GENSCRIPT BIOTECH CORPORATION (Incorporated in the Cayman Islands with limited liability) Stock code: 1548 2020 Interim Report
*For identification purpose only
C O N T E N T S
Corporate Profile | 2 |
Corporate Information | 4 |
Financial Highlight | 6 |
Management Discussion and Analysis | 8 |
Other Information | 20 |
Independent Review Report | 37 |
Interim Condensed Consolidated Statement | |
of Profit or Loss | 38 |
Interim Condensed Consolidated Statement | |
of Comprehensive Income | 39 |
Interim Condensed Consolidated Statement | |
of Financial Position | 40 |
Interim Condensed Consolidated Statement | |
of Changes in Equity | 42 |
Interim Condensed Consolidated Statement | |
of Cash Flows | 44 |
Notes to Interim Condensed Consolidated | |
Financial Information | 47 |
Corporate Profile
The Group is a well-recognised biotech company. Based on our proprietary gene synthesis technology and the other technology and know-hows on life science research and application, we have well established four major platforms including (i) a leading contract research organization (the "CRO") platform to provide one-stop solutions to global research communities, (ii) a contract development and manufacturing organization (the "CDMO") platform, (iii) an industrial synthetic products platform, and (iv) an integrated global cell therapy platform. The above four internally built platforms have demonstrated their rapid growth from research and development to commercial delivery for the six months ended June 30, 2020 (the "Reporting Period") respectively.
The Group has been inspired by the mission "Make People and Nature Healthier through Biotechnology" since it was founded 18 years ago. Our clients' business need is the Group's first priority and the ultimate cornerstone for pursuing its long term development. We have been improving our clients' competitiveness through providing our superior quality, fast-delivery and cost-effective services and products. Internally, we focus on performing continuous management reform in streamlining our operational workflows and procedures with the aim to strive for the highest quality of end-to-end delivery. Externally, we actively promote the value of strategic collaboration with business partners with the vision to build up a healthy biotech eco-system. We would like to contribute more of our efforts to speed up the evolution of the whole biotech and biopharma industries, to realize multi-win among all the participating partners in this industry.
The Group's business operations span over 100 countries worldwide with our legal entities located in the United States, Mainland China, Hong Kong, Japan, Singapore, Netherlands and Ireland. Our professional workforce has increased to approximately 3,973 headcounts as at June 30, 2020.
The life science services and products segment (CRO platform) is the strong and stable revenue generating foundation for the Group. We have maintained the position as one of the world's largest molecular biology CRO companies. We offer services and products covering gene synthesis, oligo nucleotide synthesis, peptide synthesis, protein production, antibody development, and convenient and high-put-through equipment and consumables. We have active and healthy interaction with global life science research community. Our services and products have been cited in over 51,000 international peer reviewed journal articles as at June 30, 2020.
The biologics development services segment (CDMO platform) provides end-to-end gene and cell therapy and biologics discovery and development services to pharmaceutical, biotech, government and academic customers worldwide. The team focused on building Good Manufacturing Practice ("GMP") capabilities during the Reporting Period. GMP facilities are under construction according to our strategic plan with phase by phase delivery of discovery, development, and medium to large scale of manufacturing capacity to meet demands from our customers.
Legend Biotech Corporation ("Legend") is the clinical stage biopharmaceutical subsidiary of the Group that specifically engages in the discovery and development of novel cell therapies for oncology and other indications. Our lead product candidate, ciltacabtagene autoleucel (cilta-cel;LCAR-B38MCAR-T cells), is a chimeric antigen receptor T-cell("CAR-T") therapy that Legend is jointly developing with Janssen Biotech, Inc. ("Janssen"), for the treatment of multiple myeloma ("MM"). Our clinical results achieved to date demonstrate that LCAR-B38M/JNJ-4528 has the potential to deliver deep and
2 | GENSCRIPT BIOTECH CORPORATION |
Corporate Profile
durable antitumor responses in relapsed and refractory multiple myeloma ("RRMM") patients with a manageable safety profile. Janssen remains on track to initiate a Biologic License Application ("BLA") filing for ciltacabtagene autoleucel to the U.S. Food and Drug Administration by the end of 2020 and also expects that a Marketing Authorization Application will be submitted to the European Medicines Agency in early 2021. Our new pipeline CAR-T programs have been under active development, and Legend intends to submit an investigational new drug ("IND") application for LB1901 in relapsed or refractory T cell Lymphoma in the second half of 2020. Legend was listed on Nasdaq Global Market on June 5, 2020.
Bestzyme Biotech Corporation ("Bestzyme") is a subsidiary of the Group engaged in the synthetic biology fields. Bestzyme uses our advanced enzyme engineering technology to develop products for food processing and food additives markets. Our long-term goals are: (i) to improve the quality of people's daily lives, (ii) to address environmental problems, and (iii) to use enzymes in various industry sectors at a large scale to improve the performance and to reduce costs. We believe synthetic biology offers us new opportunities from both technical and commercial perspectives.
During the Reporting Period, all non-cell therapy business units have achieved external sales growth. The Group invested significantly in talent pool and research and development to improve our technical competitiveness. We are very confident that our persistent investments into technology and management reforms and streamlining will be paid off and enable us to achieve a better future ultimately.
Interim Report 2020 | 3 |
Corporate Information
BOARD OF DIRECTORS
Executive Directors
Ms. Wang Ye (President)
Mr. Meng Jiange (Secretary of the Board of Directors)
Non-Executive Directors
Dr. Zhang Fangliang (Chairman) (Resigned from the position of
- Chief Executive Officer and re-designated from
- executive Director to non-executive Director
- with effect from August 2, 2020)
Dr. Wang Luquan
Mr. Pan Yuexin
Ms. Wang Jiafen
Independent Non-Executive Directors
Mr. Guo Hongxin
Mr. Dai Zumian
Mr. Pan Jiuan
AUDIT COMMITTEE
Mr. Dai Zumian (Chairman)
Mr. Pan Jiuan
Mr. Guo Hongxin
REMUNERATION COMMITTEE
Mr. Guo Hongxin (Chairman)
Ms. Wang Ye
Mr. Dai Zumian
NOMINATION COMMITTEE
Dr. Zhang Fangliang (Chairman)
Mr. Pan Jiuan
Mr. Dai Zumian
SANCTIONS RISK CONTROL COMMITTEE
Dr. Zhang Fangliang (Chairman)
Ms. Wang Ye
Mr. Meng Jiange
Mr. Eric Wang
Mr. Shawn Wu
COMPANY SECRETARY
Ms. Wong Wai Ling
AUTHORISED REPRESENTATIVES
Dr. Zhang Fangliang
Mr. Meng Jiange
HONG KONG LEGAL ADVISERS
Jones Day
31/F Edinburgh Tower
The Landmark
15 Queen's Road
Central
Hong Kong
AUDITOR
Ernst & Young
Certified Public Accountants
22/F, CITIC Tower
1 Tim Mei Avenue
Central
Hong Kong
REGISTERED OFFICE IN THE CAYMAN ISLANDS
4th Floor, Harbour Place
103 South Church Street, George Town P.O. Box 10240, Grand Cayman KY1-1002 Cayman Islands
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Corporate Information
HEADQUARTERS AND PRINCIPAL PLACE OF BUSINESS IN THE PRC
No. 28, Yongxi Road
Jiangning Science Park
Nanjing Jiangsu Province
PRC
PRINCIPAL PLACE OF BUSINESS IN HONG KONG
40th Floor, Sunlight Tower
No. 248 Queen's Road East
Wanchai
Hong Kong
PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE
Harneys Services (Cayman) Limited 4th Floor, Harbour Place
103 South Church Street, George Town
P.O. Box 10240, Grand Cayman KY1-1002 Cayman Islands
HONG KONG SHARE REGISTRAR
Computershare Hong Kong Investor Services Limited
Shops 1712-1716
17th Floor, Hopewell Centre
183 Queen's Road East
Wan Chai
Hong Kong
PRINCIPAL BANKS
Bank of America, N.A. Hong Kong Branch
20th Floor, Tower 2
Kowloon Commerce Centre
51 Kwai Cheong Road
Kwai Chung
Hong Kong
Bank of America Scotch Plains Office
336 Park Avenue
Scotch Plains
NJ 07076
USA
Yueyahu Branch of China Merchant Bank
No. 88, Mu Xu Yuan Street
Nanjing
PRC
COMPANY WEBSITES
www.genscript.com
www.genscriptprobio.com
www.legendbiotech.com
www.bestzyme.com
PLACE OF LISTING OF SHARES
The Stock Exchange of Hong Kong Limited
- Main Board
STOCK CODE
1548
STOCK NAME
GENSCRIPT BIO
Interim Report 2020 | 5 |
Financial Highlight
- Revenue of the Group for the six months ended June 30, 2020 was approximately US$166.4 million, representing an increase of 36.5% as compared with approximately US$121.9 million recorded for the same period of 2019, among which, the external revenue for non-cell therapy business was approximately US$143.3 million, representing an increase of 41.6% as compared with approximately US$101.2 million for the same period of 2019, and the revenue for cell therapy business was approximately US$23.1 million, representing an increase of 11.6% as compared with approximately US$20.7 million for the same period of 2019.
- Gross profit of the Group for the six months ended June 30, 2020 was approximately US$108.2 million, representing an increase of 37.1% as compared with approximately US$78.9 million recorded for the same period of 2019, among which, the gross profit of non-cell therapy business was approximately US$95.4 million, representing an increase of 48.8% as compared with approximately US$64.1 million for the same period of 2019, and the gross profit of cell therapy business was approximately US$23.1 million, representing an increase of 11.6% as compared with approximately US$20.7 million for the same period of 2019.
- Loss of the Group for the six months ended June 30, 2020 was approximately US$160.5 million, whilst loss of approximately US$33.3 million was recorded for the same period of 2019, among which, the profit of non-cell therapy business was approximately US$18.6 million, representing an increase of 151.4% as compared with approximately US$7.4 million for the same period of 2019, and the loss of cell therapy business was approximately US$179.1 million, whilst the loss of the cell therapy business was approximately US$40.7 million for the same period of 2019.
The adjusted net loss (excluding share based payment expenses, listing expenses, service fee for the issuance of Legend Series A Preference Shares (as defined below) and fair value loss of convertible redeemable preferred shares) was approximately US$67.8 million, whilst the adjusted net loss of approximately US$28.0 million was recorded for the same period in 2019, among which, the adjusted net profit of non-cell therapy business was approximately US$25.2 million, representing an increase of 110.0% as compared with approximately US$12.0 million for the same period of 2019, and the adjusted net loss of cell therapy business was approximately US$93.0 million, whilst the adjusted net loss of the cell therapy business was approximately US$40.0 million for the same period of 2019.
During the Reporting Period, the Group invested significantly into research and development activities as well as talent recruitment, and both of which are key drivers for a sustainable business growth in the long run. For the six months ended June 30, 2020, the Group's research and development expense was approximately US$115.5 million, representing an increase of 83.9% as compared with approximately US$62.8 million for the same period in 2019, in which the total investment in research and development was approximately US$101.6 million on cell therapy for the six months ended June 30, 2020, representing an increase of 88.5% as compared with approximately US$53.9 million for the same period of 2019.
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Financial Highlight
•
Notes:
1
Loss attributable to the shareholders of the Group for the six months ended June 30, 2020 was approximately US$113.1 million, whilst the loss attributable to the shareholders of the Group of approximately US$27.3 million was recorded for the same period of 2019.
For the six months ended June 30, 2020 | |||||||||
(Unaudited) | |||||||||
Non-cell | |||||||||
therapy | Cell therapy | Total | |||||||
US$'000 | US$'000 | US$'000 | |||||||
Net profit/(loss) | 18,595 | (179,104) | (160,509) | ||||||
Excluding: | Share based payment expenses, net of tax | 6,559 | 668 | 7,227 | |||||
Listing expenses | 24 | 1,439 | 1,463 | ||||||
Service fee for the issuance of Legend Series A Preference Shares | - | 4,014 | 4,014 | ||||||
Fair value loss of convertible redeemable preferred shares | - | 79,984 | 79,984 | ||||||
Adjusted net profit/(loss) | 25,178 | (92,999) | (67,821) | ||||||
2The figures for segment results in this report are prior to intra-group eliminations (except otherwise indicated), whereas the figures for segment results in the interim report for the six months ended June 30, 2019 of the Company dated September 23, 2019 (the "Previous Report") were after intra-group eliminations representing sales to external customers only (expected otherwise indicated). Certain comparable figures that were presented in the Previous Report have been adjusted in this report to conform to the current period's presentation accordingly.
Interim Report 2020 | 7 |
Management Discussion and Analysis
BUSINESS REVIEW
Revenue
For the six months ended June 30, 2020, the Group's overall revenue increased by 36.5% to approximately US$166.4 million (the same period in 2019: approximately US$121.9 million). Gross profit was approximately US$108.2 million, representing an increase of 37.1% from approximately US$78.9 million for the same period in 2019. Gross profit margin increased to 65.0% (the same period in 2019: 64.7%). The loss attributable to the shareholders of the Company (the "Shareholders") was approximately US$113.1 million, whilst the loss attributable to the Shareholders of approximately US$27.3 million was recorded for the same period of 2019.
During the Reporting Period, the external revenue of (i) life science services and products, (ii) biologics development services,
- industrial synthetic biology products, (iv) cell therapy, and (v) operation unit accounted for approximately 68.1%, 11.2%, 6.7%, 13.9%, and 0.1%, respectively, of the total revenue of the Group.
Results Analysis of the Four Business Segments
- Life Science Services and Products
During the Reporting Period, revenue of life science services and products amounted to approximately US$115.0 million, representing an increase of 39.9% (the same period in 2019: approximately US$82.2 million). The gross profit was approximately US$78.0 million, representing an increase of 49.1% as compared with approximately US$52.3 million for the same period in 2019. The gross profit margin maintained stable, with a slight increase from 63.6% for the same period last year to 67.8% this year. During the Reporting Period, the operating profit of life science services and products was approximately US$41.6 million.
The growth of revenue was mainly attributable to the (i) successful commercial operation that focused on COVID-19 related products such as protein and antibody, (ii) expanded capacity and productivity in gene synthesis and customized reagent services, (iii) the successful development of key accounts, and (iv) the improvement of online commercial platform and tools to attract new customers. The increase in operating profit was primarily attributable to- the significant revenue driven from COVID-19 related products and key customers with relatively higher profitability,
- the continuous improvement of operation efficiency in both commercial and management team, while partially offset by the increased investment in strategic research and development.
- Biologics Development Service
During the Reporting Period, revenue of biologics development services amounted to approximately US$19.0 million, representing an increase of 102.1% (the same period in 2019: approximately US$9.4 million). The gross profit was approximately US$4.7 million, representing an increase of 51.6% as compared with approximately US$3.1 million for the same period in 2019. The gross profit margin varied from 33.0% for the same period last year to 24.7% this year. During the Reporting Period, the operating loss of biologics development services was approximately US$2.5 million.
The rapid growth of revenue was mainly attributable to the (i) establishment of Good Manufacturing Practice ("GMP") capacity in both antibody development and plasmid and virus process, (ii) successful commercial operation in both the China and Asia-Pacific market, (iii) fast growing talent pool and introduction of senior management teams for sales and marketing teams, and (iv) enhancement of the capability and process to support the successful delivery of the ongoing projects. The operating loss was primarily attributable to the (i) lower gross profit due to significant fixed cost such as quality system and talent pool, etc. at early stage of business set up period, and (ii) significant investment in commercial and senior management team.
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Management Discussion and Analysis
-
Industrial Synthetic Biology Products
During the Reporting Period, revenue for industrial synthetic biology products decreased by 8.2% to approximately US$11.2 million (the same period in 2019: approximately US$12.2 million). External revenue for industrial synthetic biology products increased by 2.9% from the same period in 2019. The gross profit was approximately US$4.3 million, representing an increase of 16.2% as compared with approximately US$3.7 million for the same period in 2019. Gross profit margin increased from 30.3% for the same period last year to 38.4% this year. During the Reporting Period, the operating loss of industrial synthetic biology products was approximately US$0.2 million.
The growth of the revenue was mainly attributable to the (i) continuous strategic implementation of key accounts business development and significant breakthroughs in both overseas and domestic feed enzymes markets and grain processing business in China, providing customized service to strategic accounts in strain development, process development and new enzymes products development, and (ii) further optimization of the organization structure and significant improvement of business capability of commercial team. - Cell Therapy
During the Reporting Period, revenue of cell therapy increased by 11.6% to approximately US$23.1 million (the same period in 2019: approximately US$20.7 million). The gross profit was approximately US$23.1 million, representing an increase of 11.6% as compared with approximately US$20.7 million for the same period in 2019. Gross profit margin maintained at 100.0% this year as well. During the Reporting Period, the operating loss of cell therapy was approximately US$182.8 million.
The increase in both revenue and gross profit was primarily attributable to further recognition of contract revenue from the collaboration with Janssen on developing LCAR-B38M/JNJ-4528.
FINANCIAL REVIEW
For the six months ended June 30, | |||
2020 | 2019 | ||
(Unaudited) | (Unaudited) | ||
US$' 000 | US$' 000 | Change | |
Revenue | 166,394 | 121,878 | 36.5% |
Gross profit | 108,173 | 78,899 | 37.1% |
Net loss | (160,509) | (33,335) | 381.5% |
Loss attributable to the Shareholders | (113,092) | (27,346) | 313.6% |
Basic loss per share (US$) | (0.0601) | (0.0148) | 306.1% |
Diluted loss per share (US$) | (0.0601) | (0.0148) | 306.1% |
REVENUE
During the Reporting Period, the Group recorded revenue of approximately US$166.4 million, representing an increase of 36.5% from approximately US$121.9 million for the same period of 2019. This is mainly attributable (i) the strong growth in business of specially-functioned protein and antibody which meet market demands on key products related to COVID-19, and (ii) the continuing increase from life science services and products from major strategic customers and new competitive services and products.
Interim Report 2020 | 9 |
Management Discussion and Analysis
GROSS PROFIT
During the Reporting Period, the Group's gross profit increased by 37.1% to approximately US$108.2 million from approximately US$78.9 million for the same period of 2019. Gross profit margin varied from 64.7% for the same period last year to 65.0% this year. This is mainly attributable to the (i) strong growth in life-science and biologics development business,
- significant improvement on capacity utilization of materials and labor efficiency, (iii) increased revenue of relatively high gross margin products, especially for COVID-19 related products, and (iv) significant improvement of operational efficiency.
