Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
Stock Code: 000028/200028 Short Form of the Stock: Accord Pharm. Accord B
Notice No.: 2009-05
Shenzhen Accord Pharmaceutical Co., Ltd.
Summary of Annual Report 2008
§1. Important Notice
1.1 Board of Directors, Supervisory Committee, all directors, supervisors and senior executives of Shenzhen Accord Pharmaceutical Co.,
Ltd. (hereinafter referred to as the Company) hereby confirm that there are no any fictitious statements, misleading statements, or important
omissions carried in this report, and shall take all responsibilities, individual and/or joint, for the reality, accuracy and completion of the whole
contents. The Summary of Annual Report is abstracted from the full text of Annual Report; the investors are suggested to read the full text of
the Annual Report to understand more details.
1.2 No director, supervisor and senior executive stated that they couldn’t ensure the correctness, accuracy and completeness
of the contents of the Annual Report or have objection for this report.
1.3 Other directors attended the meeting on examining the Annual Report except for the following directors.
Name of absent directors
Reason of absence
Name of entrusted
Fu Mingzhong
Due to business
Wu Ai’min
Wei Yulin
Due to business
Wu Ai’min
1.4 Shulun Pan Certified Public Accountants Co., Ltd. issued standard unqualified Auditors’ Report for
2008 Financial Report of the Company.
1.5 Principal of the Company Mr. Shi Jinming, General Manager Mr. Yan Zhigang, Person in Charge of
Accounting Works Mr. Wei Pingxiao, and Person in Charge of Accounting Organ (Accounting Supervisor) Mr. Chi
Guoguang hereby confirm that the Financial Report of the Annual Report is true and complete.
§2. Company Profile
2.1 Basic information
Short form of the stock
Accord Pharm., Accord-B
Stock code
000028, 200028
Listed stock exchange
Shenzhen Stock Exchange
Registered address
Accord Pharm. Bulg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong Province
Post code of registered address
518029
Office address
Accord Pharm. Bulg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong Province
Post code of office address
518029
Internet web site of the Company
http://www.szaccord.com.cn
E-mail
investor@szaccord.com.cn
1Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
2.2 Contact person and method
Secretary of the Board
Securities Affairs Representative
Name
Chen Changbing
Contact address
Accord Pharm. Bulg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong Province
Telephone
+(86)755 25875195，25875222
Fax
+(86)755 25875147
E-mail
0028@szaccord.com.cn
§3. Summary of Accounting Data and Financial Indexes
3.1 Major accounting data
Unit: RMB
2008
2007
Increase/decrease this year compared with that of last year (%)
2006
Before adjustment
After adjustment
After adjustment
Before adjustment
After adjustment
Operating income
8,360,350,198.18
6,878,305,483.32
6,878,305,483.32
21.55%
5,708,713,814.45
5,708,713,814.45
Total profit
203,497,726.90
191,051,327.11
191,051,087.11
6.51%
115,804,263.69
115,804,189.15
Net profit attributable to shareholders of the listed company
154,807,067.87
124,914,225.45
124,913,985.45
23.93%
80,224,503.01
80,224,428.47
Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses
139,335,035.00
99,427,894.80
99,427,654.80
40.14%
81,756,363.32
81,756,288.78
Net cash flow arising from operating activities
246,580,438.99
87,698,080.01
87,697,840.01
181.17%
181,729,861.80
181,729,787.26
At the end of 2008
At the end of 2007
Increase/decrease at the end of this year compared with that at the end of last year (%)
At the end of 2006
Before adjustment
After adjustment
After adjustment
Before adjustment
After adjustment
Total assets
3,683,974,196.77
2,906,088,133.89
2,911,091,112.38
26.55%
2,642,885,690.85
2,647,888,909.34
Owners’ equity(Shareholders’ equity)
627,986,713.06
484,114,112.10
489,117,090.59
28.39%
390,429,533.85
395,432,752.34
Share capital
288,149,400.00
288,149,400.00
288,149,400.00
0.00%
288,149,400.00
288,149,400.00
3.2 Major financial indexes
Unit: RMB
2008
2007
Increase/decrease this year compared with that of last year (%)
2006
Before adjustment
After adjustment
After adjustment
Before adjustment
After adjustment
2Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
Basic earnings per share (RMB/Share)
0.537
0.434
0.434
23.73%
0.278
0.278
Diluted earnings per share (RMB/Share)
0.537
0.434
0.434
23.73%
0.278
0.278
Basic earnings per share after deducting non-recurring gains and losses (RMB/Share)
0.484
0.345
0.345
40.29%
0.284
0.284
Fully diluted return on equity (%)
24.65%
25.80%
25.54%
-0.89%
20.55%
20.29%
Weighted average return on equity (%)
27.33%
28.26%
27.94%
-0.61%
20.03%
19.81%
Fully diluted return on equity after deducting non-recurring gains and losses (%)
22.19%
20.54%
20.33%
1.86%
20.94%
20.68%
Weighted average return on equity after deducting non-recurring gains and losses (%)
24.59%
22.49%
22.24%
2.35%
20.41%
20.18%
Net cash flow per share arising from operating activities (RMB/Share)
0.856
0.304
0.304
181.58%
0.631
0.631
At the end of 2008
At the end of 2007
Increase/decrease at the end of this year compared with that at the end of last year (%)
At the end of 2006
Before adjustment
After adjustment
After adjustment
Before adjustment
After adjustment
Net asset per share attributable to shareholders of listed company (RMB/Share)
2.179
1.680
1.697
28.40%
1.355
1.372
Items of non-recurring gains and losses
√Applicable □Inapplicable
Unit: RMB
Items of non-recurring gains and losses
Amount
Notes( If applicable)
Gains and losses from the disposal of non-current asset
4,972,517.28
Governmental subsidy calculated into current gains and losses, while closely related with the business of
the Company, excluding the fixed-amount or fixed-proportion governmental subsidy according to the unified
national standard
7,054,099.00
Switch back of provision for devaluation of account receivable which was singly taken devaluation test
4,419,372.88
Other non-operating income and expenditure beside for the above items
1,046,085.24
Influenced amount of minority shareholders’ gains/losses
-165,852.47
Impact on income tax
-1,854,189.06
Total
15,472,032.87
3.3 Differences between CAS and IAS:
□Applicable √Inapplicable
3Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
§4. Changes in Share Capital and Particulars about Shareholders
4.1 Statement of change in share capital
Unit: Share
Before the change
Increase/Decrease of this time (+, -)
After the change
Amount
Proportion
New shares issued
Bonus shares
Capitalization of public reserve
Others
Subtotal
Amount
Proportion
I. Restricted shares
121,946,607
42.32%
-37,966,780
-37,966,780
83,979,827
29.14%
1. State-owned shares
2. State-owned legal person’s shares
112,786,386
39.14%
-28,814,940
-28,814,940
83,971,446
29.14%
3. Other domestic shares
9,149,046
3.18%
-9,149,046
-9,149,046
0
0.00%
Including: Domestic non-state-owned legal person’s shares
9,149,046
3.18%
-9,149,046
-9,149,046
0
0.00%
Domestic natural person’s shares
4. Foreign shares
Including: Foreign legal person’s shares
Foreign natural person’s shares
5. Senior executives’ shares
11,175
0.00%
-2,794
-2,794
8,381
0.00%
II. Unrestricted shares
166,202,793
57.68%
37,966,780
37,966,780
204,169,573
70.86%
1. RMB Ordinary shares
111,317,193
38.63%
37,966,780
37,966,780
149,283,973
51.81%
2. Domestically listed foreign shares
54,885,600
19.05%
54,885,600
19.05%
3. Overseas listed foreign shares
4. Others
III. Total shares
288,149,400
100.00%
288,149,400
100.00%
Statement on changes of restricted shares
Unit: Share
Name of shareholders
Restricted shares at year-begin
Restricted shares released in current year
Increased restricted shares in current year
Restricted shares at year-end
Reason for restriction
Releasing date
SINOPHARM Medicine Holding Co., Ltd.
112,786,386
28,814,940
0
83,971,446
Share Merger Reform
May 16, 2008
Shenzhen Baoan District Shiyan Town Economic and Development Corporation
9,149,046
9,149,046
0
0
Share Merger Reform
May 16, 2008
Total
121,935,432
37,963,986
0
83,971,446
－
－
4.2 Particulars about shares held by the top ten shareholders and the top ten shareholders with
4Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
unrestricted conditions
Unit: Share
Total shareholders
18,022
Particulars about shares held by the top ten shareholders
Names of shareholders
Nature of shareholder
Proportion of share held
Amount of share held
Amount of restricted shares held
Shares pledged or frozen
SINOPHARM MEDICINE HOLDING CO., LTD.
