国药一致(000028)一致Ｂ2005年年度报告摘要（英文）

Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2005 §1 Important Notes 1.1 Board of Directors and Supervisory Committee of Shenzhen Accord Pharmaceutical Co., Ltd. (hereinafter referred to as the Company) and its directors, supervisors and senior executives individually and collectively accept responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there are neither material omissions nor errors which would render any statement misleading. The summary of the Annual Report is abstracted from the full text of the Annual Report and the investors are suggested to read the full text of the Annual Report for details. 1.2 No directors, supervisors and senior executives stated any objection for the correctness, accuracy and completeness of the contents of this report. 1.3 Independent director Mr. Sui Guangjun asked for a leave due to other business so did not attend the 11th Meeting of the 4th Board for examining Annual Report 2005, he entrusted in writing independent director Ms. Chen Shu to present and exert voting right on his behalf. 1.4 Shanghai Shu Lan Pan Certified Public Accountants audited the Company’s Financial Report and issued a standard unqualified Auditors’ Report for the Company. 1.5 Chairman of the Company Mr. Chen Weigang, General Manager Mr. Shi Jinming and Chief Financial Officer Mr. Wei Pingxiao hereby confirm that the Financial Report enclosed in the Annual Report is true and complete. §2 Company Profile 2.1 Basic information Short form of the stock Accord Pharm., Accord Pharm.-B Stock code 000028, 200028 Listed stock exchange Shenzhen Stock Exchange Registered address: Shenzhen, China Registered address and Office address: Accord Pharm. Bulg., Ba Gua Si Road No. 15, Futian office address District, Shenzhen, Guangdong Province Post code of registered address: 518029 Post code Post code of office address: 518029 Internet web site of the www.szaccord.com.cn Company E-mail of the Company investor@szaccord.com.cn 2.2 Contact person and method Secretary of the Board of Directors Name Chen Changbing Contact address Accord Pharm. Bulg., Ba Gua Si Road No. 15, Futian District, Shenzhen, Guangdong Province Telephone +(86) 755 - 25875195 Fax +(86) 755 - 25875166 E-mail 0028@szaccord.com.cn §3 Summary of Accounting Data and Financial Indexes 3.1 Major accounting data Unit: RMB Increase/decrease over last 2003 2005 2004 year (%) After adjustment Before adjustment Income from main 1,635,568,517.10 1,576,085,283.69 3.77% 1,729,174,762.27 1,780,873,731.82 operation Total profit 41,619,934.83 25,657,456.44 62.21% 11,745,225.46 12,233,020.20 Net profit 35,765,331.72 27,254,148.36 31.23% 15,190,725.18 15,190,725.18 Net profit after deducting non-recurring gains and 35,956,065.32 23,700,002.32 51.71% 7,969,026.63 7,969,026.63 losses Net cash flow arising from 148,275,068.00 130,295,006.15 13.80% 68,016,376.91 81,221,254.92 operating activities Increase/decrease over last At the end of 2003 At the end of 2005 At the end of 2004 year (%) After adjustment Before adjustment Total assets 1,072,448,048.81 846,186,796.73 26.74% 984,428,227.33 1,008,326,556.03 Shareholder’s equity (excluding minority 393,721,269.08 358,197,820.37 9.92% 338,235,106.36 341,584,149.93 interests) 3.2 Major financial indexes Unit: RMB Increase/decrease 2003 2005 2004 over last year (%) After adjustment Before adjustment Earnings per share 0.124 0.095 30.53% 0.053 0.053 Return on equity 9.08% 7.61% Up 1.47% 4.49% 4.45% Return on equity calculated based on net profit after deducting non-recurring 9.13% 6.62% Up 2.51% 2.36% 2.33% gains and losses Net cash flow per share arising from 0.515 0.452 13.94% 0.236 0.282 operating activities At the end of At the end of Increase/decrease At the end of 2003 2005 2004 over last year (%) After adjustment Before adjustment Net assets per share 1.366 1.243 9.90% 1.174 1.185 Net assets per share after adjustment 1.342 1.193 12.49% 1.092 1.110 Items of non-recurring gains and losses √Applicable □Inapplicable Unit: RMB Items Amount 1. Gains and losses rising from disposal of long-term equity investment, construction in-progress, fixed assets, intangible -1,471,198.52 assets and other long-term assets 2. Other various non-operating income and cost after deducting withdrawal of depreciation reserve based on 38,228.04 Enterprise Accounting System of PRC 3. Switching back withdrawal of various depreciation reserve 1,244,585.81 in previous year 4. Influenced amount by income tax -2,348.93 Total -190,733.60 3.3 Difference in net profit as audited by Chinese Accounting Standard (CAS) and International Accounting Standard (IAS) √Applicable □Inapplicable Unit: RMB CAS IAS Net profit 35,765,331.72 41,398,507.70 The difference was mainly due