WuXi AppTec Reports Solid First-Quarter 2020 Results

Author: WuXi AppTec / 2023-07-23 21:43 / Source: WuXi AppTec

WuXi AppTec Reports Solid First-Quarter 2020 Results

SHANGHAI,April 29,2020 --WuXi AppTec Co.,Ltd. (stock code: 603259.SH / 2359.HK),a company that provides a broad portfolio of R&D and manufacturing services that enable companies in the pharmaceutical,biotech and medical device industries worldwide to advance discoveries and deliver groundbreaking treatments to patients,announces its unaudited financial results for the First-Quarter 2020 ("Reporting Period").

This document serves purely as a summary and is not intended to provide a complete representation of the relevant matters. For further information,please refer to the 2020 first quarterly report and relevant announcements published on the websites of the Shanghai Stock Exchange (www.sse.com.cn) and the Stock Exchange of Hong Kong (www.hkexnews.hk),and the designated media for dissemination of the relevant information. Investors are advised to exercise caution and be aware of the investment risks in dealing in the shares of the Company.

All financials disclosed in this press release are prepared based on International Financial Reporting Standards (or "IFRS").

First-Quarter 2020 Financial Highlights

Revenue grew 15.1% year-over-year to RMB3,188 million,driven by solid growth of our China-based laboratory services and US-based laboratory services.

IFRS gross profit grew 3.9% year-over-year to RMB1,097 million. Gross profit margin was 34.4%,lower than the 38.1% achieved in the same period of 2019[2],mainly because of: (1) the COVID-19 impact on our Wuhan site and clinical research services business,and (2) an increase in share-based compensation expenses.

Non-IFRS gross profit grew 10.3% year-over-year to RMB1,224 million. Non-IFRS gross profit margin was 38.1% compared to 39.9% for the same period in 2019.

EBITDA grew 2.7% year-over-year to RMB746 million.

Adjusted EBITDA grew 22.1% year-over-year to RMB1,035 million.

IFRS net profit attributable to owners of the Company was down 21.6% year-over-year to RMB303 million. In First-Quarter 2020,we experienced a RMB105 million loss from the fair value change of our investment portfolio and a RMB84 million loss of equity pick up from our joint ventures and associates,primarily due to a decline in stock price as of March 31,2020,of certain public companies in our investment portfolio. During the same period in 2019,we reported a RMB189 million loss from the fair value change of our investment portfolio and a RMB181 million gain of equity pick up from our joint ventures and associates.

Adjusted non-IFRS net profit attributable to owners of the Company grew 10.8% year-over-year to RMB576 million.

Adjusted diluted non-IFRS EPS increased by 9.4% to RMB0.35 versus the same period last year,while diluted EPS was down 25.0% to RMB0.18.[3]

[1] In the three months ended March 31,2019 and three months ended March 31,we had a fully-diluted weighted average share count of 1,630 million and 1,638 million ordinary shares,respectively.

[2] If prepared under Accounting Standard for Business Enterprises of PRC,the gross profit grew 4.0% year-over-year to RMB1,098 million. Gross profit margin was 34.5%,lower than the 38.1% achieved during the same period in 2019.

[3]In the three months ended March 31,respectively.

Management Comment

Dr. Ge Li,Chairman and CEO of WuXi AppTec,said,"We achieved solid growth in the first quarter of 2020,in spite of the COVID-19 impact on our Wuhan site,which was closed for almost two months,and dramatically reduced activities in our China clinical research services business. Our revenue grew 15.1% year-over-year to RMB3,188 million and our adjusted Non-IFRS net profit grew 10.8% year-over-year to RMB576 million,which was attributable to the timely implementation of our Business Continuity Plan. We maintained and continue to be in close communication with our global customers through video conferencing."

"For the three months ended March 31,we added over 240 new customers,including 128 global customers,and our number of active customers continued to exceed 3,900. We also continued to make progress across all business segments. As of March 31,our small molecule CDMO/CMO pipeline has grown to more than 1,000 active projects,including 42 projects in Phase III clinical trials and 22 in commercial manufacturing,and our cell and gene therapies CDMO business provided services for 35 clinical stage projects,including 24 projects in Phase I and 11 projects in Phase II/III. During the Reporting Period,our success-based drug discovery unit filed INDs for 6 new-chemical-entities for our customers and obtained 5 CTAs. As of March 31,we have cumulatively submitted 91 new-chemical-entities IND filings for our customers and obtained 62 CTAs."

Dr. Ge Li concluded,"The fundamentals of our business remain very strong. Our laboratories and facilities in China arefully operational and we expect to deliver a strong second quarter. Due to the spreadof COVID-19in the United States,our US operations will be negatively impacted in the second quarter,however,we expect the continued implementation of our Business Continuity Plan to mitigate some of this impact. We are determined to navigate through the COVID-19 crisis in partnership with our global customers,and to assume an even greater responsibility for keeping the R&D and manufacturing engine humming. We are confident that we will win back 2020 and deliver another year of strong growth."