State-owned legal person
39.14%
112,786,386
83,971,446
0
BANK OF CHINA－FRANKLIN TEMPLETON SEALAND POTENTIAL COMBINATION FUND
Domestic non-state-owned legal person
3.19%
9,187,902
0
BANK OF CHINA－CHINA MERCHANTS PIONEER FUND
Domestic non-state-owned legal person
2.65%
7,636,374
0
0
CHINA INDUSTRIAL AND COMMERCIAL BANK－CHINA MERCHANTS CORE VALUE MIXED FUND
Domestic non-state-owned legal person
2.52%
7,274,185
0
0
BANK OF CHINA－DACHENG WEALTH MANAGEMENT 2020 LIFECYCLE FUND
Domestic non-state-owned legal person
2.08%
6,006,939
0
0
CHINA CONSTRUCTION BANK－HUAAN HONGLI STOCK FUND
Domestic non-state-owned legal person
2.01%
5,800,000
0
0
BANK OF CHINA－AIG-HUATAI PROSPEROUS CHINA EQUITY FUND
Domestic non-state-owned legal person
1.79%
5,154,266
0
0
CHINA INDUSTRIAL AND COMMERCIAL BANK－BOSHI SELECTIVE STOCK FUND
Domestic non-state-owned legal person
1.72%
4,963,365
0
0
CHINA INDUSTRIAL AND COMMERCIAL BANK－GUANGFA JUFENG STOCK FUND
Domestic non-state-owned legal person
1.70%
4,912,540
0
0
CHINA INDUSTRIAL AND COMMERCIAL BANK－BOC CONTINUOUS GROWTH FUND
Domestic non-state-owned legal person
1.52%
4,375,188
0
0
Particulars about shares held by the top ten unrestricted shareholders
Name of shareholder
Amount of unrestricted shares held
Type of share
SINOPHARM MEDICINE HOLDING CO., LTD.
28,814,940
RMB common share
BANK OF CHINA－FRANKLIN TEMPLETON SEALAND POTENTIAL COMBINATION FUND
9,187,902
RMB common share
BANK OF CHINA－CHINA MERCHANTS
7,636,374
RMB common share
5Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
PIONEER FUND
CHINA INDUSTRIAL AND COMMERCIAL BANK－CHINA MERCHANTS CORE VALUE MIXED FUND
7,274,185
RMB common share
BANK OF CHINA－DACHENG WEALTH MANAGEMENT 2020 LIFECYCLE FUND
6,006,939
RMB common share
CHINA CONSTRUCTION BANK－HUAAN HONGLI STOCK FUND
5,800,000
RMB common share
BANK OF CHINA－AIG-HUATAI PROSPEROUS CHINA EQUITY FUND
5,154,266
RMB common share
CHINA INDUSTRIAL AND COMMERCIAL BANK－BOSHI SELECTIVE STOCK FUND
4,963,365
RMB common share
CHINA INDUSTRIAL AND COMMERCIAL BANK－GUANGFA JUFENG STOCK FUND
4,912,540
RMB common share
CHINA INDUSTRIAL AND COMMERCIAL BANK－BOC CONTINUOUS GROWTH FUND
4,375,188
RMB common share
Explanation on associated relationship or accordant action among the aforesaid shareholders
BANK OF CHINA－CHINA MERCHANTSPIONEER FUND and CHINA INDUSTRIAL AND COMMERCIAL BANK－CHINA MERCHANTSCORE
VALUE MIXED FUND belong to China Merchants Fund Management Co., Ltd., it is unknown that there exists no
associated relationship or belongs to the consistent actionist among the other tradable shareholders regulated
by the Management Measure of Information Disclosure on Change of Shareholding for Listed Companies.
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 of especial situation for controlling shareholder and actual controller
Name of the controlling shareholder: SINOPHARM Medicine Holding Co., Ltd.
Legal representative: She Lulin
Date of foundation: Jan. 8, 2003
Registered capital: RMB 1,637,037,451
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).
Name of the actual controller: China National Pharmaceutical Group Corporation
Legal representative: She Lulin
Date of foundation: March 1, 1988
Registered capital: RMB 857,490,000
Nature of economic: state-owned sole company
Business scope: entrusted management and assets reorganizationof pharmaceutical enterprises, consultant
service of medicine industry investment project, holding exhibition and fair of surgical
6Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
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 Medicine Group Headquarter
includes: China National Pharmaceutical Foreign Trade Corp., China Medical Device Industry Company, China
National Group Corp. of Traditional & Herbal Medicine, Sichuan Antibiotics Industrial Institute of China
National Pharmaceutical Group Corporation, Union Engineering Co. of China National Pharmaceutical Group
Corporation, Sinopharm Medicine Holding Co.,Ltd., Reed Sinopharm Exhibitions Co. Ltd., National Pharmaceutical
Industry Corporation and SINOPHARM Advertising Co., Ltd.
4. 3. 3 Property right and controlling relationships between the actual controller of the Company and the
Company is as follows:
Shanghai Fosun Pharmaceutical (Group) Co., Ltd.
China National
Pharmaceutical Group Corporation
Shanghai Qishen Investment Management Co., Ltd.
Sinopharm Industry Investment Co., Ltd.
SINOPHARM Medicine Holding Co., Ltd.
100%
100%
51%
96%
4%
39.14%
Shenzhen Accord Pharmaceutical Co., Ltd.
The State-owned Assets Supervision & Administration Commission of the State Council
49%
§5. Particulars about Directors, Supervisors, Senior Executives
7Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
5.1 Particulars about changes in shares held by directors, supervisors and senior executives and their remunerations
Name
Title
Sex
Age
Beginning date of office term
Terminating date of office term
Shares held at year-begin
Shares held at year -end
Reason for change
Total remuneration drawn from the Company in the report period
(RMB’0000)(before tax)
Drawing remuneration from shareholders’ units or other related units or not
Shi Jinming
Chairman
Male
41
Sep. 11, 2007
Sep. 11, 2010
0
0
Naught
68.30
No
Fu Mingzhong
Director
Female
58
April 25, 2008
Sep. 11, 2010
0
0
Naught
Yes
Wei Yulin
Director
Male
51
Sep. 11, 2007
Sep. 11, 2010
0
0
Naught
Yes
Lu Jun
Director
Male
50
Sep. 11, 2007
Dec. 26, 2008
0
0
Naught
Yes
Wu Ai’min
Director
Male
39
Sep. 11, 2007
Sep. 11, 2010
0
0
Naught
Yes
Jiang Ning
Director
Male
49
Sep. 11, 2007
Sep. 11, 2010
0
0
Naught
Yes
Chen Shu
Independent Director
Female
54
Sep. 11, 2007
Sep. 11, 2010
0
0
Naught
8.00
No
Peng Juan
Independent Director
Female
44
Sep. 11, 2007
Sep. 11, 2010
0
0
Naught
8.00
No
Liao Li
Independent Director
Male
42
Sep. 11, 2007
Sep. 11, 2010
0
0
Naught
8.00
No
Song Tingfeng
Supervisor
Male
40
Sep. 11, 2007
Sep. 11, 2010
0
0
Naught
Yes
Guan Xiaohui
Supervisor
Female
38
Sep. 11, 2007
Sep. 11, 2010
0
0
Naught
Yes
Yan Zhigang
Director, General Manager
Male
49
Dec. 26, 2008
Sep. 11, 2010
0
0
Naught
58.50
No
Lin Zhaoxiong
Deputy General Manager
Male
41
Dec. 26, 2008
Sep. 11, 2010
0
0
Naught
57.80
No
Tan Guoshu
Deputy General Manager
Male
54
Sep. 11, 2007
Sep. 11, 2010
0
0
Naught
56.50
No
Liu Jun
Deputy General Manager
Female
51
Dec. 26, 2008
Sep. 11, 2010
0
0
Naught
54.50
No
Lin Min
Deputy General Manager
Male
44
Dec. 26, 2008
Sep. 11, 2010
0
0
Naught
54.50
No
Lin Xinyang
Deputy General Manager
Male
44
Sep. 11, 2007
Sep. 11, 2010
0
0
Naught
56.50
No
Ou Jianneng
Deputy General Manager
Male
50
Sep. 11, 2007
Dec. 26, 2008
0
0
Naught
56.50
No
Wei Pingxiao
CFO
Male
45
Sep. 11, 2007
Sep. 11, 2010
0
0
Naught
51.00
No
Chen Changbing
Secretary of the Board of
Male
41
Sep. 11, 2007
Sep. 11, 2010
11,175
8,381
Legitimate Reduction
28.50
No
8Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
Directors
Wang Huaiqin
Supervisor
Male
51
Sep. 11, 2007
Sep. 11, 2010
0
0
Naught
26.20
No
Total
-
-
-
-
-
-
592.80
-
Stocks option of the directors, supervisors and senior executives bestowed in the report period
□Applicable √Inapplicable
5.2 Presences at the meetings of the Board by the directors
Name of the directors
Positions
Due
Presence
(times)
Presence in person
(times)
Attending the meeting in way of communication
(times)
Entrusted presence
(times)
Absence (times)
Whether attending the meeting in person in successive two times or not
Shi Jinming
Chairman
8
5
3
0
0
No
Fu Mingzhong
Director
7
4
3
0
0
No
Wei Yulin
Director
8
4
3
1
0
No
Jiang Ning
Director
8
3
3
2
0
No
Wu Ai’min
Director
8
4
3
1
0
No
Chen Shu
Independent Director
8
5
3
0
0
No
Peng Juan
Independent Director
8
4
3
1
0
No
Liao Li
Independent Director
8
4
3
1
0
No
Explanations on not attending the meeting of the Board in person in successive two times
Meetings of the Board held during the year (times)
8
Of which: site meetings (times)
5
Meetings held in way of communication (times)
3
Meetings held in way of both site and communication (times)
0
§6. Report of the Board of Directors
6.1 Discussion and analysis from the management team
Year 2008 was a key year for Shenzhen Accord Pharmaceutical Co., Ltd. to start its second Three Years Development and operate its
integration strategy in practice. According to the working spirit Re-breakthrough, Re-innovation and Re-development made at year begin, and
taking realization of optimized values of enterprise and optimized interests of shareholders as springboard, as well as taking rapid, good and
long-term development of the enterprise as target, the Company continuously promoted harmonization construction by furthering internal
integration, grasping risk management and injecting innovation into management thought. New breakthroughs were made in various works of
the Company, which made sure that the Company stepped into the second rapid development period as scheduled.
