LuyePharma
Financial Statements
First Quarter (1QFY09) Financial Statement Announcement for the Period Ended 31/3/2009
Income Statement
Revenue
First Quarter Performance
The Group had a strong first quarter of FY2009 ("1QFY09"), with revenue rising by RMB 62.5 million or 50.2% as compared to 1QFY08. The increase in revenue can be attributed to higher sales of our pharmaceutical drugs of RMB 63.2 million. Sales of our Group's pharmaceutical drugs contributed 100% of our total revenue in 1QFY09 following the termination of the R&D sales and sale of active ingredients business segments.
The main contributors to the increase in the sale of our pharmaceutical drugs were Lipusu, Lutingnuo, Nuosen, CMNa and Hypocol.
Gross profit
First Quarter Performance
The Group's first quarter gross profit improved by RMB 55.4 million or 50.8% from RMB 108.9 million in 1QFY08 to RMB 164.3 million in 1QFY09. The growth in gross profit was in line with the increase in pharmaceutical sales.
Operating expenses
First Quarter Performance
Selling and distribution costs rose by 61.0% or RMB 35.4 million from RMB 57.9 million to RMB 93.3 million in line with the increase in pharmaceutical sales of 51.0% in 1QFY09. The increase in selling and distribution costs can be attributed to larger sales force, higher wages, travelling and conference expenses. Administrative expenses increased by 3.8% or RMB 1.0 million from RMB 26.1 million to RMB 27.1 million in 1QFY09 due mainly to higher salary expenses, additional staff insurance expenses and higher meeting expenses. Other expenses increased by 44.0% or RMB 3.2 million due mainly to higher R&D expenses of RMB 3.0 million.
Profitability
First Quarter Performance
Net profit after tax and minority interests increased by 27.2% or RMB 5.5 million from RMB 20.0 million in 1QFY08 to RMB 25.5 million in 1QFY09 primarily due to:
- increase in gross profits by RMB 55.4 million as explained above;
- decrease in finance costs of RMB 1.6 million as a result of lower interest expenses due to repayments of bank borrowings; offset by
- decrease in other income of RMB 3.6 million as a result of lower government grant of RMB 0.8 million and reduction in a one-time write-back of liabilities no longer payable of RMB 2.9 million in 1QFY2008;
- increase in taxation of RMB 7.7 million due mainly to higher current tax as a result of increased profitability of the PRC subsidiaries as well as an increase in deferred tax of RMB 3.1 million for withholding tax on the retained profits of the PRC subsidiaries as no provision was made for FY2008 till 4QFY2008
Balance sheet
There is no material variance for the balance sheet items between 31 March 2009 and 31 December 2008 except for the following:
- Property, plant and equipment decreased by RMB 0.4 million due mainly to depreciation charge for the period of RMB 4.4 million; offset by additions of RMB 4.0 million;
- Construction in progress (CIP) increased by RMB 20.5 million due to the addition of a new R&D building for Yantai that was prepaid last year;
- Intangible assets decreased by RMB 5.5 million due mainly to amortisation charge of intangible assets for the period of RMB 5.9 million;
- Inventories increased by RMB 5.8 million to RMB 61.8 million due mainly to higher inventory stock in view of strong market demand and higher sales promotion activities;
- Trade and note receivables decreased by RMB 5.1 million to RMB 216.2 million due mainly to efforts of the management to improve the debtors' turnover despite the increase in sales;
- Prepayments, deposits and other receivables decreased by RMB 10.6 million to RMB 28.0 million due mainly to decrease of RMB 19.0 million of prepayment for construction of buildings that was transferred to CIP; offset by increase of RMB 6.3 million in advance to sales offices;
- Cash and cash equivalents, net of pledged short-term deposits, increased by RMB
68.5 million to RMB 186.9 million due mainly to the following;
- net cash inflow from operating activities of RMB 44.2 million;
- proceeds from loans of RMB 44.4 million;
- interest income of RMB 0.5 million; offset by
- repayment of loan of RMB 9.3 million; and
- purchase of property, plant and equipment & construction-in-progress of RMB 6.5 million.
- Amount due from related parties increased by RMB 2.2 million due mainly to trade amounts due from associates for sales of pharmaceutical drugs;
- Interest-bearing loans and borrowings increased by RMB 37.8 million as a result of proceed of RMB 44.4 million being offset partially by repayment of long term loan;
- Net deferred tax liabilities increased by RMB 5.2 million due mainly to deferred tax laibilities of RMB 3.2 million for withholding tax for the Group's PRC subsidiaries' dividends and other tax timing differences;
- Trade payables increased by RMB 3.3 million due mainly to higher amount due to suppliers for raw materials;
- Income tax payable decreased by RMB 2.9 million due to payments made to the tax authorities.
Commentary on Current Year Prospects
In view of the global economic downturn, the Group expects a more challenging environment for the next reporting period and the next 12 months. However, with the recent PRC government's healthcare reforms to increase healthcare expenditure in the PRC, together with our strong product base, the Group believes that we are in a solid position to face this competitive market.
Balance Sheet
