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 announcements 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.
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Interim Report
| 1 |
| Contents |
| Corporate Information 2 |
| Group Profile 3 |
| Group Structure 4 |
| Management Discussion and Analysis 5 |
| Condensed Consolidated Income Statement 14 |
| Condensed Consolidated Balance Sheet 15 |
| Condensed Consolidated Statement of Changes in Equity 17 |
| Condensed Consolidated Cash Flow Statement 18 |
| Condensed Notes to the Financial Statements 19 |
| Discloseable Information 29 |
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
2
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
Corporate Information
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
Number of H 33,000,000 H shares
shares issued:
Nominal value: RMB1.00 per H share
Stock short Biosino Bio-Tec
name:
Interim Report 2007
3
Group Profile
Biosino Bio-Technology and Science Incorporation (“Biosino Bio-Tec” or ”the Company”)
is the leading supplier of in-vitro diagnostic reagents in China. The Company and its
subsidiaries (collectively referred to as the “Group”) is principally engaged in the research
and development, manufacture, sale and distribution of in-vitro diagnostic reagents and
pharmaceutical products, and providing hospital and other medical institutions with quality
and reliable diagnostic reagents and pharmaceutical products. Beijing Baiao Pharmaceuticals
Co., Ltd. (“Baiao Pharmaceuticals”), a subsidiary of the Group, manufactures Lumbrokinase
capsule, a Class II prescription drug which is used to treat cardio cerebrovascular diseases.
These two kinds of products laid the solid business foundations of the Group in the
medical industry in China, thus strengthening the Group for further development.
Shareholders of the Company are having strong background. Our largest shareholder, the
Institute of Biophysics of the Chinese Academy of Sciences (“IBP”), is the leading research
institution in life sciences in China; while the second largest shareholder is Beijing Enterprises
Holdings High-Tech Development Co., Ltd. (“BEHT”), a subsidiary of Beijing Enterprises
Holdings Limited.
The “Biosino” and “Baiao” brands of the Group are well-known in the industry. “Biosino”
was awarded as “Renowned Beijing Brand”/in 2002 and was awarded
“No. 1 Brand with High Quality and Reputation in the In-vitro Diagnostic Reagent Market
of the PRC”7b9\/KSin 2005, and it is highly
recognised among market users and in the medical sector. The Group adopted an integrated
retail and distribution model in marketing, and established an efficient, stable and extensive
sales network covering over 30 provinces, cities and municipalities with more than 600
distributors. The Group’s diagnostic reagents and Lumbrokinase capsule are well distributed
at domestic hospitals and medical institutions.
The Group ranked No. 1 in the conventional medical chemistry market in China.
Lumbrokinase capsule is included in the Drugs Catalogue of National Basic Medical Insurance
7?I<f}and Reimbursable Drugs Catalogue of Public Medical and
Labour Insurance in Beijing Municipality/9l<e<\V,
showing that the Group’s products are highly recognised in the market.
In addition, a number of management members of the Group are professors and doctors,
by upholding our business principles of ”By people, for people; ceaseless innovation;
unquestionable quality pursuing perfection; genuine craftsmanship and ethical
management”, our management strives to strengthen our overall competitiveness, with
some of them had research experience in the IBP, these solid scientific research background
and ambition provide firm research foundations of Biosino Bio-Tec. and advantageous to
the long-term business development of the Group.
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
4
Group Structure
As at 30 June 2007
100%
20%
The Chinese Academy
of Sciences
(“CAS”)
24.5%
BEHT
31.30%
IBP
Biosino Bio-tec
(Stock Code: 8247)
55.88%
Biosino Lab Tech. Inc.
51%
Beijing Zhongsheng
Jinyu Diagnostic
Technology Co., Ltd.
50%
BioTrand Incorporation
80%
50%
Baiao Pharmaceuticals
Beijing Enterprises
Holdings Limited
#
(Stock Code: 0392)
97.985%
Hangzhou Everlong
Biotechnics Co., Ltd
56.25%
PublicFan RongZhu Yigui
Shanghai New Margin
Venture Capital
Co., Ltd.
Biosino-AgiAccu
Bio-Technology Inc.