Since the formal operation of the new management & control pattern and organization structure in
9Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
year-begin, to the second organization structure adjustment which took accelerating distribution integration as mainline since year-end,
every work was operated with efficiency firstly considered. Under the condition that no existing experience could be referred, with
approximately one-year operation, adjustment, negotiation, thinkingand exploration, the integrated management & control pattern gradually
became matured. For achievements obtained in risk management & control and experience share such as capital, account receivable,
inventory, and intelligence communication between different regions in field of purchase, sale and customer service particularly in spread
implementation of instruments such as plan management, target management and performance management, teams coming from different
region with different history and civilization background identified with each other and gradually got harmonized. Harmonized and high-efficient
organization atmosphere was getting dense day by day.
I. In 2008, the Company mainly finished the following works in medicine distribution and pharmaceutical industry:
1. Medicine distribution: strengthened core business and further integrated business
According to the position made in strategy development and meeting the market demand, the Company further integrated business. Taking
channel network construction and regional strategic layout as focus, and keeping hospital pure sales market, meanwhile, the distribution
business department also greatly expanded terminal distribution market, developed commercial attemper market, and redefined rapid business
field of Sinopharm Medicine Holding Guangdong Xinlong Co., Ltd., Guangxi Accord Pharmaceutical Co., Ltd. and Shenzhen Jianmin
Pharmaceutical Co., Ltd., and programmed and promoted construction of subsidiaries and distribution sites in cities around Pearl River Delta
Region such as Foshan and Dongguan, and in east and west of Guangdong province.
In the aspect of industry structure: proportion of pure sales and terminal distribution in hospital to the pharmaceutical distribution was 57.84%
in year 2008 with some rises compared with that in year 2007, in which the proportion of pure sales in hospital to the distribution remained the
same compared with that in 2007, and the proportion of terminal distribution to the distribution climbed 1.7 percentage points compared with
that in year 2007 with an increase number of RMB 0.26 billion. From the key areas of Shenzhen and Guangzhou, sales growth ratio of the
third terminal business of Shenzhen Jianmin Pharmaceutical Co., Ltd exceeded 39%, number of newly-increased customers had a fast growth;
number of newly-increased terminal customers of Sinopharm Medicine Holding Guangzhou Co., Ltd. in 2008 accounted for 77% in total
number of newly-increased customers; meanwhile, strived for distribution qualification in Haizhu and Luogang districts in Guangzhou city for
community distribution, thus its sales performance obviously raised. In 2008, sales through community distribution increased 269% compared to
that of last year, and 289% for variety quantity traded.
In aspect of variety resource share: 1) variety quantity shared by Guangdong and Guangxi provinces increased 28% in 2008 compared to
that of 2007. Sinopharm Medicine Holding Guangzhou Co., Ltd. had totally sold exceeding 400 varieties to Guangxi province in 2008, sales
amount increased 20% compared to that of last year; 2) taking advantage of variety resource in Guangzhou Company general distribution and
regional distribution, the commercial variety structure of Shenzhen distribution got greatly improved and commercial sales scale presented
rapid development in general. Until end of December, commercial sales increased 52.7% and gross profit increased 61.4% compared with
those of the same period of last year; 3) obvious effect was obtained in leading imported joint venture variety to Guangxi. Many imported joint-
venture varieties led in 2008 enjoyed great rise in sales in Guangxi.
Besides, adapting to market change in medicine distribution business, the Company received the following significant achievements by
accelerating strategic layout in key regions and detailing market exploration: successful sales contract of Wyeth Pei’er Bacterin in
south of China, official
10Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
establishment of Sinopharm Medicine Holding Foshan Co., Ltd. as well as purchase and establishment of
Dongguan Accord Pharmaceutical Co., Ltd., according to its operation strategy that Take New Business
Exploration First, Pour Efforts in Many Works at the Same Time and Develop Network to Build Terminal Control.
Efficiency gained by marketing strategy sinking was bigger day by day.
2. Pharmaceutical industry: Laterally extended product line and vertically completed industry chain
Zhijun Pharmaceutical realized develop current target that laterally extending product line and completing
industry chain basically by focusing on current operation and future development.
In current operation: 1) accelerating normal operation of Guanlan new factory. Within the year sincemoved,
the already-constructed product line could successfully finish the complicated works such as product ownership
transfer and location change. Meanwhile, through continuous optimization, upgrade and reform, all product lines
had reached or even exceeded the capacities original designed, among which, the capacity of cefepime fixed
product line exceeded the original-designed one over 100%; 2) with reform in Yima line before international
authentication, meanwhile, move of Luomake line was finished and approved GMP authentication in June; 3) two
made-in-China powder needle lines were built in November and approved GMP authentication in December.
In sales: 1) in the situation that supply of codein material decreased 20%, through adjusting product
structure and intensified proportion in solid preparation, the Company completely built high, middle and low
level sales network. Through strengthening third terminal construction, and strengthening and adjusting
examination and incentive method for sales personnel, the Company realized sale amount exceeding RMB 900
million for the whole year, recovering rate of payment for goods reached 99% and sales increased 18.18%
compared to that of the same period of last year; 2) promoted international authentication and cooperation with
foresight, and introduced in the patent stomach medicine Revanex from Yuhan Corporation from South Korea; 3)
the Company successfully purchased 75% equity of Suzhou Wanqing Pharmaceutical Co., Ltd., which laid foundation
for industry chain integration in pharmaceutical industry.
II. Innovate management thought
1. Discentralized management realized through shrinking equity management chain
To reduce internal cross share-holding, compress management levels and cut down management cost, by public
hanging out in Assets and Equity Exchange, the Company finished internal equity adjustment conformity for the
following 12 level III and IV companies with cross share-holding: Accord Medicinal Materials, Guangdong
Xinlong, Sinopharm Liuzhou, Shenzhen Accord Logistics, Guangdong Accord Drugstore, Main Luck Pharmaceuticals,
Guangdong Yuexing, Huixin Investment, Hengchang Logistics, Sinopharm Foshan, Zhijun Medicine Trade as well as
Shenzhen Accord Chain.
2. Strengthen management & control function in operation
The Company carried out discussion and stipulation for business strategic development program, carried out
discussion for running pattern of new business and new market, strengthened management in budget, risk and
capital, and through optimizing procedure system and smoothing key business, the Company greatly improved
operation quality and efficiency; by smoothing key business points and setting index for risk alarm, the
Company made analysis on difference, and formed special report, to reach balanced operation in purchase and
sale business; strengthened control in risk of account receivable, optimized mechanism of credit alarm, and led
the third party-professional consultation corporation to appraise and optimize Guangdong and Guangxi procedure
system together.
11Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
3. Strengthen financial management function
The Company made and perfected systems of statement management, account check for account receivable,
account payable management for purchase, expense budget management, calculation of retail shops, monetary fund
management and inventory check management; emended relevant procedures of examine-and-approve for budget,
expense cancellation disposal, capital attemper, payment paid for purchase, asset purchase as well as asset
cancellation; generally constructed and gradually standardized three level statement management systems of
Consolidated Statement of Accord Pharmaceutical, Statement of Undertaking Department and Monomer Statement of
Legal Person Unit. The Company put emphasis on risk asset management over capital, account receivable and
inventory, ensuring fore-control for work of risk management.
