Livzon Pharmaceutical Group Inc. Abstract of 2004 Interim Report

Transcription

1 Livzon Pharmaceutical Group Inc. Abstract of Interim Report 1 IMPORTANT NOTICE 1.1 The board of directors ("the Board") of Livzon Pharmaceutical Group Inc. ("the Company") and its directors confirm that there are no misleading statements or misrepresentation contained in or material omissions from this report. The Directors accept joint and several responsibilities for the truthfulness, accuracy and completeness of the contents herein. This interim Report is extracted from the interim report full text, the full text of which has been published at CNINFO ( Investors should carefully read the full text of the interim report for details. 1.2 ne of the directors has made any statement that he could not confirm or has expressed any objection to the truthfulness, accuracy and completeness of this report. 1.3 All directors attended the Board meeting. 1.4 The Company's interim report is unaudited. 1.5 Mr. Zhu Baoguo (Chairman of the Company), Mr. An Ning (Chief Accountant) and Ms. Si Yanxia (Chief Financial Controller) have declared that they are responsible for the truthfulness and completeness of the financial statements in the interim report. 1.6 The report is published in Chinese and English. The Chinese version is set to be accurate if any ambiguities occur in the understanding of such two versions. 2 COMPANY PROFILE 2.1 Basic information Short form of stock Livzon Group, Livzon B Stock code , Stock Exchange of Shenzhen Securities Exchange listing Secretary to the board of directors Representative in charge of securities affairs Name Wang Wuping Hong Lu Correspondence Livzon Building, Guihua rth Road, Livzon Building, Guihua rth address Gongbei, Zhuhai, Guangdong Road, Gongbei, Zhuhai, Guangdong Telephone Facsmile wangwuping@livzon.com.cn honglu@livzon.com.cn 2.2 Major accounting data and indexes (unaudited)(unless otherwise specified, all 1

2 amounts herein are denominated in RMB.) Consolidated Income Statement 30 June RMB June 2003 RMB 000 Revenue 765,633 1,021,136 Cost of Sales (371,949) (521,173) Gross profit 393, ,963 Other operating income 4,078 7,737 Selling expenses (195,950) (275,947) Administrative expenses (126,568) (137,628) Other operating expenses (572) (3,910) Profit from operations 74,672 90,215 Financial costs (3,534) (907) Profit from investments 28,003 (611) Share of profit of associates 776 Profit before tax 99,917 88,697 Income tax expense (17,523) (24,082) Profit after tax 82,394 64,615 Minority interests (5,988) (21,561) Net profit for the year 76,406 43, Consolidated Balance Sheet 30 June RMB December 2003 RMB 000 Assets n-current assets Property, plant and equipment 647, ,559 Construction in progress 110,774 61,450 Goodwill 21,397 25,796 Negative goodwill (150) (1,292) Intangible assets 30,220 26,877 Investments in associates 25,464 17,080 Other investments 161, , ,812 1,038,443 Current assets Inventories 191, ,001 Trade and other receivables 410, ,223 Amounts due from associates 13,374 16,867 2

3 Other investments 59,538 60,464 Bank balances and cash 482, ,072 1,157,949 1,062,627 Total assets 2,154,761 2,101,070 Equity and liabilities Capital and reserves Share capital 306, ,035 Reserves 770, ,923 1,076,155 1,029,958 Minority interests 90, ,497 1,166,602 1,159,455 n-current liabilities Bank loans due after one year 25,000 Current liabilities Trade and other payables 305, ,038 Amounts due to associates 1,947 4,335 Tax liabilities 9,637 24,742 Bank loans due within one year 670, , , ,615 Total equity and liabilities 2,154,761 2,101, The explan of Difference in net profit The Company s net profit for the first half of was78,556(rmb 000) in accordance with the PRC Accounting Standards, or 76,406(RMB 000) in accordance with the International Accounting Standards. The difference of 2,150(RMB 000) is mainly attributable to, in accordance with the International Accounting Standards, the adjustments to Long-term prepaid expenses, Finance costs and Amortization of negative goodwill, which resulted in additions to profits amounting to 365(RMB 000), 399(RMB 000) and 98(RMB 000) respectively; and the adjustments to Depreciation on property, plant and equipment, Amortization of goodwill and Deferred expenses, which resulted in reductions to profit amounting to 268(RMB 000), 125(RMB 000) and 2,619(RMB 000) respectively. The Company s net assets as at 30 June was 1,092,905(RMB 000) in accordance with the PRC Accounting Standards, or 1,076,155(RMB 000) in accordance with the International Accounting Standards. The difference of RMB16,750(RMB 000) is mainly attributable to: the adjustments to Accrual of expenses and Amortization of goodwill, which resulted in additions to net assets amounting to 14,549(RMB 000) and 1,634(RMB 000) respectively; and the adjustments to Elimination of interest capitalized for property, plant and equipment, Deferred expenditure, Depreciation on property, plant and equipment, and Amortization of negative goodwill, which resulted in reductions to net assets amounting to 25,354(RMB 000), 3,087(RMB 000), 2,211(RMB 000) and 1,150(RMB 000) respectively. 3 CHANGES IN SHARE CAPITAL AND PARTICULARS ABOUT SHAREHOLDERS 3