33%0.70%1.05%3.5%5.95%
Listed on the Growth Enterprise Market (the “GEM”) of The Group, as the leader of in-vitro diagnostic reagent production in
China, undertakes and leads the implementation of such project. Moreover, the State
Food and Drug Administration of the PRC (“SFDA”) officially issued and implemented the
“Management Method of In Vitro Diagnostic Reagents Registration (Interim)”.b
WM#l,during the first half of the year, and some relevant ancillary
regulations including “Detailed Rules for the Implementation of the Production of In Vitro
Diagnostic Reagents (Interim)”.b[DZ, “Guiding Principles
for the Preparation of Manuals for In Vitro Diagnostic Reagents”.b
38awere issued afterward. Such regulation is the State’s first regulation
specific to in-vitro diagnostic reagents, the issuance and implementation of which not
only provides the Company with new concepts, new policies and new demands, but also
presents new opportunities and targets for the Company. As a leading enterprise in the
in-vitro diagnostic reagent industry, the Group has already prepared itself to meet the
new standards. The implementation of these new regulations will enhance the industry’s
orderly development to reach high standards and requirements, and will also facilitate the
growth of the Group. Since this year, the State has put additional resources in public
hospital services and insurance for the low-income group. This has already driven the
market growth of the in-vitro diagnostic industry and created higher demands for the
Group’s products.
For the first half of the year, the Group took full advantage of the opportunities brought
by the development of China and devoted more resources to product research and
development as well as infrastructure construction. We also adopted an active approach
in expanding the product mix and target market, thereby facilitating the trend of healthy
and rapid growth of our businesses.
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
6
Management Discussion and Analysis
(Continued)
FINANCIAL REVIEW FOR THE FIRST HALF OF 2007
The revenue for the six months ended 30 June 2007 was approximately RMB83.65 million,
representing a remarkable increase of 22.7% as compared with approximately RMB68.17
million for the corresponding period last year. The revenue of approximately RMB54.03
million of in-vitro diagnostic reagent products accounted for 64.6% of the Group’s total
revenues, representing a 23.8% increase as compared with RMB43.65 million over the
corresponding period last year. For pharmaceutical products, the revenue of RMB29.62
million of Lumbrokinase capsules accounted for 35.4% of the Group’s total revenue,
representing an increase of 20.8% as compared with RMB24.52 million over the
corresponding period last year.
For the six months ended 30 June 2007, profit from operating activities amounted to
RMB14.09 million, representing an increase of 18.3% as compared with the corresponding
period last year. With an aim to promote business expansion and further consolidate its
leading position in the market, the Group continued its effort in the research and
development of new diagnostic reagent products and pharmaceutical products, and thereby
recorded higher research and development expenses. On the other hand, the surge in
operating expenses as compared with the corresponding period last year was mainly
attributable to the consolidation of operational expenses of four subsidiaries which were
established or acquired by the Group since the end of the first quarter last year, offsetting
part of the increase in profit generated from the out-performed growth in sales.
Profit attributable to shareholders for the six months ended 30 June 2007 was RMB7.18
million, representing a decrease of approximately 17.3% as compared with the
corresponding period last year. Such decrease was mainly attributable to the increase in
interest expenses as a result of the increase in the Group’s bank borrowings for research
and development and business expansion, together with the higher income tax expense
due to the adjustment in the fixed deductible amount on salary expenses by State
Administration of Taxation.
Interim Report 2007
7
Management Discussion and Analysis
(Continued)
PROSPECT AND OUTLOOK
Looking forward, the Group is confident about the prospect of development of the in-
vitro diagnostic reagent industry and of the Group. By actively carrying out the State’s 863
Program and establishing a technological innovation system for China’s medical test and
in-vitro diagnostic reagent industry, we will give full support to the State’s policy of
“establishing a technological innovation system with enterprises as the subject, market
trend as the guide and the construction of a system embracing manufactures, studies and
researches”. On the other hand, we will also make greater efforts in the research and
development of new products, as well as enhance our self-innovation capability by setting
up a reference system and an industry standard system, with an aim to increase our share
in the China market and export our products.
Besides, in view of the long-term growth, the Group will step up its efforts in expanding
product mix and enhancing market network. By maintaining a team with talented staff
and establishing an industrial system with high productivity and competitiveness, the
Group can sustain its development and become a pioneer in China’s protein industry with
international influence, which in turn maximizing our shareholders’ interest.
COMPARISON OF BUSINESS OBJECTIVES WITH ACTUAL
BUSINESS PROGRESS
The following is a comparison of the actual business progress for the six months ended 30
June 2007 with the Group’s business objectives as set out in the prospectus of the
Company.
