2010-11-12 13:30:00
THIRD QUARTERLY REPORT FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2010
Shanghai Fudan-Zhangjiang Bio-Pharmaceutical Co., Ltd. *
(a joint stock limited company incorporated in the People’s Republic of China)
(STOCK CODE: 8231)
THIRD QUARTERLY REPORT
For the nine months ended 30 September 2010
* For identification purpose onlyCHARACTERISTICS 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 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 nature 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 announcement.
This report, for which the directors (the “Directors”) of Shanghai Fudan-
Zhangjiang Bio-Pharmaceutical Co., Ltd. (the “Company”) collectively and
individually accept full responsibility, includes particulars given in compliance
with the Rules Governing the Listing of Securities on the Growth Enterprise
Market of The Stock Exchange of Hong Kong Limited for the purpose of giving
information with regard to the Company. 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.1
The Board hereto presents the unaudited consolidated interim results of the
Company together with its subsidiaries (collectively the “Group”) for the nine
months ended 30 September 2010.
MANAGEMENT DISCUSSION AND ANALYSIS
Financial review for the nine months ended 30 September 2010
For the nine months ended 30 September 2010, the Group recorded a turnover
of approximately RMB53,609,000, comparing to a turnover of approximately
RMB40,261,000 for the same period in 2009. This represents an increase of
33%.
Of the total turnover of the Group for the nine months ended 30 September
2010, RMB800,000 (1.5% of the total turnover) came from the income of
technology transfer, and the rest approximately RMB52,809,000 (98.5% of the
total turnover) was derived from the sale of medical products and the provision
of related ancillary services. In contrast, of the total turnover of the same period
last year, RMB38,261,000 or 95% of total turnover was derived from the sale
of medical products and the provision of related ancillary services and the
income from the amortization of the exclusive distribution rights, and
RMB2,000,000 or 5% of total turnover came from the income of technology
transfer. The new product, ALA (
®
) , which the Group launched during the
second half of 2007, has now entered into a rapidly developed selling cycle,
after over two year’s market exploration and promotion. In addition, Libod
®
(
®
) ,which the Group had launched to the market during the second half of
2009, has contributed significant revenue to the Group. These are two important
factors that lead to the continuous increase of turnover of the Group.
For the nine months ended 30 September 2010, cost of sales of the Group
was approximately RMB11,408,000, comparing to RMB11,827,000 for the same
period in 2009. Gross profit was approximately RMB42,201,000, which doubled
that of the same period in 2009. Gross profit margin has grown to 79% from
71% for the same period in 2009.
Within the period under review, operating loss of the Group was approximately
RMB1,026,000, compared to RMB7,908,000 for the same period in 2009, which
represents a decrease of 87%. Of the various expenses presented before
operating loss, research and development (R&D) costs and administrative
expenses mostly remained the same with those of the same period in 2008,
whereas distribution and marketing costs increased by 48%, along with the
increase of turnover. Other income increased from the same period in 2009.2
A loss attributable to shareholders of the Company of approximately
RMB1,805,000 was recorded in the unaudited consolidated income statements
for the nine months ended 30 September 2010, whereas the loss attributable
to shareholders of the Company for the same period in 2009 was
RMB9,081,000, representing a decrease of 80%.
Business review
Committed to the principle “The more we explore, the healthier human beings
will be”, the Group aims to become a pioneer in the bio-pharmaceutical industry,
by focusing on the R&D and commercialization of patent drugs and special
drugs that suit the PRC market.
During the period under review, the Group has been making progress in the
areas of R&D and commercialization pursuing the projected plans.
In the area of R&D, Clinical trial phase III for Hemoporfin ( ), a
photodynamic new drug for the treatment of Port Wine Stain has been
completed, and application for the New Drug Certificate is under progress.
Pre-clinical study for rhTNFR(m):Fc (High bio-activity recombinant human TNF
receptor 2-Fc fusion protein mutant -Fc
) for the treatment of arthritis has been completed, and application for
clinical study is about to be submitted at the end of this year. Application for a
PCT patent for the project has been made.
With regard to patents, the Group has always been endeavoring in protecting
the intellectual property rights of its innovative drugs and R&D achievements.
Within the period under review, the Group has been granted 1 invention patent.
