For FY2020, FY2021, FY2022 and the nine months ended 30 September 2023, we incurred subcontracting fees of approximately HK$71.0 million, HK$48.9 million, HK$91.6 million and HK$57.2 million for our construction site works, representing approximately 29.3%, 32.9%, 39.8% and 34.9% of our total purchases, respectively.
Summary · p. 1
According to the Industry Report, it is common for structural steelwork contractors in Hong Kong to engage subcontractors to perform construction site works. Our executive Directors confirm that our subcontracting arrangement is in line with normal market practice.
Business · p. 206
In general, works performed by our subcontractors are inspected and monitored by our project management team based on our quality management system, environmental management system and occupational health and safety management system which are in conformity with the requirements of ISO 9001, ISO 14001 and ISO 45001 standards, respectively.
In 2020, 2021, 2022 and the six months ended June 30, 2022 and 2023, subcontracting costs amounted to RMB252.8 million, RMB285.5 million, RMB290.2 million, RMB143.9 million and RMB155.4 million, respectively, which accounted for 96.6%, 96.6%, 89.9%, 94.4% and 88.3% of our total cost of sales, respectively.
Business · p. 204
We typically select qualified subcontractors that meet our service standards through open tendering.
Business · p. 205
We also conduct annual surveys among commercial banks, retail banks and dealerships regarding the quality of services provided by our subcontractors.
For the years ended December 31, 2020, 2021 and 2022 and the six months ended June 30, 2023, the total subcontracting fees we paid to our appointed subcontractors were RMB24.6 million, RMB85.3 million, RMB101.1 million and RMB38.8 million, respectively, representing 37.2%, 42.0%, 46.9% and 49.0% of our total cost of sales, respectively.
Summary · p. 10
We categorize our subcontractors by the services type they can provide, and maintain more than 15 subcontractors in each category.
Business · p. 200
As we are ultimately accountable to our customers for the performance of our subcontractors under the contract or under applicable laws, we strictly manage and supervise the quality, schedule, health, safety and environmental records of our subcontractors.
During the Track Record Period, our subcontracting charges amounted to approximately RMB69.2 million, RMB86.6 million, RMB121.6 million and RMB63.2 million, respectively, representing approximately 42.6%, 51.5%, 64.1% and 69.2% of our total operating expenses (being the aggregate of our employee benefit expenses, subcontracting charges, material, supplies and other project costs, depreciation and amortisation, net impairment losses of contract assets and trade receivables and other operating expenses) in the corresponding years/period, respectively.
Business · p. 220
Subcontracting charges paid to our five largest subcontractors in each year/period during the Track Record Period in aggregate accounted for approximately 57.2%, 54.5%, 56.5% and 61.2%, respectively, of our total subcontracting charges, while subcontracting charges paid to our largest subcontractor in each year/period during the Track Record Period accounted for approximately 21.5%, 21.9%, 19.9% and 22.6%, respectively, of our total subcontracting charges.
Business · p. 227
Although we had relied on subcontracting arrangement during the Track Record Period, our Directors consider that there is no undue reliance on our part considering that (i) we had not relied on any single subcontractor for the provision of subcontracted services during the Track Record Period; (ii) we had not experienced any material disruption in obtaining subcontracted services which may materially and adversely affect or delay our delivery of services or products to our customers during the Track Record Period; and (iii) there are plenty of subcontractors providing similar services in the market and thus the risk of shortage or delay in the provision of necessary services is low and we are unlikely to encounter any material difficulty in engaging a substitute subcontractor on similar terms if needs arise.
Save for the personnel from our project management team, which include, among others, project manager, technical supervisor, construction officer, mechanical officer, procurement officer, labour officer, standardisation officer, safety officer, quality officer and information officer, all of our construction labour force and specialised construction workers were provided by third party subcontractors.
Business · p. 169
We believe that by engaging subcontractors, our Group can (i) deploy our valuable resources and focus on our core business needs which consist of project bidding, project management, cost control, quality control, occupational health and safety management and construction schedule; (ii) circumvent the tedious administrative processes of hiring full-time employees such as recruitment, training and payroll management; (iii) minimise legal risks and obligations; (iv) minimise the risks of labour shortage;
Business · p. 169
We select subcontractors with higher level of compliance records, ethical standards, and quality of works, among other important commercial terms considerations, we have maintained a list of approved suppliers for all significant and strategic suppliers, including labour subcontractors and specialised construction subcontractors.