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
8
Management Discussion and Analysis
(Continued)
COMPARISON OF BUSINESS OBJECTIVES WITH ACTUAL
BUSINESS PROGRESS (CONTINUED)
Business Objectives Actual Business Progress
Expanding research and development effort in product development
– Continue the clinical experiment and
development of Alprostadil injection and
Lumbrokinase injection
– Pre-clinical research of Alprostadil
injection has been completed and
application for the registration has been
filed to SFDA, pending for the technical
evaluation at the Drug Evaluation Center
of SFDA
– Clinical experiment and development of
Lumbrokinase injection have not yet
commenced
– Research development, and
enhancement of Homocysteine
diagnostic reagent, for the diagnosis of
cardiac and cerebrovascular related
diseases and Lipase diagnostic reagents
– Research and development of Lipase
diagnostic reagents is in progress
– The Group is actively seeking partners
to collaborate on the research and
development of Homocysteine diagnostic
reagent
– Research planning and research for
tumour prognostic solutions and cardiac
muscular triple card prognostic solutions
– Certain products, such as Cardiac
Troponin, have completed the research
stage and are undergoing small-scale
production and clinical trials
Interim Report 2007
9
Management Discussion and Analysis
(Continued)
COMPARISON OF BUSINESS OBJECTIVES WITH ACTUAL
BUSINESS PROGRESS (CONTINUED)
Business Objectives Actual Business Progress
Expanding research and development effort in product development (Continued)
– Complete research and development of
Pancreatic Kininogenase raw material
and Pancreatic Kininogenase capsule and
Aprotinin injection
– Registration certificate for Pancreatic
Kininogenase raw material has been
obtained from SFDA
– Clinical experiment of Pancreatic
Kininogenase enteric-coated capsules has
been completed. The Group is applying
to SFDA for the production of such
capsules
– Pre-clinical research on Aprotinin
injection is in progress
– Continue the establishment of anti-body
substances research laboratory
– Infrastructure for the laboratory has been
completed and equipment are purchased
Enhancing the existing PRC sales network and exploring business opportunities in
other Asian countries
– Prepare for hosting of the 20th
Anniversary of Biosino promotional
activities
– Preparation work for such activities is
underway
– Further enhancement of marketing plans – New customers have been secured in
several countries and regions such as
Hong Kong and India
– Negotiation with a Singapore company,
aiming at studying the feasibility to
develop reagent business in Malaysia, is
in progress
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
10
Management Discussion and Analysis
(Continued)
COMPARISON OF BUSINESS OBJECTIVES WITH ACTUAL
BUSINESS PROGRESS (CONTINUED)
Business Objectives Actual Business Progress
Introducing new products periodically
– Obtain SFDA’s registration certificate and
commence production and sale of fecal
occult blood rapid testing card
– Registration certificate has been
obtained from SFDA and production and
sale have commenced
– Conduct academic promotional activities
for Octreotide Acetate injection and
Pentoxifylline capsules, and commercial
launch of Pentoxifylline enteric-coated
capsules
– Academic promotional activities for
Octreotide Acetate injection have not yet
been commenced
– As the clinical application of
Pentoxifylline capsules slumps, the
related project has been shelved
– Launch of C-Reaction Protein rapid
testing cards
– Due to changes in market condition,
products such as bio-chemical reagents
for bio-chemical analyzer, high sensitive
CRP, have more favourable market
response as compared with C-Reaction
Protein rapid testing cards, the Group
decided to devote research and
development resources to such products
– Launch Homocysteine, Lipase diagnostic
reagents and Angiotensin converting
enzyme kits
– Each project is undergoing its research
and assessment stage
– Launch Beta 2-microglobulin diagnostic
reagent
– Registration certificate for Beta 2-
microglobulin diagnostic reagent has
been obtained from SFDA and such
product has been launched to the market
Interim Report 2007
11
Management Discussion and Analysis
(Continued)
COMPARISON OF BUSINESS OBJECTIVES WITH ACTUAL
BUSINESS PROGRESS (CONTINUED)
Business Objectives Actual Business Progress
Introducing new products periodically (Continued)
– Obtain SFDA new drug certificate for
Octreotide Acetate injection and
commercial launch
– Registration certificate for Octreotide
Acetate injection has been obtained from
SFDA
Expanding production facilities/capacity
– Arrange GMP certification of in-vitro
diagnostic reagent manufacturing
facilities
– In June this year, SFDA issued
the “Detailed Rules for the
Implementation of the Production of In
Vitro Diagnostic Reagents (Interim)” (
.b[DZ). The
Group will carry out the certification of
its manufacturing facilities under the
arrangement of such State policy
– Continue to enhance existing production
facilities
– A construction engineering design
contract for the improvement of existing
production facilities has been signed. It
is anticipated that the construction work
will commence in September this year
Forming strategic alliances
– Continue seeking strategic alliances with
bio-chemical diagnostic equipment
manufacturers to explore business
opportunities in the PRC and overseas
market
– The Group is collaborating with Quawell
Technology, Inc. on the research and
development of bio-chemical diagnostic
equipments.