In respect of commercialization, since the launch of ALA (
®
) for the treatment
of dermal HPV infectious disease and proliferative disease as represented by
Condyloma acuminate, and Libod
®
(
®
) for the treatment of tumors, sales
revenue of the products has been increasing steadily. ALA (
®
) has been
approved as Shanghai Patent New Product and Libod
®
(
®
) has been
accredited as Shanghai Hi-Tech Result Transfer Project.3
Future prospects
The Group has accumulated extensive experiences in R&D, and has taken a
leading position in the pharmaceutical industry in the PRC. In the future, the
Group will continue devoting efforts to R&D on projects with proprietary
intellectual property rights. In particular, drugs for the treatment of dermal
diseases and tumors will be of the most importance.
In the area of commercialization, the Group has realized production and sales
on diagnostic products, ALA
®
, and Libod
®
for the treatment of tumor. The revenue
has been increasing steadily. It is expected that the future sales will be increasing
extensively. The Group has successfully accomplished the transformation from
pure R&D to a combination of R&D and commercialization. An intact system of
R&D, production, sales and marketing combined orderly has been formed.
The Group will be able to progress to a better development stage.
DIRECTORS’, CHIEF EXECUTIVE’S AND SUPERVISORS’ INTERESTS IN
SHARES OF THE COMPANY
As at 30 September 2010, the interests (including interests in shares and / or
short positions) of the Directors, the Chief Executive and the Supervisors and
their respective associates in the shares or debentures of the Company and its
associated corporations, if any, (a) as notified to the Company and the Stock
Exchange pursuant to: Divisions 7 and 8 of Part XV of the Securities and Futures
Ordinance (“SFO”); (b) as recorded in the register maintained by the Company
under Section 352 of the SFO; or (c) as required pursuant to Rules 5.46 to
5.67 of the GEM Listing Rules relating to securities transactions by Directors,
were as follows:
Percentage Percentage
Number of holding in of holding in
Name of Class of Domestic Type of Domestic total share
Directors shares shares held Capacity interest shares capital
Wang Hai Bo Domestic 51,886,430 (L) Beneficial Personal 10.13% 7.31%
Shares owner
Su Yong Domestic 18,312,860 (L) Beneficial Personal 3.58% 2.58%
Shares owner
Zhao Da Jun Domestic 15,260,710 (L) Beneficial Personal 2.98% 2.15%
Shares owner
Fang Jing Domestic 5,654,600 (L) Beneficial Personal 1.10% 0.80%
Shares owner
Note: The letter “L” stands for long position.4
SUBSTANTIAL SHAREHOLDERS
So far as the Directors are aware, as at 30 September 2010, the persons other
than a director, chief executive or supervisor of the Company who have interests
and / or short positions in the shares or underlying shares of the Company
subject to disclosure under Divisions 2 and 3 of Part XV of the SFO are listed
as follows (the interests in shares and short positions, if any, disclosed herein
are in addition to those disclosed in respect of the Directors, Chief Executive
and Supervisors):
Percentage in
the respective Percentage
Name of substantial Class of Number of Type of class of in total
shareholders shares shares held Capacity interest share capital share capital
Shanghai Industrial Domestic 139,578,560 (L) Interest of Corporate 27.26%
29.60%
Investment Shares controlled
(Holdings) Co., Ltd. corporation
H Shares 70,564,000 (L) Corporate 35.64%
Shanghai Domestic 139,578,560 (L) Beneficial Corporate 27.26%
29.60%
Pharmaceutical Shares Owner
Holding Co., Ltd.
H Shares 70,564,000 (L) Beneficial Corporate 35.64%
Owner
China General Domestic 130,977,816 (L) Beneficial Corporate 25.58% 18.45%
Technology (Group) Shares Owner
Holding, Limited
Shanghai Zhangjiang Domestic 105,915,096 (L) Interest of Corporate 20.69% 14.92%
(Group) Co. Ltd. Shares controlled
corporation
Shanghai Zhangjiang Domestic 105,915,096 (L) Beneficial Corporate 20.69% 14.92%
Hi-Tech Park Shares Owner
Development Corp.
Fudan University Domestic 30,636,286 (L) Beneficial Corporate 5.98% 4.31%
Shares Owner5
PURCHASE, REDEMPTION OR SALE OF LISTED SECURITIES
Neither the Company nor its subsidiaries purchased, redeemed or sold any of
the Company’s listed securities during the nine months ended 30 September
2010.