to balance amortization of equity investment rising Explanation on the from trading in used assets on new in previous years, as well as unconfirmed difference investment losses adjustment rising form excess deficit of subsidiaries in 2005. §4 Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share (Unit: share) Increase / decrease in this Before the change After the change time (+, -) Subtotal I. Unlisted Shares 1. Sponsors’ shares 150,935,400 0 150,935,400 Including: State-owned share 124,864,740 0 124,864,740 Domestic legal person’s 26,070,660 0 26,070,660 shares Foreign legal person’s shares 0 0 0 Others 0 0 0 2. Raised legal person’s 27,442,800 0 27,442,800 shares 3. Inner employees’ shares 0 0 0 4. Preference shares or others 0 0 0 Total of unlisted shares 178,378,200 0 178,378,200 II. Listed Shares 1. RMB ordinary shares 54,885,600 0 54,885,600 2.Domestically listed foreign 54,885,600 0 54,885,600 shares 3. Overseas listed foreign 0 0 0 shares 4. Others 0 0 0 Total of listed shares 109,771,200 0 109,771,200 III. Total shares 288,149,400 0 288,149,400 4.2 Statement of shares held by the top ten shareholders and the top ten shareholders holding shares in circulation Unit: share Total number of shareholders at the end of report period 31,026 Particulars about shares held by the top ten shareholders Numbers of Number of share Nature of Proportion of Total of shares Full name of Shareholders non-circulating pledged/ shareholder shares held held shares held frozen SINOPHARM Medicine State-owned 43.33% 124,864,740 124,864,740 0 Holding Co., Ltd. shareholder Shenzhen Baoan District Shiyan Town Economic and Other 9.05% 26,070,660 26,070,660 16,079,700 Development Corporation Shenzhen Baoan Shangwu Economic and Development Other 4.84% 13,942,800 13,942,800 13,846,000 Co., Ltd. Shenzhen Wangzong Other 1.84% 5,303,200 5,303,200 0 Industrial Co., Ltd. Nanjing Junyue Investment Other 1.74% 5,000,000 5,000,000 0 and Consultation Co., Ltd. Wuxi Huaxin Investment Other 0.48% 1,396,800 1,396,800 0 Management Co., Ltd. Shanghai Shisheng Enterprise Other 0.35% 1,000,000 1,000,000 0 Development Co., Ltd. Shanghai Huaxia Yifu Other 0.28% 80,000 80,000 0 Investment Co., Ltd. CHEN YONGQUAN Other 0.17% 509,922 0 0 FAN HUIQIONG Other 0.17% 484,900 0 0 Particulars about shares held by the top ten shareholders of circulation shares Number of circulation shares held Shareholders’ name (full name) Type of shares at the year-end CHEN YONG QUAN 509,922 Domestically listed foreign share FAN HUI QIONG 484,900 Domestically listed foreign share YAO JIAN PING 341,800 RMB Common share EVERPOINT INVESTMENTS LIMITED 320,000 Domestically listed foreign share CHEN ZE BING 313,400 Domestically listed foreign share JIANG XIAO MING 309,950 Domestically listed foreign share WU XIN 300,000 RMB Common share YANG YUAN ZHOU 294,500 Domestically listed foreign share ZHANG YAN DONG 270,000 RMB Common share NI WEI 210,100 Domestically listed foreign share Explanation on associated relationship among the top ten The Company had no idea about the relationship among the top ten shareholders of circulation share shareholders of circulation shares. 4.3 Particulars about controlling shareholders and actual controller of the Company 4.3.1 Particulars about change in controlling shareholders and actual controller of the Company □Applicable √Inapplicable 4.3.2 Introduction to the situation of controlling shareholder and other actual controller I. The controlling shareholder of the Company Name of the controlling shareholder: SINOPHARM. Medicine Holding Co., Ltd. Legal representative: Zheng Hong Date of foundation: Jan. 8, 2003 Registered capital: RMB 1,027,953,725 Nature of economic: state-owned holding company Business scope: the wholesale of Chinese patent medicines (including ginseng, pilose antler and silver mushroom), chemical material, a chemical agent, antibiotics, biochemical, biological, diagnosis drug, industry investment, entrusted management and assets reorganization of pharmaceutical enterprises, domestic trade (barring specific permission), logistics supply and relevant consultant services (in right of exequatur to run if refers to permission operation). II. Particulars about the actual controller: Name of the actual controller: China National Pharmaceutical Group Co. Headquarter Legal representative: Zheng Hong Date of foundation: Mar. 1, 1988 Registered capital: RMB 857,490,000 Nature of economic: state-owned sole company Business scope: entrusted management and assets reorganization of pharmaceutical enterprises, consultant service of medicine industry investment project, holding exhibition and fair of surgical appliance, the wholesale of Chinese medicine, Chinese patent medicines, Chinese medicine