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
12
Management Discussion and Analysis
(Continued)
USE OF PROCEEDS
The actual use of proceeds for the six months ended 30 June 2007, as compared to the
amount set out in the section headed “Reasons for the Placing and the Use of Proceeds”
of the Company’s prospectus, is summarised as follows:
Proposed Actual
HK$’000 HK$’000
Expanding research and development effort
in product development 3,050 2,779
Enhancing existing PRC sales network and
exploring business opportunities in other Asian countries 2,600 2,600
Product promotion 400 400
Expanding production facilities/ capacity 5,000 4,535
Working capital 360 360
Total 11,410 10,674
CAPITAL STRUCTURE, FINANCIAL POSITION AND LIQUIDITY
The Group generally financed its operations with sales generated cash flows, capital
contributions from shareholders and bank borrowings. During the period, cash flow from
operating activities is approximately RMB7.5 million. There is no new issue of shares and
new bank borrowings for the period.
As at 30 June 2007, the Group had the cash and bank balances approximately RMB149
million (as at 31 December 2006: approximately RMB155 million). The Group’s bank
borrowings amounted to RMB90 million as at 30 June 2007 and 31 December 2006.
Such borrowings are denominated in Renminbi and at fixed interest rates. The Group is in
a net cash position of approximately RMB59 million (as at 31 December 2006: approximately
RMB65 million). The gearing ratio (defined as total bank loans over the equity attributable
to shareholders of the Company) is 53.6% (as at 31 December 2006: 52.7%).
Interim Report 2007
13
Management Discussion and Analysis
(Continued)
FOREIGN CURRENCY RISK
The Group operates principally in the PRC except for limited exposure to foreign exchange
rate risk arising principally with respect to the cash proceeds denominated in Hong Kong
Dollar from our placing of H shares, which is held as bank deposits in China.
PLEDGE OF ASSETS OF THE GROUP
As at 30 June 2007 and 31 December 2006, the Group’s bank loans were secured by the
Group’s land in Mainland China and building erected thereon, with an aggregate carrying
value of approximately RMB54,859,000 and RMB55,654,000 respectively at the balance
sheet date.
CONTINGENT LIABILITIES
As at 30 June 2007 and 31 December 2006, the Group had no any contingent liabilities.
EMPLOYEE
On 30 June 2007, approximately 540 employees (as at 31 December 2006: approximately
511) were employed by the Group. The total staff costs of the Group (including the
directors’ remunerations) for the period ended 30 June 2007 amounted to approximately
RMB18.46 million (2006: approximately RMB15.44 million). The Group fixes and reviews
the emoluments of its staff and directors based on their qualification, experience,
performance, and market rates, so as to maintain the remunerations of its staff and
directors at a competitive level.
APPRECIATION
On behalf of the Board, I would like to extend my sincere thanks to all shareholders and
business partners of the Group for their unswerving support, and to the entire staff of the
Group for their valuable contribution.