SELLING AND DISTRIBUTION EXPENSES
During the Reporting Period, the Group's selling and distribution expenses increased by 32.6% to approximately US$41.1 million from approximately US$31.0 million for the same period in 2019. This increase is mainly driven by
- increased investment into the commercial talent pool by recruiting more experienced personnel and improved incentive packages, and (ii) increased travelling and advertising expenses, primarily attributable to the global expansion of our business.
ADMINISTRATIVE EXPENSES
During the Reporting Period, the administrative expense increased by 38.9% to approximately US$36.4 million from approximately US$26.2 million for the same period in 2019. This is mainly attributable to (i) competitive compensation package for our employees including shared-based payment provided to recruit experienced talents for all business segments, and (ii) the reinforcement of some key functions such as information technology, supply chain and finance to build up capable and professional administrative team to support the Group's overall business expansion.
RESEARCH AND DEVELOPMENT EXPENSES
During the Reporting Period, the research and development expenses increased by 83.9% to approximately US$115.5 million from approximately US$62.8 million for the same period in 2019. This is mainly attributable to (i) the investment in COVID-19 related projects and other new challenging research and development projects, which significantly strengthened our competitiveness in the market and improved our production efficiency, (ii) the increase in clinical trial expenses and preclinical study costs, especially in cell therapy segment, and (iii) the increase in compensation package including shared-based payment for research and development personnel.
FAIR VALUE CHANGES OF CONVERTIBLE REDEEMABLE PREFERRED SHARES
Changes in the fair value of our convertible redeemable preference shares of Legend (the "Legend Series A Preference Shares") were recorded as fair value changes of convertible redeemable preferred shares. During the Reporting Period, the fair value changes of the Legend Series A Preference Shares recorded a loss of approximately US$80.0 million as compared with nil for the same period in 2019, primarily due to the revaluation of equity value of Legend based on its offering price. Upon the completion of the listing of Legend, all our Legend Series A Preference Shares were automatically converted into ordinary shares of Legend. The fair value of each of the Legend Series A Preference Shares is equivalent to the fair value of each of the ordinary shares of Legend on the conversion date, which is the public offering price. For details of the automatic conversion, please refer to the announcements of the Company dated March 31, 2020 and April 14, 2020.
INCOME TAX (EXPENSE)/CREDIT
During the Reporting Period, the income tax expense was approximately US$2.5 million in 2020 whilst the income tax credit was approximately US$3.3 million in 2019, mainly because of the increase in profits of the non-cell therapy business.
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Management Discussion and Analysis
NET LOSS
During the Reporting Period, net loss of the Group was approximately US$160.5 million, whilst the net loss for the same period of 2019 was approximately US$33.3 million.
SIGNIFICANT INVESTMENTS HELD
As at June 30, 2020, significant investments held by the Group are as follows:
As at June 30, As at December 31, | ||
2020 | 2019 | |
(Unaudited) | (Audited) | |
US$' 000 | US$' 000 | |
Financial assets at fair value through profit or loss | ||
- Current | 49,429 | 25,434 |
- Non-current | 5,568 | 4,667 |
Total | 54,997 | 30,101 |
The current part of financial assets at fair value through profit or loss represent investments in wealth management products issued by banks in China and Hong Kong.
The wealth management products which we purchased during the Reporting Period, including the CMBI Multi-Tranche Bond Fund, Goldman Sachs US$ Liquid Reserves Plus I Acc Shares, Supply Chain Finance Fund and structured deposits, were with floating annual interests ranging from 0.57% to 6.3% and with maturity dates between 1 day and 365 days. These products did not guarantee the return of principals upon maturity, and none of them was past due or impaired as of June 30, 2020, except those call option or forward exchange transactions. As of June 30, 2020, the Group has redeemed those wealth management products whose due date were arrived and has no intention to dispose of all the investments in the long-term.
As part of our treasury management, we have purchased wealth management products as an auxiliary means to improve utilization of our cash on hand on a short-term basis. We have made such purchases only when (i) we have surplus funds after we have fully considered the cash requirement of our operations for the year and allocated accordingly, and (ii) our management has carefully assessed the risks and benefits and decided to make such purchases (including the availability of certain wealth management products which have high liquidity and generate interest income meeting our standards).
All investments shall be made in low-risk, liquid and sound wealth management products and low risk trust products, such as products with agreed yield expectations and adequate safeguards, and products backed by highly liquid collaterals.
Any purchase and redemption of our investments in wealth management products shall be reviewed and approved by our vice president of finance.
During the Reporting Period, we only invested in wealth management products issued by major reputable banks in China and Hong Kong, and we preserved all our investment capital in these products and did not encounter any default by the issuing banks. We had not invested and are prohibited under our internal control policies, from directly investing in listed financial product, and our investments had not been pledged to secure our borrowings during the period ended June 30, 2020.
Interim Report 2020 | 11 |
Management Discussion and Analysis
Information in relation to the current part of financial assets at fair value through profit or loss as at June 30, 2020 are set out as follows:
Investment Cost | ||||||||||
Fair value as of | ||||||||||
Product type / | Original amount | June 30, 2020 | ||||||||
Banks | description | In RMB or US$ | In US$' 000 | In US$' 000 | Purchase date | Maturity date | Redemption date | |||
1 | China Merchants | Variable interest | RMB 124,390,000 | 17,570 | 17,695 | 01/08/2020 | On Call | N/A | ||
Bank | financial product | |||||||||
2 | Credit Suisse AG, | Premium Cash Plus | USD 10,000,000 | 10,000 | 9,966 | 02/12/2019 | On Call | Partially | ||
Hong Kong Branch | (Pure FRNs) USD | redeemed on | ||||||||
06/30/2020 | ||||||||||
3 | China Merchants | Variable interest | RMB 40,000,000 | 5,650 | 5,663 | 05/29/2020 | On Call | N/A | ||
Bank | financial product | |||||||||
4 | Citibank Hong Kong | USD 3 Year Notes | USD 5,075,000 | 5,075 | 5,075 | 03/13/2020 | 03/16/2023 | - | ||
Linked to the GAM | ||||||||||
Star Credit | ||||||||||
Opportunities Fund | ||||||||||
5 | CMB International | CMBI MULTI-TRANCHE | USD 5,000,000 | 5,000 | 5,063 | 02/03/2020 | On Call | N/A | ||
Capital Corporation | BOND FUND | |||||||||
Limited | ||||||||||
6 | China CITIC Bank | Variable interest | RMB 25,000,000 | 3,531 | 3,565 | 04/01/2020 | 07/01/2020 | 07/01/2020 | ||
financial product | ||||||||||
7 | Bank of | Variable interest | RMB 20,000,000 | 2,825 | 2,852 | 03/31/2020 | On Call | N/A | ||
Communications | financial product | |||||||||
8 | Citibank, N.A. | Forward Exchange | - | - | (46) | 03/19/2020 | 12/22/2020 | - | ||
Transaction | ||||||||||
9 | Bank of Ningbo | Write a Call Option | - | - | (404) | 02/21/2020 | 12/23/2020 | - | ||
Total: | 49,651 | 49,429 |
12 | GENSCRIPT BIOTECH CORPORATION |
Management Discussion and Analysis
Information in relation to the non-current part of financial assets at fair value through profit or loss as at June 30, 2020 are set out as follows:
Realised | Unrealised | ||||||||||
gain on | gain/(loss) | ||||||||||
Percentage | change in | on change | Dividends | ||||||||
Percentage | to the | fair value | in fair value | received | |||||||
Number of | of total share | Market | Group's | for the | for the | for the | |||||
shares/ | capital/units | value | total assets | period | period | period | |||||
Principal | units/ | owned by the | as at | as at | ended | ended | ended | ||||
business or | amount of | Group as at | Investment | June 30, | June 30, | June 30, | June 30, | June 30, | |||
Name of investee | investment | Nature of | investments | June 30, 2020 | Cost | 2020 | 2020 | 2020 | 2020 | 2020 | |
company/fund | scope | investment | held | % | US$' 000 | US$' 000 | % | US$' 000 | US$' 000 | US$' 000 | |
Healthcare Fund | Equity | Investment in | 486.43 | 0.28 | 500 | 500 | 0.03 | - | - | - | |
I Segregated | investment | fund/securities | |||||||||
Yuanming | |||||||||||
Prudence | |||||||||||
SPC - | |||||||||||
Portfolio | |||||||||||
Panacea Venture | Equity | Investment in | Not | 5.54 | 5,712 | 5,068 | 0.35 | - | (488) | - | |
Healthcare | investment | fund/securities | applicable | ||||||||
Fund I, L.P. | |||||||||||
Note: | Given the value of investments does not constitute a notifiable transaction of the Company pursuant to Chapter 14 of the Rules Governing the Listing of |
Securities on The Stock Exchange (the "Listing Rules"), as the applicable percentage ratios (as defined in Rule 14.07 of the Listing Rules), whether on a | |
standalone or aggregate basis, are less than 5.0% of the total assets of the Group as of June 30, 2020, the Company has not prepared an analysis on | |
their prospects. |
For the Reporting Period, we recorded the investment gain on the financial assets at fair value through profit or loss of approximately US$1,442,000 and a fair value loss at approximately US$736,000.
Save as disclosed above, the Group did not have any significant investments held during the Reporting Period.
Interim Report 2020 | 13 |
Management Discussion and Analysis
MATERIAL ACQUISITIONS AND DISPOSALS
On March 31, 2020 and April 16, 2020, the deemed disposals of the Company's equity interest in Legend were completed (the "Closing"). The Closing resulted in a reduction of the percentage shareholding of the Company in Legend and constitutes a deemed disposal of the Company's equity interests in Legend under Rule 14.29 of the Listing Rules. Please refer to the announcements dated March 31, 2020, April 14, 2020 and April 16, 2020 for details.
The spin-off by way of a separate listing of Legend on Nasdaq Global Market through the initial public offering of the ordinary shares of Legend in the form of American depositary shares was completed on June 5, 2020 (the "Offering"). The Offering resulted in a reduction of the percentage shareholding of the Company in Legend and constitutes a deemed disposal of the Company's equity interests in Legend under Rule 14.29 of the Listing Rules. Please refer to the announcements dated March 10, 2020, March 16, 2020, May 14, 2020, May 26, 2020, May 29, 2020, June 5, 2020 and June 7, 2020 for details.
Legend remains a non-wholly owned subsidiary of the Company and the financial results of Legend continues to be consolidated into the financial statements of the Group.
Save as disclosed above, the Group did not have any material acquisitions or disposals of subsidiaries and associated companies during the Reporting Period.
CONTINGENT LIABILITIES AND GUARANTEES
As at June 30, 2020, the Group did not have any contingent liabilities or guarantees.
CURRENT RATIO AND GEARING RATIO
As at June 30, 2020, the Group's current ratio (current assets to current liabilities) was approximately 3.8 (as at December 31, 2019: 2.5), and gearing ratio (total liabilities to total assets) was approximately 38.5% (as at December 31, 2019: 58.1%).
BANK LOANS
As at June 30, 2020, Nanjing GenScript Biotech Co., Ltd. ("GS China") borrowed short-terminterest-bearing loans from Citi Bank for a total amount of RMB57,820,000 (equivalent to approximately US$8,167,000) and from China Merchants Bank for a total amount of RMB100,000,000 (equivalent to approximately US$14,125,000) with a fixed annual interest rate at 3.4% and 3.5% respectively, which were secured by credit. GS China used such loans to purchase raw materials and replenish working capital.
As at June 30, 2020, Nanjing Bestzyme Bioengineering Co., Ltd. ("Nanjing Bestzyme") and Jiangsu Genscript Biotech Co., Ltd ("Jiangsu Jinsirui") borrowed short-terminterest-bearing loans from CITIC Bank for a total amount of RMB90,000,000 (equivalent to approximately US$12,713,000) with a fixed annual interest rate at 3.2%, which were secured by credit. Nanjing Bestzyme and Jiangsu Jinsirui used such loans to purchase raw material and replenish working capital.
14 | GENSCRIPT BIOTECH CORPORATION |
Management Discussion and Analysis
As at June 30, 2020, Genscript (Hong Kong) Limited ("GS HK") borrowed a short-terminterest-bearing loan from Citi Bank for a total amount of US$7,000,000 with a floating interest rate at the one-month LIBOR rate plus 0.5%, and from China Merchants Bank for a total amount of US$6,000,000 with a floating interest rate at the one-month LIBOR rate plus 1.5%, which were secured by credit. GS HK used such loan to purchase goods and replenish working capital.
As at June 30, 2020, Genscript Japan Inc. ("GS JP") borrowed a long-terminterest-bearing loan from Mizuho Bank for a total amount of JYP220,000,000 (equivalent to approximately US$2,045,000) with a floating interest rate at the TIBOR rate plus 0.25%, which were secured by the building and freehold land held by GS JP. GS JP used such loan to purchase building.
Save as above, the Group did not have any other outstanding, unpaid bank loans and/or other borrowings.
FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS
The Group plans to (i) expand the capacity for life science services and products and biologics development services with a total investment amount of approximately US$150.0 million to US$200.0 million in the next three years to meet the growing demand from our CRO and CDMO clients, (ii) invest in GMP qualified facilities and office and commerce system of Legend with a total investment amount of approximately US$200.0 million to US$300.0 million in the next three years to support the commercialization of cilta-cel and the development of Legend's new pipelines, and (iii) acquire or invest in the leading edge technology and/or intellectual properties to further strengthen and integrate our current technology platforms so as to support the long term growth of the Group.
Save as disclosed above, there was no specific plan of material investments or capital assets as of June 30, 2020.
FOREIGN EXCHANGE RISK
The Group mainly operates in the PRC and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the U.S. dollar. Foreign exchange risk arises from foreign currencies held in certain overseas subsidiaries. The Group seeks to limit its exposure to foreign currency risk by closely monitoring and minimizing its net foreign currency position. Since January 2019, the Group has engaged in a series of forward contracts to manage the Group's currency risk.
CASH FLOW AND FAIR VALUE INTEREST RATE RISK
Other than bank balances with variable interest rate and short-term deposits with fixed interest rates, the Group has financial products of approximately US$49.4 million related to fair value interest rate risk. The interest rates risk arising from bank loan is low as the interest rates are fixed for short-term period or even floating with relatively low rates to take advantage of the lower rates thus available.
Interim Report 2020 | 15 |
Management Discussion and Analysis
CREDIT RISK
The carrying amounts of cash and cash equivalents, trade and notes receivables, other receivables and other current financial assets are the Group's maximum exposure to credit risk in relation to its financial assets. The objective of the Group's measures to manage credit risk is to control potential exposure to recoverability problems.
In respect of trade and other receivables, individual credit evaluations are performed on all customers and counterparties. These evaluations focus on the counterparties' financial position, past history of payments, and take into account information specific to the counterparties as well as pertaining to the economic environment in which the counterparties operates. Monitoring procedures have been implemented to ensure that follow-up actions will be taken to recover overdue debts. Credit limits were granted to certain customers in consideration of their payment history and business performance. Prepayment agreements were sometimes entered into with certain customers from food companies, colleges, universities, research institutes and pharmaceutical and biotech companies in China, as well as occasionally with other customers in the United States, Europe and Singapore. In addition, the Group reviews the recoverable amount of each individual trade and other receivable balances by semi-year to ensure adequate impairment losses are made for irrecoverable amounts.
CHARGES ON GROUP ASSETS
As at June 30, 2020, the building and freehold land located in Tokyo, Japan of approximately JPY1.3 billion (equivalent to approximately US$12.1 million) was pledged by GS JP to secure a loan of JPY220.0 million (equivalent to approximately US$2.0 million).
As at June 30, 2020, bank balances of approximately US$2.9 million was pledged by GS China for notes payable of approximately US$2.9 million, and of approximately US$256,000 was pledged by Legend Biotech USA Incorporated for credit cards.
Save as disclosed above, as of June 30, 2020, the Group did not have any other charges over its assets.
WORKING CAPITAL AND FINANCIAL RESOURCES
As at June 30, 2020, the cash and cash equivalents of the Group amounted to approximately US$706.7 million (as at December 31, 2019: approximately US$252.4 million).
CAPITAL EXPENDITURE
During the Reporting Period, capital expenditure incurred in purchasing intangible assets, namely software, patents and license was approximately US$2.4 million, capital expenditure incurred in purchasing property, plant and equipment and construction in process was approximately US$58.1 million.
16 | GENSCRIPT BIOTECH CORPORATION |
Management Discussion and Analysis
EMPLOYEES AND REMUNERATION POLICIES
As of June 30, 2020, the Group had a total of 3,973 employees. The Group had entered into employment contracts covering positions, employment conditions and terms, salaries, employees' benefits, responsibility for breach of contractual obligations, and reason for termination with its employees. The remuneration package of the Group's employees includes basic salary, subsidies, and other employees' benefits, which are determined with reference to their experience, number of years with the Group, and other general factors.
During the Reporting Period, the Group's total expenses on the remuneration of employees was approximately US$91.0 million (excluding share-based payment of approximately US$7.5 million), representing 54.7% of the revenue of the Group. This significant increase in labor costs had been viewed by the Group as the necessary long term investment in our talents pool. This investment has demonstrated the Group's desires and resolutions to continue to strengthen its talent uplifting strategy. This talent uplifting strategy not only involves the recruitment of experienced professional and managerial personnel to fulfill the front line posts of research and development, commercial and production functions, but also systematically increases the overall salary and benefits packages to sustain the stability of the employees to drive for long term commitment and performance improvement as well.
On July 15, 2015, the Company adopted the pre-IPO share option scheme (the "Pre-IPO Share Option Scheme"). On December 7, 2015, the Company adopted a post-IPO share option scheme (the "Post-IPO Share Option Scheme"). On December 21, 2017, the Company approved and adopted the share option scheme of Legend (the "Subsidiary Share Option Scheme", together with the Pre-IPO Share Option Scheme and the Post-IPO Share Option Scheme, the "Share Option Schemes"). On March 22, 2019, the Company adopted the Restricted Share Award Scheme (the "RSA Scheme"). On May 26, 2020, the shareholders of Legend approved and adopted the restricted shares plan of Legend (the "2020 Restricted Shares Plan"). No further options have been granted under the Pre-IPO Share Option Scheme since the Company was listed on the Stock Exchange.
