fiscal
year 2008. Cash resources (represented by bills receivables) amounted to $4.8
million (31 December 2008: $7.1 million, 30 June 2008: $3.8 million).
The average turnover of trade receivables for the period decreased 2 days to 78
days from 80 days for the six months ended 30 June 2008.
Operating Review
Sales & Marketing
China healthcare industry has grown by more than 28% per year since 2005. Even
under the influence of the global economic crisis, the revenue and profit before
tax of China healthcare industry from January to May 2009 have increased overall
by 18.1% and 17.1% respectively over the same period last year. As one of the
leading pharmaceutical companies, CMS out-performed the market growth rate as a
result of our expanding sales network, quality portfolio, the wealth of
experience of our management team and the diligent effort of our staff.
During the period under review, CMS recruited more than 177 new employees with
medical or pharmacy background to satisfy the need from our expanding portfolio
and promotional activities. Our total sales force now stands at over 830.
We have been working closely with key opinion leaders in related professional
fields, promoting the Company and our products at carefully selected industry
meetings and conferences, and have yielded highly desirable results.
The following section provides detailed status of individual product
development:
Growth Stage Products
Sales of products at the growth stage of the product life cycle grew by 32.1% to
$36.2 million (H1 2008: $27.4 million), which includes two products - Deanxit
and Ursofalk.
Deanxit
Deanxit is a product manufactured by H Lundbeck A/S, Denmark. As a product which
has been marketed exclusively by CMS in China for the past ten years, Deanxit
has built up remarkable brand loyalty with patients and healthcare professionals
as a treatment for depression, and has consistently and progressively
contributed to the accelerated growth of CMS's total revenue in recent years.
Sales of Deanxit increased 30.3% to $22.8 million in the first half of 2009 (H1
2008: $17.5 million). During the first half of 2009, six major events were
organized by CMS to further broaden and maintain the existing market position of
Deanxit, including:
Review Meeting of Clinical Research on Treatment of
Functional Dyspepsia Accompanied by Depression or Anxiety with Deanxit, Advanced
Seminar on Management of Neurology Department and Discipline Construction and so
on.
There were also in excess of 200 local promotion activities and
academic meetings held across the country in the period, which fully highlights
the investment and confidence of CMS in the future development of Deanxit.
Ursofalk
Ursofalk, indicated for treatment of cholesterol gallstones, cholestatic liver
disease and gastritis. With the extension of its indications supported by local
experience and the enhancement of its reputation, sales of Ursofalk continued to
increase steadily by 35.4% to 13.4 million (H1 2008: $9.9 million). During the
period, Review Meeting of Clinical Research on Treatment of Drug Induced Liver
Injure (DILI) with Ursofalk was held in March, the success of which provided
powerful support to the acceptance and awareness of Ursofalk. In addition, CMS
also featured Ursofalk at selected conferences like Summit Forum of Fatty Liver
Disease held in Shanghai in May, in which CMS participated as a co-organizer, to
continually expand Ursofalk's market influence as a quality imported product
listed in national medical insurance list in China.
Considering their healthy growth rate, we firmly believe that the products in
the growth stage will continue to enjoy a favourable increase in the coming
years.
Main Introductory Stage Products
Following the growth in product range since our listing, CMS's strong and
expanding sales network has delivered a rapid growth in sales of our
introductory stage products. The percentage of sales derived from introductory
stage products increased steadily from 13% in H1 2008 to 19% in H1 2009, and
their total sales has increased by 102.3% to $8.9 million (H1 2008: $4.4
million), The investment in portfolio diversification has now been gradually
rewarded.
Stulln
The sales of Stulln, the only imported eye-drop approved by SFDA for the
treatment of senile / age-related macula degeneration (SMD/AMD), rose by 40% to
$2.8 million(H1 2008: $2.0 million). Following the nationwide lecture tour of
Asthenopia for the promotion of Stulln during the last quarter of 2008, CMS
continued to place emphasis on promotional activities to broaden its market
penetration in this period,including Doctors Scholarships 2009 for Overseas
Education, Multi-centered Clinical Research on Treatment of Asthenopia with
Stulln, and more than 80 academic activities held in 22 cities of China. Stulln
frequently appeared in a number of influential events like the 9th International
Congress of Ophthalmology and Optometry (COOC) in March 2009, during which the
Review Meeting of Multi-centered Clinical Research of Efficacy and Safety on
Treatment of Asthenopia with Stulln was held.
In addition, for the purpose of Stulln's long-term strategic development,
following the acquisition of exclusive right to sell and market Stulln in
China for the next ten years in 2008,the company acquired 73.47% of Ophol (the
former agent of Stulln) at a consideration of RMB22.5 million in early 2009, in
which, RMB18.0 million shall be paid initially with the balancing RMB4.5
million being payable over four years beginning from 2010. By the end of June
2009, CMS has completed the transfer of 48.98% in Ophol to two founding
shareholders for the consideration of RMB12.0 million (included in the initial
payment). Consequently the Company ultimately holds a 24.49% shares in Ophol at
a consideration of RMB6.0 million (included in the initial payment).
GanFuLe
As a traditional Chinese medicine product included in the national medical
insurance list and enjoys China's National TCM protection for the treatment of
primary liver cancer, hepatitis B and cirrhosis with specified symptoms, GanFuLe
also obtained stable sales increase during this period, rising 15.8% to $2.2
million (H1 2008: $1.9 million), coupled with the expansion of CMS sales team
and penetration into more areas and hospitals. During the period, an experience
exchange seminar of GanFuLe was held, many positive feedback was collected from
which demonstrates that traditional Chinese medicine will receive more attention
and credibility especially in the area of cancer, lending support to the future
potential of GanFuLe.