By order of the Board
Biosino Bio-Technology and Science Incorporation
Mr. Wu Lebin
Chairman
Beijing, the PRC, 8 August 2007
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
14
The Board of Directors (the “Board”) of the Company announced the unaudited
consolidated results of the Group for the three months and six months ended 30 June
2007 and the unaudited condensed consolidated balance sheet of the Group as at 30
June 2007, together with the comparative figures in 2006, as follows:
Condensed Consolidated Income
Statement
For the three months and six months ended 30 June 2007
Three months ended Six months ended
30 June 30 June
2007 2006 2007 2006
Unaudited Unaudited Unaudited Unaudited
Notes RMB’000 RMB’000 RMB’000 RMB’000
REVENUE 2, 3 47,188 38,171 83,652 68,170
Cost of sales (16,472) (12,664) (29,318) (22,525)
Gross profit 30,716 25,507 54,334 45,645
Other income 2,033 373 3,688 444
Selling and distribution expenses (11,322) (10,703) (18,582) (17,821)
Administrative expenses (11,227) (6,803) (19,776) (12,322)
Research and development costs (2,029) (2,223) (5,018) (4,029)
Other operating expenses (161) – (556) –
PROFIT FROM OPERATING
ACTIVITIES 4 8,010 6,151 14,090 11,917
Finance costs 5 (1,390) (496) (2,732) (1,044)
PROFIT BEFORE TAX 6,620 5,655 11,358 10,873
Tax 6 (1,830) (977) (3,294) (1,624)
PROFIT FOR THE PERIOD 4,790 4,678 8,064 9,249
Attributable to:
Shareholders of the Company 4,180 4,364 7,182 8,682
Minority interests 610 314 882 567
4,790 4,678 8,064 9,249
EARNINGS PER SHARE
ATTRIBUTABLE TO
SHAREHOLDERS OF
THE COMPANY 7
– Basic (RMB) 0.042 0.044 0.072 0.098
– Diluted N/A N/A N/A N/A
Interim Report 2007
15
Condensed Consolidated Balance
Sheet
As at 30 June 2007
30 June 31 December
2007 2006
Unaudited Audited
Notes RMB’000 RMB’000
ASSETS
Non-current assets:
Property, plant and equipment 110,129 111,266
Prepaid land premiums 6,881 6,957
Goodwill 471 309
Know-how 2,219 2,238
Trade and bills receivables 9 1,830 1,530
Total non-current assets 121,530 122,300
Current assets:
Prepaid land premiums 146 146
Inventories 21,492 21,199
Trade and bills receivables 9 37,079 27,963
Prepayments, deposits and other receivables 13,672 10,581
Financial assets at fair value through profit or loss 195 –
Pledged bank balance 3 3
Cash and cash equivalents 149,247 154,580
Total current assets 221,834 214,472
TOTAL ASSETS 343,364 336,772
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
16
Condensed Consolidated Balance Sheet
(Continued)
As at 30 June 2007
30 June 31 December
2007 2006
Unaudited Audited
Notes RMB’000 RMB’000
EQUITY AND LIABILITIES
Equity attributable to shareholders
of the Company:
Issued capital 10 100,018 100,018
Reserves 68,014 60,832
Proposed final dividend – 10,002
168,032 170,852
Minority interests 20,328 18,872
TOTAL EQUITY 188,360 189,724
Non-current liabilities:
Government grants 12,820 12,820
Bank borrowings 80,000 80,000
Total non-current liabilities 92,820 92,820
Current liabilities:
Trade and bills payables 11 6,665 2,355
Other payables and accruals 40,125 35,866
Taxes payable 5,394 6,007
Bank borrowings 10,000 10,000
Total current liabilities 62,184 54,228
TOTAL LIABILITIES 155,004 147,048
TOTAL EQUITY AND LIABILITIES 343,364 336,772
Interim Report 2007
17
Condensed Consolidated Statement of
Changes in Equity
For the six months ended 30 June 2007
Attributable to shareholders of the Company
Issued Proposed
share Capital Statutory Retained final Minority Total
capital reserves# reserves Profits dividend Total interests equity
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
RMB’000 RMB’000 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 10,283 122,943
Proceeds from issuing of new H shares 30,000 31,200 – – – 61,200 – 61,200
Share issuance costs – (12,301) – – – (12,301) – (12,301)
Profit for the period and total
income and expense for the period – – – 8,682 – 8,682 567 9,249
Final 2005 dividend declared – – – – (10,002) (10,002) – (10,002)
Acquisition of an interest in a subsidiary – – – – – – 1,577 1,577
Dividend declared to a minority shareholder – – – – – – (2,900) (2,900)
At 30 June 2006 100,018 26,443 17,286 16,492 – 160,239 9,527 169,766
At 1 January 2007 100,018 30,309
†
20,179
†
10,344
†
10,002 170,852 18,872 189,724
Profit for the period and total
income and expense for the period – – – 7,182 – 7,182 882 8,064
Final 2006 dividend declared – – – – (10,002) (10,002) – (10,002)
Acquisition of an interest in a subsidiary ––––––574574
At 30 June 2007 100,018 30,309
†
20,179
†
17,526
†
– 168,032 20,328 188,360
# 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.
† These reserve accounts comprise the consolidated reserves of RMB68,014,000 and
RMB60,832,000 in the consolidated balance sheets as at 30 June 2007 and 31 December 2006,
respectively.