herb in pieces, chemical material medicine, a chemical agent, antibiotics, biochemical, biological. The underling exclusively invested company and controlling subsidiary of China National Pharmaceutical Group Co. Headquarter includes: China Medicine Industry Co., SINOPHARM Medicine Co., Ltd., China Medicine Foreign Trade Co., China Medical Appliance Co., China Drugs Group, SINOPHARM Medicine Holding Co., Ltd., SINOPHARM Exhibition Co., Ltd., Sichuan Antibiotics Industrial Institute of China Medicine Group Headquarter, Union Engineering Co. of China National Pharmaceutical Group Co. and SINOPHARM Advertising Co., Ltd.. 4.3.3 The property and controlling relationship between the actual controller of the Company and the Company is as follows: The state-owned Assets Supervision & Administration Commission of the State Council 100% China National Pharmaceutical Group Co. 51% SINOPHARM Medicine Holding Co., Ltd. 43.33% Shenzhen Accord Pharmaceutical Co., Ltd. §5 Particulars about Directors, Supervisors, Senior Executives 5.1 Particulars about changes in shares held by directors, supervisors and senior executives and their payments Total payments Drawing payment Shares held Shares held drew from the from Reason at the at the Company in the shareholder’s Name Title Sex Age Office term of year-begin year-end report period company or other change (share) (share) (RMB’0000) related units or not Chen Chairman of Jan. 13, 2005 – Yes Male 47 0 0 0.00 Weigang the Board Sep. 28, 2007 Wu Director Jan. 13, 2005 – Yes Male 36 0 0 0.00 Ai’ming Sep. 28, 2007 Zuo Jie Director Jan. 13, 2005 – Yes Male 34 0 0 0.00 Sep. 28, 2007 Shi Director, No Jan. 13, 2005 – Jinming General Male 38 0 0 40.00 Sep. 28, 2007 Manager Yin Jumin Director Sep. 28, 2004 – Yes Male 57 0 0 0.00 Sep. 28, 2007 Zou Jun Director Sep. 28, 2004 – Yes Male 34 0 0 0.00 Sep. 28, 2007 Chen Shu Independent Sep. 28, 2004 – No Female 51 0 0 6.00 Director Sep. 28, 2007 Sui Independent Sep. 28, 2004 – No Male 44 0 0 6.00 Guangjun Director Sep. 28, 2007 Peng Juan Independent Sep. 28, 2004 – No Female 41 0 0 6.00 Director Sep. 28, 2007 Zhu Dixin Supervisor Jan. 13, 2005 – No Male 58 0 0 24.00 Jan. 13, 2008 Shen Supervisor Jan. 13, 2005 – No Male 56 0 0 21.00 Tianfang Jan. 13, 2008 Zhao Supervisor Jan. 13, 2005 – Yes Male 37 0 0 0.00 Junpeng Jan. 13, 2008 Ou Deputy General Jan. 13, 2005 – No Male 47 0 0 30.00 Jianneng Manager Sep. 28, 2007 Tian Deputy General Jan. 13, 2005 – No Male 51 0 0 30.00 Guoshu Manager Sep. 28, 2007 Yan Deputy General Jan. 13, 2005 – No Male 46 0 0 30.00 Zhigang Manager Sep. 28, 2007 Lin Deputy General Jan. 13, 2005 – No Male 41 0 0 30.00 Xinyang Manager Sep. 28, 2007 Wei Financial chief Dec. 7, 2004 – No Male 42 0 0 30.00 Pingxiao supervisor Sep. 28, 2007 Total - - - - - 253.00 - §6. Report of the Board of Directors 6.1 Discussion and analysis to the whole operation in the report period In 2005, it is the first year of substantive operation for State-controlling into the Company. Taking around the ideas of “Taking care of the life, protecting the health” and the policies of “Persisting in the quality management, striving for one famous enterprise”; building integrated operation platform with conformity of the administrative structure and property reorganization of the Company; optimizing unceasingly the business flow and interior controlling system; strengthening the control in the expenses; transforming the management ideas; and promoting the operation quality of the Company. Under the environment of drop of profit-gaining in medicine, three businesses of the Company still kept fast development and completed the management target the Company preplanned. In the aspect of pharmaceuticals wholesaling, the Company integrated the internal resources, adjusted the organization structure, strengthened credit administration to realize effective sales, optimized the supply chain system of “Purchase-Flow-Sale”, realized advantageous supplements in type and sales network of large shareholder Sinopharm Medicine Holding Co., Ltd with new structures and business operation of the Company; and stabilized Medicine top one in the Shenzhen Market. In the aspect of manufacturing pharmaceuticals industry, with the influence of policy dropping in the price of antibiotic drugs, the Company adjusted timely the marketing strategies, promoted unceasingly the sales scale and market shares; meanwhile, emphasized the development and sales scales of antibiotic products, expanded positively the marketing network, and the management achievements were upgraded. In the aspect of pharmaceuticals retailing, Accord Chain was in ultra-saturated retail sales terminal market and keen competition environment. On the one hand, the Company adjusted the type structures; on the other hand, continued to develop the medicine chain networks in Pearl Delta; enhanced the market coverage; took actively the measures like promotion activities, enhancement of service level, taking in special counter products; researching for new growth of profits and obtained obvious economic results and market effects. 