XinHuoSu
XinHuoSu, indicated for acutely decompensated congestive heart failure (ADHF)
and classified as a National Class One New Drug by SFDA, was introduced in 2008
and has made a good start. During the past six months, its sales has reached
$3.0 million, an increase of 500.0 %( H1 2008: $0.5 million).
With the aim to spread out its nationwide academic network and enhance its brand
awareness as a newly introduced product, CMS not only launched a nationwide
multi-centered Phase IV clinical trial of XinHuoSu covering 17 provinces and
cities in China, but also brought XinHuoSu to a number of selected conferences
like South China International Congress of Cardiology (SCC), the attendees of
which included the initiators and leaders of the clinical trial. The clinical
trial was conducted for more than one year with the preliminary statistical
result showing XinHuoSu to be effective and safe, and CMS is confident of
XinHuoSu's future potential in the marketplace.
Cystistat
Cystistat was in-licensed in 2008 and CMS has successfully renewed its
Registration Certificate as a Medical Device in March 2009 with a validation
period of 4 years. The success of the registration renewal strengthens the
status of CMS as the agent and after-sales service agent of Cystistat in China,
clearing the way for its future sales and marketing.
The sales of Cystistat for the past six months has reached $0.2 million.
Cystistat is for the temporary replacement of the glycosaminoglycan (GAG) layer
in the bladder. Following pre-marketing investigation and product positioning,
CMS is focusing on establishment of a nationwide academic network for promotion
and looking forward to see its performance in the future.
Salofalk
Salofalk is also a product of Dr. Falk who has cooperated with CMS on Ursofalk
for more than ten years. Salofalk was in-licensed in the latter half of 2008 and
has reached $0.7 million sales during the first half of 2009. It is used to
treat Ulcerative Colitis and the acute phase of Crohn's disease. By utilizing
the academic and distribution network in digestion that Ursofalk has put in
place, CMS is able to establish Salofalk's own academic network rapidly on the
base of carefully determined product positioning in the preliminary stage, to
exploit Salofalk's value in the marketplace as efficiently as possible and
accelerate its sales development.
During the period, CMS co-sponsored the 24th-28th Falk Symposium in Shanghai,
Guangzhou, Nanjing, Zhengzhou and Beijing, from March 28 to April 10. Nearly 500
doctors in the field of digestive diseases attended the symposium and
contributed to lively discussions after the lecture on Diagnosis and Treatment
of Inflammatory Bowel Disease: Effect of Mesalazine (Salofalk). Salofalk is
believed to have great potential in the market as basic medicine for treatment
of Ulcerative Colitis and the acute phase of Crohn's disease.
Declining Stage Products
Jinerlun (Naloxone Hydrochloride Injection)
There is also a product that has stepped into the declining stage of its life
cycle. Jinerlun, sales of the past six months has decreased by 17.6% to $1.4
million (H1 2008: $1.7 million) and it is in line with the board's expectation.
CMS has further reduced the importance of Jinerlun in the Company's portfolio
strategy in order to make the best use of resources and capital, accompanied by
the high-speed increase of products in growth stage and introductory stage.
Research & Development
In-house research and development of CMS was initiated in 1998 and currently CMS
has the capability to offer a broad range of services to customers, ranging from
evaluation of new drugs, facilitation of clinical research in China, to
registering and selling approved products in China, while emphasizing
intellectual property protection.
In addition to a number of candidate drugs of biologically active peptides and
anti-bacterial compounds which are all at the pre-clinical stage, there are two
candidates which are closer to market approval:
CMS024 (Tyroserleutide), the lead tri-peptide compound developed by CMS for the
treatment of Primary Liver Cancer. It has completed Phase IIb clinical trials
and received an Assessment Notice from the SFDA in the end of 2007 requiring the
enlargement of the patient sample group. CMS has initiated an explorative
research on methods of drug delivery since 2008, and expects to initiate an
expanded, randomized, double-blind, multi-centre clinical trial in the latter
half of 2009.
CMS024-02 (Tyroservatide), for the treatment of Non-Small Cell Lung Cancer, is
in the preparation period of Phase II Clinical Trial protocol after it received
SFDA approval in June 2008.
Intellectual Property
Up to 30 June 2009, 50 overseas patents for pharmaceutical substances have been
granted to CMS with 8 obtained in the first half of 2009, and 43 domestic
patents have been granted with 4 obtained in the first half of 2009. Meanwhile,
CMS has also obtained 5 patents for medical devices with 9 more applications
submitted in China during the six months.
In terms of our in-house research, up to 30 June 2009, CMS024 has obtained grant
of patents in 30 countries with 6 obtained during this six months; CMS024-02 has
obtained grant of patents in 7 countries with 2 obtained during this six months.
Director's Purchase of Options
On 9 March 2009, Mr. Chen Hongbing, COO,
Executive Vice President and a director of the Company, acquired 708,695 options
to subscribe for ordinary shares of US$0.1 each of the Company ("Ordinary
Share") all at the exercise price of 138p being the subscription price of the
shares at the time of initial public offering. The acquisition price for the
share options was 21p per option. The options may be exercised up to the fifth
anniversary of the date of listing (i.e. by 21 June 2012).
Key Employee Benefit Scheme
Every member of staff at CMS is passionate
about our business, and it is individual commitment to a group effort that makes
CMS grow steadily and constantly. In return, CMS intends to establish a
long-term scheme to provide more protection for key employees who have made
outstanding contributions to the Company, which is named CMS Key Employee
Benefit Scheme ("the Scheme"). The principle is that following the fulfillment
of certain conditions, retiring awards may be granted to key employee of the
Company and its subsidiaries ("Group"), who have been the member of the Scheme.