First-Quarter 2020 Adjusted Non-IFRS Results

First-Quarter 2020 adjusted non-IFRS net profit attributable to owners of the Company grew 10.8% year-over-year to RMB576 million. This adjusts for share-based compensation expenses,listing expenses and convertible bonds issuance expenses,fair value gain or loss from conversion option of convertible bonds,foreign exchange-related effects,amortization of intangible assets acquired in business combinations,realized/unrealized gains or losses from our venture investments and realized/unrealized gains or losses from our joint ventures.

Reconciliation of Non-IFRS and Adjusted Non-IFRS Net Profit Attributable

to Owners of the Company[4]

RMB Million

2020Q1

2019Q1

Profit Attributable to the owners of the Company

303

386

Add:

Share-based compensation expenses

117

Listing expenses and issuance expenses of

convertible bonds

Fair value gains from derivative component of

convertible bonds

(15)

Foreign exchange related (gains)/losses

(16)

Amortization of intangible assets acquired in

business combinations

Non-IFRS Net Profit Attributable the owners of the

Company

399

523

Add:

Realized and unrealized (gains)/losses from

venture investments

171

(9)

Realized and unrealized share of losses from

joint ventures

Adjusted non-IFRS net profit attributable to the

owners of the Company

576

520

[4] If the sum of the data below is inconsistent with the total,it is caused by rounding.

EBITDA[5]

RMB Million

Three Months

Ended March

31,2020

Three Months

Ended March

31,2019

Profit before tax

416

503

Add:

Interest expense

Depreciation and amortization

272

210

EBITDA

746

726

% EBITDA margin

23.4%

26.2%

Add:

Share-based compensation expenses

142

Listing expenses and issuance expenses

of convertible bonds

Fair value gain from derivative component

of convertible bonds

(15)

Foreign exchange related (gains)/losses

(17)

115

Realized and unrealized (gains)/losses

from venture investments

171

(9)

Realized and unrealized share of losses

from joint ventures

Adjusted EBITDA

1,035

876

% Adjusted EBITDA margin

32.5%

31.6%

[5] If the sum of the data below is inconsistent with the total,it is caused by rounding.

Consolidated Statement of Profit or Loss and Other Comprehensive Income[6]

RMB million

Three Months

Ended March

31,2019

YoY

Change

Revenue

3,188

2,769

15.1%

Cost of services

(2,091)

(1,714)

22.0%

Gross profit

1,097

1,055

3.9%

Other income

-13.0%

Other gains and losses

(261)

-107.8%

Impairment losses under expected credit

losses ("ECL") model,net of reversal

(2)

-316.5%

Selling and marketing expenses

(119)

(105)

13.7%

Administrative expenses

(370)

(301)

23.0%

Research and development expenses

(126)

(112)

12.7%

Operating Profit

558

335

66.5%

Share of profits (losses) of associates

(77)

187

-141.1%

Share of losses of joint ventures

(7)

(6)

8.4%

Finance costs

(58)

(13)

356.8%

Profit before tax

416

503

-17.4%

Income tax expense

(111)

(90)

23.3%

Profit for the period

305

414

-26.2%

Other comprehensive income (expense)

for the period

Items that may be reclassified

subsequently to profit or loss:

Exchange differences on translation of

financial statements of foreign operations

(60)

-156.0%

hedging instrument designated in cash

flow hedges

(28)

-134.2%

Other comprehensive income for the period,

net of income tax

-68.2%

Total comprehensive income for the period

311

433

-28.1%

[6] If the sum of the data below is inconsistent with the total,it is caused by rounding.

Consolidated Statement of Profit or Loss and Other Comprehensive Income (continued)[7]

RMB million

Three Months

Ended March

31,2019

YoY

Change

Profit for the period attributable to:

Owners of the Company

303

386

-21.6%

Non-controlling interests

-92.4%

305

414

-26.2%

Total comprehensive income for the

period attributable to:

Owners of the Company

310

402

-22.9%

Non-controlling interests

-94.8%

311

433

-28.1%

Weighted average number of ordinary

shares for the purpose of calculating

(express in million shares)

– Basic

1,629

0.0%

– Diluted

1,638

1,630

0.5%

Earnings per share attributable to

ordinary equity holders of the parent

(expressed in RMB per share)[8]

– Basic

0.19

0.24

-20.8%

– Diluted

0.18

0.24

-25.0%

[7] If the sum of the data below is inconsistent with the total,it is caused by rounding.

[8] In July 2019,pursuant to the 2018 Profit Distribution Plan considered and approved by the

shareholders' general meeting,the Company issued 4 shares for every 10 shares of the

Company by way of capitalization of reserves. In accordance with the regulations of the China

Securities Regulatory Commission,the Company has adjusted the basic earnings per share

and diluted earnings per share for the comparative period according to the 2018 Profit

Distribution Plan.