5,525,000 share options with an exercise price of HK$13.840 per share were granted under the Post-IPO Share Option Scheme to certain employees on April 29, 2020. Please refer to our announcement dated April 29, 2020 for details. Save as disclosed, no other options have been granted under the Post-IPO Share Option Scheme during the Reporting Period.
930,443 restricted shares were granted under the RSA Scheme to certain employees on April 29, 2020. Please refer to our announcement dated April 29, 2020 for details. Save as disclosed, no other shares have been granted under the RSA Scheme during the Reporting Period.
During the Reporting Period, 90,000 share options were granted under the Subsidiary Share Option Scheme. Save as disclosed, no other options have been granted under the Subsidiary Share Option Scheme during the Reporting Period.
Interim Report 2020 | 17 |
Management Discussion and Analysis
52,173 restricted share units were granted under the 2020 Restricted Shares Plan on June 5, 2020. Save as disclosed, no other shares have been granted under the 2020 Restricted Shares Plan during the Reporting Period.
The number of employees of the Group categorized by function as of June 30, 2020 is set forth as follows:
Number of | Percentage | |
Function | employees | of Total |
Production | 1,295 | 32.6% |
Sales and marketing | 382 | 9.6% |
Administration | 555 | 14.0% |
Research and development | 1,127 | 28.4% |
Management | 614 | 15.4% |
Total | 3,973 | 100.0% |
The Group's remuneration policy and structure for remuneration of the Directors and senior management of the Group are based on the Group's operating results, individual performance and comparable market statistics and are reviewed by the remuneration committee of the Company (the "Remuneration Committee") periodically.
The remuneration of the non-executive Directors is recommended by the Remuneration Committee and is decided by the Board, while the remuneration of the executive Directors and senior management members is determined by the Remuneration Committee, having regard to their merit, qualifications, and competence, the Group's operating results and comparable market statistics.
PROSPECTS
In the first half of 2020, we witnessed the novel coronavirus (COVID-19) pandemic causing profound changes in people's daily lives, international relationships and the global economy. Some of these changes may be temporary, but many will be long lasting.
Many of our customers have been negatively impacted by the COVID-19 during the first half of 2020. The demand for life science services and products from academic and research institutions grew at a slower pace due to campus shutdowns and logistics disruptions globally. International customer demand for industrial enzyme and bio-synthesized products also took a pause given the uncertain global economic environment. Nevertheless, we believe these negative impacts are temporary and the spread of the COVID-19 will eventually be contained Customer demand from the impacted areas is starting to increase.
More importantly, it is clear that the need for the new generation of medicines and diagnostics, as well as the tools and services that enable the pharmaceutical industry to research and produce such medicines is strong and ever growing.
18 | GENSCRIPT BIOTECH CORPORATION |
Management Discussion and Analysis
GenScript is well positioned to serve this need. Our life science CRO platform has been providing high grade raw materials and kits used for detection of the COVID-19. Our biologics CDMO platform is enabling customers in the biopharma industry to develop vaccines and antibody drugs against the COVID-19. Not only did these projects help accelerate the Group's overall revenue and profit growth during the Reporting Period, but they were also likely to lead to sustained revenue stream in the coming years. Our research and development, production and customer relationship have stood the test of the pandemic. These will be the foundation for future growth.
On the front of cell therapy, we were able to push forward clinical trials and generate best-in-class data against the pandemic backdrop. We also successfully raised over US$600 million funding for Legend from the outside investors. Legend now has enough cash to sustain its operations throughout 2020 and 2021. For our lead product LCARB38M/JNJ-4528, Janssen remains on track to initiate a Biologics License Application (BLA) to the U.S. Food and Drug Administration (FDA) by the end of 2020 and expects that a Marketing Authorization Application (MAA) will be submitted to the European Medicines Agency (EMA) in early 2021. We also expect to submit BLAs in China and Japan for this product in 2021.
We believe the global regulatory framework is still much favorable for companies that pushing the boundaries of science and technology to provide better healthcare, from which Legend and many of our life science CRO and biologics CDMO customers will continue to benefit. Together with an aging global population, we believe the demand for life science research and preclinical and clinical stage development services will continue to rise in the foreseeable future.
The Board is confident about the future development of the Group and believes that we can add greater value to the Shareholders when the above strategies can be successfully implemented.
Interim Report 2020 | 19 |
Other Information
DIRECTORS' INTERESTS IN COMPETING BUSINESS
During the six months ended June 30, 2020, neither the Directors nor any of their close associates had any interests in any business which competed or was likely to compete, either directly or indirectly, with the business of the Group.
DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES, AND DEBENTURES
As at June 30, 2020, the interests and short positions of the Directors and chief executive of the Company in the shares of the Company (the "Shares"), underlying Shares, and debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the "SFO")), which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have taken under such provisions of the SFO), or were required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein, or were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") contained in Appendix 10 to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Stock Exchange") (the "Listing Rules"), are set out as follows:
Long positions in the ordinary shares and underlying Shares of the Company as at June 30, 2020
Number of Shares/ | Approximate | ||
Name of Director and | underlying Shares | Percentage of | |
Chief Executive | Capacity/Nature of interest | held/interested | Shareholding* |
(%) | |||
Directors | |||
Zhang Fangliang | Interest in controlled corporation (Note 1), | 943,408,581 | 49.19 |
parties acting in concert (Note 2) and | |||
founder of a discretionary trust (Note 7) | |||
Wang Luquan | Interest in controlled corporation (Note 3) | 943,408,581 | 49.19 |
and parties acting in concert (Note 2) | |||
Wang Ye | Interest in controlled corporation (Note 4), | 943,408,581 | 49.19 |
parties acting in concert (Note 2), | |||
beneficial owner (Note 5) and | |||
founder of a discretionary trust (Note 8) | |||
Meng Jiange | Beneficial Owner (Note 6) | 2,705,037 | 0.14 |
Pan Yuexin | Beneficial Owner (Note 9) | 400,000 | 0.02 |
Guo Hongxin | Beneficial Owner (Note 10) | 400,000 | 0.02 |
Dai Zumian | Beneficial Owner (Note 11) | 400,000 | 0.02 |
Chief Executive | |||
Zhenyu (Patrick) Liu (Appointed as | Beneficial Owner (Note 12) | 6,548,400 | 0.34 |
- chief executive officer with
- effect from August 2, 2020)
- The percentage has been calculated based on 1,917,922,786 Shares in issue as at June 30, 2020.
20 | GENSCRIPT BIOTECH CORPORATION |
Other Information
Notes:
- As of June 30, 2020, Zhang Fangliang held approximately 28.54% of the issued share capital of Genscript Corporation ("GS Corp") and was deemed, or taken to be interested in, all the Shares held by GS Corp for the purpose of the SFO.
- On August 14, 2008, Zhang Fangliang, Wang Luquan, and Wang Ye entered into the GS Corp Shareholder Voting Agreement, whereby Zhang Fangliang, Wang Luquan, and Wang Ye agreed to vote unanimously in the shareholder meetings of GS Corp and, contemporaneously, proxies were conferred by Wang Luquan and Wang Ye to Zhang Fangliang authorising Zhang Fangliang to vote and exercise all voting and related rights with respect to the shares that each of Wang Luquan and Wang Ye beneficially owned in GS Corp, which held 875,366,235 Shares as of June 30, 2020. On May 29, 2015, Wu Yongmei signed a proxy agreement whereby she conferred all her voting and related rights in relation to all the shares that she owned in GS Corp, i.e. 108,625,000 shares of GS Corp to Zhang Fangliang.
- As of June 30, 2020, Wang Luquan held approximately 22.76% in the issued share capital of GS Corp. Pursuant to the GS Corp Shareholder Voting Agreement and for the purpose of the SFO, Wang Luquan was deemed, or taken to be interested in, all the Shares held by GS Corp.
- As of June 30, 2020, Wang Ye held approximately 5.89% in the issued share capital of GS Corp. Pursuant to the GS Corp Shareholder Voting Agreement and for the purpose of the SFO, Wang Ye was deemed, or taken to be interested in, all the Shares held by GS Corp.
- Wang Ye held 68,016,194 underlying Shares under the options conditionally granted to her under the Pre-IPO Share Option Scheme.
- Meng Jiange held 2,705,037 underlying Shares under the options conditionally granted to him under the Pre-IPO Share Option Scheme.
- On October 12, 2017, Zhang Fangliang set up 2017 Fang Liang Zhang Trust (the "Zhang Trust"), an irrevocable discretionary family trust, with his three children and their respective living issue as beneficiaries. Jin Weihong, the spouse of Zhang Fangliang, is the trustee of the Zhang Trust. The Zhang Trust (through its trustee), held approximately 12.60% of the entire issued share capital of GS Corp and was deemed, or taken to be interested in, all the Shares held by GS Corp for the purpose of the SFO.
- On October 5, 2017, Wang Ye set up 2017 Wang Ye Family Trust (the "Wang Trust"), an irrevocable discretionary family trust, with her spouse, her son and his living issue as beneficiaries. Hu Zhiyong, the spouse of Wang Ye, is the trustee of the Wang Trust. The Wang Trust (through its trustee) held approximately 6.32% of the entire issued share capital of GS Corp and was deemed, or taken to be interested in, all the Shares held by GS Corp for the purpose of the SFO.
- Pan Yuexin held 400,000 underlying Shares under the options granted to him under the Post-IPO Share Option Scheme.
- Guo Hongxin held 400,000 underlying Shares under the options granted to him under the Post-IPO Share Option Scheme.
- Dai Zumian held 400,000 underlying Shares under the options granted to him under the Post-IPO Share Option Scheme.
- Zhenyu (Patrick) Liu held 1,537,650 underlying Shares and 5,000,000 underlying Shares under the options granted to him under the Pre-IPO Share Option Scheme and Post-IPO Share Option Scheme, respectively, and held 10,750 underlying Shares under the RSA under the RSA Scheme.
Save as disclosed above, as at June 30, 2020, none of the Directors or chief executive of the Company had any interests or short positions in the shares or underlying Shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) that (i) was recorded in the register required to be kept pursuant to Section 352 of the SFO, or as otherwise (ii) was required to be notified to the Company and the Stock Exchange pursuant to the Model Code.
Interim Report 2020 | 21 |
Other Information
SUBSTANTIAL SHAREHOLDERS' INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES
As at June 30, 2020, within the knowledge of the Directors, the following persons (other than the Directors or chief executive of the Company) had an interest or a short position in the Shares or underlying Shares, which would be required to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or as recorded in the register required to be kept pursuant to Section 336 of the SFO:
Long positions in the ordinary shares of the Company as at June 30, 2020
Number of Shares/ | Approximate | ||
underlying Shares | Percentage of | ||
Name | Capacity/Nature of interest | held/interested | Shareholding* |
(%) | |||
GS Corp (Note 1)
Jin Weihong (Note 2) Hu Zhiyong (Note 3)
Beneficial Owner | 875,366,235 | 45.64 | |
Interest in controlled corporation, | 943,408,581 | 49.19 | |
parties acting in concert and trustee | |||
Interest in controlled corporation, | 943,408,581 | 49.19 | |
parties acting in concert and trustee |
-
The percentage has been calculated based on 1,917,922,786 Shares in issue as at June 30, 2020.
Notes:
- As of June 30, 2020, GS Corp is a company incorporated in the State of Delaware in the United States and owned as to approximately 28.54%, approximately 12.60%, approximately 22.76%, approximately 10.78%, approximately 0.78%, approximately 7.17%, approximately 3.93%, approximately 5.89%, approximately 6.32%, approximately 1.05% and approximately 0.18% by Zhang Fangliang, the Zhang Trust, Wang Luquan, Wu Yongmei, the Wu 2017 Trust (Note 4), the Wu 2018 Trust (Note 4), the Wu 2019 Trust (Note 4), Wang Ye, the Wang Trust, Mu Yingjun and Charity B, respectively.
- On October 12, 2017, Zhang Fangliang set up the Zhang Trust, an irrevocable discretionary family trust, with his three children and their respective living issue as beneficiaries. Jin Weihong, the spouse of Zhang Fangliang, is the trustee of the Zhang Trust. Jin Weihong, as the trustee of the Zhang Trust, held approximately 12.60% of the entire issued share capital of GS Corp and was deemed, or taken to be interested in, all the Shares held by GS Corp for the purpose of the SFO.
- On October 5, 2017, Wang Ye set up the Wang Trust, an irrevocable discretionary family trust, with her spouse, her son and his living issue as beneficiaries. Hu Zhiyong, the spouse of Wang Ye, is the trustee of the Wang Trust. Hu Zhiyong, as the trustee of the Wang Trust, held approximately 6.32% of the entire issued share capital of GS Corp and was deemed, or taken to be interested in, all the Shares held by GS Corp for the purpose of the SFO.
- On December 17, 2017, Wu Yongmei set up 2017 Wu Yongmei Trust (the "Wu 2017 Trust"), an irrevocable family trust, with her two children and their respective living issue as beneficiaries. Wu Yongmei and her two children, are the trustees of the Wu 2017 Trust. On October 29, 2018, Wu Yongmei set up 2018 Wu Yongmei Trust (the "Wu 2018 Trust"), an irrevocable family trust, with her two children and their respective living issue as beneficiaries. Wu Yongmei is the trustee of the Wu 2018 Trust. On October 31, 2019, Wu Yongmei set up Yongmei Wu 2019 Trust (the "Wu 2019 Trust"). Wu Yongmei is the initial trustee of the Wu 2019 Trust.
22 | GENSCRIPT BIOTECH CORPORATION |
Other Information
Save as disclosed above, as at June 30, 2020, the Directors were not aware of any other person (other than the Directors or chief executive of the Company) who had interests or short positions in the Shares or underlying Shares, which would be required to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO as recorded in the register required to be kept pursuant to Section 336 of the SFO.
SHARE OPTION SCHEMES
As disclosed above, the Company has adopted the Pre-IPO Share Option Scheme, Post-IPO Share Option Scheme and Subsidiary Share Option Scheme. The purpose of the Share Option Schemes is to enable us to grant options to selected participants as incentives or rewards for their contributions. The Directors consider the Share Option Schemes, with its broad basis of participation, will enable the Company to reward its employees, Directors and other selected participants for their contributions.
- Pre-IPOShare Option Scheme
The Company adopted the Pre-IPO Scheme by resolutions of the then sole shareholder of the Company on July 15, 2015. The Pre-IPO Share Option Scheme is not subject to the provision of Chapter 17 of the Listing Rules as the Pre-IPO Share Option Scheme does not involve the grant of options by the Company to subscribe for Shares once the Company is listed on the Stock Exchange. No further options shall be granted under the Pre-IPO Share Option Scheme after the listing.
Interim Report 2020 | 23 |
CORPORATION BIOTECH GENSCRIPT 24
Set out below are details of the outstanding options under the Pre-IPO Share Option Scheme:
Number of share options | ||||||||||
Cancelled during | Exercised during | |||||||||
Category/ | Exercise Price | Outstanding as at | Granted during the | the Reporting | Lapsed during the | the Reporting | Outstanding as at | |||
Name of Grantee | Date of Grant | Vesting Period | Exercise Period | per Share | January 1, 2020 | Reporting Period | Period | Reporting Period | Period(1) | June 30, 2020 |
US$ | ||||||||||
Directors of the Company | ||||||||||
Wang Ye | May 22, 2012 | December 31, 2012 - | December 31, 2012 - | 0.103 | 24,618,093 | - | - | - | 24,618,093 | - |
July 31, 2020 | July 31, 2020 | |||||||||
December 31, 2013 - | ||||||||||
July 31, 2020 | ||||||||||
December 31, 2014 - | ||||||||||
July 31, 2020 | ||||||||||
March 20, 2014 | December 31, 2014 - | December 31, 2014 - | 0.062 | 68,016,194 | - | - | - | - | 68,016,194 | |
July 31, 2025 | July 31, 2025 | |||||||||
December 31, 2015 - | ||||||||||
July 31, 2025 | ||||||||||
December 31, 2016 - | ||||||||||
July 31, 2025 | ||||||||||
Meng Jiange | February 20, 2010 | April 1, 2011 - | April 1, 2011 - | 0.077 | 295,320 | - | - | - | - | 295,320 |
December 31, 2020 | December 31, 2020 | |||||||||
April 1, 2012 - | ||||||||||
December 31, 2020 |
April 1, 2013 -
December 31, 2020
April 1, 2014 -
December 31, 2020
April 1, 2015 -
December 31, 2020
Information Other
2020 Report Interim
Number of share options | ||||||||||
Cancelled during | Exercised during | |||||||||
Category/ | Exercise Price | Outstanding as at | Granted during the | the Reporting | Lapsed during the | the Reporting | Outstanding as at | |||
Name of Grantee | Date of Grant | Vesting Period | Exercise Period | per Share | January 1, 2020 | Reporting Period | Period | Reporting Period | Period(1) | June 30, 2020 |
US$ | ||||||||||
May 1, 2013 | May 1, 2016 - | May 1, 2016 - | 0.103 | 466,397 | - | - | - | - | 466,397 | |
December 31, 2020 | December 31, 2020 | |||||||||
May 1, 2017 - | ||||||||||
December 31, 2020 | ||||||||||
May 1, 2018 - | ||||||||||
December 31, 2020 | ||||||||||
May 1, 2019 - | ||||||||||
December 31, 2020 | ||||||||||
May 1, 2020 - | ||||||||||
December 31, 2020 | ||||||||||
January 30, 2015 | January 30, 2016 - | January 30, 2016 - | 0.077 | 1,943,320 | - | - | - | - | 1,943,320 | |
July 31, 2025 | July 31, 2025 | |||||||||
January 30, 2017 - | ||||||||||
July 31, 2025 | ||||||||||
January 30, 2018 - | ||||||||||
July 31, 2025 | ||||||||||
January 30, 2019 - | ||||||||||
July 31, 2025 | ||||||||||
January 30, 2020 - | ||||||||||
July 31, 2025 |
Information Other
25
CORPORATION BIOTECH GENSCRIPT 26
Number of share options | ||||||||||
Cancelled during | Exercised during | |||||||||
Category/ | Exercise Price | Outstanding as at | Granted during the | the Reporting | Lapsed during the | the Reporting | Outstanding as at | |||
Name of Grantee | Date of Grant | Vesting Period | Exercise Period | per Share | January 1, 2020 | Reporting Period | Period | Reporting Period | Period(1) | June 30, 2020 |
US$ | ||||||||||
Chief executive of the Company | ||||||||||
Zhenyu (Patrick) Liu | March 28, 2014 | December 31, 2014 - | December 31, 2014 - | 0.077 | 1,537,650 | - | - | - | - | 1,537,650 |
(was appointed | December 31, 2020 | December 31, 2020 | ||||||||
as chief executive | December 31, 2015 - | |||||||||
officer with effect | December 31, 2020 | |||||||||
from August 2, | December 31, 2016 - | |||||||||
2020) | December 31, 2020 | |||||||||
December 31, 2017 - | ||||||||||
December 31, 2020 | ||||||||||
December 31, 2018 - | ||||||||||
December 31, 2020 | ||||||||||
Other employees | ||||||||||
Employees | October 17, 2005 - | October 17, 2008 - | October 17, 2008 - | 0.003-0.103 | 46,184,634 | - | - | - | 13,004,943 | 33,179,691 |
March 30, 2015 | December 31, 2025 | December 31, 2025 | ||||||||
143,061,608 | - | - | - | 37,623,036 | 105,438,572 | |||||
Notes:
- The weighted average closing price immediately before the dates on which the options were exercised was HK$15.59, calculated based on the closing price per Share immediately before the date of exercise as adjusted due to the adjustment made to the historical closing price of the Shares by the Stock Exchange as a result of the declaration of the Special Dividend (as defined below) (the "Adjustment").