An EGM has been scheduled on 31 July 2009 at Ballroom 3, Wynn Macau to approve
the Scheme, during which the Company will propose an ordinary resolution to
consider and approve the Scheme and authorize the board of directors of the
Company to adopt the same and do all such acts and things which they may
consider necessary or desirable to bring the Scheme into effect. The directors
believe that the adoption of the Scheme could not only align the interests of
the key employees and shareholders in the long term growth and development of
the Company but also attract and retain staff in the future.
Summary & Outlook
The fundamentals of the Company remain strong and CMS has achieved strong
organic growth from the expanding portfolio. In order to further diversify our
portfolio, we are actively seeking new products from all over the world. We have
put in place an effective platform for screening potential new products, and we
are currently in discussion with several companies, we look forward to reporting
on new product additions. With a growing product portfolio, a developed sales
network covering most major cities in China, a profitable cash-generative
business and a strong balance sheet, the board looks forward with optimism.
The board would like to thank all the staff and executives for their exceptional
effort and looks forward to delivering future successes to our shareholders. We
have behind us two years of remarkable growth since our listing; we have before
us an exciting and bright future.
Kong Lam
Chairman & CEO
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Condensed Consolidated Statement of Comprehensive Income |
+--------------------------------------------------------------------------------------------------+
| For the six months ended 30 June 2009 |
+--------------------------------------------------------------------------------------------------+
| (All amounts in US$ thousands unless otherwise stated) |
+--------------------------------------------------------------------------------------------------+
| | | | | |
+--------------------------+----------+----------+----------+--------------------------------------+
| | | | | Six months ended |
+--------------------------+----------+----------+----------+--------------------------------------+
| | | Notes | | 2009 | | 2008 |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | (Unaudited) | | (Unaudited) |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Turnover | | 3 | | 46,775 | | 33,842 |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Cost of | | | | (17,121) | | (12,483) |
| goods | | | | | | |
| sold | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Gross | | | | 29,654 | | 21,359 |
| profit | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Other | | 4 | | 313 | | 2,114 |
| income | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Selling | | | | (11,366) | | (9,344) |
| expenses | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Administrative | | | | (4,178) | | (3,572) |
| expenses | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Research | | | | (1,057) | | (1,166) |
| and | | | | | | |
| development | | | | | | |
| costs | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Finance | | 5 | | (194) | | - |
| costs | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Share of | | | | (17) | | 73 |
| result | | | | | | |
| of | | | | | | |
| associates | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Share of | | | | 12 | | - |
| result | | | | | | |
| of a | | | | | | |
| jointly | | | | | | |
| controlled | | | | | | |
| entity | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Profit | | | | 13,167 | | 9,464 |
| before | | | | | | |
| taxation | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Taxation | | 6 | | (3,243) | | (2,026) |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Profit | | 7 | | 9,924 | | 7,438 |
| for the | | | | | | |
| period | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Other | | | | | | |
| comprehensive | | | | | | |
| income: | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Exchange | | | | 20 | | 2,511 |
| differences | | | | | | |
| arising on | | | | | | |
| translation | | | | | | |
| of foreign | | | | | | |
| operations | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Other | | | | 20 | | 2,511 |
| comprehensive | | | | | | |
| income for | | | | | | |
| the period | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Total | | | | 9,944 | | 9,949 |
| comprehensive | | | | | | |
| income for | | | | | | |
| the period | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Profit | | | | | | |
| for the | | | | | | |
| period | | | | | | |
| attributable | | | | | | |
| to: | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| - Equity | | | | 9,815 | | 7,411 |
| holders | | | | | | |
| of the | | | | | | |
| Company | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| - | | | | 109 | | 27 |
| Non-controlling | | | | | | |
| interests | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | 9,924 | | 7,438 |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Total | | | | | | |
| comprehensive | | | | | | |
| income | | | | | | |
| attributable | | | | | | |
| to: | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| - Equity | | | | 9,835 | | 9,936 |
| holders | | | | | | |
| of the | | | | | | |
| Company | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| - | | | | 109 | | 13 |
| Non-controlling | | | | | | |
| interests | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | 9,944 | | 9,949 |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Dividends | | 8 | | 4,725 | | 4,725 |
| paid | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Dividends | | 8 | | 4,725 | | 2,362 |
| proposed | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Earnings | | 9 | | | | |
| per | | | | | | |
| share | | | | | | |
| (US$ per | | | | | | |
| share) | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Basic | | | | 0.208 | | 0.157 |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| | | | | | | |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
| Diluted | | | | 0.208 | | 0.157 |
+--------------------------+----------+----------+----------+-------------+----------+-------------+
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| Condensed Consolidated Statement of Financial Position |
+------------------------------------------------------------------------------------------+
| As at 30 June 2009 |
+------------------------------------------------------------------------------------------+
| (All amounts in US$ thousands unless otherwise stated) |
+------------------------------------------------------------------------------------------+
| | | |Notes | | 30.6.2009 | | 31.12.2008 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | (Unaudited) | | (Audited) |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| Non-current assets | | | | | | |
+-------------------------------------------+--+-------+--+--------------+--+--------------+
| | Property, plant and equipment | | 10 | | 4,959 | | 5,459 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Prepaid lease payments | | | | 263 | | 267 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Interests in associates | | 11 | | 2,189 | | 535 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Interest in a jointly controlled | | | | 12 | | - |