6.2 Statement of main operations classified according to industries or products Unit: RMB’0000 Main operations classified according to industries Classified according Income from Cost of main Gross Increase/decrease Increase/decreas Increase/decrease to industries or main operations operations profit in income from e in cost of main in gross profit ratio products ratio (%) main operations operations over over the last year over the last year the last year (%) (%) (%) Medical industry 50,787.09 24,886.55 51.00% 11.32% 19.55% -3.37% Medical wholesale 169,199.65 162,430.54 4.00% 2.06% 2.53% -0.44% Medical retail 22,126.98 17,524.66 20.80% -4.06% -2.81% -1.02% Less: Counteracting between internal 78,556.86 78,599.42 - - - - industries Total 163,556.85 126,242.33 22.81 3.77 4.95 -0.87 Including: related 11,278.08 5,455.84 51.62 223.48 211.49 1.86 transactions Notes: 1. The price of related transactions were on the basis of market price. 2. Combining the Jan. to Oct. sales of Chinese and Western Medicine Industry in 2004, excluding 2005; influence the sales income of decreasing of RMB67,943,000; combining the Jan. to Dec. sales of Chinese and Western Medicine Industry in 2004, combining the Jan. to July sales of Chinese Medicine Factory in 2005, influence the sales income of decreasing RMB22,289,300; if excluding the reason of consolidating sheet and calculated on calibration, 2004 actual income of the Company amounted to RMB1,485,853,000 .RMB149,715,500 increased in the report period compared to the last period, and the ratio of increasing was 10.08%. Main operations classified according to industries Isedyl cough syrup 24,299.84 4,632.63 80.94% 49.74% 38.10% 1.61% Cef. Series of 22,865.11 18,509.95 19.05% -3.34% 26.38% -19.03% products Jian’er antipyretic 1,795.87 623.09 65.30% -35.75% -49.16% 9.15% liquid Including: related 7,350.14 1,637.97 77.72 118.70 97.97 2.34 transactions Pricing principle Market price adopted Necessity and 1. Related transactions of the Company, with making profit as objective, transacted fairly based on market price, durative of related accorded with market economy principles. transactions 2. Related transactions took small part of the total sales amount, which didn’t impact the Company severely. 3. To enlarge market share and decrease costs, relevant related transactions of the Company would be necessary and durative. 6.3 Particulars about main operations classified according to areas Unit: RMB’0000 Areas Income from main operations Increase/decrease in income from main operations over the last year (%) Domestic sales 163,195.80 4.61% Oversea sales 361.06 -77.48% 6.4 Application of the raised proceeds □Applicable √Inapplicable Particulars about changed projects: □Applicable √Inapplicable 6.5 Application of the proceeds not raised through shares offering √Applicable □Inapplicable Unit: RMB’0000 Name of project Amount of project Progress of project Income of project Ended the report period, costing for this project amounted to RMB The project has not been Project of Medicine R& D 23,000.00 40,267,700 in the report accomplished yet ended the report Base period and totaled period. 49,625,400 and accounting for 21% Total 23,000.00 - - 6.6 Explanation of the Board of Directors on the “Qualified Opinion” made by the Certified Public Accountants □Applicable √Inapplicable 6.7 The preplan on the profit distribution and capitalization of capital public reserve of the Board of Directors √Applicable □Inapplicable With the principle of taking the lower amount of the two was adopted in the profit distribution promulgated by CAS and IAS. In 2005, profits for distribution were amounted to RMB 17,134,827.17.According to the related laws and the Articles of Association, the profit distribution plan for 2005 was as follows: after 10% net profit appropriating as statutory reserve amounted to RMB 3,932,395.69 confirmed by CAS and 5% net profit appropriating as statutory reserve amounted to RMB 1,966,197.84confirmed by CAS, in the report period, the profit for distribution of the shareholders were amounting to RMB 11236233.64. Calculated on the released shares of 288,149,400, cash dividends for every 10 share was RMB 0.38(including tax), and the total amount for cash dividend was amounting to RMB 10,949,677.20; the surplus of profits for distribution amounted to RMB 286,556.44 and were transferred to annual distribution. The