Consolidated Statement of Financial Position[9]

RMB million

March 31,

December 31,

2020

2019

Non-current Assets

Property,plant and equipment

7,675

7,666

Right of use assets

1,562

1,564

Biological Assets

362

360

Goodwill

1,370

1,362

Other intangible assets

497

496

Interest in associates

748

768

Interest in joint ventures

Deferred tax assets

256

262

Financial assets at fair value through profit

or loss ("FVTPL")

4,681

4,009

Other non-current assets

Amount Due from Related Parties

17,235

16,576

Current Assets

Inventories

1,480

1,208

Contract costs

147

180

Biological assets

356

354

Amounts due from related parties

Trade and other receivables

3,439

3,556

Contract assets

400

379

Income tax recoverable

Financial assets at FVTPL

1,300

1,702

Derivative financial instruments

Pledged bank deposits

Bank balances and cash

5,853

5,223

12,996

12,663

Total Assets

30,231

29,239

[9] If the sum of the data below is inconsistent with the total,it is caused by rounding.

Consolidated Statement of Financial Position (continued)[10]

RMB million

March 31,

2020

December 31,

2019

Current Liabilities

Trade and other payables

3,420

3,393

Amounts due to related parties

Derivative financial instruments

112

Contract liabilities

1,054

897

Borrowings

2,213

1,810

Income tax payables

299

261

Financial liabilities at FVTPL

Lease liabilities

164

143

7,305

6,634

Non-current Liabilities

Borrowings

667

762

Convertible bonds – debt component

1,922

1,875

Convertible bonds-embedded derivative

component

287

298

Deferred tax liabilities

179

231

Deferred income

661

667

Other long-term liabilities

233

232

Financial liabilities at FVTPL

Lease liabilities

1,101

1,105

5,075

5,195

Total Liabilities

12,381

11,829

Net Assets

17,851

17,410

Capital and Reserves

Share capital

1,651

Reserves

16,100

15,661

Equity attributable to owners of the Company

17,751

17,312

Non-controlling interests

100

17,410

[10] If the sum of the data below is inconsistent with the total,it is caused by rounding.

About WuXiAppTec

WuXi AppTec provides a broad portfolio of R&D and manufacturing services that enable companies in the pharmaceutical,biotech and medical device industries worldwide to advance discoveries and deliver groundbreaking treatments to patients. As an innovation-driven and customer-focused company,WuXi AppTec helps our partners improve the productivity of advancing healthcare products through cost-effective and efficient solutions. With industry-leading capabilities such as R&D and manufacturing for small molecule drugs,cell and gene therapies,and testing for medical devices,WuXi AppTec's open-access platform is enabling more than 3,900 collaborators from over 30 countries to improve the health of those in need – and to realize our vision that "every drug can be made and every disease can be treated." Please visit: http://www.wuxiapptec.com

Forward-Looking Statements

This press release may contain certain "forward-looking statements" which are not historical facts,but instead are predictions about future events based on our beliefs as well as assumptions made by and information currently available to our management. Although we believe that our predictions are reasonable,future events are inherently uncertain and our forward-looking statements may turn out to be incorrect. Our forward-looking statements are subject to risks relating to,among other things,the ability of our service offerings to compete effectively,our ability to meet timelines for the expansion of our service offerings,our ability to protect our clients' intellectual property,unforeseeable international tension,competition,the impact of emergencies and other force majeure. Our forward-looking statements in this press release speak only as of the date on which they are made,and we assume no obligation to update any forward-looking statements except as required by applicable law or listing rules. Accordingly,you are strongly cautioned that reliance on any forward-looking statements involves known and unknown risks and uncertainties. All forward-looking statements contained herein are qualified by reference to the cautionary statements set forth in this section. All information provided in this press release is as of the date of this press release and are based on assumptions that we believe to be reasonable as of this date,and we do not undertake any obligation to update any forward-looking statement,except as required under applicable law.

Use of Non-IFRS and Adjusted Non-IFRS Financial Measures

We provide Non-IFRS gross profit,exclude the impact in revenue and cost from effective hedge accounting,share-based compensation expenses and amortization of intangible assets acquired in business combinations,and Non-IFRS net profit attributable to owners of the Company,which exclude share-based compensation expenses,listing expenses and issuance expenses of convertible bonds,fair value gain or loss from derivative component of convertible bonds,foreign exchange-related gains or losses and amortization of intangible assets acquired in business combinations. We also provide adjusted Non-IFRS net profit attributable to owners of the Company and earnings per share,which further exclude realized and unrealized gains or losses from our venture investments and joint ventures. Neither is required by,or presented in accordance with IFRS. We believe that the adjusted financial measures used in this press release are useful for understanding and assessing our core business performance and operating trends,and we believe that management and investors may benefit from referring to these adjusted financial measures in assessing our financial performance by eliminating the impact of certain unusual,non-recurring,non-cash and non-operating items that we do not consider indicative of the performance of our core business. Such adjusted Non-IFRS net profit attributable to owners of the Company,the management of the Company believes,is widely accepted and adopted in the industry the Company is operating in. However,the presentation of these adjusted Non-IFRS financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. You should not view adjusted results on a stand-alone basis or as a substitute for results under IFRS,or as being comparable to results reported or forecasted by other companies.