Information Other
- Please refer to Appendix V "Statutory and General Information" of the Prospectus and note 18 to the financial statements in this Interim Report.
2020 Report Interim
- Post-IPOShare Option Scheme
The Company approved and adopted the Post-IPO Share Option Scheme by written resolutions of its then sole shareholder on December 7,2015. The Post-IPO Share Option Scheme is subject to the requirements under Chapter 17 of the Listing Rules. Options to subscribe for 97,783,137 shares had been granted (of which 8,638,334 options had lapsed) under the Post-IPO Share Option Scheme from the date of its adoption to June 30, 2020.
Set out below are details of the outstanding options under the Post-IPO Share Option Scheme:
Number of share options | ||||||||||||
Closing Price | ||||||||||||
Per Share | Outstanding | Granted | Cancelled | Lapsed | Exercised | Outstanding | ||||||
immediately | as at | during the | during the | during the | during the | as at | ||||||
Category/ | Exercise Price | before the | January 1, | Reporting | Reporting | Reporting | Reporting | June 30, | ||||
Name of Grantee | Date of Grant | Vesting Period | Exercise Period | per Share | date of grant | 2020 | Period | Period | Period | Period(1) | 2020 | |
HK$ | HK$ | |||||||||||
Directors of the Group | ||||||||||||
Pan Yuexin | November 29, 2018 | November 29, 2018 - | November 29, 2018 - | 14.04 | 14.32 | 400,000 | - | - | - | - | 400,000 | |
November 28, 2023 | November 28, 2023 | |||||||||||
November 29, 2019 - | ||||||||||||
November 28, 2023 | ||||||||||||
November 29, 2020 - | ||||||||||||
November 28, 2023 | ||||||||||||
November 29, 2021 - | ||||||||||||
November 28, 2023 | ||||||||||||
November 29, 2022 - | ||||||||||||
November 28, 2023 | ||||||||||||
Guo Hongxin | November 29, 2018 | November 29, 2018 - | November 29, 2018 - | 14.04 | 14.32 | 400,000 | - | - | - | - | 400,000 | |
November 28, 2023 | November 28, 2023 | |||||||||||
November 29, 2019 - | ||||||||||||
November 28, 2023 | ||||||||||||
November 29, 2020 - | ||||||||||||
November 28, 2023 | ||||||||||||
November 29, 2021 - | ||||||||||||
November 28, 2023 | ||||||||||||
November 29, 2022 - | ||||||||||||
November 28, 2023 |
Information Other
27
CORPORATION BIOTECH GENSCRIPT 28
Number of share options | |||||||||||||
Closing Price | |||||||||||||
Per Share | Outstanding | Granted | Cancelled | Lapsed | Exercised | Outstanding | |||||||
immediately | as at | during the | during the | during the | during the | as at | |||||||
Category/ | Exercise Price | before the | January 1, | Reporting | Reporting | Reporting | Reporting | June 30, | |||||
Name of Grantee | Date of Grant | Vesting Period | Exercise Period | per Share | date of grant | 2020 | Period | Period | Period | Period(1) | 2020 | ||
HK$ | HK$ | ||||||||||||
Dai Zumian | November 29, 2018 | November 29, 2018 - | November 29, 2018 - | 14.04 | 14.32 | 400,000 | - | - | - | - | 400,000 | ||
November 28, 2023 | November 28, 2023 | ||||||||||||
November 29, 2019 - | |||||||||||||
November 28, 2023 | |||||||||||||
November 29, 2020 - | |||||||||||||
November 28, 2023 | |||||||||||||
November 29, 2021 - | |||||||||||||
November 28, 2023 | |||||||||||||
November 29, 2022 - | |||||||||||||
November 28, 2023 | |||||||||||||
Chief executive of the Company | |||||||||||||
Zhenyu (Patrick) | June 22, 2016 | June 22, 2019 - | June 22, 2019 - | 1.2040 | 1.210 | 5,000,000 | - | - | - | - | 5,000,000 | ||
Liu (was appointed | June 21, 2026 | June 21, 2026 | |||||||||||
as chief executive | June 22, 2020 - | ||||||||||||
officer with effect | June 21, 2026 | ||||||||||||
from August 2, | June 22, 2021 - | ||||||||||||
2020) | June 21, 2026 | ||||||||||||
June 22, 2022 - | |||||||||||||
June 21, 2026 | |||||||||||||
June 22, 2023 - | |||||||||||||
June 21, 2026 |
Information Other
2020 Report Interim
Number of share options | |||||||||||||
Closing Price | |||||||||||||
Per Share | Outstanding | Granted | Cancelled | Lapsed | Exercised | Outstanding | |||||||
immediately | as at | during the | during the | during the | during the | as at | |||||||
Category/ | Exercise Price | before the | January 1, | Reporting | Reporting | Reporting | Reporting | June 30, | |||||
Name of Grantee | Date of Grant | Vesting Period | Exercise Period | per Share | date of grant | 2020 | Period | Period | Period | Period(1) | 2020 | ||
HK$ | HK$ | ||||||||||||
Other employees | |||||||||||||
June 22, 2016 | June 22, 2016 - | June 22, 2016 - | 1.2040 | 1.210 | 3,315,637 | - | - | - | - | 3,315,637 | |||
June 21, 2026 | June 21, 2026 | ||||||||||||
September 23, 2016 | September 23, 2017 - | September 23, 2017 - | 2.406 | 2.300 | 10,679,000 | - | - | - | 805,000 | 9,874,000 | |||
September 22, 2026 | September 22, 2026 | ||||||||||||
April 25, 2017 | April 25, 2019 - | April 25, 2019 - | 3.512 | 3.450 | 24,002,500 | - | - | 382,500 | 808,000 | 22,812,000 | |||
April 24, 2027 | April 24, 2027 | ||||||||||||
October 11, 2017 | July 25, 2018 - | July 25, 2018 - | 8.330 | 8.070 | 11,175,000 | - | - | 725,000 | 195,100 | 10,254,900 | |||
October 10, 2027 | October 10, 2027 | ||||||||||||
November 20, 2017 | December 31, 2019 - | December 31, 2019 - | 9.350 | 8.910 | 8,385,000 | - | - | 255,000 | 50,000 | 8,080,000 | |||
November 19, 2027 | November 19, 2027 | ||||||||||||
May 4, 2018 | January 1, 2019 to | January 1, 2019 to | 26.46 | 26.65 | 9,400,000 | - | - | 333,334 | - | 9,066,666 | |||
May 3, 2028 | May 3, 2028 | ||||||||||||
November 29, 2018 | November 29, 2019 - | November 29, 2019 - | 14.040 | 14.32 | 800,000 | - | - | - | 65,000 | 735,000 | |||
November 28, 2028 | November 28, 2028 | ||||||||||||
July 19, 2019 | July 19, 2020 - | July 19, 2020 - | 18.3 | 17.86 | 4,515,000 | - | - | 470,000 | - | 4,045,000 | |||
July 18, 2029 | July 18, 2029 | ||||||||||||
November 29, 2019 | November 29, 2020 - | November 29, 2020 - | 19.132 | 19.54 | 5,885,000 | - | - | 550,000 | - | 5,335,000 | |||
November 28, 2029 | November 28, 2029 | ||||||||||||
April 29, 2020 | April 29, 2021- | April 29, 2021- | 13.840 | 13.698(3) | - | 5,525,000 | - | - | - | 5,525,000 | |||
April 28, 2030 | April 28, 2030 | ||||||||||||
84,357,137 | 5,525,000 | - | 2,715,834 | 1,923,100 | 85,243,203 | ||||||||
Notes:
- The weighted average closing price immediately before the dates on which the options were exercised was HK$16.81, calculated based on the closing price per Share immediately before the date of exercise as adjusted due to the Adjustment.
- For further details of the Post-IPO Share Option Scheme, please refer to Appendix V "Statutory and General Information" of the Prospectus and note 18 to the financial statements in this Interim Report.
- The closing price per Share immediately before the date of grant has been adjusted due to the Adjustment.
Information Other
29
CORPORATION BIOTECH GENSCRIPT 30
- Subsidiary Share Option Scheme
The Company approved and adopted the Subsidiary Share Option Scheme on December 21, 2017. The Subsidiary Share Option Scheme is subject to the requirements under Chapter 17 of the Listing Rules.
Options to subscribe for 19,937,000 shares of Legend had been granted (of which 1,834,000 options had lapsed) under the Subsidiary Share Option Scheme from the date of its adoption to June 30, 2020.
Set out below are details of the outstanding options under the Subsidiary Share Option Scheme:
Number of share options | |||||||||||
Outstanding | Cancelled | Exercised | |||||||||
as at | Granted during | during the | Lapsed during | during the | Outstanding | ||||||
Category/ | Exercise Price | January 1, | the Reporting | Reporting | the Reporting | Reporting | as at June 30, | ||||
Name of Grantee | Date of Grant | Vesting Period | Exercise Period | per Share | 2020 | Period | Period | Period | Period | 2020 | |
US$ | |||||||||||
Senior management of the Group | |||||||||||
Xu Yuan (resigned with effect from | August 30, 2018 | July 1, 2019 - | July 1, 2019 - | 1.0 | 4,400,000 | - | - | - | - | 4,400,000 | |
August 2, 2020) | August 29, 2028 | August 29, 2028 | |||||||||
July 1, 2020 - | |||||||||||
August 29, 2028 | |||||||||||
July 1, 2021 - | |||||||||||
August 29, 2028 | |||||||||||
July 1, 2022 - | |||||||||||
August 29, 2028 | |||||||||||
July 1, 2023 - | |||||||||||
August 29, 2028 | |||||||||||
Other Employees | |||||||||||
December 26, 2017 | December 25, 2019 - | December 25, 2019 - | 0.5 | 6,347,000 | - | - | - | - | 6,347,000 | ||
December 25, 2027 | December 25, 2027 | ||||||||||
August 30, 2018 | January 1, 2019 - | January 1, 2019 - | 1.0 | 2,883,000 | - | - | - | - | 2,883,000 | ||
August 29, 2028 | August 29, 2028 | ||||||||||
December 31, 2018 | December 31, 2019 - | December 31, 2019 - | 1.0 | 636,000 | - | - | - | - | 636,000 | ||
December 30, 2028 | December 30, 2028 | ||||||||||
January 14, 2019 | December 31, 2019 - | December 31, 2019 - | 1.0 | 10,000 | - | - | - | - | 10,000 | ||
December 30, 2028 | December 30, 2028 | ||||||||||
Information Other
Number of share options | ||||||||||||
Outstanding | Cancelled | Exercised | ||||||||||
as at | Granted during | during the | Lapsed during | during the | Outstanding | |||||||
Category/ | Exercise Price | January 1, | the Reporting | Reporting | the Reporting | Reporting | as at June 30, | |||||
Name of Grantee | Date of Grant | Vesting Period | Exercise Period | per Share | 2020 | Period | Period | Period | Period | 2020 | ||
US$ | ||||||||||||
January 28, 2019 | December 31, 2019 - | December 31, 2019 - | 1.0 | 10,000 | - | - | - | - | 10,000 | |||
December 30, 2028 | December 30, 2028 | |||||||||||
July 2, 2019 | July 2, 2020 - | July 2, 2020 - | 1.5 | 2,223,000 | - | - | - | - | 2,223,000 | |||
July 1, 2029 | July 1, 2029 | |||||||||||
July 8, 2019 | July 2, 2020- | July 2, 2020 - | 1.5 | 2,000 | - | - | - | - | 2,000 | |||
July 1, 2029 | July 1, 2029 | |||||||||||
July 22, 2019 | July 2, 2020 - | July 2, 2020 - | 1.5 | 1,000,000 | - | - | - | - | 1,000,000 | |||
July 1, 2029 | July 1, 2029 | |||||||||||
November 29, 2019 | November 29, 2020 - | November 29, 2020 - | 11.5 | 472,000 | - | - | - | - | 472,000 | |||
November 28, 2029 | November 28, 2029 | |||||||||||
December 9, 2019 | November 29, 2020 - | November 29, 2020 - | 11.5 | 30,000 | - | - | - | - | 30,000 | |||
November 28, 2029 | November 28, 2029 | |||||||||||
June 5, 2020 | June 5, 2021- | June 5, 2021- | 11.5 | - | 90,000 | - | - | - | 90,000 | |||
June 5, 2030 | June 5, 2030 | |||||||||||
18,013,000 | 90,000 | - | - | - | 18,103,000 | |||||||
Apart from the movements as stated above, no options were granted, exercised, lapsed or cancelled under the Subsidiary Share Option Scheme during the Reporting Period ended June 30, 2020.
2020 Report Interim
Information Other
31
Other Information
DIRECTORS' RIGHTS TO ACQUIRE SHARES OR DEBENTURES
Save as disclosed in the section headed "Share Option Schemes", no rights to acquire benefits by means of the acquisition of Shares in or debentures of the Company were granted to any Director or their respective spouses or children under 18 years of age, nor were any such rights exercised by them, nor was the Company or any of its subsidiaries a party to any arrangement to enable the Directors, or their respective spouses or children under 18 years of age, to acquire such rights in any other body corporate at any time during the Reporting Period.
RESTRICTED SHARE AWARD SCHEME
RSA Scheme
The Company adopted its Restricted Share Award Scheme (the "RSA Scheme") on March 22, 2019 (the "Adoption Date") to, among other things, recognize the contributions by any Director or employee of the Company or any of its subsidiaries selected by the Board in accordance with the terms of the RSA Scheme (the "Selected Participant"). The Company and Computershare Hong Kong Trustees Limited as the trustee (the "Trustee") entered into the trust deed in respect of the appointment of the Trustee for the administration of the RSA Scheme (the "Trust Deed"). Pursuant to the RSA Scheme, the shares that may be offered by the Company to any Selected Participant (the "Restricted Shares") will be satisfied by (i) existing shares to be acquired by the Trustee on the market, and/or (ii) new shares to be allotted and issued to the Trustee. The total number of the Restricted Shares underlying all grants made pursuant to the RSA Scheme shall not exceed ten (10)% of the issued share capital of the Company as at March 22, 2019. The RSA Scheme will initially be valid and effective for a period of ten years commencing on the Adoption Date. Vesting shall only occur upon satisfaction (or where applicable, wavier by the Board) of conditions imposed by the Board. Neither the Selected Participant nor the Trustee may exercise any of the voting rights in respect of any Restricted Shares that have not yet been vested. For details, please refer to the Company's announcement dated March 22, 2019.
During the Reporting Period, 930,443 Restricted Shares ("RSA Shares") were granted under the RSA Scheme to certain employees (the "Grantees") on April 29, 2020. The closing price of the Shares on the Stock Exchange was HK$13.840 per share on April 29, 2020. Save as disclosed, no other RSA Shares have been granted under the RSA Scheme during the Reporting Period.
The RSA Shares have been acquired by the Trustee through on-market transactions and are currently held by the Trustee in according with the Listing Rules and the Trust Deed until the end of the relevant vesting date and be transferred to the Grantees upon satisfaction of the relevant vesting conditions as may be specified by the Board at the time of making the grant of RSA Shares.
As no new Shares will be issued by the Company as a result of the grant of the RSA Shares as mentioned above, the grant of the RSA Shares will not result in any dilution effect on the shareholdings of existing shareholders of the Company.
32 | GENSCRIPT BIOTECH CORPORATION |
Other Information
Set out below are details of the outstanding shares under the RSA Scheme:
Number of Shares | ||||||
Granted | Vesting | Lapsed | Outstanding | |||
As at | during the | During the | during the | as at | ||
Category/ | January 1, | Reporting | Reporting | Reporting | June 30, | |
Name of Grantee | Date of Grant | 2020 | Period | Period | Period | 2020 |
Chief executive | ||||||
Zhenyu (Patrick) Liu | April 29, 2020 | - | 10,750 | - | - | 10,750 |
- (was appointed as
- chief executive officer with
- effect from August 2, 2020)
Other Employees | July 19, 2019 | 1,048,116 | - | - | - | 1,048,116 |
November 29, 2019 | 150,000 | - | - | - | 150,000 | |
April 29, 2020 | - | 919,693 | - | - | 919,693 | |
1,198,116 | 930,443 | - | - | 2,128,559 | ||
Save as disclosed, none of the Grantees is a Director, chief executive or substantial shareholder (as defined in the Listing Rules) of the Company, or an associate (as defined in the Listing Rules) of any of them.
2020 Restricted Shares Plan
On May 26, 2020, the shareholders of Legend approved and adopted the 2020 Restricted Shares Plan, or the RSU Scheme to grant restricted shares and restricted share units (referred to as award) to employees, consultants and directors of Legend, as well as to employees, consultants and directors of Genscript and of Legend's subsidiaries.
Under the 2020 Restricted Share Plan, the maximum aggregate number of shares that may be issued pursuant to all awards granted is 11,000,000 shares. Unless early terminated by the board of Legend, the 2020 Restricted Shares Plan shall be valid and effective for a term of ten years commencing on May 26, 2020.