Company did not convert capital reserve into share capital. The said distribution plan should be submitted to the 2005 Annual Shareholders’ General Meeting for consideration. The Company made profit but did not present preplan on cash profit distribution. □Applicable √Inapplicable §7. Significant Events 7.1 Purchase of assets √Applicable □Inapplicable Unit: RMB’0000 Assets Net profit Credit and rights contributed to the Related liability The other party Assets Date of Price of Explanation on price concerned Company from transaction concerned of transaction purchased purchasing purchasing setting transferred purchasing date to or not shifted fully ownership the end of 2005 or not fully or not Exchange Price setting 90% share based on audition for equity of shareholder’s equity SINOPHARMM SINOPHARM against to transfer edicine Medicine Jan 12, 2006 10,673.11 0.00 Yes target by Shinewing Yes Yes Holding Co., (Guangzhou) CPAs dated Base Ltd. Holding Co., Day (April 30, Ltd. 2005), premium up to 16% 7.2 Sales of assets √Applicable □Inapplicable Unit: RMB’0000 The other Net profit Gains and Related Assets Credit and Assets sold Sales date Sales price Explanation on price setting party of contributed losses rising transactio rights liability transaction to the from sales n or not concerned concerned Company transferred shifted fully from sales ownership or not date to the fully or not end of 2005 The sales were on the basis of net assets after appraisal and confirmation on files with taking the base day May 31, 2005 of the transferring of Jian An Medicine Co., Ltd. The transferring price was RMB 2,250,000, deducting the equity 21% share cost of RMB 3,250,000 and equity held accumulative investment income Shantou from of RMB -1,100,000; and the Xinyuan Shenzhen Oct 20,2005 225.12 16.06 -136.29 No actual transferring income was Yes Yes Trade Co., Jian’an RMB 100,000. RMB 580,000 of Ltd. Medicine provision for capital investment Co., Ltd. calculated into capital reserve and RMB 880,000 of capital investment balance to be amortized of Jian’an Co. during the investment period were switched into the current losses and gains on time, thus the losses of carrying value amounted to RMB 1,360,000. 7.1 & 7.2 items concerned resulting in influence on the continuity of the Company’s business and the stability of the managers According to the development strategy of striving bigger and stronger enterprise and general guideline of “Grasping leading industry, Setting free small industry”, the Company purchased and sold the assets. The purchasing assets was highly correlated with the industry of medicine, sales of assets was to reduce the potential risks of the Company. The matters concerned did no have impact on the continuity of business and stability of management. 7.3 Significant guarantees √Applicable □Inapplicable Unit: RMB’0000 Particulars about the external guarantee of the Company (Barring the guarantee for the controlling subsidiaries) Name of the Date of happening Complete Guarantee Amount of Guarantee Company (date of signing Guarantee type Implementation for related guarantee term guaranteed agreement) or not party (yes or not) Total amount of guarantee in the report period Total balance of guarantee at the end of the report period Guarantee of the Company for the controlling subsidiaries Total amount of guarantee for controlling subsidiaries in the report period 2,380.86 Total balance of guarantee for controlling subsidiaries at the end of the report 2,380.86 period Particulars about the external guarantee of the Company (Including the guarantee for the controlling subsidiaries) Total amount of guarantee 2,380.86 The proportion of the total amount of guarantee in the net assets of the Company 6.05% Including: Amount of guarantee for shareholders, actual controller and its related party 0.00 The debts guarantee amount provided for the guarantee of which the 0.00 assets-liability ratio exceeded 70% directly or indirectly Total amount of guarantee in net assets of the Company exceeded 50% 0.00 Total amount of the aforesaid three guarantees 0.00 7.4 Significant related transactions 7.4.1 Current related purchase and sale √Applicable □Inapplicable Unit: RMB’0000 Selling products and providing Purchasing products and accepting service to related parties service to related parties Related parties Transaction Proportion in the Transaction Proportion in the amount same kind of amount same kind of transaction amount transaction amount Sinopharm Medicine Holding Shanghai Co., Ltd. 2,682.91 1.64% 13.28 0.01% Sinopharm Medicine Holding Shenyang Co., Ltd. 1,748.05 1.07% 0.00 0.00% Sinopharm Medicine Holding Guangzhou Co., Ltd. 1,709.85 1.05% 4,580.22 3.49% Sinopharm Medicine Holding Tianjin