4. Optimize and advance information technology and network to get early information in competition
A series of IT develop programming was formed, and the Company made implementation plan separated by years
for IT programming target and also operation maintenance of IT system, successfully finished transfer of new
version CMS business systems in Shenzhen and Guangxi province, generally established marketing database for
distribution and retail, carried out research on supply chain system for Guangzhou community hospitals,
finished construction of finance NC platform and second development for part function, and finished
optimization and popular use of human resource management system.
5. Promote and practice plan management in full round
In 2008, on the basis of sharing three-years plan management experiences of Sinopharm Medicine Holding
Guangzhou Co., Ltd, the various regional distributors and Zhijun Pharmaceutical carried out plan management
work in succession. The general target of the Company was finally reached from clearing working target and task
function of the Company, to take-over part task of the Company by various levels, then to communication between
departments and finally to periodical follow and feedback. Since this year, plan management played an more and
more important role day by day, and it had became an assistant tool for employee, department and senior
executives to finish their working target with high efficiency, and an important guarantee to guide and
assistant employees to better finish works.
In 2008, after honored as Innovation Enterprise Award since 30 Years from Reform and Opening-up Policy and
Enterprise with Outstanding Contribution Award since 30 Years from Reform and Opening-up Policy by Guangdong
medicine industry, Accord Pharmaceutical was awarded as the Top 10 Potential Listed Companies of Guangdong
province and Top 10 Listed Companies with Strongest Profit-making Ability of Guangdong province in achievement
conference of Top 10 Listed Companies of Guangdong province held by Guangdong enterprise summit in 2008. Its
brand influence in south area was getting up day by day.
6.2 Statement of main operations classified according to industries or products
Unit: RMB’0000
Main operations classified according to industries
Classified according to industries or products
Income from operations
Cost of operations
Gross profit ratio
(%)
Increase/decrease in income from operations over the last year
(%)
Increase/decrease in cost of operations over the last year
(%)
Increase/decrease in gross profit ratio over the last year
(%)
Industry-medicine
87,717.07
64,753.72
26.18%
18.18%
36.17%
-9.75%
Commerce-medical
816,457.65
777,742.29
4.74%
20.91%
21.01%
-0.07%
12Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
wholesale
Commerce- medical retail
34,224.58
26,356.95
22.99%
4.55%
6.17%
-1.17%
Non-medicine trade
5,955.31
4,546.54
23.66%
39.45%
34.58%
2.76%
Lease
1,402.36
856.98
38.89%
-1.24%
65.62%
-24.67%
Subtotal
945,756.97
874,256.48
7.56%
20.04%
21.59%
-1.18%
Mutual counteract of sales departments between internal enterprises
113,694.68
111,880.11
1.60%
9.45%
9.38%
0.06%
Total
832,062.29
762,376.37
8.38%
21.65%
23.62%
-1.46%
Main operations classified according to products
Respiratory antitussivemedicines
16,915.47
3,116.96
81.57%
-26.13%
-12.65%
-2.84%
Anti-infectious cef- series products
60,569.83
52,661.05
13.06%
36.54%
36.94%
-0.26%
Including: related transaction
8,180.56
4,480.46
45.23%
18.16%
12.46%
2.77%
6.3 Particulars about main operations classified according to areas
Unit: RMB’0000
Areas
Income from operations
Increase/decrease in income from operations over last year (%)
Domestic sales
831,193.14
21.62%
Overseas sales
869.15
55.47%
Total
832,062.29
21.65%
6.4 Items measured by adopting fair value
□Applicable √Inapplicable
6.5 Application of the raised proceeds
□Applicable √Inapplicable
Particulars about the changed projects
□Applicable √Inapplicable
6.6 Application of the proceeds not raised through shares offering
√Applicable □Inapplicable
Unit: RMB’0000
Name
Amount
Progress
Earnings
Project on manufacture base of pharmaceutical R&D
20,400.00
100%
The new project was put into operation, the annual sales amount exceeded RMB 0.7 billion.
Project of technical reform
3,561.00
90.62%
The production capacity improved largely, in which annual production capacity of newly-increased 2 domestic
Spasmolytic Production Line was estimated to be 200 million branches, annual production
13Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
capacity of newly-increased 2 domestic Anti-infectious Production Line was estimated to be 220 million
pieces/granules, it was predicated that the sales income of RMB 65 million.
Total
23,961.00
-
-
6.7 Explanation of the Board of Directors on changes to the accounting policy and accounting estimates, or
reasons of modification of material accounting errors and the influences
□Applicable √Inapplicable
6.8 Explanation of the Board of Directors on the “Qualified Opinion” made by the CPAs
□Applicable √Inapplicable
6.9 The preplan of the profit distribution and capitalization of capital public reserve of the Board of
Directors
The 2008 Financial Settlement of the Company has been audited and confirmed by ShulunPan Certified Public
Accountants Co., Ltd. The net profit realized by the parent company in 2008 was RMB 93,030,643.10, in
accordance with the regulation of Company Law and Articles of the Association, withdrawal of surplus public
reserve was RMB 9,303,064.31based on 10% of net profit, plus the undistributed profit at year-begin RMB
37,929,690.77, the Company has profit of RMB 121,657,269.56 available for distribution for shareholders ended
as Dec. 31, 2008.
The 2008 Preplan of Profit Distribution of theCompany is: taking the total 288,149,400 shares as of Dec.
31, 2008 as the radix, cash bonus of RMB 1.00 (tax included) each 10 share will be distributed to the whole
shareholders. It is predicated that the distributed dividend would be RMB 28,814,940.00, and the remained RMB
92,842,329.56 would be transferred to the next year.
The Company did not tak capitalization of capital reserve in year 2008.
Particulars about the cash bonus of the Company in previous three years
Unit: RMB
Amount of cash bonus
(tax included)
Net profit attributable to owners of parent company in consolidated statement
Ratio of net profit attributable to owners of parent company in consolidated statement
2007
0.00
124,913,985.45
0.00%
2006
25,902,701.26
80,224,428.47
32.29%
2005
10,940,962.61
36,824,230.25
29.71%
The Company didn’t put forward cash profit distribution preplan though the Company achieved the profit in
the report period
□Applicable √Inapplicable
§7. Significant Events
7.1 Purchase of assets
√Applicable □Inapplicable
Unit: RMB’0000
14Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
The other party of transaction or final controller
Assets purchased
Purchase date
Purchase price
Net profit contributed to the Company from the purchase date to the year-end
Net profit contributed to the Company from the year-begin to the year-end(applicable for enterprise merger
under the common control)
Related transaction or not(If yes, note the principle of price setting)
Explanation on price setting
Assets rights concerned transferred ownership fully or not
Credit and liability concerned shifted fully or not
The related relationship
Guangxi Guoda Drugstore Chains Co., Ltd./
Nanning Medicines Wholesales of Guangxi Zhuang Autonomous Region
Guangxi Accord Pharmaceutical Co., Ltd.
August 28, 2008
500.30
7.54
6.04
Yes
Taking the book amount of net asset as of July 31, 2007 as the reference evidence, the price was formed by
open bidding in Assets and Equity Exchange.
Yes
Yes
The same final controlling shareholder
China National Pharmaceutical Shanghai Corporation
10 percent equities of Sinopharm Medicine Holding Guangzhou Co., Ltd.
Nov. 10, 2008
3,066.11
392.71
392.71
Yes
Taking the assessment value as of Sep. 30, 2007 as the reference evidence, the price was formed by open
bidding in Assets and Equity Exchange.
Yes
No
Same controlling shareholder
7.2 Sales of assets
□Applicable √Inapplicable
Influences on the business continuity and stability of management of the Company by the matters 7.1 and 7.2
concerned
The purchased assets involved did not have influences on the business continuity and stability of
management of the Company.
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 Company guaranteed
Date of happening (Date of signing agreement)
Amount of guarantee
Guarantee type
Guarantee term
Complete
Implementation or not
Guarantee for related party (Yes or not)
Total amount of guarantee in the report period
0.00
15Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
Total balance of guarantee at the end of the report period
0.00
Guarantee of the Company for the controlling subsidiaries
Total amount of guarantee for controlling subsidiaries during the report period
96,500.00
Total balance of guarantee for controlling subsidiaries at the end of the report period
113,820.00
Total amount of guarantee of the Company (including guarantee for controlling subsidiaries)
Total amount of guarantees
113,820.00
Ratio of total guarantee to net assets of the Company
181.25%
Including:
Amount of guarantee for shareholders, actual controller and its related parties
0.00
The debts guarantee amount provided for the guarantee of which the assets-liability ratio exceeded 70%
directly or indirectly
113,820.00
Proportion of total amount of guarantee in net assets of the Company exceeded 50%
82,420.66
Total amount of the aforesaid three guarantees
113,820.00
Explanations on possibly bearing joint and several liquidating responsibilities for undue guarantees
The Company had no matters on possibly bearing joint and several liquidating responsibilities for undue
guarantees.