| | entity | | | | | | |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Intangible assets | | 12 | | 6,418 | | 7,575 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Goodwill | | | | 581 | | 581 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Deferred tax assets | | | | 957 | | 1,073 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | 15,379 | | 15,490 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| Current assets | | | | | | |
+-------------------------------------------+--+-------+--+--------------+--+--------------+
| | Inventories | | | | 8,777 | | 5,945 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Trade and other receivables | | 13 | | 30,629 | | 27,684 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Amount due from an associate | | | | 169 | | 172 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Amounts due from directors | | 14 | | 61 | | 43 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Pledged bank deposits | | | | - | | 1,060 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Bank balances and cash | | | | 24,258 | | 20,100 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | 63,894 | | 55,004 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| Current liabilities | | | | | | |
+-------------------------------------------+--+-------+--+--------------+--+--------------+
| | Trade and other payables | | 15 | | 12,476 | | 9,252 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Dividends payable | | | | - | | 5 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Deferred consideration payable for | | | | 781 | | 685 |
| | acquisition of an intangible asset | | | | | | |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Tax payable | | | | 1,226 | | 813 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | 14,483 | | 10,755 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | | | |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| Net current assets | | | | 49,411 | | 44,249 |
+-------------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | | |
+-------------------------------------------+--+-------+--+--------------+--+--------------+
| Total assets less current liabilities | | | | 64,790 | | 59,739 |
+-------------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | | | |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| Capital and reserves | | | | | | |
+-------------------------------------------+--+-------+--+--------------+--+--------------+
| | Share capital | | 16 | | 4,725 | | 4,725 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Reserves | | | | 53,175 | | 48,065 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | | | |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| Equity attributable to equity holders of | | | | 57,900 | | 52,790 |
| the company | | | | | | |
+-------------------------------------------+--+-------+--+--------------+--+--------------+
| Non-controlling interests | | | | (63) | | (69) |
+-------------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | 57,837 | | 52,721 |
+-------------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | | | |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| Non-current liabilities | | | | | | |
+-------------------------------------------+--+-------+--+--------------+--+--------------+
| | Deferred tax liabilities | | | | 1,248 | | 839 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Deferred consideration | | | | 5,543 | | 6,179 |
| | payable for | | | | | | |
| | acquisition of an | | | | | | |
| | intangible asset | | | | | | |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | Deferred consideration | | | | 162 | | - |
| | payable for | | | | | | |
| | acquisition of an | | | | | | |
| | associate | | | | | | |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | 6,953 | | 7,018 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | | | |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | 64,790 | | 59,739 |
+--+----------------------------------------+--+-------+--+--------------+--+--------------+
The financial statements were approved and authorised for issue by Board of
Directors on 28 July 2009.
Condensed Consolidated Statements of Changes in Equity
For the six months ended 30 June 2009
(All amounts in US$ thousands unless otherwise stated)
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+---------------------+---------------------+
| | | Attributable to the equity holders of the Company | | |
| | | | | |
| | | | | |
+---------------------------+--+--------------------------------------------------------------------------------------------------------------------------+--+------------------------------------------+
| | | Share | | Share | |Capital | | Share | |Surplus | |Accumulated | |Dividend | |Translation | | Total | |Non-controlling | | Total |
| | |capital | |premium | |reserve | | option | |reserve | | profits | | reserve | | reserve | | | | interests | | |
| | | | | | | | |reserve | | fund | | | | | | | | | | | | |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+-------------------------------------------+
| | | | | | | | | | | | | | | | | | | | | | | |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+-------------------------------------------+
| Balance at 1 January 2008 | | 4,725 | | 17,147 | | 4,911 | | 570 | | 4,255 | | 2,937 | | 4,725 | | 2,730 | | 42,000 | | (156) | | 41,844 |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+-------------------------------------------+
| Exchange differences | | - | | - | | - | | - | | - | | - | | - | | 2,525 | | 2,525 | | (14) | | 2,511 |
| arising on translation of | | | | | | | | | | | | | | | | | | | | | | |
| foreign operations | | | | | | | | | | | | | | | | | | | | | | |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+-------------------------------------------+
| Profit for the period | | - | | - | | - | | - | | - | | 7,411 | | - | | - | | 7,411 | | 27 | | 7,438 |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+-------------------------------------------+
| Total comprehensive | | - | | - | | - | | - | | - | | 7,411 | | - | | 2,525 | | 9,936 | | 13 | | 9,949 |
| income for the period | | | | | | | | | | | | | | | | | | | | | | |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+-------------------------------------------+
| Dividends paid | | - | | - | | - | | - | | - | | - | | (4,725) | | - | |(4,725) | | - | | (4,725) |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+-------------------------------------------+
| Dividends proposed - 2008 | | - | | - | | - | | - | | - | | (2,362) | | 2,362 | | - | | - | | - | | - |
| interim | | | | | | | | | | | | | | | | | | | | | | |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+-------------------------------------------+
| Balance at 30 June 2008 | | 4,725 | | 17,147 | | 4,911 | | 570 | | 4,255 | | 7,986 | | 2,362 | | 5,255 | | 47,211 | | (143) | | 47,068 |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+-------------------------------------------+
| | | | | | | | | | | | | | | | | | | | | | | |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+-------------------------------------------+