During the Reporting Period, 52,173 restricted share units (the "Restricted Share Units") were granted under the 2020 Restricted Shares Plan on June 5, 2020.
Save as disclosed, no other Restricted Shares or Restricted Share Units have been granted under the 2020 Restricted Shares Plan during the Reporting Period.
PUBLIC FLOAT
Based on information publicly available to the Company and within the knowledge of the Directors, the Directors confirmed that the Company had maintained a sufficient public float of more than 25% of the Company's issued share capital as required under the Listing Rules as of the date of this Interim Report.
Interim Report 2020 | 33 |
Other Information
INTERIM DIVIDEND
On June 5, 2020, the Board declared a special dividend to the shareholders of the Company in connection with the spinoff and separate listing of Legend Biotech Corporation on Nasdaq Global Market (the "Special Dividend"). Please refer to the announcements dated June 7, 2020 and July 23, 2020 and the circular dated June 26, 2020 for details.
The Board resolved not to declare any interim dividend for the six months ended June 30, 2020.
PURCHASE, SALE, OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY
During the Reporting Period, neither the Company nor any of its subsidiaries has purchased, sold, or redeemed any of the Company's listed securities, except that the trustee of the RSA Scheme purchased on the Stock Exchange a total of 5,550,000 shares of the Company at a total consideration of approximately HK$73,350,687 (equivalent to approximately US$9,460,000) to satisfy the award of shares to selected employees pursuant to the terms of the rules and trust deed of the RSA Scheme.
USE OF PROCEEDS FROM THE TOP-UP PLACING
On June 5, 2018, the Company entered into a placing and subscription agreement with Genscript Corporation, one of the controlling shareholders of the Company (the "Vendor") and placing agents pursuant to which (i) the Vendor completed a placing through placing agents 75,000,000 ordinary shares of the Company to certain placees at the price of HK$26.50 per share, and (ii) the Vendor subscribed for an aggregate of 75,000,000 shares of the Company of HK$26.50 per share (the "Top-up Placing"). The net proceeds of the Top-up Placing is HK$1,971,702,660.50 (equivalent to approximately US$251.3 million). Please refer to the announcements dated June 4, 2018, June 5, 2018, June 8, 2018, June 13, 2018 and June 14, 2018 for details.
A detailed breakdown and description of the use of the net proceeds from the Top-Up Placing is set forth as follows:
Unutilized | Utilized | Unutilized | |||
amount as | amount during | amount as | Intended | ||
at January 1, | the Reporting | at June 30, | year of | ||
Item | 2020 | Period | 2020 | application | |
US$ million | US$ million | US$ million | |||
Building up CAR-T R&D and production | |||||
facility in China, the US and Europe | 58.0 | 26.5 | 31.5 | 2020 to 2021 | |
Building up the GMP manufacturing | |||||
facilities for plasmid and biologics products | 63.7 | 11.1 | 52.6 | 2020 to 2021 | |
Total | 121.7 | 37.6 | 84.1 | ||
34 | GENSCRIPT BIOTECH CORPORATION |
Other Information
MODEL CODE FOR SECURITIES TRANSACTIONS OF THE DIRECTORS
The Company has adopted its own Code for Securities Transaction by Directors and Specified Individuals (the "Code") on terms no less exacting than the required standard set out in the Model Code as set out in Appendix 10 of the Listing Rules. Specific inquiry has been made to all the Directors and each of the Directors has confirmed that he/she has complied with the Code during the Reporting Period.
The Code is also applicable to the Company's relevant employees who are likely to be in possession of unpublished inside information of the Company in respect of their dealings in the Company's securities. No incidence of non-compliance with the Code by the Directors and the relevant employees of the Company were noted by the Company during the Reporting Period.
CORPORATE GOVERNANCE
The Group is committed to maintaining high standards of corporate governance to safeguard the interests of the Shareholders and to enhance corporate value and accountability. The Company has adopted the Corporate Governance Code and the Corporate Governance Report (the "CG Code") contained in Appendix 14 to the Listing Rules as its own code of corporate governance.
The Company has been in compliance with the code provisions of the CG Code throughout the six months ended June 30, 2020, except for the deviation of code provision A.2.1.
As required by code provision A.2.1 of the CG Code, the roles of chairman and chief executive officer should be separate and performed by different individuals. Yet, Dr. Zhang Fangliang had been assuming the roles of both the chairman of the Board and the chief executive officer of the Company since the date of listing up to August 2, 2020, on which he resigned from the position of the chief executive officer of the Company. The Board believed that resting the roles of both the chairman and the chief executive officer in the same person during the Reporting Period had helped to ensure consistent leadership within the Group and to enable more effective and efficient overall strategic planning for the Group. Although these two roles were performed by the same individual, certain responsibilities were shared with the executive Directors to balance power and authority. In addition, all major decisions were made in consultation with members of the Board, as well as with the senior management. The Board has three independent non-executive Directors who offer different independent perspectives. Therefore, the Board is of the view that the balance of power and safeguards in place were adequate during the Reporting Period.
AUDIT COMMITTEE
The Company has established an audit committee (the "Audit Committee"). The Audit Committee currently consists of three members, namely Mr. Dai Zumian (Chairman), Mr. Pan Jiuan and Mr. Guo Hongxin, all of whom are independent non- executive Directors. The primary duties of the Audit Committee are to review and supervise the Company's financial reporting process and internal controls.
The Audit Committee has together with the management and external auditors reviewed the accounting principles and practices adopted by the Group and discussed internal controls and financial reporting matters including the review of the Group's unaudited consolidated interim results for the six months ended June 30, 2020.
Interim Report 2020 | 35 |
Other Information
SANCTIONS RISK CONTROL COMMITTEE
During the Reporting Period to the date of this report, the sanctions risk control committee of the Company (the "Sanctions Risk Control Committee") held two meetings on March 6, 2020 and May 27, 2020 to review the activities, relevant policies and procedures in relation to economic sanctions, the guidance on the compliance with contractual covenants including those made in connection with the Global Offering and Listing of Shares on the Stock Exchange, the use of proceeds, and the internal control policies and procedures with respect to the sanctions risks. The Sanctions Risk Control Committee reviewed the activities of the Group that may be subject to economic sanctions for the Reporting Period and monitored the Group's exposure to risks of sanctions violations. The Sanctions Risk Control Committee resolved that the activities that may be subject to economic sanctions were being monitored effectively and was satisfied with the effectiveness of the relevant policies, procedures, guidance, and internal control measures.
CHANGES IN DIRECTORS' AND EXECUTIVES' INFORMATION
Pursuant to Rule 13.51B(1) of the Listing Rules, the changes of information on the Directors and executives are as follows:
Dr. Zhang Fangliang has resigned from the position of chief executive officer of the Company and has been re-designated from an executive Director to a non-executive Director with effect from August 2020. Please refer to the announcement dated August 2, 2020 for details.
Dr. Zhenyu (Patrick) Liu was appointed as chief executive officer of the Company with effect from August 2, 2020. Please refer to the announcement dated August 2, 2020 for details.
Mr. Pan Jiuan resigned as the chief human resources officer of Shanghai Lingjiao Enterprise Management Consulting Co. Ltd*(上海領教企業管理諮詢有限公司) in May 2020 and has been appointed as the chief executive officer of Shanghai FastLink Door Co., Limited* (上海快聯門業有限公司) in June 2020.
Mr. Guo Hongxin has been awarded the title of distinguished professor of Nanjing Tech University (南京工業大學) in May 2020.
After making specific enquiries by the Company and confirmed by the Directors, save as disclosed as above no other changes in the information of any Directors after the date of the Annual Report 2019 that are required to be disclosed pursuant to paragraphs (a) to (e) and paragraph (g) of Rule 13.51(2) of the Listing Rules have to be disclosed pursuant to Rule 13.51B(1) of the Listing Rules.
36 | GENSCRIPT BIOTECH CORPORATION |
Independent Review Report
To the board of directors of Genscript Biotech Corporation
(Incorporated in the Cayman Islands with limited liability)
INTRODUCTION
We have reviewed the interim financial information set out on pages 38 to 80, which comprises the condensed consolidated statement of financial position of Genscript Biotech Corporation (the "Company") and its subsidiaries (the "Group") as at 30 June 2020 and the related condensed consolidated statements of profit or loss, comprehensive income, changes in equity and cash flows for the six-month period then ended, and explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 Interim Financial Reporting ("HKAS 34") issued by the Hong Kong Institute of Certified Public Accountants ("HKICPA"). The directors of the Company are responsible for the preparation and presentation of this interim financial information in accordance with HKAS 34. Our responsibility is to express a conclusion on this interim financial information based on our review. Our report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.
SCOPE OF REVIEW
We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the HKICPA. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
CONCLUSION
Based on our review, nothing has come to our attention that causes us to believe that the interim financial information is not prepared, in all material respects, in accordance with HKAS 34.
Ernst & Young
Certified Public Accountants
Hong Kong
29 August 2020
Interim Report 2020 | 37 |
Interim Condensed Consolidated Statement of Profit or Loss
For the six months ended 30 June
2020 | 2019 | ||||
Notes | US$'000 | US$'000 | |||
(Unaudited) | (Unaudited) | ||||
REVENUE | 4 | 166,394 | 121,878 | ||
Cost of sales | (58,221) | (42,979) | |||
Gross profit | 108,173 | 78,899 | |||
Other income and gains | 4 | 12,999 | 8,594 | ||
Selling and distribution expenses | (41,059) | (30,961) | |||
Administrative expenses | (36,365) | (26,166) | |||
Research and development expenses | (115,451) | (62,836) | |||
Fair value loss of convertible redeemable preferred shares | (79,984) | - | |||
Finance costs | (4,510) | (387) | |||
Other expenses | (1,969) | (3,064) | |||
Share of losses of associates | (314) | (139) | |||
Reversal of/(provision provided for) impairment losses | |||||
on financial assets, net | 433 | (559) | |||
LOSS BEFORE TAX | 5 | (158,047) | (36,619) | ||
Income tax (expense)/credit | 6 | (2,462) | 3,284 | ||
LOSS FOR THE PERIOD | (160,509) | (33,335) | |||
Attributable to: | |||||
Owners of the parent | (113,092) | (27,346) | |||
Non-controlling interests | (47,417) | (5,989) | |||
(160,509) | (33,335) | ||||
LOSS PER SHARE ATTRIBUTABLE TO | |||||
ORDINARY EQUITY HOLDERS OF THE PARENT | 8 | ||||
Basic | (US6.01 cents) | (US1.48 cents) | |||
Diluted | (US6.01 cents) | (US1.48 cents) | |||
38 | GENSCRIPT BIOTECH CORPORATION |
Interim Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June
20202019
US$'000US$'000
(Unaudited) (Unaudited)
LOSS FOR THE PERIOD | (160,509) | (33,335) |
OTHER COMPREHENSIVE LOSS
Other comprehensive loss that may be reclassified to profit or loss in subsequent periods:
Exchange differences: | |||
Exchange differences on translation of foreign operations | (4,935) | (711) | |
Net other comprehensive loss that may be reclassified to | |||
profit or loss in subsequent periods | (4,935) | (711) | |
Other comprehensive income that will not be reclassified to
- profit or loss in subsequent periods:
- Equity investments designated at fair value through other
- comprehensive income:
Changes in fair value | - | 61 | |
Net other comprehensive income that will not be reclassified to | |||
profit or loss in subsequent periods | - | 61 | |
OTHER COMPREHENSIVE LOSS FOR THE PERIOD, NET OF TAX | (4,935) | (650) | |
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD | (165,444) | (33,985) | |
Attributable to: | |||
Owners of the parent | (117,673) | (28,163) | |
Non-controlling interests | (47,771) | (5,822) | |
(165,444) | (33,985) | ||
Interim Report 2020 | 39 |
Interim Condensed Consolidated Statement of Financial Position
30 June 2020
30 June | 31 December | ||
2020 | 2019 | ||
Notes | US$'000 | US$'000 | |
(Unaudited) | (Audited) | ||
NON-CURRENT ASSETS | |||
Property, plant and equipment | 9 | 280,004 | 235,986 |
Advance payments for property, plant and equipment | 5,936 | 8,585 | |
Investment properties | 7,472 | 7,442 | |
Right-of-use assets | 32,173 | 29,642 | |
Goodwill | 15,207 | 15,245 | |
Other intangible assets | 27,352 | 25,482 | |
Investments in associates | 2,504 | 2,615 | |
Financial assets at fair value through profit or loss | 10 | 5,568 | 4,667 |
Deferred tax assets | 3,949 | 5,701 | |
Total non-current assets | 380,165 | 335,365 | |
CURRENT ASSETS | |||
Inventories | 24,179 | 19,855 | |
Trade and notes receivables | 11 | 63,211 | 73,067 |
Prepayments, other receivables and other assets | 37,750 | 31,621 | |
Financial assets at fair value through profit or loss | 10 | 49,429 | 25,434 |
Pledged short-term deposits | 12 | 3,142 | 972 |
Loans to an associate | 2,189 | 2,007 | |
Time deposits | 12 | 173,050 | 148,693 |
Cash and cash equivalents | 12 | 706,693 | 252,397 |
Total current assets | 1,059,643 | 554,046 | |
CURRENT LIABILITIES | |||
Trade and bills payables | 13 | 22,733 | 17,627 |
Other payables and accruals | 14 | 123,932 | 125,035 |
Dividends payable | 7 | 14,879 | - |
Interest-bearing bank loans | 15 | 48,563 | 17,008 |
Lease liabilities | 2,353 | 1,769 | |
Tax payable | 3,555 | 2,846 | |
Contract liabilities | 16 | 62,583 | 60,130 |
Government grants | 88 | 90 | |
Total current liabilities | 278,686 | 224,505 | |
NET CURRENT ASSETS | 780,957 | 329,541 | |
TOTAL ASSETS LESS CURRENT LIABILITIES | 1,161,122 | 664,906 | |
40 | GENSCRIPT BIOTECH CORPORATION |
Interim Condensed Consolidated Statement of Financial Position
30 June 2020
30 June | 31 December | ||
2020 | 2019 | ||
Notes | US$'000 | US$'000 | |
(Unaudited) | (Audited) | ||
NON-CURRENT LIABILITIES | |||
Interest-bearing bank loans | 15 | 1,487 | 1,748 |
Lease liabilities | 6,106 | 3,608 | |
Deferred tax liabilities | 7,699 | 5,582 | |
Contract liabilities | 16 | 256,749 | 277,827 |
Government grants | 3,630 | 3,843 | |
Total non-current liabilities | 275,671 | 292,608 | |
Net assets | 885,451 | 372,298 | |
EQUITY | |||
EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT | |||
Share capital | 17 | 1,918 | 1,879 |
Treasury shares | 17 | (17,234) | (7,774) |
Reserves | 958,677 | 388,699 | |
943,361 | 382,804 | ||
Non-controlling interests | (57,910) | (10,506) | |
Total equity | 885,451 | 372,298 |
Zhang Fangliang | Wang Ye |
Director | Director |
Interim Report 2020 | 41 |
Interim Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2020
Attributable to owners of the parent | |||||||||||||
Share | Statutory | Exchange | Non- | ||||||||||
Share | Treasury | Share | Merger | option | surplus | Retained | fluctuation | controlling | Total | ||||
capital | shares | premium* | reserve* | reserve* | reserves* | earnings* | reserve* | Total | interests | equity | |||
US$'000 | US$'000 | US$'000 | US$'000 US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | ||||
(Note 18 | |||||||||||||
(Note 17) | (Note 17) | (Note 17) | & Note 19) | ||||||||||
At 31 December 2019 (Audited) | 1,879 | (7,774) | 368,781 | (20,883) | 27,651 | 14,359 | 15,580 | (16,789) | 382,804 | (10,506) | 372,298 | ||
Loss for the period | - | - | - | - | - | - | (113,092) | - | (113,092) | (47,417) | (160,509) | ||
Other comprehensive (loss)/income | |||||||||||||
for the period: | |||||||||||||
Exchange differences on | |||||||||||||
translation of foreign | |||||||||||||
operations | - | - | - | - | - | - | - | (4,581) | (4,581) | (354) | (4,935) | ||
Total comprehensive loss | |||||||||||||
for the period | - | - | - | - | - | - | (113,092) | (4,581) | (117,673) | (47,771) | (165,444) | ||
Issue of ordinary shares for | |||||||||||||
initial public offering of | |||||||||||||
Legend Cayman | - | - | 690,520 | - | - | - | - | - | 690,520 | - | 690,520 | ||
Acquisition of equity by minority | |||||||||||||
shareholders | - | - | - | - | - | - | - | - | - | 367 | 367 | ||
Shares repurchased | - | (9,460) | - | - | - | - | - | - | (9,460) | - | (9,460) | ||
Equity-settled share option | |||||||||||||
arrangements | - | - | - | - | 7,462 | - | - | - | 7,462 | - | 7,462 | ||
Dividend declared | - | - | (14,879) | - | - | - | - | - | (14,879) | - | (14,879) | ||
Exercise of share options | 39 | - | 6,288 | - | (1,740) | - | - | - | 4,587 | - | 4,587 | ||
At 30 June 2020 (Unaudited) | 1,918 | (17,234) | 1,050,710 | (20,883) | 33,373 | 14,359 | (97,512) | (21,370) | 943,361 | (57,910) | 885,451 | ||
- These reserve accounts comprise the consolidated reserves of US$958,677,000 (For the year ended 31 December 2019: US$338,699,000) in the consolidated statement of financial position.
