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Third Quarterly Results Report
For The Nine Months Ended 30 September 2007
CHARACTERISTICS OF THE GROWTH ENTERPRISE MARKET (THE “GEM”) OF THE
STOCK EXCHANGE OF HONG KONG LIMITED (THE “STOCK EXCHANGE”)
GEM has been established as a market designed to accommodate companies to
which a high investment risk may be attached. In particular, companies may list
on GEM with neither a track record of profitability nor any obligation to forecast
future profitability. Furthermore, there may be risks arising out of the emerging
nature of companies listed on GEM and the business sectors or countries in which
the companies operate. 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.
The principal means of information dissemination on GEM is publication on the
internet website operated by the Stock Exchange. Listed companies are not
generally required to issue paid reports in gazetted newspapers. Accordingly,
prospective investors should note that they need to have access to the GEM website
in order to obtain up-to-date information on GEM-listed companies.
This report, for which the directors (the “Directors”) of Biosino Bio-Technology and Science
Incorporation (the “Company”) collectively and individually accept full responsibilities,
includes particulars given in compliance with the Rules Governing the Listing of Securities
on GEM (the “GEM Listing Rules”) of the Stock Exchange 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.
Third Quarterly Report
| 1 |
| Contents |
| Corporate Information 2 |
| Management Discussion and Analysis 3 |
| Condensed Consolidated Income Statement 5 |
| Notes to the Condensed Financial Statements 6 |
| Discloseable Information 9 |
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
2
Corporate Information
PRC OFFICE
No. 27 Chaoqian Road,
Science and Technology Industrial Park,
Changping District,
Beijing, PRC
HONG KONG OFFICE
Room 4301,
43rd Floor, Central Plaza,
18 Harbour Road,
Wanchai, Hong Kong
WEBSITE
http://www.zhongsheng.com.cn
http://baiao.com.cn
BOARD OF DIRECTORS
Chairman and executive Director
Mr. Wu Lebin
Vice Chairman and non-executive Directors
Mr. Zhang Yong
Dr. Gao Guang Xia
Executive Directors
Dr. Wang Lin
Mr. Hou Quanmin
Non-executive Directors
Ms. Li Chang
Mr. Rong Yang
Mr. Wang Fu Gen
Ms. Yu Xiaomin
Independent non-executive Directors
Dr. Cheng Jing
Dr. Hua Sheng
Mr. Chan Yiu Kwong
SUPERVISORS
Dr. He Rongqiao
Mr. Wang Xin
Mr. Shao Yimin
COMPANY SECRETARY
Mr. Tung Woon Cheung Eric CPA, CPA (U.S)
QUALIFIED ACCOUNTANT
Mr. Sit Hon Cheong CPA
AUTHORISED
REPRESENTATIVES
Mr. Wu Lebin
Mr. Tung Woon Cheung Eric
COMPLIANCE OFFICER
Mr. Wu Lebin
AUDITORS
Ernst & Young
HONG KONG H SHARE
REGISTRAR AND
TRANSFER OFFICE
Tricor Investor Services Limited
26th Floor, Tesbury Centre,
28 Queen’s Road East,
Wanchai,
Hong Kong
PRINCIPAL BANKERS
Bank of Beijing
Industrial and Commercial Bank of China
Bank of China (Hong Kong) Limited
INFORMATION OF SHARE
Place of listing: The Growth Enterprise
Market of The Stock
Exchange of Hong
Kong Limited
Stock code: 8247
Stock short name: Biosino Bio-Tec
Third Quarterly Report 2007
3
Management Discussion and Analysis
BUSINESS REVIEW FOR THE NINE MONTHS ENDED 30
SEPTEMBER 2007
The revenue for the nine months ended 30 September 2007 was approximately RMB130
million, representing an increase of 22.10% as compared with approximately RMB107
million for the corresponding period last year. During the period, the revenue of
approximately RMB84.48 million was generated from the sales of in-vitro diagnostic reagents
which accounted for 64.85% of the Group’s total revenue, representing a 24.06% increase
as compared with RMB68.09 million for the corresponding period last year. For
pharmaceutical products, the revenue of RMB45.79 million of Lumbrokinase capsules
accounted for 35.15% of the Group’s total revenue, representing an increase of 18.56%
as compared with RMB38.62 million for the corresponding period last year.
For the nine months ended 30 September 2007, profit from operating activities amounted
to RMB24.75 million, representing an increase of 32.9% as compared with the
corresponding period last year. Despite the consolidation of the operational expenses of
new subsidiaries and higher research and development expenses for continued effort of
new products, there was still a growth in profit from operating activities because of
satisfactory increase in revenue.