| Balance at 1 January 2009 | | 4,725 | | 17,147 | | 4,911 | | 570 | | 6,057 | | 8,994 | | 4,725 | | 5,661 | | 52,790 | | (69) | | 52,721 |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+-------------------------------------------+
| Exchange differences | | - | | - | | - | | - | | - | | - | | - | | 20 | | 20 | | - | | 20 |
| arising on translation of | | | | | | | | | | | | | | | | | | | | | | |
| foreign operations | | | | | | | | | | | | | | | | | | | | | | |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+-------------------------------------------+
| Profit for the period | | - | | - | | - | | - | | - | | 9,815 | | - | | - | | 9,815 | | 109 | | 9,924 |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+-------------------------------------------+
| Total comprehensive | | - | | - | | - | | - | | - | | 9,815 | | - | | 20 | | 9,835 | | 109 | | 9,944 |
| income for the period | | | | | | | | | | | | | | | | | | | | | | |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+-------------------------------------------+
| Dividends paid | | - | | - | | - | | - | | - | | - | | (4,725) | | - | |(4,725) | | (103) | | (4,828) |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+-------------------------------------------+
| Dividends proposed - 2009 | | - | | - | | - | | - | | - | | (4,725) | | 4,725 | | - | | - | | - | | - |
| interim | | | | | | | | | | | | | | | | | | | | | | |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+-------------------------------------------+
| Balance at 30 June 2009 | | 4,725 | | 17,147 | | 4,911 | | 570 | | 6,057 | | 14,084 | | 4,725 | | 5,681 | | 57,900 | | (63) | | 57,837 |
+---------------------------+--+---------+--+---------+--+---------+--+---------+--+---------+--+-------------+--+----------+--+-------------+--+---------+--+-----------------+--+---------------------+---------------------+
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Condensed Consolidated Statement of Cash Flows |
+-----------------------------------------------------------------------------------------+
| For the six months ended 30 June 2009 |
+-----------------------------------------------------------------------------------------+
| (All amounts in US$ thousands unless otherwise stated) |
+-----------------------------------------------------------------------------------------+
| | | | | Six months ended |
+------------------------------------------+--+-------+--+--------------------------------+
| | |Notes | | 2009 | | 2008 |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | (Unaudited) | | (Unaudited) |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Net cash from operating activities | | | | 10,599 | | 1,002 |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Investing activities | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Interest received | | | | 94 | | 154 |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Acquisition of interest in an associate | | 11 | | (878) | | - |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Purchase of property, plant and | | 10 | | (138) | | (143) |
| equipment | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Acquisition of | | | | - | | (35) |
| available-for-sale | | | | | | |
| investment and | | | | | | |
| intangible asset | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Net cash used in investing activities | | | | (922) | | (24) |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Financing activities | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Repayment of deferred consideration to | | | | (743) | | - |
| an associate | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Dividend paid to a non-controlling | | | | (103) | | - |
| shareholder | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Dividend paid | | | | (4,725) | | (4,725) |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Net cash used in financing activities | | | | (5,571) | | (4,725) |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Net increase (decrease) in cash and cash | | | | 4,106 | | (3,747) |
| equivalents | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Effect of foreign exchange rate changes | | | | 52 | | 604 |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Cash and cash equivalent at beginning of | | | | 20,100 | | 17,601 |
| the period | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
| Cash and cash equivalent at | | | | 24,258 | | 14,458 |
| end of the period, | | | | | | |
| represented by bank | | | | | | |
| balances and cash | | | | | | |
+------------------------------------------+--+-------+--+--------------+--+--------------+
Notes to the Condensed Consolidated Financial Statements
For the six months ended 30 June 2009
(All amounts in US$ thousands unless otherwise stated)
1. General
The Company was incorporated as an exempted company with limited liability in
the Cayman Islands on 18 December 2006. On 26 June 2007, the Company was listed
on the Alternative Investment Market operated ("AIM") by the London Stock
Exchange plc. The principal activities of its subsidiaries are production of
medicines, distribution and import of drugs and medical devices and research and
development on microbiology related drugs.
This condensed consolidated financial statements for the period ended 30 June
2009 have been prepared in accordance with International Accounting Standard 34,
'Interim financial reporting'. The condensed consolidated financial statements
should be read in conjunction with the annual consolidated financial statements
for the year ended 31 December 2008, which have been prepared in accordance with
International Financial Reporting Standards ("IFRSs").
2. Significant accounting policies
The condensed consolidated financial statements have been prepared on the
historical cost basis except for certain financial instruments, which are
measured at fair value.
A number of new or revised Standards and Interpretations are effective for the
financial year beginning on 1 January 2009. Except as described below, the same
accounting policies, presentation and methods of computation have been followed
in these condensed consolidated financial statements as were applied in the
preparation of the Group's financial statements for the year ended 31
December 2008.
IAS 1 (revised 2007) Presentation of Financial Statements
(Effective for annual periods beginning on or after 1 January 2009)
IAS 1 (revised 2007) has introduced a number of terminology changes (including
revised titles for the condensed consolidated financial statements) and has
resulted in a number of changes in presentation and disclosure. However, IAS 1
(revised 2007) has had no impact on the reported results or financial position
of the Group.
3. Turnover
Turnover represents the net amount received and receivable for goods sold during
the period.
The Group's operation is regarded as a single entity, being an enterprise
engaged in production of medicines, distribution and import of drugs and medical
devices, and research and development on microbiology related drugs. All sale of
the Group are made in the People's Republic of China ("PRC") and substantial of
the Group's assets are situated in the PRC during the six months ended 30 June
2009.