4 3.1 Changes in share capital 3.2 Particulars about shares held by the top ten shareholders Total number of shareholders at the end 43,834 (including 13,481 holders of B shares) of the reporting period Unit: Share Name of shareholder China Everbright Holdings Company Limited Tiancheng Industrial Joincare Pharmaceutical Industry (Group) Huabao Xingye Multi-strategies Growth Securities Investment Fund Shenzhen Haibin Pharmaceutical Guangzhou Baokeli Trading Company DEUTSCHE BANK AG LONDON Taihe Securities Investment Fund Guolianan Desheng Small Caps Prime Securities Investment Fund Particulars about shares held by the top ten shareholders Change during the reporting period Shareholding as at 30 June Percentage (%) Type of shares (non-circulating or circulating) Shares under pledge or in the moratorium period 0 38,917, n-circulating ,284, Circulating ,285, Domestic legal person shares: 22,379,239 A Shares in circulation: 9,905,877 8,321,785 8,321, Circulating 0 0 6,752, Circulating 0 0 6,059, n-circulating 6,059,428 4,085,343 4,085, Circulating 0 3,082,577 3,082, Circulating 0 2,653,329 2,653, Circulating 0 Yuan Lanxiang 2,022,983 2,161, Circulating 0 0 4

5 Particulars about circulating shares held by the top ten shareholders Name of Class of shares (A, B, H Circulating shareholding as at 30 June shareholder share or else) Tiancheng Industrial 34,284,870 B Joincare Pharmaceutical Industry (Group) 9,905,877 A Huabao Xingye Multi-strategies Growth Securities Investment 8,321,785 A Fund Shenzhen Haibin Pharmaceutical 6,752,435 A DEUTSCHE BANK AG LONDON 4,085,343 B Taihe Securities Investment Fund 3,082,577 A Guolianan Desheng Small Caps Prime Securities Investment 2,653,329 A Fund Yuan Lanxiang 2,161,983 B Jingfu Securities Investment Fund 1,911,800 A E-Fund Stable Growth Securities Investment Fund 1,436,716 A 5

6 Connections or parties acting in concert among the aforesaid shareholders Agreed moratorium period for strategic investors or general legal persons as subscribers of new placing shares (i) Both Tiancheng Industrial and Shenzhen Haibin Pharmaceutical are subsidiaries of Joincare Pharmaceutical Industry (Group), which directly and indirectly holds 100% equity interests therein. (ii) On 2 January, Joincare Pharmaceutical Industry (Group) (formerly known as Shenzhen TAITAI Pharmaceutical Industry ), Guangzhou Baokeli Trading Company and Zhuhai Lishi Investment entered into the Share Transfer, Custody and Mortgage Agreement, and Joincare Pharmaceutical Industry (Group) and Guangzhou Baokeli Trading Company entered into the Share Transfer and Custody Agreement as well as the Share Mortgage Agreement, pursuant to which Guangzhou Baokeli Trading Company agreed to directly transfer, place on custody and mortgage the 6,059,428 domestic legal person shares of the Company, representing 1.98% of the Company s total issued share capital, to Joincare Pharmaceutical Industry (Group) (iii) As at 30 June, Joincare Pharmaceutical Industry (Group) and its subsidiaries held and controlled 79,381,849 shares of the Company in aggregation, representing 25.94% of the Company total issued share capital, and became the Company s largest shareholder. (iv) On 12 April 2002, China Everbright Holdings ( China Everbright ) entered into the Share Custody Agreement with Xi an Dongsheng Group ( Xi an Dongsheng ), pursuant to which China Everbright agreed to place 38,917,518 domestic legal person shares of the Company held by it on custody to Xi an Dongsheng. (v) Save as disclosed above, there is no connection among the Company's top ten shareholders, nor the Company is aware of any parties acting in concert as defined in Measures for Management on Information Disclosure of Changes in Shareholdings of Listed Company's Shareholders. Name of shareholder Agreed moratorium Period Changes in controlling shareholder and ultimate shareholder of the Company 4 DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT 4.1 Changes in shareholdings of directors, supervisors and senior management 6

7 5 MANAGEMENT DISCUSSION AND ANALYSIS 5.1 Analysis of principal operation by business segments or products (based on the financial statements prepared in accordance with the PRC Accounting Standards) Unit: RMB'000 Business segment Principal operating income Principal operating cost Gross profit margin (%) Change in principal operating income as compared with the corresponding period of last year(%) Change in principal operating cost as compared with the corresponding period of last year(%) Change in gross profit margin as compared with the corresponding period of last year(%) Pharmacy 765, , Including: connected transactions 3, , Products Principal operating income Change in principal operating income as compared with the corresponding period of last year(%) Livzon Dele series 83, Ceftriaxone Sodium 55, Anti-cold granule 42, CefoperazoneSodium 31, Mevastatin 30, APA 29, Dages 27, Shenqi Fuzheng Injection Liquid 25, Including: connected transactions totalling 3,751.4(RMB 000) for products sold by the Company to its controlling shareholder and subsidiaries during the reporting period 5.2 Principal operation by geographical areas Unit: RMB'000 Geographical areas Principal operating income Change from the corresponding period of last year(%) rth-eastern China 44, rthern China 127, Central China 67, Eastern China 142,