Profit attributable to shareholders for the nine months ended 30 September 2007 was
RMB13.81 million, representing an increase of approximately 4.6% as compared with the
corresponding period last year. Such increase was mainly attributable to the increase in
revenue and profit from operating activities, which completely offset the increase in interest
expenses as a result of the increase in the bank borrowings for research and development
and business expansion, and higher income tax expense as a result of the adjustment in
the fixed deductible amount on salary expenses imposed by State Administration of Taxation.
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
4
Management Discussion and Analysis
(Continued)
PROSPECT AND FUTURE OUTLOOK
It is expected that the economy of China will continue to grow stably with improvement
in living standard and health consciousness of people. The PRC government is going to
introduce new social medical protection policies which will facilitate the healthy and
stable development of clinical diagnostic products and pharmaceutical products. As such,
China will remain one of the world’s fastest growing markets of these industries.
Looking forward, the Directors believe that the market share of our products will be
expanded steadily throughout the result of our gradual endeavour and timely effort for
market development. The overseas sales of our diagnostic products will rise after some of
our diagnostic reagents have passed the “CE” certification.
The research and development and the sales model of the entire medical industry will be
changed upon the introduction and implementation of new social medical protection
policies of the state. Baiao Pharmaceuticals, the inventor of Lumbrokinase, will be well-
positioned to benefit from the rectification and improvement of the medical market order
of the state.
The Group is confident that our market share and return of shareholders will be increased
as a result of our continuous efforts in research and development in order to launch more
new products and enhance promotion effort in the near future.
By order of the Board
Biosino Bio-Technology and Science Incorporation
Mr. Wu Lebin
Chairman
Beijing, the PRC, 8 November 2007
Third Quarterly Report 2007
5
The Third Quarterly Results for the
Three Months and Nine Months Ended
30 September 2007
The Board of Directors (the “Board”) of the Company announced the unaudited
consolidated results of the Company and its subsidiaries (collectively referred to as the
“Group”) for the three months and nine months ended 30 September 2007, together
with the comparative figures for the same period in 2006, as follows:
CONDENSED CONSOLIDATED INCOME STATEMENT
Three months ended Nine months ended
30 September 30 September
2007 2006 2007 2006
Unaudited Unaudited Unaudited Unaudited
Notes RMB’000 RMB’000 RMB’000 RMB’000
REVENUE 3 46,612 38,541 130,264 106,711
Cost of sales (16,315) (12,305) (45,633) (34,830)
Gross profit 30,297 26,236 84,631 71,881
Other income 3,343 126 7,031 570
Selling and
distribution expenses (11,252) (10,820) (29,834) (28,641)
Administrative expenses (9,062) (7,137) (28,838) (19,459)
Research and
development costs (2,588) (1,698) (7,606) (5,727)
Other operating expenses (83) – (639) –
PROFIT FROM
OPERATING ACTIVITIES 10,655 6,707 24,745 18,624
Finance costs (1,394) (1,291) (4,126) (2,335)
PROFIT BEFORE TAX 9,261 5,416 20,619 16,289
Tax 4 (2,223) (857) (5,517) (2,481)
PROFIT FOR THE PERIOD 7,038 4,559 15,102 13,808
Attributable to:
Shareholders of
the Company 6,632 4,532 13,814 13,214
Minority interests 406 27 1,288 594
7,038 4,559 15,102 13,808
EARNINGS PER SHARE
ATTRIBUTABLE TO
SHAREHOLDERS OF
THE COMPANY 5
– Basic (RMB) 0.07 0.05 0.14 0.13
– Diluted N/A N/A N/A N/A
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
6
Notes to the Condensed Financial
Statements
1. CORPORATE INFORMATION
Biosino Bio-Technology and Science Incorporation (the “Company”) is a limited liability company
incorporated in the People’s Republic of China (the “PRC”). The registered office of the Company
is located at No. 27, Chaoqian Road, Science and Technology Industrial Park, Changping District,
Beijing, the PRC. H shares of the Company were listed on the Growth Enterprise Market (the
“GEM”) of
During the period, the Group principally engaged in the manufacture, sale and distribution of
in-vitro diagnostic reagent products and a pharmaceutical product.
2. BASIS OF PREPARATION
The unaudited condensed accounts have been prepared in accordance with Hong Kong Financial
Reporting Standards (“HKFRSs”) (which also include Hong Kong Accounting Standards (“HKASs”)
and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”)
and accounting principles generally accepted in Hong Kong. The accounting policies and basis
of preparation used in the preparation of the unaudited condensed accounts are consistent
with those used in the Company’s audited financial statements for the year ended 31 December
2006.
3. REVENUE
Revenue, which is also the Group’s turnover, represents the net invoiced value of goods sold,
net of value added tax and government surcharges, and after allowances for the goods returned
and trade discounts.