4. Other income
+----------------------------------------------------+--------------+--+--------------+
| | Six months ended |
+----------------------------------------------------+--------------------------------+
| | 30.6.2009 | | 30.6.2008 |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| Service fee income | - | | 771 |
+----------------------------------------------------+--------------+--+--------------+
| Net exchange gain | - | | 349 |
+----------------------------------------------------+--------------+--+--------------+
| Government subsidies (Note) | 161 | | 693 |
+----------------------------------------------------+--------------+--+--------------+
| Interest income | 108 | | 154 |
+----------------------------------------------------+--------------+--+--------------+
| Gain on disposal of investments held for trading | - | | 120 |
+----------------------------------------------------+--------------+--+--------------+
| Imputed interest income on available-for-sale | - | | 17 |
| investment | | | |
+----------------------------------------------------+--------------+--+--------------+
| Others | 44 | | 10 |
+----------------------------------------------------+--------------+--+--------------+
| | 313 | | 2,114 |
+----------------------------------------------------+--------------+--+--------------+
Note: The amount represents the incentive subsidies provided by the PRC local
authorities to the Group to encourage performance of research and development.
There is no specific conditions attached to the grants, the Group recognised the
grants upon receipts.
5. Finance costs
The finance costs represent the imputed interest on deferred consideration
payable for acquisition of intangible asset.
6. Taxation
+----------------------------------------------------+--------------+--+--------------+
| | Six months ended |
+----------------------------------------------------+--------------------------------+
| | 30.6.2009 | | 30.6.2008 |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| Current tax | | | |
+----------------------------------------------------+--------------+--+--------------+
| PRC Enterprise Income Tax | 2,719 | | 2,099 |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| Deferred taxation charge | | | |
+----------------------------------------------------+--------------+--+--------------+
| - current period | 524 | | (73) |
+----------------------------------------------------+--------------+--+--------------+
| Taxation charge for the period | 3,243 | | 2,026 |
+----------------------------------------------------+--------------+--+--------------+
The provision for PRC Enterprise Income Tax is based on the estimated taxable
income for PRC taxation purposes at the rate of taxation applicable to each
year.
The profit of the Group mainly sourced from Shenzhen Kangzhe Pharmaceutical Co.,
Ltd. ("Shenzhen Kangzhe"), Kangzhe (Hunan) Medical Co., Ltd. ("Hunan Kangzhe"),
and Changde Kangzhe Pharmaceutical Co., Ltd. ("Changde Kangzhe"). For the
period, Shenzhen Kangzhe was subject to income tax rate at 20% (2008: 18%),
Hunan Kangzhe and Changde Kangzhe were subject to income tax rate at 15%
pursuant to the development of western part of China Tax Concession policy.
7. Profit for the period
+----------------------------------------------------+--------------+----------+--------------+
| | Six months ended |
+----------------------------------------------------+----------------------------------------+
| | 30.6.2009 | | 30.6.2008 |
+----------------------------------------------------+--------------+----------+--------------+
| | | | |
+----------------------------------------------------+--------------+----------+--------------+
| Profit for the period has been arrived at after | | | |
| charging | | | |
+----------------------------------------------------+--------------+----------+--------------+
| | | | |
+----------------------------------------------------+--------------+----------+--------------+
| Amortisation of intangible asset | 567 | | 35 |
+----------------------------------------------------+--------------+----------+--------------+
| Depreciation of property, plant and equipment | 324 | | 270 |
+----------------------------------------------------+--------------+----------+--------------+
| Loss on disposal of property, plant and equipment | 24 | | 6 |
+----------------------------------------------------+--------------+----------+--------------+
| Minimum lease payment under operating lease in | 314 | | 263 |
| respect of property | | | |
+----------------------------------------------------+--------------+----------+--------------+
| Release of prepaid lease payments | 4 | | 4 |
+----------------------------------------------------+--------------+----------+--------------+
8. Dividends
+----------------------------------------------------+--------------+--+--------------+
| Dividend paid | Six months ended |
+----------------------------------------------------+--------------------------------+
| | 30.6.2009 | | 30.6.2008 |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| Final dividend for 2008 of | 4,725 | | 3,307 |
| US$0.10 (2007: US$0.07) per | | | |
| share on 47,246,376 shares | | | |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| Special dividend for 2007 of | - | | 1,418 |
| US$0.03 (2008:nil) per share on | | | |
| 47,246,376 shares | | | |
+----------------------------------------------------+--------------+--+--------------+
| | 4,725 | | 4,725 |
+----------------------------------------------------+--------------+--+--------------+
+----------------------------------------------------+--------------+--+--------------+
| Dividend proposed | Six months ended |
+----------------------------------------------------+--------------------------------+
| | 30.6.2009 | | 30.6.2008 |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| Proposed interim dividend for | 4,725 | | 2,362 |
| 2009 of US$0.10 (2008: US$0.05) | | | |
| per share on 47,246,376 shares | | | |
+----------------------------------------------------+--------------+--+--------------+
| | 4,725 | | 2,362 |
+----------------------------------------------------+--------------+--+--------------+
9. Earnings per share
The calculation of the basic and diluted earnings per share attributable to the
ordinary equity holders of the Company is based on the following data:
+----------------------------------------------------+--------------+--+--------------+
| | Six months ended |
+----------------------------------------------------+--------------------------------+
| | 30.6.2009 | | 30.6.2008 |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| Profit attributable to equity holders of the | 9,815 | | 7,411 |
| Company | | | |
+----------------------------------------------------+--------------+--+--------------+
+----------------------------------------------------+--------------+--+--------------+
| | Number of ordinary shares |
| | Six months ended |
+----------------------------------------------------+--------------------------------+
| | 30.6.2009 | | 30.6.2008 |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| Weighted average number of | 47,246,376 | | 47,246,376 |
| ordinary shares for the purpose | | | |
| of basic earnings per share | | | |
+----------------------------------------------------+--------------+--+--------------+
| Effect of dilutive potential ordinary shares on | 10,374 | | - |
| share options | | | |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| Weighted average number of | 47,256,750 | | 47,246,376 |
| ordinary shares for the purpose | | | |
| of diluted earnings per share | | | |
+----------------------------------------------------+--------------+--+--------------+
10. Property, plant and equipment
During the period, the Group spent US$138,000 (US$143,000 for the six months
ended 30 June 2008) on the acquisition of property, plant and equipment.
