Essex Bio-Tech (Essex Bio-Technology Limited) reported a sharp earnings contraction for the six months ended 30 June 2026 as new tax rules and tighter compliance requirements weighed on sales and margins.

Turnover fell 10.5% year-on-year to HK$784.69 million after a VAT hike on biologics in Mainland China squeezed selling prices. Gross profit margin narrowed to 83.6% from 88.8%, while net profit declined 32.2% to HK$110.72 million. Basic earnings per share dropped to HK19.53 cents (1H 2025: HK28.82 cents).

The Board declared an interim dividend of HK$0.05 per share, down from HK$0.07 a year earlier.

Segment performance • Ophthalmology revenue fell 12.0% to HK$367.21 million. • Surgical (wound care) revenue contracted 24.0% to HK$341.23 million. • Healthcare and Partner Services surged to HK$76.25 million, up 648%, lifting its share of group turnover to 9.7%.

Biologic drugs in the Beifushu® and Beifuji® portfolios accounted for 78.2% of total turnover.

Cost structure and investment Distribution and selling expenses fell 15.9% to HK$396.52 million, reflecting lower marketing outlays. Administrative expenses rose 27.1% to HK$126.88 million, driven by foreign-exchange movements, overseas expansion and higher R&D spending. Total R&D expenditure (capitalised and expensed) amounted to HK$51.02 million, or 6.5% of turnover.

Financial position • Cash and cash equivalents: HK$806.63 million (up 3.1% from end-2025). • Net assets: HK$2.55 billion (up 5.6%). • Bank borrowings: HK$324.48 million; gearing ratio edged down to 0.30. • Current ratio improved slightly to 2.15. • Capital commitments stood at HK$170.03 million, mainly for a second factory and R&D projects.

Pipeline and development Key late-stage ophthalmic assets include the SkQ1 dry-eye candidate (phase III ongoing) and HLX04-O anti-VEGF therapy for wet AMD, for which a Biologics License Application has been accepted by China’s NMPA. These two programmes have absorbed HK$842.00 million in cumulative investment, representing 23.3% of total assets.

Outlook Management cited higher VAT, expanded volume-based procurement and intensified compliance inspections as continuing headwinds but intends to mitigate their impact through digital engagement, expansion into lower-tier cities and the ramp-up of healthcare service revenue streams.

The interim dividend will be paid on 2 September 2026 to shareholders registered on 24 August 2026.