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
18
Condensed Consolidated Cash Flow
Statement
For the six months ended 30 June 2007
Six months ended
30 June
2007 2006
Unaudited Unaudited
RMB’000 RMB’000
Net cash inflow from operating activities 7,498 5,381
Net cash outflow from investing activities (5,309) (13,295)
Net cash inflow/(outflow) from financing activities (7,522) 67,125
Increase/(decrease) in cash and cash equivalents (5,333) 59,211
Cash and cash equivalents at beginning of period 154,580 37,840
Cash and cash equivalents at end of period 149,247 97,051
Interim Report 2007
19
Condensed Notes to the Financial
Statements
1. BASIS OF PREPARATION
The unaudited condensed consolidated accounts for the three months and six months ended
30 June 2007 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 consolidated accounts are consistent with
those used in the Company’s audited financial statements for the year ended 31 December
2006.
2. SEGMENT INFORMATION
Segment information is presented by way of two segment formats: (i) on a primary segment
reporting basis, by business segment; and (ii) on a secondary segment reporting basis, by
geographical segment.
The Group’s operating businesses are structured and managed separately according to the
nature of their operations and the products they provide. Each of the Group’s business segments
represents a strategic business unit that offers products which are subject to risks and returns
that are different from those of the other business segments. Particulars of the business segments
are summarised as follows:
(i) the in-vitro diagnostic reagent products segment manufactures, sells and distributes a
variety of mono/double diagnostic reagent products; and
(ii) the pharmaceutical product segment manufactures, sells and distributes a pharmaceutical
product.
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
20
Condensed Notes to the Financial
Statements (Continued)
2. SEGMENT INFORMATION (CONTINUED)
(a) Business segments
The following tables present revenue and results for the Group’s business segments for
each of the six months ended 30 June 2007 and 2006.
Six months ended 30 June 2007
In-virto
diagnostic Pharma-
reagent ceutical
products product Eliminations Total
Unaudited Unaudited Unaudited Unaudited
RMB’000 RMB’000 RMB’000 RMB’000
Segment revenue:
Sales to external customers 54,026 29,626 – 83,652
Other income 2,996 – – 2,996
Total 57,022 29,626 – 86,648
Segment results 9,281 4,117 13,398
Interest income 692
Profit from operating activities 14,090
Finance costs (2,732)
Profit before tax 11,358
Tax (3,294)
Profit for the period 8,064
Interim Report 2007
21
Condensed Notes to the Financial
Statements (Continued)
2. SEGMENT INFORMATION (CONTINUED)
(a) Business segments (Continued)
Six months ended 30 June 2006
In-virto
diagnostic Pharma-
reagent ceutical
products product Eliminations Total
Unaudited Unaudited Unaudited Unaudited
RMB’000 RMB’000 RMB’000 RMB’000
Segment revenue:
Sales to external customers 43,652 24,518 – 68,170
Other income 24 – – 24
Total 43,676 24,518 – 68,194
Segment results 8,821 2,676 11,497
Interest income 420
Profit from operating activities 11,917
Finance costs (1,044)
Profit before tax 10,873
Tax (1,624)
Profit for the period 9,249
(b) Geographical segments
No geographical segmental analysis is presented as all of the Group’s operations were
located in Mainland China for each of the six months ended 30 June 2007 and 2006.
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
22
Condensed Notes to the Financial
Statements (Continued)
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 for the three months and six months ended 30 June 2007 is
as follows:
Three months ended Six months ended
30 June 30 June
2007 2006 2007 2006
Unaudited Unaudited Unaudited Unaudited
RMB’000 RMB’000 RMB’000 RMB’000
Sale of in-vitro diagnostic reagent products 30,774 24,622 54,026 43,652
Sale of a pharmaceutical product 16,414 13,549 29,626 24,518
47,188 38,171 83,652 68,170
4. PROFIT FROM OPERATING ACTIVITIES
Profit from operating activities was arrived at after charging:
Three months ended Six months ended
30 June 30 June
2007 2006 2007 2006
Unaudited Unaudited Unaudited Unaudited
RMB’000 RMB’000 RMB’000 RMB’000
Depreciation 2,551 1,888 4,973 3,319
Amortisation of know-how 108 107 214 185
Amortisation of prepaid land premiums 39 37 77 73
5. FINANCE COSTS
Three months ended Six months ended
30 June 30 June
2007 2006 2007 2006
Unaudited Unaudited Unaudited Unaudited
RMB’000 RMB’000 RMB’000 RMB’000
Interest on bank loans 1,390 496 2,732 1,044
Interim Report 2007
23
Condensed Notes to the Financial
Statements (Continued)
6. TAX
No provision for Hong Kong profits tax has been made as the Group did not generate any
assessable profits arising in Hong Kong during the six months ended 30 June 2007 (2006: Nil).
Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the
countries 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
concessionary income tax rates of 15% and 7.5% in their respective subsidiaries, which have
been applied for both periods.