42 | GENSCRIPT BIOTECH CORPORATION |
Interim Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2020
Attributable to owners of the parent | ||||||||||||||
Fair value | ||||||||||||||
reserve of | ||||||||||||||
financial | ||||||||||||||
assets at | ||||||||||||||
fair value | ||||||||||||||
through | ||||||||||||||
Share | Statutory other com- | Exchange | Non- | |||||||||||
Share | Treasury | Share | Merger | option | surplus prehensive | Retained | fluctuation | controlling | Total | |||||
capital | shares | premium* | reserve* | reserve* | reserves* | income* | earnings* | reserve* | Total | interests | equity | |||
US$'000 | US$'000 US$'000 | US$'000 US$'000 | US$'000 US$'000 | US$'000 US$'000 | US$'000 US$'000 US$'000 | |||||||||
At 1 January 2019 (Audited) | 1,836 | - | 364,100 | (20,883) | 18,955 | 14,359 | (11) | 112,442 | (12,246) | 478,552 | 14,635 | 493,187 | ||
Loss for the period | - | - | - | - | - | - | - | (27,346) | - | (27,346) | (5,989) | (33,335) | ||
Other comprehensive income/(loss) | ||||||||||||||
for the period: | ||||||||||||||
Change in fair value of | ||||||||||||||
equity investments designated | ||||||||||||||
at fair value through other | ||||||||||||||
comprehensive income, | ||||||||||||||
net of tax | - | - | - | - | - | - | 61 | - | - | 61 | - | 61 |
- Disposal of equity investments
- designated at fair value
- through other comprehensive
income, net of tax | - | - | - | - | - | - | (50) | 50 | - | - | - | - |
Exchange differences on | ||||||||||||
translation of foreign | ||||||||||||
operations | - | - | - | - | - | - | - | - | (878) | (878) | 167 | (711) |
Total comprehensive loss | ||||||||||||
for the period | - | - | - | - | - | - | 11 | (27,296) | (878) | (28,163) | (5,822) | (33,985) |
Purchases of minority interests | ||||||||||||
of the subsidiary | - | - | (2,011) | - | - | - | - | - | - | (2,011) | (3,996) | (6,007) |
Acquisition of equity by | ||||||||||||
minority shareholders | - | - | 383 | - | - | - | - | - | - | 383 | 281 | 664 |
Equity-settled share | ||||||||||||
option arrangements | - | - | - | - | 5,375 | - | - | - | - | 5,375 | - | 5,375 |
Shares repurchased | - | (2,271) | - | - | - | - | - | - | - | (2,271) | - | (2,271) |
Exercise of share options | 24 | - | 2,904 | - | (892) | - | - | - | - | 2,036 | - | 2,036 |
At 30 June 2019 (Unaudited) | 1,860 | (2,271) | 365,376 | (20,883) | 23,438 | 14,359 | - | 85,146 | (13,124) | 453,901 | 5,098 | 458,999 |
- These reserve accounts comprise the consolidated reserves of US$454,312,000 in the consolidated statement of financial position.
Interim Report 2020 | 43 |
Interim Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June
2020 | 2019 | ||||
Notes | US$'000 | US$'000 | |||
(Unaudited) | (Unaudited) | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||
Loss before tax | (158,047) | (36,619) | |||
Adjustments for reconcile profit before tax to net cash flows: | |||||
(Reversal of)/provision for impairment of trade receivables, net | (433) | 559 | |||
(Reversal of write-downof)/write-down of inventories to net | |||||
realizable value | (143) | 310 | |||
Depreciation of property, plant and equipment | 11,307 | 7,305 | |||
Depreciation of investment properties | 60 | 105 | |||
Depreciation of right-of use assets | 1,412 | 827 | |||
Amortisation of other intangible assets | 1,273 | 890 | |||
Loss on disposal of items of property, plant and equipment | 9 | 901 | 88 | ||
Interest income | 4 | (2,870) | (5,391) | ||
Fair value loss of convertible redeemable preferred shares | 79,984 | - | |||
Investment (income)/loss | (1,442) | 275 | |||
Share of losses of associates | 314 | 139 | |||
Fair value loss on financial assets at fair value through profit or loss | 736 | 85 | |||
Finance costs | 4,510 | 387 | |||
Equity-settled share option expense | 7,462 | 5,375 | |||
(54,976) | (25,665) | ||||
Decrease in trade and notes receivables | 7,329 | 17,908 | |||
Decrease/(increase) in prepayments and other receivables and | |||||
other assets | 13,365 | (4,537) | |||
Increase in inventories | (4,180) | (2,605) | |||
Decrease in government grants | (215) | (54) | |||
Increase in trade and bills payables | 5,106 | 2,746 | |||
Decrease in other payables, accruals and contract liabilities | (20,211) | (9,768) | |||
Increase in time deposits | (24,566) | (141,061) | |||
(Increase)/decrease in pledged short-term deposits | (2,170) | 12,504 | |||
Cash used in operations | (80,518) | (150,532) | |||
Interest received | 2,987 | 9,402 | |||
Interest paid for finance rental lease payment | (117) | - | |||
Interest paid | (448) | (115) | |||
Income tax paid | (17,775) | (12,057) | |||
Net cash flows used in operating activities | (95,871) | (153,302) | |||
44 | GENSCRIPT BIOTECH CORPORATION |
Interim Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June
2020 | 2019 | |
Notes | US$'000 | US$'000 |
(Unaudited) | (Unaudited) | |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property, plant and equipment | (58,141) | (53,838) |
Proceeds from disposal of items of property, plant and equipment | 18 | 1 |
Purchases of intangible assets | (2,409) | (170) |
Purchase of investment in associate | (203) | (200) |
Redemption of equity investments designated at fair value | ||
through other comprehensive income | - | 5,010 |
Purchases of financial assets at fair value through profit or loss | (267,082) | (771,717) |
Maturity of financial assets at fair value through profit or loss | 241,451 | 760,777 |
Loan to an associate | (212) | - |
Receipt of investment income | 1,442 | - |
Net cash flows used in investing activities | (85,136) | (60,137) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Purchases of minority interest of the subsidiary | - | (6,007) |
Acquisition of equity by minority shareholders | 367 | 664 |
Gross Proceeds from issue of ordinary shares for initial | ||
public offering of Legend Cayman | 487,341 | - |
Underwriting commission of issue of ordinary shares for | ||
initial public offering of Legend Cayman | (34,114) | |
Expenses of issue of ordinary shares for initial | ||
public offering of Legend Cayman | (3,142) | - |
Proceeds from preferred shares for initial | ||
public offering of Legend Cayman | 160,450 | - |
Expenses of issue preferred shares for initial | ||
public offering of Legend Cayman | (250) | - |
Shares repurchased | (9,460) | (2,271) |
Exercise of share options | 4,741 | 2,036 |
New bank loans | 48,005 | 19,378 |
Repayment of bank loans | (16,597) | (10,688) |
Principal portion of lease payments | (1,081) | (631) |
Net cash flows from financing activities | 636,260 | 2,481 |
Interim Report 2020 | 45 |
Interim Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June
2020 | 2019 | ||
Notes | US$'000 | US$'000 | |
(Unaudited) | (Unaudited) | ||
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 455,253 | (210,958) | |
Net foreign exchange difference | (957) | (21) | |
Cash and cash equivalents at beginning of period | 12 | 252,397 | 494,558 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 12 | 706,693 | 283,579 |
ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS | |||
Cash and bank balances | 656,693 | 158,359 | |
Non-pledged time deposits with original maturity | |||
of less than three months when acquired | 50,000 | 125,220 | |
Cash and cash equivalents as stated | |||
in the statement of financial position | 12 | 706,693 | 283,579 |
Cash and cash equivalents as stated | |||
in the statement of cash flows | 706,693 | 283,579 | |
46 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
1. CORPORATE INFORMATION
Genscript Biotech Corporation (the "Company") was incorporated on 21 May 2015 as an exempted company in the Cayman Islands with limited liability under the Companies Law of the Cayman Islands. The registered office address of the Company is PO Box 10240, Harbour Place, 103 South Church Street, George Town, Grand Cayman KY1-1002, Cayman Islands.
The Company is an investment holding company. The Company's subsidiaries are principally engaged in the manufacture and sale of life science research products and services. The products and services mainly include life science services and products, biologics development services, industrial synthetic biology products and cell therapy. The shares of the Company were listed on the Main Board of the Stock Exchange of Hong Kong Limited (the "Stock Exchange") on 30 December 2015.
In the opinion of the directors, the ultimate holding company of the Company is Genscript Corporation ("GS Corp"), which was incorporated in the United States of America.
Information about subsidiaries
Particulars of the Company's principal subsidiaries are as follows:
Place and date of | Percentage of | ||||||||
incorporation/ | Issued ordinary | equity interest | |||||||
registration and | shares/paid-up | attributable to the | |||||||
Company | place of business | capital | Company | Principal activities | |||||
Direct | Indirect | ||||||||
% | % | ||||||||
Genscript (Hong Kong) | Hong Kong | HK$ | - | 100 | Sale of life science | ||||
Limited ("GS HK") | 8 January 2009 | 155,000 | research products | ||||||
and services | |||||||||
Nanjing GenScript | PRC/Mainland | US$ | - | 100 | Manufacture and | ||||
Biotech Co.,Ltd. | China | 88,020,000 | sale of life science | ||||||
("GS China") | 12 March 2009 | research products | |||||||
-whollyforeign-owned | and services | ||||||||
enterprise | |||||||||
Genscript USA | United States of | US$ | 100 | - | Manufacture and | ||||
Incorporated | America | 1,000 | sale of life science | ||||||
("GS USA") | 26 March 2009 | research products | |||||||
and services | |||||||||
Interim Report 2020 | 47 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
1. CORPORATE INFORMATION (CONTINUED)
Information about subsidiaries (continued)
Place and date of | Percentage of | |||||||
incorporation/ | Issued ordinary | equity interest | ||||||
registration and | shares/paid-up | attributable to the | ||||||
Company | place of business | capital | Company | Principal activities | ||||
Direct | Indirect | |||||||
% | % | |||||||
Jinsikang Technology | PRC/Mainland | RMB | - | 100 | Manufacture and | |||
(Nanjing) Co., Ltd. | China | 132,550,600 | sale of life science | |||||
("Nanjing Jinsikang") | 30 April 2009 | research products | ||||||
-limited liability company | and services | |||||||
Genscript Japan Inc. | Japan | JPY | - | 100 | Sale of life science | |||
("GS JP") | 7 July 2011 | 8,300,000 | research products | |||||
and services | ||||||||
Nanjing Bestzyme | PRC/Mainland | US$ | - | 94.62 | Manufacture and | |||
Bioengineering Co., Ltd. | China | 42,835,219 | sale of life science | |||||
("Nanjing Bestzyme") | 6 June 2013 | research products | ||||||
-cooperative joint | and services | |||||||
venture enterprise | ||||||||
Nanjing Legend | PRC/Mainland | US$ | - | 64.59 | Manufacture and | |||
Biotechnology Co., Ltd. | China | 62,500,000 | sale of life science | |||||
("Legend Nanjing") | 17 November 2014 | research products | ||||||
-whollyforeign-owned | and services | |||||||
enterprise | ||||||||
Shanghai Bestzyme | PRC/Mainland | RMB | - | 100 | Manufacture and | |||
Biological Co., Ltd. | China | 3,000,000 | sale of life science | |||||
("Shanghai Bestzyme") | 11 December 2018 | research products | ||||||
-limited liability company | and services | |||||||
Jinan Bestzyme | PRC/Mainland | RMB | - | 76.11 | Manufacture and | |||
Biological Co., Ltd. | China | 45,436,341 | sale of life science | |||||
("Jinan Bestzyme") | 19 August 2009 | research products | ||||||
-limited liability company | and services |
48 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
1. CORPORATE INFORMATION (CONTINUED)
Information about subsidiaries (continued)
Place and date of | Percentage of | |||||||
incorporation/ | Issued ordinary | equity interest | ||||||
registration and | shares/paid-up | attributable to the | ||||||
Company | place of business | capital | Company | Principal activities | ||||
Direct | Indirect | |||||||
% | % | |||||||
Jiangsu Genscript | PRC/Mainland | RMB | - | 100 | Manufacture and | |||
Biotech Co., Ltd. | China | 604,119,000 | sale of life science | |||||
("Jiangsu Jinsirui") | 31 August 2016 | research products | ||||||
-whollyforeign-owned | and services | |||||||
enterprise | ||||||||
Legend Biotech USA | United States of | -- | - | 64.59 | Manufacture and | |||
Incorporated | America | sale of life science | ||||||
("Legend USA") | 31 August 2017 | research products | ||||||
and services | ||||||||
Legend Biotech | Ireland | -- | - | 64.59 | Manufacture and | |||
Ireland Limited | 13 November 2017 | sale of life science | ||||||
("Legend Ireland") | research products | |||||||
and services | ||||||||
GenScript Biotech | Netherlands | -- | - | 100 | Manufacture and | |||
(Netherlands) B.V. | 6 December 2017 | sale of life science | ||||||
("GS EU") | research products | |||||||
and services | ||||||||
CustomArray, Inc. | United States of | US$ | - | 100 | Manufacture and | |||
("CustomArray") | America | 957,800 | sale of life science | |||||
1 January 2018 | research products | |||||||
and services | ||||||||
Legend Biotech Corporation | Cayman Islands | US$ | - | 64.59 | Investment holding | |||
("Legend Cayman") | 27 May 2016 | 26,328 | company | |||||
The above table lists the subsidiaries of the Company which, in the opinion of the directors, principally affected the results for the reporting period or formed a substantial portion of the net assets of the Company and its subsidiaries (the "Group"). To give details of other subsidiaries would, in the opinion of the directors, result in particulars of excessive length.
Interim Report 2020 | 49 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
2. BASIS OF PREPARATION AND CHANGES TO THE GROUP'S ACCOUNTING POLICIES
2.1 BASIS OF PREPARATION
The interim condensed consolidated financial information for the six months ended 30 June 2020 has been prepared in accordance with HKAS 34 Interim Financial Reporting. The interim condensed consolidated financial information does not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's annual consolidated financial statements for the year ended 31 December 2019.
2.2 CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
The accounting policies adopted in the preparation of the interim condensed consolidated financial information are consistent with those applied in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2019, except for the adoption of the following revised Hong Kong Financial Reporting Standards ("HKFRSs") for the first time for the current period's financial information.
Amendments to HKFRS 3 | Definition of a Business |
Amendments to HKFRS 9, | |
HKAS 39 and HKFRS 7 | Interest Rate Benchmark Reform |
Amendment to HKFRS 16 | Covid-19-Related Rent Concessions (early adopted) |
Amendments to HKAS 1 | |
and HKAS 8 | Definition of Material |
The adoption of the revised standards has no significant financial effect to the Group's interim condensed consolidated financial information.
50 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
3. OPERATING SEGMENT INFORMATION
For management purposes, the Group is organised into business units based on their products and services and has four reportable operating segments as follows:
- The life science services and products unit provides comprehensive research services and products, which are widely used and are fundamental to life science research and application;
- The biologics development services unit provides comprehensive services aimed to help biopharmaceutical and biotech companies accelerate the development of therapeutic antibodies, and gene/cell therapy products with an integrated platform;
- The industrial synthetic biology products unit provides industrial enzyme development and production through non-pathogenic microbial strains constructed using genetic engineering;
- The cell therapy unit discovers and develops innovative CAR-T therapies for the treatment of liquid and solid tumors;
- The operation unit mainly provides shared services to other segments.
Management monitors the results of the Group's operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on reportable segment profit or loss, which is a measure of adjusted profit or loss after tax.
No analysis of the Group's assets and liabilities by operating segments is disclosed as it is not regularly provided to the chief operating decision maker for review.
Interim Report 2020 | 51 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
3. OPERATING SEGMENT INFORMATION (CONTINUED)
Industrial | |||||||
Life science | Biologics | synthetic | |||||
Six months ended 30 June 2020 | services and | development | biology | Operation | |||
(Unaudited) | products | services | products | Cell therapy | unit | Eliminations | Total |
US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | |
Segment revenue (Note 4) | |||||||
Sales to external customers | 113,329 | 18,662 | 11,070 | 23,146 | 187 | - | 166,394 |
Intersegment sales | 1,656 | 312 | 170 | - | 9,590 | (11,728) | - |
Total revenue | 114,985 | 18,974 | 11,240 | 23,146 | 9,777 | (11,728) | 166,394 |
Segment cost of sales | (36,966) | (14,274) | (6,951) | - | (1,383) | 1,353 | (58,221) |
Segment results | 78,019 | 4,700 | 4,289 | 23,146 | 8,394 | (10,375) | 108,173 |
Other income and gains | - | - | 635 | 3,796 | 8,678 | (110) | 12,999 |
Selling and distribution expenses | (20,929) | (2,472) | (1,531) | (16,102) | (100) | 75 | (41,059) |
Administrative expenses | (4,805) | (1,186) | (1,479) | (7,938) | (28,473) | 7,516 | (36,365) |
Research and development expenses | (11,011) | (3,604) | (2,050) | (101,570) | - | 2,784 | (115,451) |
Fair value loss of convertible | |||||||
redeemable preferred shares | - | - | - | (79,984) | - | - | (79,984) |
Finance costs | - | - | (119) | (4,079) | (312) | - | (4,510) |
Other expenses | - | - | (31) | (82) | (1,966) | 110 | (1,969) |
Share of losses of associates | - | - | - | - | (314) | - | (314) |
Reversal of impairment losses | |||||||
on financial assets, net | 294 | 30 | 109 | - | - | - | 433 |
Profit/(loss) before tax | 41,568 | (2,532) | (177) | (182,813) | (14,093) | - | (158,047) |
Income tax (expense)/credit | - | - | (335) | 3,709 | - | - | 3,374 |
Unallocated income tax expense | - | - | - | - | - | - | (5,836) |
Profit/(loss) for the period | 41,568 | (2,532) | (512) | (179,104) | (14,093) | - | (160,509) |
52 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
3. OPERATING SEGMENT INFORMATION (CONTINUED)
Industrial | |||||||
Life science | Biologics | synthetic | |||||
Six months ended 30 June 2019 | services and | development | biology | Operation | |||
(Unaudited) | products | services | products | Cell therapy | unit | Eliminations | Total |
US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | |
Segment revenue (Note 4) | |||||||
Sales to external customers | 81,143 | 9,300 | 10,756 | 20,679 | - | - | 121,878 |
Intersegment sales | 1,062 | 67 | 1,460 | 14 | 5,713 | (8,316) | - |
Total revenue | 82,205 | 9,367 | 12,216 | 20,693 | 5,713 | (8,316) | 121,878 |
Segment cost of sales | (29,896) | (6,281) | (8,549) | - | (663) | 2,410 | (42,979) |
Segment results | 52,309 | 3,086 | 3,667 | 20,693 | 5,050 | (5,906) | 78,899 |
Other income and gains | - | - | 465 | 4,073 | 4,056 | - | 8,594 |
Selling and distribution expenses | (18,720) | (1,072) | (2,127) | (7,786) | (1,385) | 129 | (30,961) |
Administrative expenses | (3,917) | (837) | (1,172) | (2,712) | (21,617) | 4,089 | (26,166) |
Research and development expenses | (5,520) | (3,245) | (1,830) | (53,929) | - | 1,688 | (62,836) |
Finance costs | - | - | (196) | (57) | (134) | - | (387) |
Other expenses | - | - | (34) | (625) | (2,405) | - | (3,064) |
Share of losses of associates | - | - | - | - | (139) | - | (139) |
Provision provided for | |||||||
impairment losses on financial | |||||||
assets, net | (499) | (41) | (19) | - | - | - | (559) |
Profit/(loss) before tax | 23,653 | (2,109) | (1,246) | (40,343) | (16,574) | - | (36,619) |
Income tax credit/(expense) | - | - | 219 | (336) | - | - | (117) |
Unallocated income tax credit | - | - | - | - | - | - | 3,401 |
Profit/(loss) for the period | 23,653 | (2,109) | (1,027) | (40,679) | (16,574) | - | (33,335) |
Interim Report 2020 | 53 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
3. OPERATING SEGMENT INFORMATION (CONTINUED)
Geographic information
(a) Revenue from external customers
For the six months ended 30 June | ||
2020 | 2019 | |
US$'000 | US$'000 | |
(Unaudited) | (Unaudited) | |
United States of America | 90,312 | 72,411 |
Europe | 15,917 | 13,015 |
China | 44,082 | 25,286 |
Asia Pacific (excluding China and Japan) | 12,889 | 7,093 |
Japan | 2,680 | 2,256 |
Others (including other North American countries, | ||
South America and Africa) | 514 | 1,817 |
Total | 166,394 | 121,878 |
The revenue information above is based on the locations of the customers.