AUDIT COMMITTEE
The audit committee comprises three independent non-executive Directors of
the Company, namely Mr. Pan Fei, who is the chairman, Mr. Weng De Zhang,
who is the vice chairman, and Mr. Cheng Lin. Mr. Pan Fei holds a recognized
professional qualification as prescribed by the GEM Listing Rules.
The Audit Committee has reviewed the accounting principles and practices
adopted by the Group and discussed internal controls and financial reporting
matters with the management team of the Company. The audit committee
reviewed the third quarterly report for the nine months ended 30 September
2010 before proposing to the Board for approval.6
The Directors hereto present the unaudited consolidated third quarterly results
of the Company together with its subsidiaries (collectively the “Group”) for the
nine months ended 30 September 2010.
UNAUDITED CONSOLIDATED INCOME STATEMENT
Three months ended Nine months ended
30 September 30 September
2010 2009 2010 2009
Note RMB’000 RMB’000 RMB’000 RMB’000
Turnover 2 17,711 19,357 53,609 40,261
Cost of sales (3,375) (5,292) (11,408) (11,827)
Gross profit 14,336 14,065 42,201 28,434
Other income 5,000 3,557 9,605 7,215
Research and
development costs (4,241) (5,370) (14,998) (15,813)
Distribution and
marketing costs (10,424) (9,110) (28,934) (19,515)
Administrative expenses (2,919) (2,367) (8,576) (8,001)
Other operating expenses (272) (210) (324) (228)
Operating profit / (loss) 1,480 565 (1,026) (7,908)
Finance costs (734) (493) (2,090) (1,852)
Income / (loss) before
income tax 746 72 (3,116) (9,760)
Income tax expense 3 (600) — (600) —
Income / (loss) for the period 146 72 (3,716) (9,760)
Other comprehensive income
Available-for-sale investments — (859) — 959
Total comprehensive
income/(loss) for the year 146 (787) (3,716) (8,801)
Income / (loss) attributable to:
Shareholders of the Company 496 274 (1,805) (9,081)
Minority interests (350) (202) (1,911) (679)
146 72 (3,716) (9,760)7
Unaudited Unaudited
Three months ended Nine months ended
30 September 30 September
2010 2009 2010 2009
Note RMB’000 RMB’000 RMB’000 RMB’000
Total comprehensive
income/(loss) attributable to:
Shareholders of the Company 496 (507) (1,805) (8,199)
Minority interests (350) (280) (1,911) (602)
146 (787) (3,716) (8,801)
Basic and diluted income/(loss)
per share for income/(loss)
attributable to the
shareholders of the
Company (RMB) 4 0.0007 0.0004 (0.0025) (0.0128)
NOTES
1. Accounting policies and basis of preparation
The consolidated unaudited third quarterly financial information of the Group has
been prepared in accordance with IAS 34. The accounting policies adopted in
preparing the unaudited consolidated financial information for the nine months
ended 30 September 2010 are consistent with those followed in the preparation of
the Group’s annual financial statements for the year ended 31 December 2009.
The unaudited consolidated financial information includes the financial information
of the Company and its subsidiaries made up to 30 September. Subsidiaries are
all entities over which the Group has the power to govern the financial and operating
policies generally accompanying a shareholding of more than one half of the voting
rights. Subsidiaries are consolidated from the date on which control is transferred
to the Group and are no longer consolidated from the date that control ceases. All
intercompany transactions, balances and unrealized gains on transactions between
group companies are eliminated; unrealized losses are also eliminated but
considered an impairment indicator of the asset transferred. Where necessary,
accounting policies of subsidiaries have been changed to ensure consistency with
the policies adopted by the Group.8
2. Turnover
The Group is principally engaged in research, development and selling of self-
developed bio-pharmaceutical know-how, carrying out contracted research for
customers, manufacturing and selling of medical products and the provision of
related ancillary services in the PRC. Turnover recognized during the reporting
period is as follows:
Unaudited Unaudited
Three months ended Nine months ended
30 September 30 September
2010 2009 2010 2009
RMB’000 RMB’000 RMB’000 RMB’000
Sales of medical products
and the provision of
related ancillary services 17,711 19,357 52,809 38,261
Technology transfer revenue — — 800 2,000
17,711 19,357 53,609 40,261
3. Income tax
Unaudited Unaudited
Three months ended Nine months ended
30 September 30 September
2010 2009 2010 2009
RMB’000 RMB’000 RMB’000 RMB’000
Income tax (600 ) — (600)—
Under the Corporate Income Tax Law of the People’s Republic of China, as the
Company was certified as a New and High Technology Enterprise, it is entitled to
a reduced income tax rate of 15%. The corporate income tax rate applicable to the
subsidiaries is 25%. In 2009, the Company obtained an approval for an income
tax incentive of two-year full exemption followed by a three-year 50% reduction,
with year 2008 being the first tax-free year.