11. Interests in associates
On 20 February 2009, the Group entered into an agreement (the "Ophol Agreement")
with the controlling shareholder of Ophol Limited (the "Ophol") to acquire its
equity interest of 73.47% in Ophol at a consideration of RMB22, 500,000. In
which, RMB18, 000,000 shall be paid at initial and the rest RMB4, 500,000 shall
be paid over four years beginning from 2010. On 15 March 2009, the Group entered
into separate agreements (the "March Agreements") with each of the other
two original shareholders of Ophol. Pursuant to the two March Agreements, the
Group shall transfer a 24.49% equity interest in Ophol to each of the other two
original shareholders of Ophol at the consideration of RMB7, 500,000 each. Upon
the completion of the March Agreements, the Group shall hold a 24.49% equity
interest in Ophol, while the other two original shareholders of Ophol will hold
equity interest of 38.78% and 36.73% respectively. On the same date, the Group
entered into a supplementary agreement with the vendor, the other two original
shareholders of Ophol, Ophol and Qingdao League for the purpose to ratify the
terms of the Ophol Agreement and the March Agreements.
As at 30 June 2009, all the transactions mentioned above had been completed. As
a result, the Group acquired a 24.49% equity interest in Ophol at a
consideration of RMB7, 500,000. In which, RMB6, 000,000 shall be paid at initial
and the rest RMB1, 500,000 shall be paid over four years beginning from 2010.
Considering the current operating activities of Ophol is only to receive the
agency fee derived from the product of the Group, and the Group has recognised
the agency fee as intangible assets, the directors were of view that the
discount on acquisition of the 24.49% equity interest in Ophol amounted to
US$590 should be deducted against intangible assets recognised previously, the
amortisation of intangible assets should be adjusted accordingly.
12. Intangible assets
+------------------------------------+------------------------+--+------------------+--+--------------+
| |Exclusive distribution | |Exclusive agency | | Total |
| | right | | right | | |
+------------------------------------+------------------------+--+------------------+--+--------------+
| | | | | | |
+------------------------------------+------------------------+--+------------------+--+--------------+
| Cost | | | | | |
+------------------------------------+------------------------+--+------------------+--+--------------+
| | | | | | |
+------------------------------------+------------------------+--+------------------+--+--------------+
| At 1 January 2009 | 951 | | 7,403 | | 8,354 |
+------------------------------------+------------------------+--+------------------+--+--------------+
| Transfer | - | | (590) | | (590) |
+------------------------------------+------------------------+--+------------------+--+--------------+
| Exchange adjustments | - | | - | | - |
+------------------------------------+------------------------+--+------------------+--+--------------+
| At 30 June 2009 | 951 | | 6,813 | | 7,764 |
+------------------------------------+------------------------+--+------------------+--+--------------+
| | | | | | |
+------------------------------------+------------------------+--+------------------+--+--------------+
| Amortisation | | | | | |
+------------------------------------+------------------------+--+------------------+--+--------------+
| | | | | | |
+------------------------------------+------------------------+--+------------------+--+--------------+
| At 1 January 2009 | 288 | | 491 | | 779 |
+------------------------------------+------------------------+--+------------------+--+--------------+
| Charge for the period | 158 | | 409 | | 567 |
+------------------------------------+------------------------+--+------------------+--+--------------+
| Exchange adjustments | (24) | | 24 | | - |
+------------------------------------+------------------------+--+------------------+--+--------------+
| At 30 June 2009 | 422 | | 924 | | 1,346 |
+------------------------------------+------------------------+--+------------------+--+--------------+
| | | | | | |
+------------------------------------+------------------------+--+------------------+--+--------------+
| Carrying value | | | | | |
+------------------------------------+------------------------+--+------------------+--+--------------+
| At 1 January 2009 | 663 | | 6,912 | | 7,575 |
+------------------------------------+------------------------+--+------------------+--+--------------+
| | | | | | |
+------------------------------------+------------------------+--+------------------+--+--------------+
| At 30 June 2009 | 529 | | 5,889 | | 6,418 |
+------------------------------------+------------------------+--+------------------+--+--------------+
During the period, no intangible asset was added, and if for detailed
information on existing intangible assets please refer to note 17 of annual
report for 2008.
13. Trade and other receivables
+----------------------------------------------------+--------------+--+--------------+
| | As at |
+----------------------------------------------------+--------------------------------+
| | 30.6.2009 | | 31.12.2008 |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| Bills receivables | 4,777 | | 7,062 |
+----------------------------------------------------+--------------+--+--------------+
| Trade receivables | 23,113 | | 17,441 |
+----------------------------------------------------+--------------+--+--------------+
| Less: allowance for bad and doubtful debts | (253) | | (221) |
+----------------------------------------------------+--------------+--+--------------+
| | 27,637 | | 24,282 |
+----------------------------------------------------+--------------+--+--------------+
| Other receivables | 2,992 | | 3,402 |
+----------------------------------------------------+--------------+--+--------------+
| Total trade and other receivables | 30,629 | | 27,684 |
+----------------------------------------------------+--------------+--+--------------+
The Group normally allows a credit period of three months to its trade
customers.