Information about major customers
Revenue of approximately US$23,146,000 (For the six months ended 30 June 2019:US$20,639,000) was derived from sales by the cell therapy segment to a single customer.
54 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
4. REVENUE, OTHER INCOME AND GAINS
An analysis of revenue is as follows: | ||
For the six months ended 30 June | ||
2020 | 2019 | |
US$'000 | US$'000 | |
(Unaudited) | (Unaudited) | |
Revenue from contracts with customers | 166,131 | 121,878 |
Revenue from other sources | ||
Gross rental income from operating leases | 263 | - |
166,394 | 121,878 | |
Disaggregated revenue information for revenue from contracts with customers
For the six months ended 30 June 2020
Industrial | |||||
Life science | Biologics | synthetic | |||
services and | development | biology | |||
Segment | products | services | products | Cell therapy | Total |
US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | |
Types of goods or services | |||||
Rendering of services | 88,653 | 18,804 | - | - | 107,457 |
Sale of industrial products | 24,534 | - | 10,994 | - | 35,528 |
Licence and collaboration | |||||
revenue | - | - | - | 23,146 | 23,146 |
Total revenue from contracts | |||||
with customers | 113,187 | 18,804 | 10,994 | 23,146 | 166,131 |
Timing of revenue recognition | |||||
Goods transferred at a point in time | 24,534 | - | 10,994 | - | 35,528 |
Services transferred at a point in time | 88,653 | 18,804 | - | - | 107,457 |
Services transferred over time | - | - | - | 23,146 | 23,146 |
Total revenue from contracts | |||||
with customers | 113,187 | 18,804 | 10,994 | 23,146 | 166,131 |
Interim Report 2020 | 55 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
4. REVENUE, OTHER INCOME AND GAINS (CONTINUED)
Disaggregated revenue information for revenue from contracts with customers (continued)
For the six months ended 30 June 2019 | |||||||
Industrial | |||||||
Life science | Biologics | synthetic | |||||
services and | development | biology | |||||
Segment | products | services | products | Cell therapy | Total | ||
US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | |||
Types of goods or services | |||||||
Rendering of services | 74,253 | 9,300 | - | - | 83,553 | ||
Sale of industrial products | 6,890 | - | 10,756 | - | 17,646 | ||
Licence and collaboration revenue | - | - | - | 20,679 | 20,679 | ||
Total revenue from contracts | |||||||
with customers | 81,143 | 9,300 | 10,756 | 20,679 | 121,878 | ||
Timing of revenue recognition | |||||||
Goods transferred at a point in time | 6,890 | - | 10,756 | - | 17,646 | ||
Services transferred at a point in time | 74,253 | 9,300 | - | - | 83,553 | ||
Services transferred over time | - | - | - | 20,679 | 20,679 | ||
Total revenue from contracts | |||||||
with customers | 81,143 | 9,300 | 10,756 | 20,679 | 121,878 | ||
For the six months ended 30 June | |||||||
2020 | 2019 | ||||||
US$'000 | US$'000 | ||||||
(Unaudited) | (Unaudited) | ||||||
Other income and gains | |||||||
Government grants | 7,267 | 3,129 | |||||
Bank interest income | 2,870 | 5,391 | |||||
Investment income | 1,442 | - | |||||
Foreign currency exchange gain, net | 1,257 | - | |||||
Others | 163 | 74 | |||||
12,999 | 8,594 | ||||||
56 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
5. LOSS BEFORE TAX
The Group's loss before tax is arrived at after charging/(crediting):
For the six months ended 30 June | |||
2020 | 2019 | ||
US$'000 | US$'000 | ||
(Unaudited) | (Unaudited) | ||
Cost of inventories sold | 7,367 | 2,691 | |
Cost of services provided | 22,262 | 15,860 | |
Depreciation of right-of use assets | 1,412 | 827 | |
Depreciation of items of property, plant and equipment | 11,307 | 7,305 | |
Depreciation of investment properties | 60 | 105 | |
Amortisation of other intangible assets | 1,273 | 890 | |
(Reversal of)/provision for impairment of trade receivables , net | (433) | 559 | |
Lease payments not included in the measurement of lease liabilities | 489 | 606 | |
Auditors' remuneration | 100 | 108 | |
Employee benefit expense (excluding directors' remuneration): | |||
Wages and salaries | 87,533 | 60,919 | |
Pension scheme contributions (defined contribution schemes) | 2,884 | 6,798 | |
Equity-settled share option expense | 7,371 | 5,204 | |
97,788 | 72,921 | ||
Research and development costs | 80,634 | 42,304 | |
Loss on disposal of items of property, plant and equipment | 901 | 88 | |
Exchange differences, net | (1,257) | 2,450 | |
Listing expense | 1,463 | - | |
Service fee for the issuance of Legend Series A preferred shares | 4,014 | - | |
Fair value loss of convertible redeemable preferred shares | 79,984 | - | |
(Reversal of write-downof)/write-down of inventories to | |||
net realisable value | (143) | 310 | |
Interim Report 2020 | 57 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
6. INCOME TAX
Pursuant to the rules and regulations of Cayman and the British Virgin Islands, the Group was not subject to any income tax in Cayman and the British Virgin Islands both in 2019 and 2020.
Hong Kong profits tax was subject to the two-tiered profits tax rates regime. The first HK$2,000,000 (2019: HK$2,000,000) of assessable profits was taxed at 8.25% (2019: 8.25%) and the remaining assessable profits was taxed at 16.5% (2019: 16.5%).
The subsidiaries of the Group operating in the United States of America were subject to federal tax at a rate of 21% (2019:21%) and state tax at a rate of 11.5% (2019: 9%) in New Jersey and 0% (2019:9%) in the State of Washington during the reporting period.
The subsidiary of the Group operating in Ireland was subject to income tax at the rate of 12.5% (2019:12.5%) on the estimated assessable profits arising in Ireland during the reporting period.
The subsidiary of the Group operating in Japan was subject to income tax at a rate ranging from 22% to 31.5% (2019: 22% to 31.5%) depending on its earnings during the reporting period.
The subsidiary of the Group operating in the Netherlands was subject to income tax at the rate of 19% to 25% (2019: 19% to 25%) on the estimated assessable profits arising in the Netherlands during the reporting period.
The provision for China current income tax is based on the statutory rate of 25% of the assessable profits of certain PRC subsidiaries of the Group as determined in accordance with the PRC Corporate Income Tax Law which was approved and became effective on 1 January 2008, except for certain subsidiaries of the Group in China which are granted tax concession and are taxed at preferential tax rates.
Jiangsu Jinsirui is qualified as Advanced Technology Service Enterprises. It was subject to income tax at a preferential tax rate of 15% (2019:15%) for the reporting period. Jinan Bestzyme is qualified as High and New Technology Enterprises. It was subject to income tax at a preferential tax rate of 15% (2019: 15%) for the reporting period.
58 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
6. | INCOME TAX (CONTINUED) | ||
For the six months ended 30 June | |||
2020 | 2019 | ||
US$'000 | US$'000 | ||
(Unaudited) | (Unaudited) | ||
Current income tax (credit)/expense | |||
Charge for the period | 2,352 | 1,186 | |
Under-provision/(Overprovision) in prior periods | 448 | (63) | |
Tax refund | (3,709) | - | |
Deferred income tax expense/(credit) | 3,371 | (4,407) | |
Total tax charge/(credit) for the period | 2,462 | (3,284) | |
7. | DIVIDENDS |
For the six months ended 30 June
20202019
US$'000US$'000
(Unaudited) (Unaudited)
Dividends on ordinary shares during the period | 14,879 | - |
On 5 June 2020, the board of directors declared a special dividend to the shareholders of the Company in connection with the spin-off and separate listing of Legend Biotech Corporation on the NASDAQ global market.
The Board resolved not to declare any interim dividend for the six months ended 30 June 2020.
Interim Report 2020 | 59 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
8. LOSS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT
The calculation of the basic loss per share amount is based on the loss for the reporting period attributable to ordinary equity holders of the parent, and the weighted average number of ordinary shares of 1,883,243,651 (for the six months ended 30 June 2019: 1,845,794,313) in issue during the reporting period.
The calculations of basic and diluted loss per share are based on: | ||
For the six months ended 30 June | ||
2020 | 2019 | |
US$'000 | US$'000 | |
(Unaudited) | (Unaudited) | |
Loss | ||
Loss attributable to ordinary equity holders of the parent, | ||
used in the basic loss per share calculation: | (113,092) | (27,346) |
Number of shares | ||
2020 | 2019 | |
Shares | ||
Weighted average number of ordinary shares in issue during | ||
the period | 1,888,677,605 | 1,845,915,562 |
Effect of shares repurchased | (5,433,954) | (121,249) |
Weighted average number of ordinary shares in issue during | ||
the period used in the basic loss per share calculation | 1,883,243,651 | 1,845,794,313 |
Effect of dilution - weighted average number of ordinary shares: | ||
Share options | 29,137,741 | 38,830,518 |
1,912,381,392 | 1,884,624,831 | |
The diluted loss per share is the same as the basic loss per share because the effect of share option is anti-dilutive for the six months ended 30 June 2020 and 2019.
60 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
9. PROPERTY, PLANT AND EQUIPMENT
During the six months ended 30 June 2020, the Group acquired items of property, plant and equipment of a cost of US$50,439,000 (for the six months ended 30 June 2019: US$52,121,000).
Assets with a net book value of US$2,483,000 were disposed of by the Group during the six months ended 30 June 2020 (for the six months ended 30 June 2019: US$89,000), resulting in a net loss on disposal of US$901,000 (for the six months ended 30 June 2019: US$88,000).
Assets with a net book value of US$3,982,000 were pledged as security for interest-bearing bank loans as set out in Note 15 to the interim condensed consolidated financial statements.
See Note 20 for capital commitments.
10. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
30 June | 31 December | |
2020 | 2019 | |
US$'000 | US$'000 | |
(Unaudited) | (Audited) | |
Financial assets at fair value through profit or loss | ||
Unlisted equity investments, at fair value | 5,568 | 4,667 |
Investment in financial products, at fair value | 49,429 | 25,434 |
54,997 | 30,101 | |
The above investment in financial products were wealth management products issued by banks in Mainland China and Hong Kong. They were mandatorily classified as financial assets at fair value through profit or loss as their contractual cash flows are not solely payments of principal and interest.
Interim Report 2020 | 61 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
11. TRADE AND NOTES RECEIVABLES
30 June | 31 December | |
2020 | 2019 | |
US$'000 | US$'000 | |
(Unaudited) | (Audited) | |
Trade receivables | 63,766 | 74,107 |
Notes receivables | 3,448 | 3,396 |
67,214 | 77,503 | |
Less: Impairment of trade receivables | (4,003) | (4,436) |
63,211 | 73,067 | |
An ageing analysis of the trade receivables as at the end of the reporting period, based on the invoice date is as follows:
30 June | 31 December | |
2020 | 2019 | |
US$'000 | US$'000 | |
(Unaudited) | (Audited) | |
Within 3 months | 54,298 | 68,034 |
3 months to 6 months | 4,031 | 1,585 |
6 months to 12 months | 2,088 | 2,145 |
Over 1 year | 3,349 | 2,343 |
63,766 | 74,107 | |
Less: Impairment of trade receivables | (4,003) | (4,436) |
59,763 | 69,671 | |
62 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
12. CASH AND CASH EQUIVALENTS AND PLEDGED DEPOSITS
30 June | 31 December | |||
2020 | 2019 | |||
US$'000 | US$'000 | |||
(Unaudited) | (Audited) | |||
Cash and bank balances | 706,693 | 252,397 | ||
Time deposits | 173,050 | 148,693 | ||
Pledged short-term deposits | 3,142 | 972 | ||
882,885 | 402,062 | |||
Less: Pledged for credit cards | (256) | (256) | ||
Pledged for bills payable | (2,886) | (716) | ||
Time deposits | (173,050) | (148,693) | ||
Cash and cash equivalents | 706,693 | 252,397 | ||
Denominated in USD | 614,674 | 159,058 | ||
Denominated in HKD | 2,283 | 1,531 | ||
Denominated in RMB | 79,401 | 88,154 | ||
Denominated in CHF | 692 | 362 | ||
Denominated in EUR | 1,892 | 1,406 | ||
Denominated in SGD | 4,259 | - | ||
Denominated in GBP | 551 | 631 | ||
Denominated in JPY | 2,941 | 1,255 | ||
Cash and cash equivalents | 706,693 | 252,397 | ||
At the end of the reporting period, the cash and bank balances of the Group denominated in Renminbi ("RMB") amounted to US$79,401,000 (31 December 2019: US$88,154,000). The RMB is not freely convertible into other currencies, however, under Mainland China's Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business.
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are pledged for bills payable. The bank balances and pledged deposits are deposited with creditworthy banks with no recent history of default. The carrying amounts of the cash and cash equivalents approximate to their fair values.
Interim Report 2020 | 63 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
13. TRADE AND BILLS PAYABLES
30 June | 31 December | |
2020 | 2019 | |
US$'000 | US$'000 | |
(Unaudited) | (Audited) | |
Trade payables | 19,435 | 14,559 |
Bills payable | 3,298 | 3,068 |
22,733 | 17,627 | |
As at 30 June 2020 and 31 December 2019, the ageing analysis of the trade payables based on the invoice date, is as follows:
30 June | 31 December | |
2020 | 2019 | |
US$'000 | US$'000 | |
(Unaudited) | (Audited) | |
Within 3 months | 18,646 | 13,666 |
3 months to 6 months | 415 | 678 |
6 months to 12 months | 197 | 105 |
Over 1 year | 177 | 110 |
19,435 | 14,559 | |
Trade payables are not interest-bearing and are normally settled on terms of 60 to 90 days.
64 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
14. OTHER PAYABLES AND ACCRUALS
30 June | 31 December | ||||||||||
2020 | 2019 | ||||||||||
US$'000 | US$'000 | ||||||||||
(Unaudited) | (Audited) | ||||||||||
Payables for purchases of machinery and | |||||||||||
construction of buildings | 33,156 | 32,560 | |||||||||
Accrued payroll | 25,890 | 23,210 | |||||||||
Accrued expenses | 42,223 | 64,740 | |||||||||
Other payables | 18,983 | 3,327 | |||||||||
Taxes payable other than corporate income tax | 3,680 | 1,198 | |||||||||
123,932 | 125,035 | ||||||||||
15. INTEREST-BEARING BANK LOANS | |||||||||||
30 June 2020 | 31 December 2019 | ||||||||||
Effective | Effective | ||||||||||
interest | interest | ||||||||||
Note | rate (%) | Maturity | US$'000 | rate (%) | Maturity | US$'000 | |||||
Current | |||||||||||
Bank loans - unsecured | 3.2-3.5 | 2021 | 48,005 | 2.4-3.8 | 2020 | 16,456 | |||||
Current portion of | |||||||||||
long term bank | |||||||||||
loans - secured | (a) | 0.32 | 2021 | 558 | 0.32 | 2020 | 552 | ||||
48,563 | 17,008 | ||||||||||
Non-current
- Non-currentportion of
- long term bank
loans - secured | (a) | 0.32 2022-2024 | 1,487 | 0.32 2021-2024 | 1,748 |
Interim Report 2020 | 65 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
15. INTEREST-BEARING BANK LOANS (CONTINUED)
30 June | 31 December | |
2020 | 2019 | |
US$'000 | US$'000 | |
Analysed into: | ||
Bank loans repayable: | ||
Within one year or on demand | 48,563 | 17,008 |
In the second year | 558 | 552 |
In the third to fifth years, inclusive | 929 | 1,196 |
50,050 | 18,756 | |
- Certain of the Group's bank loan is secured by the land and buildings with book value of approximately US$11,594,000 (2019:US$11,547,000).
16. CONTRACT LIABILITIES
Details of contract liabilities as at 30 June 2020 and 31 December 2019 are as follows:
30 June | 31 December | |
2020 | 2019 | |
US$'000 | US$'000 | |
(Unaudited) | (Audited) | |
Non-current | ||
Licence and collaboration revenue | 256,749 | 277,827 |
Current | ||
Licence and collaboration revenue | 44,334 | 46,294 |
Rendering of services | 12,805 | 13,403 |
Sales of products | 5,444 | 433 |
62,583 | 60,130 | |
319,332 | 337,957 | |
Contract liabilities are recognised as revenue upon the Group satisfying its performance obligations under the agreement.