Co., Ltd. 1,714.17 1.05% 0.00 0.00% Sinopharm Medicine Guoda Pharmacy Co., Ltd. 994.96 0.61% 28.23 0.02% Shenzhen Chinese and Western Pharmaceutical 697.94 0.43% 534.77 0.41% Company Guangdong Guoda Pharmacy Franchise Co., Ltd. 588.06 0.36% 0.00 0.00% Sinopharm Medicine Holding Hubei Xinlong Co., 512.47 0.31% 0.00 0.00% Ltd. Sinopharm Medicine Holding Xinlong 350.32 0.21% 413.03 0.31% (Guangdong) Co., Ltd. China National Pharmaceutical Group Southwest 69.97 0.04% 0.00 0.00% Medicine Co., Ltd. Guangdong Nanfang Medicine Corporation 56.05 0.03% 96.93 0.07% Sinopharm Medicine Holding Shanxi Co., Ltd. 47.44 0.03% 0.00 0.00% China National Pharmaceutical Group Northwest 38.46 0.02% 0.00 0.00% Medicine Co., Ltd. China National Pharmaceutical Group Shanghai 26.24 0.02% 0.00 0.00% Likang Medicine Co., Ltd. China National Pharmaceutical Group Guangzhou 13.97 0.01% 0.00 0.00% Company Shanghai Donghong Medicine Co., Ltd. 13.25 0.01% 0.00 0.00% Sinopharm Medicine Holding Nanning Co., Ltd. 9.58 0.01% 0.00 0.00% Shanghai Guoda Pharmacy Franchise Co., 4.14 0.00% 0.00 0.00% Ltd. Shanxi Guoda Pharmacy Franchise Co., Ltd. 0.25 0.00% 0.00 0.00% Guangdong Yuexing Medicine Co., Ltd. 0.00 0.00% 2,790.21 2.13% China National Medicines Corporation Ltd. 0.00 0.00% 484.90 0.37% Shenzhen Main Luck Pharmaceutical Inc. 0.00 0.00% 85.65 0.07% Sinopharm Medicine Holding Shenzhen TCM 0.00 0.00% 43.27 0.03% China Medicine Group Company 0.00 0.00% 36.94 0.03% Total 11,278.08 6.90% 9,107.43 6.94% Including: the amount of related transaction Company selling products and supplying labors for controlling shareholders and its subsidiaries amounting to RMB 105,801,400 in the report period 7.4.2 Current related credits and liabilities √Applicable □Inapplicable Unit: RMB’0000 Supply funds to related parties Related parties supplied funds to the Related parties Company Occurred amount Balance Occurred amount Balance Sinopharm Medicine Holding Shanghai Co., 3,094.42 645.78 30.60 1.98 Ltd. Sinopharm Medicine Holding Tianjin Co., Ltd. 2,072.44 0.00 0.00 0.00 Sinopharm Medicine Holding Guangzhou 2,000.52 253.16 10,034.34 665.77 Co., Ltd. Sinopharm Medicine Holding Guoda Pharmacy 1,147.80 374.40 52.52 12.60 Co., Ltd. Shenzhen Chinese and Western Pharmaceutical 827.37 155.25 1,380.55 129.58 Company Guangdong Guoda Pharmacy Franchise 684.42 481.53 0.00 12.33 Co., Ltd. Sinopharm Medicine Holding Hubei Xinlong 640.79 0.00 0.00 0.00 Co., Ltd. Sinopharm Medicine Holding Shenyang Co., 617.29 1.85 0.00 0.00 Ltd. Sinopharm Medicine Holding Guangdong 421.30 164.49 879.67 15.37 Xinlong Co., Ltd. Guangdong Nanfang Medicine 182.99 0.00 235.57 5.74 Corporation China National Pharmaceutical Group 81.86 3.51 0.00 0.00 Southwest Medicine Co., Ltd. China National Pharmaceutical Group Shanghai 57.10 0.00 0.00 0.00 Likang Medicine Co., Ltd. Sinopharm Medicine Holding Shanxi Co., Ltd. 55.50 32.42 0.00 0.00 Sinopharm Medicine Holding Nanning Co., 11.21 11.21 0.00 0.00 Ltd. Shanghai Guoda Pharmacy Franchise 5.62 0.00 0.00 0.00 Co., Ltd. Dongyuan Accord Pharm. Franchise 0.00 98.29 0.00 0.00 Co.,Ltd. Guangdong Yuexing Medicine Co., Ltd. 0.00 0.00 4,789.65 1,483.79 Sinopharm Medicine Holding Shenzhen TCM 0.00 0.00 744.30 107.87 China National Medicines Corporation 0.00 0.00 1,074.57 46.41 Ltd. China Medicine Group Company 0.00 0.00 43.22 24.22 Shenzhen Main Luck Pharmaceutical Inc. 0.00 0.00 173.79 29.95 Sinopharm Shanghai Waigaoqiao 0.00 0.00 0.00 3.19 Medicine Co., Ltd. Shenzhen Nanshan Medicine Company 0.00 0.00 0.00 0.00 Total 11,900.63 2,221.89 19,438.78 2,538.80 Including: in the report period, the capital amount the listed company provided to controlling shareholder and its subsidiaries was RMB 110,732,600 and the balance was RMB 19,683,500. Capital occupied and pay-off scheme □Applicable √Inapplicable 7.5 Entrusted finance □Applicable √Inapplicable 7.6 Implementation of commitments 7.6.1 Commitment of Share Merger Reform 1. Content of commitment On Nov.14, 2005, the principal shareholder Sinopharm Medicine Holding Co., Ltd issued Commitment on Share Merger Reform of Shenzhen Accord Pharmaceutical Co.,Ltd, in which after the approval of the proposal of significant assets reorganization on purchasing 90% equity of Sinopharm Medicine Holding Guangzhou Co., Ltd. In the Shareholder meeting of the Company, the relevant Share Merger Reform would begin, and the relevant plans would be submitted to State-owned Assets Supervision and Administration Commission of the State Council for approval within three months after the publishing of Notice of shareholders’ meeting 2. Implementation of commitment On March 6, 2005, the Company released the notice on Share Merger Reform, issued the plans on Share Merger Reform on March 13, 2006 and adjustment plan on Share Merger Reform on March 22, 2006. The Company informed that it would hold the shareholders’ meeting of A-shares on Apr. 14, 2006. 