WuXi AppTec Announces Strong First-Quarter 2019 Results

Revenue RMB2,769 Million, up 29.3%

Net Profit Attributable to Owners of the Company RMB386 Million, up 33.0% Year-Over-Year

Diluted EPS RMB0.33, up 6.5% Year-Over-Year[1]

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Apr 29, 2019, 19:30 ET

SHANGHAI, April 29, 2019 /PRNewswire/ -- WuXi AppTec Co., Ltd. (stock code: 603259.SH / 02359.HK), a leading global pharmaceutical and medical device open-access capability and technology platform company with global operations, announces its financial results for first quarter 2019.

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

The 2019 First Quarterly Report of the Company has not been audited.

Financial Highlights

Strong revenue growth of 29.3% year-over-year to RMB2,769 million.
Gross profit grew 27.2% year-over-year to RMB1,055 million. Gross profit margin was 38.1%.^[2]
Net profit attributable to owners of the Company increased 33.0% year-over-year to RMB386 million.
Adjusted non-IFRS net profit attributable to owners of the Company grew 28.3% year-over-year to RMB519 million.
Diluted EPS and adjusted non-IFRS EPS increased by 6.5% and 4.7%, respectively.^[3]

Management Comment

"We are off to a solid start in 2019 with strong growth momentum," said Dr. Ge Li, Chairman and CEO of WuXi AppTec. "Our strong revenue growth was broad-based across all business segments, especially our clinical research and other CRO services. While achieving good revenue growth, we continuously invested in new capabilities and capacities, including talent, laboratories, manufacturing facilities and technologies."

"In the first quarter of 2019, our subsidiary WuXi STA's new drug product manufacturing facility in Shanghai, since its inception at the end of 2018, has passed its first GMP inspection by the European Medical Products Agency (MPA). In addition, three of our Laboratory Testing Division's facilities, Drug Safety Testing, Bioanalytical Services and Medical Device Testing, completed regulatory inspections by the US FDA (Food and Drug Administration), OECD (Organization for Economic Co-operation and Development), and CNAS (China National Accreditation Service for Conformity Assessment), all with excellent results. Moreover, our newly built Qidong research and development center began operation, and will become an extension of our Shanghai headquarter in the future."

"We believe these investments will build on our solid foundation sustaining our growth. At WuXi AppTec, we will continue to relentlessly enhance our platform with the most comprehensive and cutting-edge technologies so we can fulfill our dream that 'every drug can be made and every disease can be treated'." Dr. Li concluded.

First-Quarter 2019 Results

First-quarter 2019 revenue increased 29.3% year-over-year to RMB2,769 million. We experienced strong revenue growth across all business segments, especially for our clinical research and other CRO services.
First-quarter 2019 gross profit increased 27.2% year-over-year to RMB1,055 million. Gross profit margin was 38.1%, slightly lower than 38.7% in first-quarter 2018[4] primarily given we continued to enhance capabilities and build capacity. We also paid more incentives, including share-based compensation, to our employees, to sustain talent.
First-quarter 2019 net profit attributable to owners of the Company increased 33.0% year-over-year to RMB386 million. We experienced significant synergies across business segments and increased customer conversion rate by fully leveraging the strength of our "integrated end-to-end" R&D services platform.

First-Quarter 2019 Non-IFRS Results

First-quarter 2019 non-IFRS net profit attributable to owners of the Company increased 32.0% year-over-year to RMB523 million. This adjusts for RMB32 million share-based payments, RMB99 million foreign exchange-related effects and RMB5 million amortization of intangible assets acquired.

First-Quarter 2019 Adjusted Non-IFRS Results

Excluding a further RMB10 million realized and unrealized gains from our venture investments and RMB6 million losses from our joint ventures, first-quarter 2019 adjusted non-IFRS net profit attributable to owners of the Company increased 28.3% year-over-year to RMB519 million.

^[1] As of Mar 31, 2018 and Mar 31, 2019, we had 938 million and 1,170 million ordinary shares, respectively.

^[2] If prepared under Accounting Standard for Business Enterprises of PRC, the gross profit grew 26.1% year over year to RMB1,056 million. Gross profit margin was 38.1%.

^[3] As of Mar 31, 2018 and Mar 31, 2019, we had 938 million and 1,170 million ordinary shares, respectively.

^[4] If prepared under Accounting Standard for Business Enterprises of PRC, first-quarter 2019 gross profit increased 26.1% year-over-year to RMB1,056 million. Gross profit margin was 38.1%, slightly lower than 39.1% in first-quarter 2018.