In 2020, 2021 and 2022 and the six months ended June 30, 2023, our purchase amount from Jabil was nil, RMB16.7 million, RMB65.8 million and RMB19.6 million, respectively.
Business · p. 207
While we engaged Jabil to produce our LiDAR products in the past, we currently only engage them for the production of certain components for our products, as we are gradually shifting the production of our LiDAR products in-house.
Business · p. 207
In 2020, 2021 and 2022 and the six months ended June 30, 2023, our purchase amount from Luxvision (which includes purchase amount from Luxsense given that Luxsense is an indirect subsidiary of Luxvision) was nil, nil, RMB77.5 million and RMB54.0 million, respectively.
We also leverage contract manufacturers to produce certain products, mainly including humanoid Alpha Mini and smart robotic appliances, to increase the flexibility of our production capacity and optimize our production network.
Business · p. 239
For FY2020, FY2021, FY2022 and 6M2023, the amount of subcontracting service fee paid by us was RMB80.3 million, RMB105.8 million, RMB63.8 million and RMB6.9 million, respectively, accounting for 19.6%, 18.8%, 8.9% and 3.3%, respectively, of our total cost of sales for the corresponding year/period.
Business · p. 293
During the introduction stage of new products and services, our production manufacturing team and our contract manufacturers are jointly responsible for process planning to ensure compliance with our specifications and quality requirements.
Unlike the IDM model where companies perform design, manufacturing, packaging and testing of IC products, companies operating with a fabless model focus on the design process, and outsource the IC manufacturing to foundries.
Business · p. 212
Although we currently do not operate any manufacturing facilities, we have a number of policies in place to select and continuously evaluate the foundries and ensure compliance with the relevant requirements.
Business · p. 246
We evaluate the selected foundries periodically to ensure that they are in continuous compliance with our internal control requirements and provide qualified supplies in a timely manner.
In terms of the involvement and contributions of each of the major CDMO partners (including CMOs) to the development of our product candidates, we collaborate with our CDMO partners to manufacture a portion of our product candidates to supply for preclinical studies and clinical trials.
Business · p. 321
We retain all the intellectual property rights and grant our CDMO partners the right to use our intellectual property rights for such manufacturing and packaging activities during the contract period.
Business · p. 321
CIC is of the view that there are alternative CDMOs on comparable terms with similar quality available in the market.
Since February 2021 and up to the Latest Practicable Date, we carry out substantially all of our mining works comprising demolition, drilling, blasting and excavation works ourselves seeking to reduce the costs of mining but outsource all the refining and logistics works to qualified third-party subcontractors.
Summary · p. 2
Engagement of subcontractors enables us to achieve better cost controls, reduce our capital expenditures and operating cash costs and minimise our exposure to operational risks associated with labour and safety.
Business · p. 233
the percentage of direct labour costs and subcontracting costs to sales (excluding the effect of increase in average selling price of gold bullion) decreased from approximately 11.5% for FY2020 to approximately 9.5% for FY2021, representing an increase in gross profit margin of approximately 2.0% and net profit margin of approximately 1.5%.
Our independent third party processing partners primarily provide processing services for our flavored tea products, such as Little Green Mandarin, while we are responsible to provide adequate tea leaves and packaging materials.
Business · p. 225
Our cost of sales increased by 3.3% from RMB89.3 million in the six months ended June 30, 2022 to RMB92.2 million in the six months ended June 30, 2023, primarily due to the increase in revenue generated from Tea Mama products, resulting in increases in consigned processing expenses and packaging expenses for such products.
Summary · p. 11
Prior to being admitted to our qualified supplier list, supplier candidates shall provide us with nationally recognized third-party test reports for their products and pass our internal sampling tests.
We employ subcontracting arrangements and use various third party service providers in our operations mainly given that (i) cleaning and maintenance services are labour intensive; (ii) we may have a number of ongoing projects from time to time, some of them may be in different provincial-level regions in the PRC; and (iii) we do not own a sufficient number of specialised vehicles to complete certain projects.
Business · p. 200
For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023, our subcontracting labour costs amounted to approximately RMB149.9 million, RMB188.9 million, RMB172.9 million, RMB84.4 million and RMB85.9 million, respectively.