4. Profit/(loss) per share
The calculation of the basic profit per share for the three months ended 30
September 2010 was based on the unaudited profit attributable to shareholders of
the Company of approximately RMB496,000 (2009: profit attributable to
shareholders of the Company of approximately RMB274,000) and the weighted
average number of 710,000,000 shares during the three months ended 30
September 2010 (2009: 710,000,000 shares).9
The calculation of the basic loss per share for the nine months ended 30 September
2010 was based on the unaudited loss attributable to shareholders of the Company
of approximately RMB1,805,000 (2009: loss attributable to shareholders of the
Company of approximately RMB9,081,000) and the weighted average number of
710,000,000 shares during the nine months ended 30 September 2010 (2009:
710,000,000 shares).
Diluted profit/(loss) per share has not been calculated for the three months or nine
months ended 30 September 2010 and 30 September 2009 as there were no
dilutive potential ordinary shares during the periods then ended.
5. Dividend
The Board of Directors does not recommend the payment of an interim dividend
for the nine months ended 30 September 2010 (2009: Nil).
6. Consolidated statement of changes in equity
Unaudited
Attributable to shareholders of the Company
Statutory
Capital common
Share accumulation reserve Accumulated Minority
capital reserve fund losses interests Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Balance at 1 January 2009 71,000 141,945 2,829 (142,187) 2,296 75,883
Comprehensive loss
Loss for the period — — — (9,081) (679) (9,760)
Other comprehensive income
Available-for-sales investments — 882 — — 77 959
Total comprehensive loss — 882 — (9,081) (602) (8,801)
-------- -------- -------- -------- -------- --------
Balance at 30 September 2009 71,000 142,827 2,829 (151,268) 1,694 67,082
Balance at 1 January 2010 71,000 211,367 2,829 (149,507) 32,679 168,368
Comprehensive loss
Loss for the period — — — (1,805) (1,911) (3,716)
Total comprehensive loss — — — (1,805) (1,911) (3,716)
-------- -------- -------- -------- -------- --------
Transactions with owners
Acquisition of minority interests (a) — (127) — — (721) (848)
Total transactions with owners — (127) — — (721) (848)
-------- -------- -------- -------- -------- --------
Balance at 30 September 2010 71,000 211,240 2,829 (151,312) 30,047 163,80410
(a) In January 2010, the Company entered into a share transfer agreement
with Shanghai Zhangjiang (Group) Co., Ltd. (“SZCL”) to acquire all SZCL’s
31.25% interests in the Company’s subsidiary Morgan-Tan. The
consideration is RMB848,000. After the acquisition, Morgan-Tan became a
wholly owned subsidiary of the Company. SZCL is the parent company of
Shanghai Zhangjiang Hi-Tech Park Development Corp., one of the
Company’s shareholders.
By Order of the Board
Wang HaiBo
Chairman
As at the date thereof, the Board comprises:
Mr. Wang Hai Bo (Executive Director)
Mr. Su Yong (Executive Director)
Mr. Zhao Da Jun (Executive Director)
Ms. Fang Jing (Non-executive Director)
Mr. Zhou Jie (Non-executive Director)
Mr. Guo Jun Yu (Non-executive Director)
Mr. Hao Hong Quan (Non-executive Director)
Mr. Zhu Ke Qin (Non-executive Director)
Mr. Pan Fei (Independent non-executive Director)
Mr. Cheng Lin (Independent non-executive Director)
Mr. Weng De Zhang (Independent non-executive Director)
Shanghai, the PRC
10 November 2010
GLN20101112017.pdf