Reconciliation of Non-IFRS and Adjusted Non-IFRS Net Profit Attributable to Owners of the Company^[5]

RMB million	Quarter ended 31/3/2019	Quarter ended 31/3/2018
Profit Attributable to Owners of the Company	386	291
Add:	136	105
Share-based compensation expense	32	7
Listing expenses	-	1
Foreign exchange gain or losses	99	93
Amortization of acquired intangible assets from merge and acquisition	5	4
Non-IFRS profit attributable to Owners of the Company	523	396
Add：	(4)	9
Realized and unrealized gains or losses from venture investments	(10)	5
Realized and unrealized share of losses of joint ventures	6	4
Adjusted Non-IFRS net profit attributable to owners of the Company	519	405

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

Consolidated Statement of Profit or Loss^[6]

RMB million	Quarter ended 31/3/2019	Quarter ended 31/3/2018	YoY Change

Revenue	2,769	2,142	29.3%
Cost of services	(1,714)	(1,312)	30.6%
Gross profit	1,055	829	27.2%
Other income	60	20	199.8%
Other gains and losses	(261)	(108)	141.8%
Impairment losses under expected credit losses ("ECL") model	(2)	1	-309.0%
Impairment losses, net of reversal	-	-	-
Selling and marketing expenses	(105)	(73)	43.6%
Administrative expenses	(301)	(204)	47.6%
Research and development expenses	(112)	(69)	61.9%
Operating Profit	335	396	-15.5%
Share of profits (losses) of associates	187	(6)	-3165.9%
Share of losses of joint ventures	(6)	(4)	70.6%
Finance costs	(13)	(21)	-38.5%
Profit before tax	503	366	37.5%
Income tax expenses	(90)	(62)	45.3%
Profit for the year	414	304	35.9%

Profit for the year attributable to:
Owners of the Company	386	291	33.0%
Non-controlling interests	27	14	99.6%
	414	304	35.9%

Weighted average number of ordinary shares for the purpose of calculating (express in shares)
– Basic	1,163,307,960	937,787,000	24.0%
– Diluted	1,164,499,919	937,787,000	24.2%

Earnings per share (express in RMB per shares)
– Basic	0.33	0.31	6.5%
– Diluted	0.33	0.31	6.5%

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

Consolidated Statement of Financial Position^[7]

RMB million	2019/3/31	2018/12/31

Non-current Assets
Property, plant and equipment	6,275	6,058
Goodwill	1,137	1,144
Other intangible assets	352	348
Prepaid lease payments	271	272
Interests in associates	834	619
Interests in joint ventures	31	37
Deferred tax assets	240	250
Financial assets at fair value through profit or loss ("FVTPL")	1,905	2,079
Other non-current assets	191	47
Right-of-use assets	685	-
Total Non-current Assets	11,921	10,854

Current Assets
Inventories	866	855
Contract costs	116	98
Amounts due from related parties	12	14
Trade and other receivables	2,719	2,499
Contract assets	345	385
Prepaid lease payments	6	6
Income tax recoverable	9	34
Financial assets at FVTPL	2,583	2,125
Derivative financial instruments	73	37
Pledged bank deposits	3	3
Bank balances and cash	5,111	5,758
Total Current Assets	11,844	11,813

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

Consolidated Statement of Financial Position (continued)^[8]

RMB million	2019/3/31	2018/12/31

Current Liabilities
Trade and other payables	2,247	2,611
Amounts due to related parties	12	12
Derivative financial instruments	61	153
Contract liabilities	628	682
Borrowings	240	120
Income tax payables	252	184
Rental liabilities-current	39	-
Total Current Liabilities	3,479	3,762

Non-current Liabilities
Borrowings	15	15
Deferred tax liabilities	120	112
Deferred income	410	419
Rental liabilities	742	-
Provision	14	-
Other long-term liabilities	96	194
Total Non-current liabilities	1,397	740

Total Liabilities	4,876	4,502

Net Assets	18,888	18,165

Capital and Reserves
Share capital	1,170	1,165
Reserves	17,216	16,523
Equity attributable to owners of the Company	18,386	17,688
Non-controlling interests	502	477
Total Equity	18,888	18,165

^[8] If the sum of the data below is inconsistent with the total, it is caused by rounding.

About WuXi AppTec

WuXi AppTec is a leading global pharmaceutical and medical device open-access capability and technology platform company with global operations. As an innovation-driven and customer-focused company, WuXi AppTec provides a broad and integrated portfolio of services to help our worldwide customers and partners shorten the discovery and development time and lower the cost of drug and medical device R&D through cost-effective and efficient solutions. With its industry-leading capabilities such as small molecule drug R&D and manufacturing, cell therapy and gene therapy R&D and manufacturing, drug R&D and medical device testing, WuXi platform is enabling more than 3,500 innovative collaborators from more than 30 countries to bring innovative healthcare products to patients, and to fulfill WuXi's dream that "every drug can be made and every disease can be treated."

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, and our ability to protect our clients' intellectual property. 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.

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

We provide non-IFRS net profit attributable to owners of the Company and earnings per share, which exclude share-based compensation expenses, listing expenses for offering of our A shares and H shares, foreign exchange-related gains or losses and amortization of intangible assets acquired in business combinations. We further provide an adjusted non-IFRS net profit attributable to owners of the Company and earnings per share, which 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 and non-recurring items that we do not consider indicative of the performance of our core business. 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.

SOURCE WuXi AppTec