Business · p. 201
For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023, our subcontracting labour cost largely remained stable, amounting to 38.9%, 39.8%, 34.6%, 34.7% and 34.2% of our costs of services, respectively.
For 2020, 2021, 2022 and the five months ended 31 May 2022 and 2023, revenue from the sale of pigs and yellow-feathered broilers raised under the family farm models amounted to RMB7,347.4 million, RMB7,884.6 million, RMB12,884.9 million, RMB3,841.3 million and RMB5,434.6 million, representing 90.2%, 79.6%, 85.7%, 83.8% and 85.4% of our total revenue during the same periods, respectively.
Business · p. 245
On one hand, the family farm models allow us to defer the manual labour processes of pig and poultry production to farm owners and reduce our capital input.
Business · p. 245
We maintain close supervision throughout all stages of farm owners’ operations to ensure they comply with our standards.
During the Track Record Period, we exclusively engaged Modern Creative, which is our connected person as our debt collection agent.
Business · p. 189
We also conduct phone interviews with our debt collection agent and site visits for quality control purpose to monitor its activities thereby ensuring that they are in compliance with rules and regulations with respect to their collection activities on our behalf.
Business · p. 190
We pay a fixed minimum quarterly fee plus an extra service fee (if applicable) to Modern Creative.
As it is customary in China's construction industry, aside from personnel in our project management department, we generally do not employ our own construction labor force.
Business · p. 305
According to our subcontracting contracts, we usually make progress payments to our subcontractors and retain approximately 3% to 5% of the settlement amount of the subcontracted portion until the expiry of the defect liability period.
Business · p. 306
As we have limited control over our third-party labor service providers, we cannot assure that such service providers will always perform up to our required standard.
Due to surging demand for our services, we started outsourcing externally manufacturing of antibody intermediates in 2021, which significantly increased our indirect production cost and overhead.
Financial Information · p. 302
Our net profit margin decreased from 29.8% in the six months ended June 30, 2022 to 17.8% in the six months ended June 30, 2023, primarily due to the increase in our indirect production cost and overheads incurred for the outsourcing of antibody intermediate manufacturing.
Summary · p. 18
We expect the dual-function production line to enable us to meet a large portion of our own antibody intermediate requirements.
In order to better meet market demands and ensure adequate supply for our diversified product offerings, we cooperate with reliable OEMs to produce a portion of products primarily for dealing with short-term demand surges (e.g. during the rice harvest season) and for catering to certain of our customers' demands for products manufactured with paddies from designated regions.
Business · p. 191
We do not rely on any single OEM supplier, and we maintain good relationships with multiple OEM suppliers throughout the Track Record Period.
Business · p. 191
The production volume attributed to OEM production increased from 7.5 thousand tons in the three months ended March 31, 2022 to 24.8 thousand tons in the three months ended March 31, 2023, primarily due to certain customers' demands for products manufactured with paddies from designated regions, and we also leverage such increased engagement of OEM suppliers in or near the same region to increase efficiency of delivery and control logistics costs.
Our top five suppliers in each year or period during the Track Record Period in aggregate accounted for 13.7%, 21.7%, 26.4% and 38.3% of our total purchases in 2020, 2021, 2022 and in the three months ended March 31, 2023, respectively.
Business · p. 244
Our five largest suppliers shifted from a mix of hardware vendors and development service providers in 2020 to consisting entirely development service providers in 2021, primarily because of our increased demand for third party technology services driven by our enhanced research and development efforts and the expansion of our business.
Business · p. 247
We are entitled to all copyrights in relation to the R&D projects, including but not limited to the technical materials, documents, source codes and applications.
In line with the practice in the pharmaceutical industry, we engage CROs, SMOs, CMOs/CDMOs and third-party research centers (i.e., hospitals and laboratory centers) to conduct and support our pre-clinical studies and clinical trials.
Business · p. 444
Besides manufacturing conducted at our own facilities, we currently also engage third-party CMOs/CDMOs for (i) the production for pivotal clinical trials of M701, (ii) the manufacturing for pre-clinical studies and clinical trials of Y101D, which require larger production volumes.
Business · p. 451
M701 and Y101D, the drug candidates that we expect to be firstly commercialized, will be initially manufactured by CDMOs upon marketing approval and later transferred to our own expanded manufacturing facility upon approval by competent regulatory authorities.