3. Commitment violation □Applicable √Inapplicable 7.6.2 Other commitments √Applicable □Inapplicable On Feb.18, 2004 Purchase and Sales Agreement was signed between the original principal shareholder Shenzhen Investment& Management Corporation and Sinopharm Medicine Holding Co., Ltd, of which Sinopharm Medicine Holding Co., Ltd committed that the assets and business of its Guangzhou Branch were merged into the Company and carry out resource integration. Since June, 2005, the reorganization between the related parties began, and at the end of 2005 it was completely finished. 7.7 Significant lawsuits and arbitrations □Applicable √Inapplicable §8.Report of the Supervisory Committee √Applicable □Inapplicable 1. In the report year, the Supervisory Committee supervised over the Company’s various work in terms of the procedures of holding the Shareholders’ General Meeting and the Board of Directors, resolutions, implementation of the resolutions of the Shareholders’ General Meeting by the Board of Directors, the Company’s production and operation and management of decision-making according to the law, regulations and Articles of Association, and believed the Company had abided by the Company Law and the Articles of Association in terms of management and operation and ensured its operation according to law. 2. The Supervisory Committee supervised over the duties performed by the directors and senior executives and believed that in daily operation and administration, they were patient and responsible, made decisions in scientific and reasonable way and the procedure of decision-making was normative and legal. They had neither violated the laws, regulations, Articles of Association and resolutions of the Shareholders’ General Meeting, nor had they abused their posts and rights or done harm to the interests of shareholders, the Company or employees. 3. The Supervisory Committee believed the Financial Report of 2005 had objectively and truly reflected the Company’s financial status and operation achievements, and agreed with the standard unqualified Auditors’ Reports issued by Shu Lun Pan Certified Public Accountants Co., Ltd. and Horwath Certified Public Accountants. 4. In the report period, the significant related transaction on the purchasing of significant assets between the Company and the larger shareholder did not do harm to the interest of the Company and its shareholders. The prices of other related transactions had been set based on the market principle and been fair. No actions that would do harm to the interest of the Company had been discovered. §9. Financial Report 9.1 Auditor’s opinions Auditor’s opinions: Standard unqualified auditor’s opinions 9.2 Financial statement 9.3 Explanation on changes of accounting policy, accounting estimation and settlement compared with the latest annual report □Applicable √Inapplicable 9.4 Contents, correct amount, reason and its influence of significant accounting errors □Applicable √Inapplicable 9.5 Explanation on change of consolidated scope compared with the latest annual report √Applicable □Inapplicable From Jan. to Oct. of 2004, 26% equity of another shareholder of Shenzhen Chinese and Western Pharmaceutical Company entrusted the Company to vote and the entrusting period will last to the date of changing legal representative. On Nov.11, 2004, the legal representative of the Company changed, thus the Company actually operated the Shenzhen Chinese and Western Pharmaceutical Company from Jan. to Oct. of 2004 and consolidated its profit distribution and cash flow statement of Jan. to Oct. of 2004, and in the report period, it did not consolidate the statements. The wholly-owned subsidiary of the Company, Shenzhen Traditional Medicine Plant were changed into Shenzhen Traditional Medicine Co., Ltd, the registered capital was changed to RMB 50,000,000 of which 47.39% equity was held by the Company and 52.61% was held by Sinopharm Medicine Holding Co., Ltd. Thus, in the report period, it just consolidated profit distribution and cash flow statements of Jan. to June of 2005, in 2004 it consolidated Year-end balance sheet and Annual profit distribution and cash flow statements. In Sep., 2005, the Company established Shenzhen Accord Logistics Co., Ltd, of which 90% equity was held by the Company and 10% equity was held by Shenzhen Pharmaceutical Plant. In the report period, it did not bring into the scope of consolidation. CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2005 (Expressed in Renminbi thousands) 2005 2004 RMB’000 RMB’000 Turnover 1,635,569 1,576,085 Cost of sales (1,264,585) (1,205,295) Gross profit 370,984 370,790 Other operating revenue 25,403 29,275 Selling and distribution costs (248,325) (294,613) Administrative expenses (105,648) (76,668) Other operating expenses (552) (1,817) Profit from operations 41,862 26,967 Finance costs (401) (7,192) Share of results of associates 6,707 6,406 Loss on disposal of an associate (673) - Profit before taxation 47,495 26,181 Taxation (6,096) (6,944) Profit for the year 41,399 19,237 Attributable to: Equity holders of the parent 41,399 19,907 Minority interests - (670) Profit attributable to shareholders 41,399 19,237 Earnings per share RMB0.144 RMB0.069 CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2005 (Expressed in Renminbi thousands) 2005 2004 RMB’000 RMB’000 Non-current assets Property, plant and equipment 118,840 143,544 Construction in progress 76,568 40,963 Interests in associates 53,373 24,069 Goodwill 19,348 23,476 Other investments 284 284 268,413 232,336 Current assets Inventories 209,692 162,484 Accounts receivable and other receivables 370,772 338,410 Amounts due from related companies 16,729 8,529 Prepayments 28,216 11,521 Cash and bank balances 169,288 80,867 794,697 601,811 Current liabilities Bank loans - due within one year 10,000 12,500 Accounts payable, other payables and accruals 616,947 444,053 Receipts in advance 25,804 19,413 Amounts due to related companies 19,760 7,184 Tax payable 588 2,385 673,099 485,535 Net current assets 121,598 116,276 Net assets 390,011 348,612 Representing: Share capital 288,149 288,149 Reserves 101,862 60,463 Total equity 390,011 348,612 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEAR ENDED 31 DECEMBER 2005 (Expressed in Renminbi thousands) Statutory and discre- tionary Attributable surplus to equity Share Capital reserve Retained holders of Minority Total capital reserve fund earnings the parent interest Equity RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (Note 17) (Note 18) At 1 January 2004 288,149 18,891 57,040 (35,375) 328,705 1,276 329,981 Profit for the year - - - 19,907 19,907 (670) 19,237 Change of status from a subsidiary to an associate - - - - - (606) (606) Profit appropriations - - 9,486 (9,486) - - - At 31 December 2004 288,149 18,891 66,526 (24,954) 348,612 - 348,612 Profit for the year - - - 41,399 41,399 - 41,399 Transfer on reorganisation of a subsidiary - - (692) 692 - - - Profit appropriations - - 5,898 (5,898) - - - At 31 December 2005 288,149 18,891 71,732 11,239 390,011 - 390,011 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2005 (Expressed in Renminbi thousands) 2005 2004 RMB’000 RMB’000 Operating activities Profit before taxation 47,495 26,181 Adjustments for: Interest income (2,041) (3,948) Interest expenses 308 6,524 Depreciation 23,389 26,321 Loss on disposal of property, plant and equipment 34 480 Amortisation of goodwill - 3,913 Goodwill written off 718 2,155 Provision for impairment on revaluation of property, plant and equipment and construction in progress 228 62 Share of results of associates (6,707) (6,406) Gain on disposal of an associate (45) - Loss on short term investments - 5 Provision for impairment in value of other investments - 50 Cash flow from operations before changes in working capital 63,379 55,337 (Increase)/decrease in inventories (52,658) 37,343 (Increase)/decrease in accounts receivables, other receivables and amounts due from related parties (51,065) 1,415 Increase in prepayments (17,345) (6,171) Increase in accounts payable, other payables and accruals receipts in advance and amounts due to related companies 231,246 48,032 Cash generated from operating activities 173,557 135,956 Interest paid (308) (6,524) Income taxes paid (6,958) (7,418) Net cash generated from operating activities 166,291 122,014 CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2005 (Expressed in Renminbi thousands) 2005 2004 Notes RMB’000 RMB’000 Investing activities Interest received 2,041 3,948 Dividend received 2,669 4,168 Purchase of property, plant and equipment (9,073) (6,008) Proceeds from disposal of property, plant and equipment 206 1,542 Payment for construction in progress (35,638) (10,546) Proceeds from disposal of an associate 2,251 - Proceeds from disposal of other investments - 2 Cash outflow on change of status of a consolidated subsidiary to an associate (37,826) (3,933) Net cash used in investing activities (75,370) (10,827) Financing activities New bank loans raised 10,000 119,005 Repayment of bank loans (12,500) (295,000) Net cash used in financing activities (2,500) (175,995) Net increase/(decrease) in cash and cash equivalents 88,421 (64,808) Cash and cash equivalents, at beginning of year 80,867 145,675 Cash and cash equivalents, at end of year 169,288 80,867