7.4 Significant related transaction
7.4.1 Related transaction connected to routine operations
√Applicable □Inapplicable
Unit: RMB’0000
Sell product and supply labor force to the related parties
Purchase and accept labor force from related parties
Related parties
Transaction amount
Proportion in the amount of the same transaction
Transaction amount
Proportion in the amount of the same transaction
Sinopharm Medicine Holding Shenyang Co., Ltd.
25,697.17
3.09%
0.00
0.00%
China National Pharmaceutical Group Hubei Co., Ltd.
7,457.76
0.90%
0.00
0.00%
Sinopharm Medicine Holding Nanning Co., Ltd.
7,157.53
0.86%
1,470.15
0.19%
China National Pharmaceutical Group Southwest Medicine Co., Ltd.
5,890.56
0.71%
389.08
0.05%
Sinopharm Medicine Holding Tianjin Co., Ltd.
5,471.53
0.66%
564.52
0.07%
Sinopharm Medicine Holding Beijing Co., Ltd.
3,722.84
0.45%
0.00
0.00%
Hubei Yibao International Pharmaceutical Co., Ltd.
3,478.89
0.42%
0.00
0.00%
16Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
Sinopharm Medicine Holding Beijing Huahong Co., Ltd.
1,024.98
0.12%
0.00
0.00%
Tianjin East Bokang Medical Trade Co., Ltd.
787.47
0.09%
0.00
0.00%
Sinopharm Medicine Holding Jiangsu Co., Ltd.
584.45
0.07%
0.00
0.00%
Sinopharm Medicine Holding Shanxi Co., Ltd.
512.01
0.06%
0.00
0.00%
Sinopharm Medicine Holding (Zhengzhou) Jiurui Co., Ltd.
479.76
0.06%
0.00
0.00%
Sinopharm Medicine Holding Co., Ltd.
473.00
0.06%
1,572.41
0.21%
China National Medicines Corporation Ltd.
339.12
0.04%
8,702.20
1.14%
Shanghai Sinopharm Wai Gaoqiao Medicine Co., Ltd.
132.89
0.02%
84,783.31
11.12%
China National Pharmaceutical Group Northwest Medicine Co., Ltd.
58.03
0.01%
0.00
0.00%
Sinopharm Logistics Co., Ltd.
48.87
0.01%
0.00
0.00%
Sinopharm Medicine Guoda Pharmacy Co., Ltd.
37.74
0.00%
119.39
0.02%
Sinopharm Group Medicine Holding Suzhou Co., Ltd.
23.33
0.00%
0.00
0.00%
Sinopharm Medicine Holding Zhejiang Co., Ltd.
12.87
0.00%
0.00
0.00%
Guangxi Guoda Drugstore Chains Co., Ltd.
3.44
0.00%
0.00
0.00%
Sinopharm Group Medicine Holding Hunan Co., Ltd.
6,156.21
0.74%
0.00
0.00%
Sinopharm Medicine Holding Shanghai Co., Ltd.
0.00
0.00%
425.12
0.06%
Guangdong Dong Fang Uptodate & Special Medicines Co.
0.00
0.00%
1,034.73
0.14%
Sinopharm Medicine Holding Shenzhen TCM
0.00
0.00%
113.24
0.02%
China National Pharmaceutical Foreign Trade Corporation
0.00
0.00%
1,947.45
0.26%
Union China National Medical Equipment Corp.
0.00
0.00%
610.20
0.08%
Sinopharm Group Chemical Reagent Co., Ltd.
0.00
0.00%
23.03
0.00%
Shenzhen Main Luck Pharmaceutical Inc.
0.00
0.00%
156.96
0.02%
Total
69,550.45
8.36%
101,911.79
13.37%
Of which: In the report period, the related transaction amount the listed companies sold products or
supplied labor forced for the controlling shareholders and its subsidiaries was RMB 660,681,200.
7.4.2 Related credits and liabilities current
17Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
√Applicable □Inapplicable
Unit: RMB’0000
Provide fund for related party
Supply fund to the Company from related party
Related parties
Occurring amount
Balance
Occurring amount
Balance
Account receivable:
0.00
0.00
0.00
0.00
Sinopharm Medicine Holding Shenyang Co., Ltd.
30,064.96
5,601.39
0.00
0.00
Sinopharm Medicine Holding Hunan Co., Ltd.
7,202.76
1,321.52
0.00
0.00
China National Pharmaceutical Group Southwest Medicine Co., Ltd.
6,891.96
1,321.60
0.00
0.00
Sinopharm Medicine Holding Tianjin Co., Ltd.
6,401.69
916.92
0.00
0.00
Sinopharm Medicine Holding Beijing Co., Ltd.
4,355.72
809.73
0.00
0.00
Sinopharm Medicine Holding Nanning Co., Ltd.
8,374.31
288.86
0.00
0.00
Sinopharm Medicine Holding Shanxi Co., Ltd.
599.06
171.73
0.00
0.00
Tianjin East Bokang Medical Trade Co., Ltd.
921.34
133.58
0.00
0.00
Sinopharm Medicine Holding Co., Ltd.
553.41
103.73
0.00
0.00
China National Medicines Corporation Ltd.
317.29
38.27
0.00
0.00
China National Pharmaceutical Group Northwest Medicine Co., Ltd.
67.96
17.41
0.00
0.00
Guangdong Dong Fang Uptodate & Special Medicines Co.
353.15
55.11
0.00
0.00
Sinopharm Medicine Holding Jiangsu Co., Ltd
650.71
92.81
0.00
0.00
Sinopharm Medicine Holding Beijing Huahong Co., Ltd.
1,199.23
84.95
0.00
0.00
Sinopharm Medicine Guoda Pharmacy Co., Ltd.
44.16
40.20
0.00
0.00
Sinopharm Group Medicine Holding Suzhou Co., Ltd.
27.29
4.54
0.00
0.00
Sinopharm Medicine Holding Zhejiang Co., Ltd.
15.06
1.43
0.00
0.00
Shanghai Sinopharm Wai Gaoqiao Medicine Co., Ltd.
154.11
154.11
0.00
0.00
Sinopharm Medicine Holding (Zhengzhou) Jiurui Co., Ltd.
561.32
92.21
0.00
0.00
Hubei Yibao International Pharmaceutical Co., Ltd.
4,070.31
387.98
0.00
0.00
Guangxi Guoda Drugstore Chains Co., Ltd.
3.89
0.21
0.00
0.00
Sinopharm Group Medicine Holding Hubei Co., Ltd.
372.67
5.64
0.00
0.00
18Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
Other account receivable:
0.00
0.00
0.00
0.00
Sinopharm Medicine Guoda Pharmacy Co., Ltd.
15.29
0.00
0.00
0.00
Account payable:
0.00
0.00
0.00
0.00
Shanghai Sinopharm Wai Gaoqiao Medicine Co., Ltd.
0.00
0.00
142,253.47
11,022.08
Sinopharm Medicine Holding Co., Ltd.
0.00
0.00
1,901.90
1,850.56
China National Medicines Corporation Ltd.
0.00
0.00
11,582.43
641.80
China National Pharmaceutical Foreign Trade Corporation
0.00
0.00
2,333.77
535.92
Sinopharm Medicine Holding Shanghai Co., Ltd.
0.00
0.00
1,725.84
438.81
Sinopharm Medicine Guoda Pharmacy Co., Ltd.
0.00
0.00
1,346.52
344.36
Sinopharm Medicine Holding Nanning Co., Ltd
0.00
0.00
2,468.18
252.86
Guangdong Dong Fang Uptodate & Special Medicines Co.
0.00
0.00
2,389.90
234.70
Sinopharm Medicine Holding Tianjin Co., Ltd
0.00
0.00
484.07
80.64
Shenzhen Main Luck Pharmaceutical Inc.
0.00
0.00
2,130.17
47.09
Beijing Zhongxin Medical Trading Company
0.00
0.00
0.00
7.14
Sinopharm Medicine Group Shanghai Medical Equipment Co., Ltd.
0.00
0.00
0.00
1.62
Sinopharm Medicine Holding Shenzhen TCM
0.00
0.00
206.85
0.93
Sinopharm Medicine Group Beijing Medical Equipment Co., Ltd.
0.00
0.00
0.00
0.88
Sinopharm Medicine Holding Beijing Co., Ltd.
0.00
0.00
0.00
0.40
Guangdong Renbo Medical Equipment Co., Ltd.
0.00
0.00
0.00
0.05
Union China National Medical Equipment Corp.