66 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
17. SHARE CAPITAL AND SHARE PREMIUM
Shares
30 June | 31 December | |
2020 | 2019 | |
US$'000 | US$'000 | |
(Unaudited) | (Audited) | |
Authorised: | ||
Ordinary shares (of US$0.001 each) | 5,000 | 5,000 |
Issued and fully paid: | ||
Ordinary shares (of US$0.001 each) | 1,918 | 1,879 |
A summary of movements in the Company's share capital and share premium is as follows:
Share | Treasury | Share | |||
Number of | capital | shares | premium | Total | |
shares in issue | US$'000 | US$'000 | US$'000 | US$'000 | |
At 1 January 2020 | 1,878,376,650 | 1,879 | (7,774) | 368,781 | 362,886 |
Issue of ordinary shares for initial public | |||||
offering of Legend Cayman | - | - | - | 690,520 | 690,520 |
Shares repurchased | - | - | (9,460) | - | (9,460) |
Dividend declared | - | - | - | (14,879) | (14,879) |
Exercise of share options | 39,546,136 | 39 | - | 6,288 | 6,327 |
At 30 June 2020 | 1,917,922,786 | 1,918 | (17,234) | 1,050,710 | 1,035,394 |
Interim Report 2020 | 67 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
18. SHARE OPTION SCHEME
- The Company
During the six months ended 30 June 2020, under the Company's Post-IPO share option scheme, the Company granted performance-based share options to certain employees, which are generally vested over a 5-year term. The performance goals are determined by the board of directors. For those awards, evaluations are made as of each reporting period to assess the likelihood of performance criteria being met. Share-based compensation expenses are then adjusted to reflect the reversion of original estimates.
Share options do not confer rights on the holders to dividends or to vote at shareholders' meetings. The only condition for vesting is service condition.
For the six months ended 30 June | ||||
2020 | 2019 | |||
Weighted | Weighted | |||
average | Number | average | Number | |
exercise price | of options | exercise price | of options | |
US$ | '000 | US$ | '000 | |
per share | per share | |||
At 1 January | 0.4765 | 227,418 | 0.3444 | 261,842 |
Granted during the period | 1.7857 | 5,525 | - | - |
Forfeited during the period | 1.7753 | (2,716) | 3.3710 | (200) |
Exercised during the period | 0.1160 | (39,546) | 0.0842 | (24,470) |
At 30 June | 0.5707 | 190,681 | 0.3695 | 237,172 |
68 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
18. SHARE OPTION SCHEME (CONTINUED)
- The Company (continued)
The exercise prices and exercise periods of the share options outstanding as at the end of the reporting period are as follows:
30 June 2020 | Exercise price* | Exercise period |
Number of options | US$ | |
'000 | per share | |
194 | 0.0515 | 2013/08/10~2025/07/31 |
68,016 | 0.0617 | 2014/12/31~2025/07/31 |
35,795 | 0.0772 | 2010/12/31~2025/07/31 |
1,432 | 0.1029 | 2013/02/10~2025/07/31 |
8,316 | 0.1552 | 2016/06/22~2026/06/21 |
9,874 | 0.3102 | 2017/09/23~2026/09/22 |
22,812 | 0.4514 | 2019/04/25~2027/04/25 |
10,255 | 1.0672 | 2019/12/31~2027/10/10 |
8,080 | 1.1969 | 2019/12/31~2027/11/19 |
5,525 | 1.7857 | 2021/04/29~2030/04/28 |
1,935 | 1.7948 | 2018/11/29~2023/11/28 |
4,045 | 2.3444 | 2020/07/19~2029/07/18 |
5,335 | 2.4444 | 2020/11/29~2029/11/28 |
9,067 | 3.3710 | 2019/01/01~2028/05/03 |
190,681 | ||
Interim Report 2020 | 69 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
18. SHARE OPTION SCHEME (CONTINUED)
- The Company (continued)
30 June 2019 | Exercise price* | Exercise period |
Number of options | US$ | |
'000 | per share | |
672 | 0.0026 | 2008/05/12~2019/12/31 |
13 | 0.0072 | 2008/09/26~2019/07/31 |
30 | 0.0139 | 2012/11/08~2019/07/31 |
194 | 0.0515 | 2013/08/10~2025/07/31 |
64,176 | 0.0617 | 2014/12/31~2025/07/31 |
57,462 | 0.0772 | 2010/12/31~2025/07/31 |
38,100 | 0.1029 | 2013/02/10~2025/12/31 |
8,316 | 0.1552 | 2016/06/22~2026/06/21 |
11,185 | 0.3102 | 2017/09/23~2026/09/22 |
24,813 | 0.4514 | 2019/04/25~2027/04/24 |
11,175 | 1.0672 | 2019/12/31~2027/10/10 |
8,635 | 1.1969 | 2019/12/31~2027/11/19 |
3,001 | 1.7948 | 2018/11/29~2028/11/28 |
9,400 | 3.3710 | 2019/01/01~2028/05/03 |
237,172 | ||
- The exercise price of the share options is subject to adjustment in the case of rights or bonus issues, or other similar changes in the Company's share capital.
The fair value of the share options granted during the period was US$4,840,000 (US$0.8761 each) (for the period ended 30 June 2019: Nil). The Group recognised a share option expense of US$5,985,000 (for the period ended 30 June 2019: US$4,772,000) during the six months ended 30 June 2020.
70 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
18. SHARE OPTION SCHEME (CONTINUED)
- The Company (continued)
The fair value of equity-settled share options granted during the period was estimated as at the date of grant, using a binomial model, taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used:
30 June 2020 | 30 June 2019 | |
Dividend yield (%) | - | N/A |
Expected volatility (%) | 47-48 | N/A |
Risk-free interest rate (%) | 0.64 | N/A |
Expected life of options (year) | 10 | N/A |
Weighted average share price | ||
(HK$ per share) | 13.84 | N/A |
The volatility measured at the standard deviation of expected share price returns is based on statistical analysis of comparable listed companies in the same industry.
At the end of reporting period, the Company had 190,681,000 share options outstanding under the Scheme. The exercise in full of the outstanding share options would, under the present capital structure of the Company, result in the issue of 190,681,000 additional ordinary shares of the Company, an additional share capital of approximately US$190,681 and a share premium of approximately US$108,620,000 (before issue expenses).
- The Legend
During the six months ended 30 June 2020, under the Company's Legend Share Option Scheme, the Company granted performance-and-time-based share options to certain employees, which are generally vested over a 5-year term. The performance goals are determined by the board of directors. For those awards, evaluations are made as of each reporting period to assess the likelihood of performance criteria being met. Share-based compensation expenses are then adjusted to reflect the reversion of original estimates.
Share options do not confer rights on the holders to dividends or to vote at shareholders' meetings.
Interim Report 2020 | 71 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
18. SHARE OPTION SCHEME (CONTINUED)
- The Legend (continued)
The following share options were outstanding during the period:
For the six months ended 30 June | ||||
2020 | 2019 | |||
Weighted | Weighted | |||
average | Number | average | Number | |
exercise price | of options | exercise price | of options | |
US$ | '000 | US$ | '000 | |
per share | per share | |||
At 1 January | 0.9273 | 18,013 | 0.7786 | 14,331 |
Granted during the period | 11.5000 | 90 | - | - |
At 30 June | 1.2571 | 18,103 | 0.7786 | 14,331 |
The exercise prices and exercise periods of the share options outstanding as at the end of the reporting period are as follows:
30 June 2020 | Exercise price* | Exercise period |
Number of options | US$ | |
'000 | per share | |
6,347 | 0.5000 | 2019/12/25~2027/12/25 |
7,283 | 1.0000 | 2019/07/01~2028/08/29 |
656 | 1.0000 | 2019/12/31~2028/12/30 |
3,225 | 1.5000 | 2020/07/02~2029/07/01 |
502 | 11.5000 | 2020/11/29~2029/11/28 |
90 | 11.5000 | 2021/06/05~2030/06/05 |
18,103 | ||
72 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
18. SHARE OPTION SCHEME (CONTINUED)
- The Legend (continued)
30 June 2019 | Exercise price* | Exercise period |
Number of options | US$ | |
'000 | per share | |
7,288 | 1.0000 | 2019/01/01~2028/08/29 |
6,347 | 0.5000 | 2019/12/25~2027/12/25 |
696 | 1.0000 | 2019/12/31~2028/12/30 |
14,331 |
- The exercise price of the share options is subject to adjustment in the case of rights or bonus issues, or other similar changes in the Company's share capital.
The fair value of the share options granted during the period was US$712,260 (US$7.9140 each) (for the period ended 30 June 2019: Nil). The Group recognised a share option expense of US$640,000 (for the period ended 30 June 2019: US$778,000) during the six months ended 30 June 2020.
The fair value of equity-settled share options granted during the period was estimated, using a binomial model, taking into account the terms and conditions upon which the options were granted. The following table lists the inputs to the model used:
30 June 2020 | 30 June 2019 | |
Dividend yield (%) | - | N/A |
Expected volatility (%) | 87.2 | N/A |
Risk-free interest rate (%) | 0.91 | N/A |
Expected life of options (year) | 10 | N/A |
Weighted average share price | ||
(US$ per share) | 11.5 | N/A |
The volatility measured at the standard deviation of expected share price returns is based on statistical analysis of comparable listed companies in the same industry.
Interim Report 2020 | 73 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
18. SHARE OPTION SCHEME (CONTINUED)
- The Legend (continued)
At the end of reporting period, the Legend had 18,103,000 share options outstanding under the Scheme. The exercise in full of the outstanding share options would, under the present capital structure of the Company, result in the issue of 18,103,000 additional ordinary shares of the Legend, an additional share capital of approximately US$1,810 and a share premium of approximately US$22,756,000 (before issue expenses).
19. RESTRICTED STOCK SHARES
- The Company
The Company operates a restricted stock units scheme (the "RSU Scheme") for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group's operations. Eligible participants of the Scheme include the Company's directors, including independent non-executive directors, and employees of any member of the Group. The Scheme became effective on March 22, 2019 unless otherwise cancelled or amended. The Scheme has a performance vesting condition and is subject to forfeiture if the participants cannot meet certain performance target set by the board of directors.
The movements in the number of RSUs outstanding for the period ended 30 June 2020 were as follows:
For the six months ended 30 June | ||
Numbers | Numbers | |
2020 | 2019 | |
'000 | '000 | |
At 1 January | 1,198 | - |
Granted during the period | 930 | - |
Forfeited during the period | (40) | - |
At 30 June | 2,088 | - |
The fair value of the restricted stock units granted during the period was US$ 1,661,000(US$1.786 each) (for the period ended 30 June 2019: Nil), of which the Group recognised a restricted stock units expense of US$809,000 (for the period ended 30 June 2019: Nil) during the period ended 30 June 2020.
74 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
19. RESTRICTED STOCK SHARES (CONTINUED)
- The Legend
The Company operates a restricted stock unit plan (the "RSU Plan") for the purpose of providing incentives and rewards to eligible participants who contribute to the success of the Group's operations. Eligible participants of the Plan include the Company's directors, including independent non-executive directors, and employees of any member of the Group. The Plan became effective on May 26, 2020 unless otherwise cancelled or amended.
The movement in the number of RSU outstanding for the period ended 30 June 2020 was as follows:
For the six months ended 30 June | ||
Numbers | Numbers | |
2020 | 2019 | |
'000 | '000 | |
At 1 January | - | - |
Granted during the period | 52 | - |
At 30 June | 52 | - |
The fair value of the restricted stock units granted during the period was US$598,000 (US$11.5 each) (for the period ended 30 June 2019: Nil), of which the Group recognised a restricted stock units expense of US$28,000 (for the period ended 30 June 2019: Nil) during the period ended 30 June 2020.
20. COMMITMENTS
- The Group had the following capital commitments at the end of the period:
30 June | 31 December | |
2020 | 2019 | |
US$'000 | US$'000 | |
(Unaudited) | (Audited) | |
Contracted, but not provided for: Construction of buildings | 53,735 | 42,177 |
- The Group has various lease contracts that have not yet commenced as at 30 June 2020. The future lease payments for these non-cancellable lease contracts are US$318,000 (31 December 2019: US$262,000) due within one year, and US$35,000 (31 December 2019: US$22,000) due in the second to fifth years.
Interim Report 2020 | 75 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
21. RELATED PARTY TRANSACTIONS
Details of the Group's principal related parties are as follows: | ||
Company | Relationship | |
Hunan Gomeet Biotechnology Co., Ltd. | Associate | |
("Gomeet") | ||
Maple Bio (Nanjing) Co., Ltd. | Associate | |
("Maple Bio Nanjing") | ||
Maple Bio HK Limited | Associate | |
("Maple Bio HK") | ||
Maple Bio | Associate | |
("Maple Bio") | ||
Gourd Therapeutics, Inc. | Associate | |
("Gourd") | ||
Nanjing Golden Maple Management Consulting | Associate |
- Partnership (Limited Partnership)
- ("Golden Maple")
GenScript Corporation | The ultimate holding company |
("GS Corp") |
- In addition to the transactions detailed elsewhere in these financial statements, the Group had the following transactions with related parties during the reporting period:
For the six months ended 30 June | |||
2020 | 2019 | ||
Notes | US$'000 | US$'000 | |
(Unaudited) | (Unaudited) | ||
Sales of products to Gomeet | (i) | 93 | 204 |
Sales of products and service to Maple Bio Nanjing | (i) | 22 | 9 |
Loans to Maple Bio Nanjing | (ii) | 212 | - |
Notes:
- The prices are mutually agreed after taking into account the prevailing market prices.
- The loans to Maple Bio Nanjing were unsecured, interest-bearing and repayable within one year.
76 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
21. RELATED PARTY TRANSACTIONS (CONTINUED)
- Outstanding balances with related parties:
The Group had the following significant balances with its related party during the reporting period:
- Due from related parties
30 June | 31 December | |
2020 | 2019 | |
US$'000 | US$'000 | |
(Unaudited) | (Audited) | |
Maple Bio Nanjing | 2,277 | 2,026 |
Maple Bio HK | 406 | 1 |
GS Corp | 201 | 55 |
Maple Bio | 89 | 89 |
Gomeet | 67 | 97 |
3,040 | 2,268 | |
Excepted for the balance amounting to US$2,189,000 with Maple Bio Nanjing (2019: US$2,007,000) which was unsecured, interest-bearing and repayable within one year, the other balances are unsecured, interest- free and have no fixed terms of repayment.
- Compensation of key management personnel of the Group:
For the six months ended 30 June | ||
2020 | 2019 | |
US$'000 | US$'000 | |
(Unaudited) | (Unaudited) | |
Short-term employee benefits | 1,129 | 825 |
Pension scheme contributions | 3 | 16 |
Equity-settled share option expense | 246 | 340 |
Total compensation paid to key management personnel | 1,378 | 1,181 |
Interim Report 2020 | 77 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
22. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS
The carrying amounts and fair values of the Group's financial instruments, other than those with carrying amounts that reasonably approximate to fair values, are as follows:
Carrying Amount | Fair Values | ||||
30 June | 31 December | 30 June | 31 December | ||
2020 | 2019 | 2020 | 2019 | ||
US$'000 | US$'000 | US$'000 | US$'000 | ||
(Unaudited) | (Audited) | (Unaudited) | (Audited) | ||
Financial Assets | |||||
Trade and notes receivables | 67,214 | 77,503 | 63,211 | 73,067 | |
Financial assets included in | |||||
prepayments, other receivables | |||||
and other assets | 5,764 | 3,689 | 5,730 | 3,655 | |
Financial assets at fair value | |||||
through profit or loss | 54,997 | 30,101 | 54,997 | 30,101 | |
Pledged short-term deposits | 3,142 | 972 | 3,142 | 972 | |
Time deposits | 173,050 | 148,693 | 173,050 | 148,693 | |
Cash and cash equivalents | 706,693 | 252,397 | 706,693 | 252,397 | |
1,010,860 | 513,355 | 1,006,823 | 508,885 | ||
Financial liabilities | |||||
Trade and bills payables | 22,733 | 17,627 | 22,733 | 17,627 | |
Financial liabilities included in other | |||||
payables and accruals (Note 14) | 52,139 | 35,887 | 52,139 | 35,887 | |
Interest-bearing bank loans | 50,050 | 18,756 | 50,050 | 18,756 | |
124,922 | 72,270 | 124,922 | 72,270 | ||
78 | GENSCRIPT BIOTECH CORPORATION |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
22. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (CONTINUED)
Management has assessed that the fair values of cash and cash equivalents, time deposits, pledged short-term deposits, financial assets included in prepayments, other receivables and other assets, financial assets at fair value through profit or loss, trade receivables, trade and bills payables, financial liabilities included in other payables and accruals, interest-bearing bank loans approximate to their carrying amounts largely due to the short-term maturities of these instruments.
The Group's finance department headed by the chief finance officer is responsible for determining the policies and procedures for the fair value measurement of financial instruments. The finance department reports directly to the chief finance officer. At each reporting date, the finance department analyses the movements in the values of financial instruments and determines the major inputs applied in the valuation. The valuation is reviewed and approved by the chief finance officer. The valuation process and results are discussed with the directors once a year for annual financial reporting.
The fair values of the financial assets and liabilities are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values of those financial assets and liabilities measured at fair value:
The fair values of the financial assets at fair value through profit or loss have been calculated by discounting the expected future cash flows using rates currently available for instruments with similar terms, credit risk and remaining maturities.
Interim Report 2020 | 79 |
Notes to Interim Condensed Consolidated Financial Information
30 June 2020
22. FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (CONTINUED)
Fair value hierarchy
The following tables illustrate the fair value measurement hierarchy of the Group's financial instruments.
Assets measured at fair value: | ||||
As at 30 June 2020 (Unaudited) | ||||
Fair value measurement using | ||||
Quoted prices | Significant | Significant | ||
in active | observable | unobservable | ||
markets | inputs | inputs | ||
(Level 1) | (Level 2) | (Level 3) | Total | |
US$'000 | US$'000 | US$'000 | US$'000 | |
Financial assets at fair value through | ||||
profit or loss: | - | 54,997 | - | 54,997 |
- | 54,997 | - | 54,997 | |
As at 31 December 2019 | ||||
Fair value measurement using | ||||
Quoted prices | Significant | Significant | ||
in active | observable | unobservable | ||
markets | inputs | inputs | ||
(Level 1) | (Level 2) | (Level 3) | Total | |
US$'000 | US$'000 | US$'000 | US$'000 | |
Financial assets at fair value through | ||||
profit or loss: | - | 30,101 | - | 30,101 |
- | 30,101 | - | 30,101 | |
23. APPROVAL OF THE FINANCIAL STATEMENTS
The financial statements were approved and authorized by the board of directors on 29 August 2020.
80 | GENSCRIPT BIOTECH CORPORATION |
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