An analysis of the Group’s revenue is as follows:
Three months ended Nine months ended
30 September 30 September
2007 2006 2007 2006
Unaudited Unaudited Unaudited Unaudited
RMB’000 RMB’000 RMB’000 RMB’000
Sale of in-vitro diagnostic reagent
products 30,450 24,439 84,476 68,091
Sale of a pharmaceutical product 16,162 14,102 45,788 38,620
46,612 38,541 130,264 106,711
Third Quarterly Report 2007
7
Notes to the Condensed Financial
Statements (Continued)
4. TAX
No provision for Hong Kong profits tax has been made as the Company and its subsidiaries
have not generated any assessable profits in Hong Kong since their respective dates of
incorporation. Taxes on profits assessable elsewhere have been calculated at the rates of tax
prevailing in the country in which the Group operates, based on existing legislation,
interpretations and practices in respect thereof. According to the relevant PRC income tax law,
the Company and its subsidiaries, being registered as new and high technology enterprises in
Beijing, are entitled to a concessionary income tax rates of 15% and 7.5% in their respective
subsidiaries, which have been applied for both periods.
Three months ended Nine months ended
30 September 30 September
2007 2006 2007 2006
Unaudited Unaudited Unaudited Unaudited
RMB’000 RMB’000 RMB’000 RMB’000
Group:
Current – Mainland China 2,223 857 5,517 2,481
5. EARNINGS PER SHARE
The calculation of basic earnings per share for the three months ended 30 September 2007 is
based on the unaudited profit attributable to shareholders of the Company for the period and
the weighted average of 100,017,528 (2006: 100,017,528) registered shares in issue during
the period.
The calculation of basic earnings per share for the nine months ended 30 September 2007 is
based on the unaudited profit attributable to shareholders of the Company for the period and
the weighted average of 100,017,528 (2006: 92,980,491) registered shares in issue during the
period.
No diluted earnings per share have been presented as no diluting event existed during the
three months and nine months ended 30 September 2007 (2006: Nil).
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
8
Notes to the Condensed Financial
Statements (Continued)
6. RESERVES
The movements of reserves for the nine months ended 30 September 2007 and 2006 are as
follows:
Issued Proposed
share Capital Statutory Retained final
capital reserves
#
reserves profits dividend Total
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2006 70,018 7,544 17,286 7,810 10,002 112,660
Proceeds from issue of shares 30,000 32,400 – – – 62,400
Share issuance costs – (13,501) – – – (13,501)
Profit for the period
attributable to shareholders
of the Company – – – 13,214 – 13,214
Final 2005 dividend declared ––––(10,002) (10,002)
At 30 September 2006 100,018 26,443 17,286 21,024 – 164,771
At 1 January 2007 100,018 30,309 20,179 10,344 10,002 170,852
Profit for the period
attributable to shareholders
of the Company – – – 13,814 – 13,814
Final 2006 dividend declared – – – – (10,002) (10,002)
At 30 September 2007 100,018 30,309 20,179 24,158 – 174,664
# The capital reserves of the Group include non-distributable reserves of the Company and
its subsidiaries created in accordance with accounting and financial regulations of the
PRC.
7. INTERIM DIVIDEND
The Board does not recommend the payment of an interim dividend for the nine months ended
30 September 2007 (2006: Nil).
Third Quarterly Report 2007
9
Discloseable Information
DIRECTORS’ INTERESTS AND SHORT POSITIONS IN SHARES
AND UNDERLYING SHARES
As at 30 September 2007, the interest and short positions of the directors or supervisors
in the shares and underlying shares of the Company or any associated corporations (within
the meaning of Part XV of the Securities and Futures Ordinance (the “SFO”)), as recorded
in the register required to be kept by the Company pursuant to section 352 of the SFO, or
as required pursuant to Rules 5.46 to 5.68 of the GEM Listing Rules, to be notified to the
Company and to the Stock Exchange, were as follows:
Long position in shares of the Company
As at 30 September 2007, none of the directors or supervisors had any interests or short
position in shares and underlying shares of the Company or any of its associated
corporations (within the meaning of Part XV of the SFO), that was required to be recorded
pursuant to the required standard of dealings by directors as referred to in Rules 5.46 to
5.68 of the GEM Listing Rules or Section 352 of the SFO to be entered in the register of
interests referred to therein.