0.00
0.00
1,017.04
-21.08
China National Pharmaceutical Group Southwest Medicine Co., Ltd.
0.00
0.00
455.23
0.00
Sinopharm Group Chemical Reagent Co., Ltd.
0.00
0.00
65.27
0.00
Other account payable:
0.00
0.00
0.00
0.00
Sinopharm Medicine Holding Nanning Co., Ltd.
0.00
0.00
5.00
0.00
Sinopharm Medicine Holding Co., Ltd.
0.00
0.00
7,000.00
6,000.00
Sichuan Antibiotics Industrial Institute Co., Ltd.
0.00
0.00
0.00
285.18
19Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
China National Pharmaceutical Group Shanghai Co., Ltd.
0.00
0.00
1,533.06
1,533.06
Sinopharm Medicine Guoda Pharmacy Co., Ltd.
0.00
0.00
192.21
192.21
Sinopharm Logistics Co., Ltd.
0.00
0.00
8.91
80.00
Sinopharm Medicine Holding Shenzhen TCM
0.00
0.00
0.00
2.49
Total
73,217.65
11,643.93
179,099.82
23,531.70
Of which: In the report period, the occurring amount which the Company provided funds to the controlling
shareholder and its subsidiaries was RMB 687,750,100 and the balance was RMB 112,006,300.
7.4.3 Occupation and its progress of paying off on the fund in year 2008
□Applicable √Inapplicable
7.5 Entrusted assets management
□ Applicable √Inapplicable
7.6 Implementation of commitments
√Applicable □Inapplicable
1. SINOPHARM Medicine Holding Co., Ltd.
(1) Not selling original non-tradable equities through stock exchange in 24 months from the day they become
tradable. (2) Original non-tradable equities sold after the 24 months through stock exchange take up no more
than 10% of the Company’s total shares in the following 12 months, and the price is no lower than 110% of the
stock weighted average price, that is RMB 5.05, of the 30 trading days before Accord Pharmaceutical’s Board of
Directors publish the Reform Plan (from the day of implementing Non-tradable Shares Reform to the day when
Sinopharm Medicine Holding sells equities, Ex Warrant/Ex Dividend on the price will be implemented if dividend,
allotment or transferring of public capital to equity and so on happens ).
Commitment implementation: Implementing
2. Shenzhen Baoan District Shiyan Town Economic and Development Corporation
(1)Not trading or transferring within 12 months from the day when Reform Plan is carried out; on basis of
the aforementioned time limited, original non-tradable equities sold through stock exchange take up no more
than 5% of the Company’s total shares in the following 12 months; (2) no mare than 10% within 24 months.
Commitment implementation: Ended May 16, 2008, the commitment has been accomplished already.
Commitments made by the Company or the shareholders with holding above 5% shares in the report period or
lasting until the report period.
√Applicable □Inapplicable
Commitments
Content of commitments
Implementation
Commitments for Share Merger Reform
(1) Not selling original non-tradable equities through stock exchange in 24 months from the day they become
tradable. (2) Original non-tradable equities sold after the 24 months through stock exchange take up no more
than 10% of the Company’s total shares in the following 12 months, and
Implementing 20Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
the price is no lower than 110% of the stock weighted average price, that is RMB5.05, of the 30 trading
days before Accord Pharmaceutical’s Board of Directors publish the Reform Plan (from the day of implementing
Non-tradable Shares Reform to the day when Sinopharm Medicine Holding sells equities, Ex Warrant/Ex Dividend on
the price will be implemented if dividend, allotment or transferring of public capital to equity and so on
happens ).
Commitments made in Acquisition Report or Reports on Change in Interests
Naught
Naught
Commitments made in Material Assets Reorganization
Naught
Naught
Commitments made in issuing
Naught
Naught
Other commitments made for medium and small shareholders of the Company
Naught
Naught
7.7 Significant lawsuit and arbitrations
□ Applicable √Inapplicable
7.8 Other significant events and analysis on their influences and solutions
7.8.1 Particulars about securities investment
□Applicable √Inapplicable
7.8.2 Equity of other listed companies held
□Applicable √Inapplicable
7.8.3 Equity of non-listed financial enterprises
□Applicable √Inapplicable
7.8.4 Particulars about the purchases and selling on equity of other listed company
□Applicable √Inapplicable
§8. Report of the Supervisory Committee
√Applicable □Inapplicable
I. Works of the Supervisory Committee
In 2008, the Supervisory Committee of Shenzhen Accord Pharmaceutical Co., Ltd. earnestly performed its duty
according to the regulations of the Company Law, the Article of Association of the Company and Rules of
Procedure of the Supervisory Committee. Totally four meetings have been held by the Supervisory Committee of
the Company.
II. Independent opinion on the operation of the Company issued by the Supervisory Committee
In the report period, the members of the Supervisory Committee presented all meetings of the Board of the
Company, performed their supervisory duty on the content and procedure of the Article of the
21Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
Association carried out by the Board, and also supervised the execution of the resolutions of the Board by
the operation personnel.
(1) Operation by law
In 2008, according to the relevant regulations of the Company Law, Securities Law, Listing Rules of Stock
Market and Articles of Association, the board of directors legally managed, operated, made decisions in law and
constructed and perfected internal control system. The procedures of holding shareholders’ meeting and meeting
of the board of directors accorded with relevant regulations, and there was no behavior breaking relevant
regulations and laws of theArticle of Association of the Company and behavior violating the profit of the
Company and shareholders when the directors and managers implemented their office duty.
(II) Check on financial management of the Company
In the report period, the Supervisory Committee seriously checked the financial status of the Company and
thought that the financial management was standardized, the financial report objectively and truly reflected
the financial status and operation achievement of the Company and the profit distribution plan for 2008
complied with the actual condition of the Company. The financial report 2008 was true and accurate, and fairly
reflected the present financial status and operation achievement. The audit report with standard unqualified
opinion issuedby Shulun Pan Certified Public Accountants Co., Ltd. was objective and just.
(III) Application of raised proceeds
There was no application of raised proceeds in the report period.
(IV) The purchases and sales of assets
In the report period, the price for the purchases and sales of assets of the Company was reasonable. There
was neither secret transaction nor behavior hurting the interests of shareholders.
(V) Related transaction
The daily related transaction and other related transaction of the Company were equal and rational and of
obedience to the market principle. There was no behavior hurting profit of non-related shareholders and the
Company; the Board of the Company implemented their duty of earnest, trust and responsibility when they made
the resolutions related to related transactions. The manager tier could effectively implement the resolutions
of the board of directors and shareholders’ meeting on related transaction. There was no behavior violating
laws, regulation or the Articles of Association in the process of related transaction.
(VI) Self-evaluation of internal control
Details could be found in Section VI (III) of Chapter V - Supervisory Committee’s opinions on Self-
evaluation of its Internal Control System.
§9. Financial Report
9.1 Auditor’s opinions
Auditor’s report
Standard unqualified auditor’s opinions
Text of Auditor’s Report
Auditors’ report
Shulun Pan BaoZi(2009) No. 10598
To the shareholders of Shenzhen Accord Pharmaceutical Co., Ltd.,
We have audited the accompanying financial statements of Shenzhen Accord Pharmaceutical Co., Ltd. (“the
Company”), including balance sheet and consolidated balance sheet of 31 December 2008,
22Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
and profit statement and consolidated profit statement, and cash flow statement and consolidated cash flow
statement, and statement on changes of owners’ equity and consolidated statement on changes of owners’ equity
for the year ended, and notes to the financial statements for the year ended.
I. Management's responsibility for the financial statements
The Company's management is responsible for the preparation and fair presentation of the financial
statements in accordance with the Enterprises Accounting Standards and Enterprises Accounting System. The
responsibility includes: (1) designing, performing and maintaining internal control related to the preparation
and fair presentation of the financial statements, which are free from material misstatements whether due to
frauds or errors; (2) choosing and applying right accounting policies; (3) making reasonable accounting
estimates.
II. Auditor's responsibility
Our responsibility is to express an audit opinion on these financial statements based on our audit. We
performed our audit in accordance with Chinese CertifiedPublic Accountants' Auditing Standards. Those standards
require us to comply with professional ethics, and to plan and perform our audit so as to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures of the
financial statements. The selective audit procedures depend on auditor's judgment, including the evaluation of
the risk of material misstatement of the consolidated financial statements due to frauds or errors. When
evaluating risk, we consider internal control related to financial statements, in order to design auditing
procedures, but not for the purpose of expressing an opinion on the internal control's effectiveness. An audit
also includes assessing the appropriateness of the accounting policies adopted and the reasonableness of the
accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that we have obtained sufficient and appropriate audit evidences to provide a basis for our
audit opinion.
III. Auditing opinion
In our opinion, the Company’s financial statements have been prepared in accordance with the Enterprises
Accounting Standards and Enterprises Accounting System, and they fairly present, in all material respects, the
financial position of the Company as of December 31, 2008, and its operation results and cash flows for the
year ended.