Three months ended Six months ended
30 June 30 June
2007 2006 2007 2006
Unaudited Unaudited Unaudited Unaudited
RMB’000 RMB’000 RMB’000 RMB’000
Group:
Current – Mainland China 1,830 977 3,294 1,624
7. EARNINGS PER SHARE
The calculation of basic earnings per share for the three months ended 30 June 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 six months ended 30 June 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: 88,693,025) 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 six months ended 30 June 2007 (2006: Nil).
8. INTERIM DIVIDEND
The Board does not recommend the payment of an interim dividend for the six months ended
30 June 2007 (2006: Nil).
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
24
Condensed Notes to the Financial
Statements (Continued)
9. TRADE AND BILLS RECEIVABLES
The credit period of the Group to its customers is generally for a period ranging from 60 days
to 90 days. The Group closely monitors overdue balances, and impairment is made when it is
considered that amounts due may not be recovered. In view of the aforementioned and the
fact that the Group’s trade receivables relate to a large number of diversified customers, there
is no significant concentration of credit risk. Trade receivables are non-interest-bearing.
An aged analysis of the trade and bills receivables of the Group as at the balance sheet date
based on invoice date, are as follows:
30 June 31 December
2007 2006
Unaudited Audited
RMB’000 RMB’000
Within 3 months 30,883 22,778
4 to 6 months 4,062 2,361
7 to 12 months 2,296 1,749
1 to 2 years 2,378 3,084
Over 2 years 2,023 1,674
41,642 31,646
Less: Provision for doubtful receivables (2,733) (2,153)
38,909 29,493
Less: Portion classified as current assets (37,079) (27,963)
Non-current portion 1,830 1,530
Included in the trade and bills receivables of the Group as at 30 June 2007 was an aggregate
amount of RMB1,830,000 (as at 31 December 2006: RMB1,530,000) due from certain established
customers of the Group for several instalment sales contracts entered into with payment terms
ranging from two to four years. The balances are unsecured and interest-free.
The carrying amounts of the trade and bills receivables approximate to their fair values.
Interim Report 2007
25
Condensed Notes to the Financial
Statements (Continued)
10. SHARE CAPITAL
30 June 31 December
2007 2006
Unaudited Audited
RMB’000 RMB’000
Registered, issued and fully paid:
67,017,528 Domestic shares of RMB1.00 each 67,018 67,018
33,000,000 H shares of RMB1.00 each 33,000 33,000
100,018 100,018
11. TRADE AND BILLS PAYABLES
An aged analysis of trade and bills payables of the Group as at the balance sheet date, based
on the invoice date, is as follows:
30 June 31 December
2007 2006
Unaudited Audited
RMB’000 RMB’000
Outstanding balances aged:
Within 3 months 6,098 1,744
4 to 6 months 118 322
7 to 12 months 324 73
1 to 2 years 54 114
Over 2 years 71 102
6,665 2,355
The trade payables are non-interest-bearing and are normally settled on credit terms ranging
from 30 days to 90 days.
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
26
Condensed Notes to the Financial
Statements (Continued)
12. CONTINGENT LIABILITIES
The Group did not have any significant contingent liabilities as at 30 June 2007 (as at 31
December 2006: Nil).
13. CAPITAL COMMITMENTS
(i) The Group had the following capital commitments at the balance sheet date:
30 June 31 December
2007 2006
Unaudited Audited
RMB’000 RMB’000
Authorised, but not
contracted for:
Land and buildings – –
Plant and machinery – –
– –
(ii) Pursuant to a research and development cooperation agreement (the “Research and
Development Cooperation Agreement”) dated 9 August 2004 entered into between the
Group and the IBP, a shareholder of the Company, both parties will jointly engage in a
pre-clinical research project for the development of a chemical drug, namely, Alprostadil
for Injection. Upon the completion of such pre-clinical research, the Group will have the
right to obtain the ownership of the relevant clinical testing certificate and the production
licence to be issued thereafter by the SFDA of the PRC, while the Group would be
required to pay the IBP an amount equivalent to 50% of the assessed market value of
the clinical research rights. According to the Research and Development Cooperation
Agreement, the assessed market value of the clinical research rights is subject to a cap
of RMB5,000,000. Therefore, the maximum amount of consideration that the Group has
to pay to the IBP as compensation will be RMB2,500,000. As at the date of approval of
these unaudited condensed consolidated accounts, the Group has not made any
compensation to the IBP under the aforesaid agreement.