An aged analysis of the trade receivables net of an allowance for bad and
doubtful debts at the respective balance sheet dates was as follows:
+----------------------------------------------------+--------------+--+--------------+
| | As at |
+----------------------------------------------------+--------------------------------+
| | 30.6.2009 | | 31.12.2008 |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| 0 - 90 days | 19,383 | | 14,811 |
+----------------------------------------------------+--------------+--+--------------+
| 91 - 365 days | 3,470 | | 2,316 |
+----------------------------------------------------+--------------+--+--------------+
| Over 365 days | 7 | | 93 |
+----------------------------------------------------+--------------+--+--------------+
| | 22,860 | | 17,220 |
+----------------------------------------------------+--------------+--+--------------+
14. Amounts due from directors
Amounts due from directors comprised:
+----------------------------------------------------+--------------+--+--------------+
| | As at |
+----------------------------------------------------+--------------------------------+
| | 30.6.2009 | | 31.12.2008 |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| Hou Xiaoxuan | 4 | | - |
+----------------------------------------------------+--------------+--+--------------+
| Hui Ki Fat | 57 | | 43 |
+----------------------------------------------------+--------------+--+--------------+
| | 61 | | 43 |
+----------------------------------------------------+--------------+--+--------------+
15. Trade and other payables
+----------------------------------------------------+--------------+--+--------------+
| | As at |
+----------------------------------------------------+--------------------------------+
| | 30.6.2009 | | 31.12.2008 |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| Trade payables | 8,689 | | 5,593 |
+----------------------------------------------------+--------------+--+--------------+
| Accrued payroll | 1,642 | | 1,500 |
+----------------------------------------------------+--------------+--+--------------+
| Accrued expenses | 1,154 | | 1,030 |
+----------------------------------------------------+--------------+--+--------------+
| | 11,485 | | 8,123 |
+----------------------------------------------------+--------------+--+--------------+
| Other payables | 991 | | 1,129 |
+----------------------------------------------------+--------------+--+--------------+
| Total trade and other payables | 12,476 | | 9,252 |
+----------------------------------------------------+--------------+--+--------------+
An aged analysis of the trade payables at the respective balance sheet dates was
as follows:
+----------------------------------------------------+--------------+--+--------------+
| | As at |
+----------------------------------------------------+--------------------------------+
| | 30.6.2009 | | 31.12.2008 |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| 0 - 90 days | 8,674 | | 5,562 |
+----------------------------------------------------+--------------+--+--------------+
| 91 - 365 days | 5 | | 24 |
+----------------------------------------------------+--------------+--+--------------+
| Over 365 days | 10 | | 7 |
+----------------------------------------------------+--------------+--+--------------+
| | 8,689 | | 5,593 |
+----------------------------------------------------+--------------+--+--------------+
16. Share capital
+----------------------------------------------------+--------------+--+--------------+
| | Number of | | Amount |
| | shares | | |
+----------------------------------------------------+--------------+--+--------------+
| | '000 | | US$'000 |
+----------------------------------------------------+--------------+--+--------------+
| Authorised share capital with nominal value of | | | |
| US$0.1 each: | | | |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| At 1 January 2009 and 30 June 2009 | 1,000,000 | | 100,000 |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| Issued and fully paid: | | | |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| At 1 January 2009 and 30 June 2009 | 47,246 | | 4,725 |
+----------------------------------------------------+--------------+--+--------------+
17. Operating lease commitments
The Group as lessee
The Group's total future minimum lease payments under non-cancellable operating
lease in respect of property was payable as follows:
+----------------------------------------------------+--------------+--+--------------+
| | As at |
+----------------------------------------------------+--------------------------------+
| | 30.6.2009 | | 31.12.2008 |
+----------------------------------------------------+--------------+--+--------------+
| | | | |
+----------------------------------------------------+--------------+--+--------------+
| Within one year | 478 | | 462 |
+----------------------------------------------------+--------------+--+--------------+
| In the second and fifth year inclusive | 468 | | 631 |
+----------------------------------------------------+--------------+--+--------------+
| | 946 | | 1,093 |
+----------------------------------------------------+--------------+--+--------------+
The lease is negotiated for a lease term of 1 to 5 years.
18. Related party transactions
The Group has related party balances as at respective balance sheet dates shown
in page 10 and note 14, there were no other significant related party
transactions. .
INFORMATION FOR SHAREHOLDERS
Listing
The Company's ordinary shares are listed on the Alternative Investment Market
operated by London Stock Exchange plc
Code
CMSH
Registered Office
Maples & Calder Corporate Services Limited
P.O. Box 309GT
Ugland House, South Church Street
George Town, Grand Cayman
Head Office
6/F, 8/F, Building A
Tongfang Information Harbor
No.11 Langshan Road
Shenzhen Hi-Tech Industry Park
Nanshan District, Shenzhen, 518057
People's Republic of China
Share Registrar
Computershare Investor Services
(Channel Islands) Limited
P.O. Box 83, Ordnance House
31 Pier Road, St. Helier
Jersey, JE4 8PW, Channel Islands
Depositary
Computershare Investor Services Plc
P.O. Box 82
The Pavilions
Bridgwater Road
Bristol, BS99 7NH
United Kingdom
Investor Information
Corporate press releases, financial reports and other investor information on
the Company are available online at the Company's website
Investor Relations Contact
Please direct enquiries to:
E-mail: info@cms.net.cn
Telephone: + 86 755 8241 6868(China)
+ 852 2369 3889(Hong Kong)
Facsimile: + 86 755 8241 6622(China)
+ 852 2389 1320(Hong Kong)
Website Address
www.chinamedicalsystem.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SEIFMASUSELW
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