Shulun Pan Certified Public Accountants Co., Ltd. China Accountant: Lu Guohao
Shanghai, P.R.C China Accountant: Tan Hongmei
March, 2009
9.2 Financial statement
9.2.1 Balance Sheet
Prepared by Shenzhen Accord Pharmaceutical Co., Ltd. December 31, 2008 Unit: RMB
Balance at period-end
Balance at year-begin
Items
Merger
Parent Company
Merger
Parent Company
Current assets:
Monetary funds
345,259,516.47
62,369,583.65
254,837,411.30
54,841,676.10
Settlement provisions
23Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
Capital lent
Transaction finance asset
Notes receivable
221,876,250.45
254,500.00
166,838,281.78
575,727.24
Accounts receivable
1,726,711,922.82
243,301,803.10
1,286,649,082.59
266,608,019.71
Accounts paid in advance
40,034,923.45
4,919,683.46
54,122,228.36
1,845,633.24
Insurance receivable
Reinsurance receivables
Contract reserve of reinsurance receivable
Interest receivable
Dividend receivable
228,443.24
228,443.24
Other receivables
32,606,307.59
242,415,823.08
37,748,343.14
100,105,321.32
Purchase restituted finance asset
Inventories
735,661,642.08
94,249,578.90
574,318,139.76
71,473,576.82
Non-current asset due within one year
Other current assets
Total current assets
3,102,150,562.86
647,510,972.19
2,374,741,930.17
495,678,397.67
Non-current assets:
Granted loans and advances
Finance asset available for sales
Held-to-maturity securities
Long-term account receivable
Long-term equity investment
69,578,981.80
323,756,562.92
57,373,856.63
262,526,712.89
Investment property
22,848,031.69
2,140,353.75
37,094,592.40
2,291,009.00
Fixed assets
374,870,446.95
36,732,350.96
340,639,114.64
45,496,890.76
Construction in progress
18,756,982.97
253,886.24
7,531,515.44
253,886.24
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets
57,607,282.99
30,622,772.31
53,299,711.82
29,437,449.09
Expense on Research and Development
Goodwill
Long-term expenses to be apportioned
16,414,181.91
276,057.82
12,625,298.34
338,545.86
Deferred income tax asset
7,869,895.86
13,675,921.06
Other non-current asset
13,877,829.74
14,109,171.88
Total non-current asset
581,823,633.91
393,781,984.00
536,349,182.21
340,344,493.84
Total assets
3,683,974,196.77
1,041,292,956.19
2,911,091,112.38
836,022,891.51
Current liabilities:
Short-term loans
378,948,301.38
80,171,729.25
254,396,407.94
55,000,000.00
Loan from central bank
24Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
Absorbing deposit and interbank deposit
Capital borrowed
Transaction financial liabilities
Notes payable
791,513,252.27
129,298,292.87
494,788,218.16
91,246,553.68
Accounts payable
1,357,026,915.55
268,335,731.42
1,054,606,346.77
214,598,852.16
Accounts received in advance
18,487,835.55
4,626,342.73
15,666,567.23
1,732,574.54
Selling financial asset of repurchase
Commission charge and commission payable
Wage payable
74,195,821.61
14,678,407.64
104,917,442.34
22,849,376.49
Taxes payable
14,379,964.47
-963,780.92
19,811,311.90
-157,294.23
Interest payable
742,393.70
39,700.00
329,027.27
145,100.64
Dividend payable
3,746,270.05
3,746,270.05
Other accounts payable
271,731,949.89
119,209,791.88
323,560,290.20
114,127,379.52
Reinsurance payables
Insurance contract reserve
Security trading of agency
Security sales of agency
Long-term liabilities due within 1 year
57,720,000.00
Other current liabilities
Total current liabilities
2,968,492,704.47
615,396,214.87
2,271,821,881.86
499,542,542.80
Non-current liabilities:
Long-term loans
30,000,000.00
77,720,000.00
Bonds payable
Long-term account payable
51,261.00
113,625.83
Special accounts payable
800,000.00
800,000.00
1,800,000.00
800,000.00
Projected liabilities
898,409.16
Deferred income tax liabilities
12,174,180.87
13,071,193.57
Other non-current liabilities
23,085,874.07
23,085,874.07
Total non-current liabilities
66,111,315.94
800,000.00
116,689,102.63
800,000.00
Total liabilities
3,034,604,020.41
616,196,214.87
2,388,510,984.49
500,342,542.80
Owner’s equity (or shareholders’ equity):
Paid-in capital (or share capital)
288,149,400.00
288,149,400.00
288,149,400.00
288,149,400.00
Capital public reserve
5,055,838.57
2,508,769.94
9,801,131.71
2,508,769.94
Less: Inventory shares
Surplus public reserve
9,303,064.31
12,781,301.82
7,092,488.00
7,092,488.00
Provision of general risk
Retained profit
325,478,410.18
121,657,269.56
184,074,070.88
37,929,690.77
Balance difference of foreign currency translation
Total owner’s equity attributable to
627,986,713.06
425,096,741.32
489,117,090.59
335,680,348.71
25Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
parent company
Minority interests
21,383,463.30
33,463,037.30
Total owner’s equity
649,370,176.36
425,096,741.32
522,580,127.89
335,680,348.71
Total liabilities and owner’s equity
3,683,974,196.77
1,041,292,956.19
2,911,091,112.38
836,022,891.51
9.2.2 Profit Statement
Prepared by Shenzhen Accord Pharmaceutical Co., Ltd. January-December, 2008 Unit: RMB
Amount in this period
Amount in last period
Items
Merger
Parent Company
Merger
Parent Company
I. Total operating income
8,360,350,198.18
1,393,395,233.76
6,878,305,483.32
1,236,948,653.24
Including: Operating income
8,360,350,198.18
1,393,395,233.76
6,878,305,483.32
1,236,948,653.24
Interest income
Insurance gained
Commission charge and commission income
II. Total operating cost
8,192,562,587.02
1,402,155,815.39
6,743,064,873.98
1,248,505,099.97
Including: Operating cost
7,627,811,018.21
1,324,050,202.14
6,171,204,306.69
1,166,634,525.46
Interest expense
Commission charge and commission expense
Cash surrender value
Net amount of expense of compensation
Net amount of withdrawal of insurance contract reserve
Bonus expense of guarantee slip
Reinsurance expense
Operating tax and extras
11,132,572.30
567,924.96
12,245,830.36
547,571.00
Sales expenses
298,326,776.58
38,226,318.17
331,526,963.41
34,439,954.72
Administration expenses
204,915,589.20
41,371,738.60
188,972,655.10
44,065,623.81
Financial expenses
53,526,702.97
35,768.35
29,865,732.85
661,836.20
Losses of devaluation of asset
-3,150,072.24
-2,096,136.83
9,249,385.57
2,155,588.78
Add: Changing income of fair value(Loss is listed with “-”)
Investment income (Loss is listed with “-”)
16,510,914.22
95,694,628.72
34,086,953.88
98,338,366.71
Including: Investment income on affiliated company and joint venture
16,507,296.06
-47,794.59
8,209,843.29
-1,074,707.13
Exchange income (Loss is listed with “-”)
III. Operating profit (Loss is listed with “-”)
184,298,525.38
86,934,047.09
169,327,563.22
86,781,919.98
Add: Non-operating income
19,774,350.12
6,143,458.54
23,484,253.71
3,943,239.07
Less: Non-operating expense
575,148.60
46,862.53
1,760,729.82
517,568.73
Including: Disposal loss of
492,133.28
32,132.03
626,437.92
307,564.63
26Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
non-current asset
IV. Total Profit (Loss is listed with “-”)
203,497,726.90
93,030,643.10
191,051,087.11
90,207,590.32
Less: Income tax
41,043,599.94
52,333,330.06
V. Net profit (Net loss is listed with “-”)
162,454,126.96
93,030,643.10
138,717,757.05
90,207,590.32
Net profit attributable to owner’s equity of parent company
154,807,067.87
93,030,643.10
124,913,985.45
90,207,590.32
Minority shareholders’ gains and losses
7,647,059.09
13,803,771.60
VI. Earnings per share
i. Basic earnings per share
0.537
0.323
0.434
0.313
ii. Diluted earnings per share
0.537
0.323
0.434
0.313
9.2.3 Cash Flow Statement
Prepared by Shenzhen Accord Pharmaceutical Co., Ltd. January-December, 2008 Unit: RMB
Amount in this period
Amount in last period
Items
Merger
Parent Company
Merger
Parent Company
I. Cash flows arising from operating activities:
Cash received from selling commodities and providing labor services
9,482,544,445.66
1,654,449,631.15
8,085,599,499.72
1,439,359,660.64
Net increase of customer deposit and interbank deposit
Net increase of loan from central bank
Net increase of capital borrowed from other financial institution
Cash received from original insurance contract fee
Net cash received from reinsurance business
Insured savings and net increase of investment
Net increase of disposal of transaction financial asset