Interim Report 2007
27
Condensed Notes to the Financial
Statements (Continued)
14. RELATED PARTY TRANSACTIONS
(a) The Group had the following transactions with related parties during the period:
Six months ended
30 June
2007 2006
Unaudited Unaudited
Notes RMB’000 RMB’000
CONTINUING TRANSACTIONS:
Technical service fee paid (i) 250 250
DISCONTINUED TRANSACTIONS:
Rental paid by Baiao Pharmaceuticals
in respect of operating lease
arrangements of office properties,
factory premises and warehouses (ii) – 233
Water and electricity fees paid by Baiao
Pharmaceuticals (ii) – 84
Notes:
(i) On 9 December 2004, the IBP and the Company entered into an exclusive
technology licensing agreement (the “Licensing Agreement”) in regard to the
production of diagnostic reagents by employing the technologies owned by the
IBP (the “Reagent Technologies”). Pursuant to the Licensing Agreement, the
Company is required to pay a fee of RMB500,000 per annum to the IBP for 20
years, commencing on the effective date of the Licensing Agreement. In addition,
the IBP confirmed that it would not pursue any legal or economic obligations
against the Company for using the Reagent Technologies in prior years. In the
opinion of the directors, the technical service fee was determined based on
negotiation and by reference to the valuation of the Reagent Technologies
performed by an independent PRC asset appraisal valuer in August 2000.
(ii) The Group’s premises at Haidian District of Beijing, the PRC (the “Haidian
Premises”) were leased from the IBP, a shareholder of the Company. The rentals
were paid based on a mutually-agreed amount each year. In the opinion of the
directors, the rentals were determined by reference to the then prevailing open
market rentals.
Since April 2006, the Group has moved into its new office building and production
facility at Changping. Thus, the lease contract with the IBP has been terminated.
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
28
Condensed Notes to the Financial
Statements (Continued)
14. RELATED PARTY TRANSACTIONS (Continued)
(b) Compensation of key management personnel of the Group
Six months ended
30 June
2007 2006
Unaudited Unaudited
RMB’000 RMB’000
Short term employee benefits 3,359 3,440
Post-employment benefits – –
Total compensation paid to key
management personnel 3,359 3,440
The directors are of the opinion that the above transactions were conducted in the
ordinary course of business of the Group.
Interim Report 2007
29
Discloseable Information
DIRECTORS’ INTERESTS AND SHORT POSITIONS IN SHARES
AND UNDERLYING SHARES
As at 30 June 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 June 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
30
Discloseable Information (Continued)
SUBSTANTIAL SHAREHOLDERS’ INTERESTS IN SHARES AND
UNDERLYING SHARES
As at 30 June 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
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)
Pheim Asset Management H shares 3,050,000 9.24 3.05
(Asia) Pte. Ltd.
YHT NO.8 (YHT 8 GOU H shares 2,300,000 6.97 2.30
TOUSHIJIGYOKUMIAI)
Deutsche Bank H shares 1,840,000 5.58 1.84
Aktiengesellschaft
Note:
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.
Save as disclosed above, as far as is known to any directors or supervisors of the Company, as at 30
June 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.
Interim Report 2007
31
Discloseable Information (Continued)
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 subsidiary any rights or options to
acquire any shares in or debentures of the Company or had exercised any such rights as at
30 June 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”).
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 June 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 and end on the date
on which the Company complies with Rule 18.03 of the GEM Listing Rules in respect of
its financial results for the second full financial year ending 31 December 2008 or until
the agreement is terminated in accordance with the terms and conditions set out therein.
BIOSINO BIO-TECHNOLOGY AND SCIENCE INCORPORATION
32
Discloseable Information (Continued)
CORPORATE GOVERNANCE AND COMPLIANCE WITH
THE 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. The Board is of the view
that it is in the best interests of the Group to have Mr. Wu, who have vast and solid
experience in the medical industry to perform the dual role so that the Board can have the
benefits of a chairman who is knowledgeable about the business of the Group and is
most capable to guide and brief the Board in a timely manner on pertinent issues.
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 consolidated accounts for the six months ended 30
June 2007 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.
CODE OF CONDUCT REGARDING SECURITIES
TRANSACTIONS BY DIRECTORS
The Company has adopted the required standard of dealings set out in Rules 5.48 to 5.67
of the GEM Listing Rules as the code of conduct regarding securities transactions by the
Directors. Having made specific enquiry of all Directors, the Company confirmed that all
Directors have complied with the required standard of dealing set out in Rules 5.48 to
5.67 of the GEM Listing Rules throughout the period.