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
10
Discloseable Information (Continued)
SUBSTANTIAL SHAREHOLDERS’ INTERESTS IN SHARES AND
UNDERLYING SHARES
As at 30 September, 2007, as far as is known to any directors or supervisors of the
Company, the following persons (other than directors, supervisors and chief executives of
the Company) had interests or short positions in the shares and underlying shares of the
Company were recorded in the register required to be kept under Section 336 of the SFO:
Long positions in shares of the Company
Percentage of Percentage of
the Company’s the Company’s
Type of Number of respective type total register
Name of person shares shares held of shares (%) capital (%)
Institute of Biophysics Domestic shares 31,308,576 46.72 31.30
of the Chinese
Academy of Sciences
Beijing Enterprises Holdings Domestic shares 24,506,143 36.57 24.50
High-Tech Development
Co., Ltd. (“BEHT”)
Beijing Enterprises Domestic shares 24,506,143 36.57 24.50
Holdings Limited
(“BEHL”) (Note a)
Chung Shek Enterprises H shares 3,800,000 11.52 3.80
Company Limited
K.C. Wong Education H shares 3,800,000 11.52 3.80
Foundation (Note b)
Pheim Asset Management H shares 3,050,000 9.24 3.05
(Asia) Pte. Ltd. (Note c)
YHT NO.8 (YHT 8 GOU H shares 1,976,000 5.99 1.98
TOUSHIJIGYOKUMIAI)
(Note c)
Deutsche Bank H shares 1,840,000 5.58 1.84
Aktiengesellschaft
Third Quarterly Report 2007
11
Discloseable Information (Continued)
SUBSTANTIAL SHAREHOLDERS’ INTERESTS IN SHARES AND
UNDERLYING SHARES (CONTINUED)
Long positions in shares of the Company (Continued)
Note:
(a) These domestic shares are registered in the name of BEHT. As BEHL is entitled to exercise or
control the exercise of one-third or more of the voting rights at the general meetings of BEHT,
for the purpose of the SFO, BEHL is deemed to be interested in all the domestic shares in which
BEHT is interested.
(b) The interest represents the shares held by Chung Shek Enterprises Company Limited, which is
held directly as to 100% by K.C. Wong Education Foundation. Accordingly, K.C. Wong Education
Foundation is deemed to be interested in shares held by Chung Shek Enterprises Company
Limited.
(c) The interests disclosed are shares held as investment managers.
Save as disclosed above, as far as is known to any directors or supervisors of the Company,
as at 30 September 2007, no person, other than the directors or supervisors of the
Company, whose interests are set out in the section “Directors’ interests and short positions
in shares and underlying shares” above, had interests or short positions in the shares and
underlying shares of the Company that was required to be recorded pursuant to Section
336 of the SFO.
DIRECTORS’ RIGHTS TO ACQUIRE SHARES OR DEBENTURES
None of the directors or supervisors or their respective associates (as defined under the
GEM Listing Rules) was granted by the Company or its subsidiaries any rights or options
to acquire any shares in or debentures of the Company or had exercised any such rights as
at 30 September 2007.
DIRECTORS’ INTERESTS IN A COMPETING BUSINESS
During the period and up to the date of this report, none of the directors are considered
to have interests in a business which competes or is likely to compete, either directly or
indirectly, with the businesses of the Group other than those businesses where the directors
have been appointed or were appointed as directors to represent the interests of the
Company and/or the Group, pursuant to the Rules Governing the Listing of Securities on
the Stock Exchange (the “Listing Rules”).
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
12
Discloseable Information (Continued)
PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S
LISTED SECURITIES
Neither the Company, nor any of its subsidiaries purchased, sold or redeemed any of the
Company’s listed securities during the period.
COMPLIANCE ADVISER’S INTEREST
As updated and notified by the Company’s compliance adviser, Partners Capital International
Limited (the “Compliance Adviser”), none of the Compliance Adviser, or its directors,
employees or associates (as defined under the GEM Listing Rules) had any interest in the
share capital of the Company as at 30 September 2007 pursuant to Rule 6.36 of the GEM
Listing Rules.
Pursuant to an agreement dated 27 February 2006 entered into between the Company
and the Compliance Adviser, the Compliance Adviser will receive a fee for acting as the
Company’s compliance adviser for the period from 27 February 2006 to 31 December
2008 or until the agreement is terminated in accordance with the terms and conditions
set out therein.
AUDIT COMMITTEE
The Company has established an audit committee on 10 February 2006 with written
terms of reference in compliance with the requirements as set out in Rules 5.28 and 5.29
of the GEM Listing Rules. The audit committee’s primary duties are the review and
supervision of the Company’s financial reporting procedures and internal control system.
The Group’s unaudited condensed accounts for the period have been reviewed by the
audit committee with the three independent non-executive directors of the Company,
namely Dr. Cheng Jing (appointed on 9 January 2007), Dr. Hua Sheng and Mr. Chan Yiu
Kwong.
COMPLIANCE WITH CODE ON CORPORATE GOVERNANCE
PRACTICES
The Company always puts strong emphasis on the superiority, steadiness and rationality
of corporate governance. The Company has complied with all the code provisions in the
Code on Corporate Governance Practice (the “Code”) by establishing a formal and
transparent procedures to protect and maximise the interests of shareholders during the
period under review, except for the deviation that Mr. Wu Lebin assumes the role of both
the chairman of the Board and the president of the Company.