Cash received from interest, commission charge and commission
Net increase of capital borrowed
Net increase of returned business capital
Write-back of tax received
1,147,948.71
2,548,876.31
Other cash received concerning operating activities
28,677,323.33
18,311,540.59
52,658,123.94
101,749,994.73
Subtotal of cash inflow arising from operating activities
9,512,369,717.70
1,672,761,171.74
8,140,806,499.97
1,541,109,655.37
Cash paid for purchasing commodities and receiving labor service
8,555,202,289.04
1,457,665,870.25
7,339,461,307.31
1,455,126,883.48
Net increase of customer loans and advances
27Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
Net increase of deposits in central bank and interbank
Cash paid for original insurance contract compensation
Cash paid for interest, commission charge and commission
Cash paid for bonus of guarantee slip
Cash paid to/for staff and workers
278,835,376.12
39,084,324.95
251,959,425.42
33,609,313.69
Taxes paid
167,927,252.04
9,801,028.19
173,647,167.23
14,249,465.84
Other cash paid concerning operating activities
263,824,361.51
169,043,027.67
288,040,760.00
147,862,737.38
Subtotal of cash outflow arising from operating activities
9,265,789,278.71
1,675,594,251.06
8,053,108,659.96
1,650,848,400.39
Net cash flows arising from operating activities
246,580,438.99
-2,833,079.32
87,697,840.01
-109,738,745.02
II. Cash flows arising from investing activities:
Cash received from recovering investment
26,588,726.02
0.65
Cash received from investment income
4,534,232.29
99,987,068.69
3,457,479.92
99,413,073.19
Net cash received from disposal of fixed, intangible and other long-term assets
10,405,932.56
34,613.39
28,017,753.45
415,971.93
Net cash received from disposal of subsidiaries and other units
1,922,100.00
1,922,101.00
Other cash received concerning investing activities
Subtotal of cash inflow from investing activities
16,862,264.85
101,943,783.08
58,063,959.39
99,829,045.77
Cash paid for purchasing fixed, intangible and other long-term assets
84,982,286.53
1,956,678.00
71,410,213.94
3,694,492.21
Cash paid for investment
30,000.00
Net increase of mortgaged loans
Net cash received from subsidiaries and other units
20,333,528.49
134,598,033.49
Other cash paid concerning investing activities
Subtotal of cash outflow from investing activities
105,315,815.02
136,554,711.49
71,410,213.94
3,724,492.21
Net cash flows arising from investing activities
-88,453,550.17
-34,610,928.41
-13,346,254.55
96,104,553.56
III. Cash flows arising from financing activities
Cash received from absorbing investment
Including: Cash received from absorbing minority shareholders’ investment by subsidiaries
Cash received from loans
646,549,462.94
220,000,000.00
305,000,000.00
85,000,000.00
Cash received from issuing bonds
Other cash received concerning
56,762,100.00
56,762,100.00
4,788,000.00
28Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
29
financing activities
Subtotal of cash inflow from financing activities
703,311,562.94
276,762,100.00
309,788,000.00
85,000,000.00
Cash paid for settling debts
611,566,139.63
225,000,000.00
274,000,000.00
40,000,000.00
Cash paid for dividend and profit distributing or interest paying
50,581,025.64
6,790,184.72
61,717,855.64
27,673,764.58
Including: Dividend and profit of minority shareholder paid by subsidiaries
374,028.45
Other cash paid concerning financing activities
110,000,000.00
Subtotal of cash outflow from financing activities
772,147,165.27
231,790,184.72
335,717,855.64
67,673,764.58
Net cash flows arising from financing activities
-68,835,602.33
44,971,915.28
-25,929,855.64
17,326,235.42
IV. Influence on cash due to fluctuation in exchange rate
1,130,818.68
1,070,627.47
-115.00
V. Net increase of cash and cash equivalents
90,422,105.17
7,527,907.55
49,492,357.29
3,691,928.96
Add: Balance of cash and cash equivalents at the period -begin
254,837,411.30
54,841,676.10
205,345,054.01
51,149,747.14
VI. Balance of cash and cash equivalents at the period -end
345,259,516.47
62,369,583.65
254,837,411.30
54,841,676.10Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
9.2.4 Statement on Changes of Owners' Equity
Prepared by Shenzhen Accord Pharmaceutical Co., Ltd. 2008 Unit: RMB
Amount in this report period
Amount last year
Owners' equity attributable to the parent company
Owners' equity attributable to the parent company
Items
Paid-up capital (Share capital)
Capital reserves
Less: Treasury Stock
Surplus reserves
General risk provision
Retained profit
Others
Minority interest
Total owners’ equity
Paid-up capital (Share capital)
Capital reserves
Less: Treasury Stock
Surplus reserves
General risk provision
Retained profit
Others
Minority interest
Total owners’ equity
I. Balance at the end of the last year
288,149,400.00
9,801,131.71
7,092,488.00
184,074,070.88
33,463,037.30
522,580,127.89
288,149,400.00
23,044,074.54
83,419,602.89
96,042,987.25
-37,920,889.45
452,735,175.23
Add: Changes of accounting policy
-7,915,996.89
-83,419,602.89
-3,887,712.56
37,920,889.45
22,095,763.49
-35,206,659.40
Error correction of the last period
Others
II. Balance at the beginning of this year
288,149,400.00
9,801,131.71
7,092,488.00
184,074,070.88
33,463,037.30
522,580,127.89
288,149,400.00
15,128,077.65
92,155,274.69
22,095,763.49
417,528,515.83
III. Increase/ Decrease in this year (Decrease is liste
d with'"-")
-4,745,293.14
2,210,576.31
141,404,339.30
-12,079,574.00
126,790,048.47
-5,326,945.94
7,092,488.00
91,918,796.19
11,367,273.81
105,051,612.06
(I) Net profit
154,807,067.87
7,647,059.09
162,454,126.96
124,913,985.45
13,803,771.60
138,717,757.05
(II) Profits and losses calculating into owners' equity
254,706.86
-7,092,488.00
-4,099,664.26
-10,937,445.40
-5,326,945.94
1,683,800.71
-3,643,145.23
30Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
1. Net changing amount of fair value of financial assets available for sale
-7,317,105.65
-813,011.73
-8,130,117.38
2. Effect of changes of other owners' equity of invested units under equity method
3. Effect of income tax related to owners' equity
4. Others
254,706.86
-7,092,488.00
-4,099,664.26
-10,937,445.40
1,990,159.71
2,496,812.44
4,486,972.15
Total of (I)and (II)
254,706.86
-7,092,488.00
150,707,403.61
7,647,059.09
151,516,681.56
-5,326,945.94
124,913,985.45
15,487,572.31
135,074,611.82
(III) Owners' devoted and decreased capital
-5,000,000.00
-5,000,000.00
1. Owners' devoted capital
-5,000,000.00
-5,000,000.00
2. Amount calculated into owners' equity paid in shares
3. Others
(IV) Profit distribution
9,303,064.31
-9,303,064.31
7,092,488.00
-32,995,189.26
-4,120,298.50
-30,022,999.76
1. Withdrawal of surplus reserves
9,303,064.31
-9,303,064.31
7,092,488.00
-7,092,488.00
2. Withdrawal of general risk provisions
3. Distribution for owners
-25,902,7
-4,120,29
-30,022,
31Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
32
(shareholders)
01.26
8.50
999.76
4. Others
(V) Carrying forward internal owners' equity
-19,726,633.09
-19,726,633.09
1. Capital reserves conversed to capital (share capital)
2. Surplus reserves conversed to capital (share capital)
3. Remedying loss with profit surplus
4. Others
-19,726,633.09
-19,726,633.09
IV. Balance at the end of the report period
288,149,400.00
5,055,838.57
9,303,064.31
325,478,410.18
21,383,463.30
649,370,176.36
288,149,400.00
9,801,131.71
7,092,488.00
184,074,070.88
33,463,037.30
522,580,127.89Shenzhen Accord Pharmaceutical Co., Ltd. Summary of Annual Report 2008
9.3 Explanation on changes of accounting policy, accounting estimation and settlement method 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
1. One consolidated unit was increased this year, and the reasons were as follows:
The Company purchased Guangxi Accord Pharmaceutical Co., Ltd in 2008.
2. Two consolidated units were decreased this year, and the reasons were as follows:
The subsidiaries Guangzhou Qingyun Hotel Co., Ltd. and Guangdong Dongshi Enterprise Development Co., Ltd
which were invested by Huixin----the subordinate company of the Company had been written off in 2007.
33