8 Southern China 211, South-western China 100, rth-western China 32, Export 37, Other operations with significant influence on net profit Unit: RMB'000 Other operations Profit (loss) Percentage of net profit Profit from investments 32, % 5.4 Investee companies' operation (applicable to those contributing profit from investment to the Company amounting to 10% or more of net profit) 5.5 Reasons for material changes in principal operation and its structure 5.6 Reasons for material changes in profitability of principal operation (gross profit margin) as compared with last year 5.7 Analysis of the reasons for major changes in profit constituents as compared with last year The Company disposed its equity interests in Hubei Keyi Pharmaceutical Holdings Company Limited and Hubei Liyi Pharmaceutical Technology with a profit from investment of 32,793.7(RMB 000), representing a significant influence on net profit for the reporting period which accordingly increased by 85.07% from the corresponding period of last year. 5.8 Use of raised proceeds Utilisations of raised proceeds Change in the projects 5.9 Amendments to the Board's operating plan for the 2nd half of 5.10 Warning on any potential loss in accumulated net profit for the period from the year beginning to the end of next reporting period or any material change from the corresponding period of last year and the reason thereof 8

9 The Company disposed its equity interests in Hubei Keyi Pharmaceutical Holdings Company Limited and Hubei Liyi Pharmaceutical Technology with a profit from investment of 32,793.7(RMB 000). As a result, net profit for the reporting period increased by 85.07% from the corresponding period of last year. Net profit for the next reporting period is estimated to increase over the corresponding period of last year. Meanwhile, the expected price decrease of antibiotic preparations and expiry of the agency agreement for Dages may have a negative influence on the Company's operations The management's explanation on non-standard opinion for the reporting period given by the auditors 5.12 The management's explanation on changes in or arrangement for the events in connection with non-standard opinion for the previous year given by the auditors 6 SIGNIFICANT EVENTS 6.1 Acquisition and disposal of assets and asset reorganisation Asset acquired or taken up Party involved and asset acquired or taken up Shanghai Livzon Dongfeng Biotechnical Co., Ltd. Zhuhai Livzon Meidaxin Technology Development Co., Ltd. Shanghai Lijin Biochemical Products Co., Ltd. Date of acquisition 10 February 10 February 15 March Consideration Net profit attributable to the Company since date of acquisition to the end of reporting period Unit: RMB'000 Whether a connected transaction (if so, state the basis of pricing) 6, , Livzon Integrated Pharmacy Manufacturing Co., Ltd. Lida Pharmaceutical Co., Ltd. 5 July 5 July 14, ,

10 6.1.2 Asset disposed or transferred out Party involved and assets disposed or transferred out Hubei Liyi Pharmaceutical Technology Co., Ltd. Hubei Keyi Pharmaceutical Holdings Co., Ltd. Date of disposal 13 April 13 April Unit: RMB'000 Net profit Whether a attributable to the Profit connected Consideration Company since (loss) transaction the beginning of from the (if so, state the year to the disposal the basis date of disposal of pricing) 18, , , , Progress and influences on operating results and financial position for the reporting period following the publishing of report of asset reorganisation or announcement of asset acquisition or disposal Applicable t applicable During the 1st half of, the Company disposed its equity interests in Hubei Liyi Pharmaceutical Technology and Hubei Keyi Pharmaceutical Holdings Company Limited with a profit from investment of 32,793.7(RMB 000), representing a significant influence on net profit for the reporting period which accordingly increased by 85.07% from the corresponding period of last year. At the same time, the consolidated sales revenue for the same period recorded a decrease of 85,280(RMB 000). 6.2 Guaranties Parties under guaranties Zhuhai S.E.Z Likang pharmaceutical Co., Ltd. Commencing from (Signing date of agreement) 15 July ,000.0 Amount Type Term Guaranty under joint and several liabilities 15 July July 2006 Unit: RMB'000 Whether a guaranty Whether to expired connected party Zhuhai S.E.Z Likang pharmaceutical Co., Ltd. 15 July ,000.0 As above 15 July July

11 Zhuhai S.E.Z Likang pharmaceutical Co., Ltd. Livzon synthetic Pharmaceutical Co., Ltd. Livzon Pharmaceutical Trading Co., Ltd. Livzon (Group) Pharmaceutical Factory Livzon (Group) Biotechnological Pharmaceutical Factory Livzon (Group) Livzon Traditional Chinese Medicine Factory Guangdong New north River Pharmacy Livzon (Group) Pharmaceutical Factory 1 August August August August August August ,000.0 As above 20,000.0 As above 20,000.0 As above 10,000.0 As above 5,000.0 As above 5,000.0 As above 21 May 60,000.0 As above 22 June 20,000.0 As above 1 Aug July 1 Aug July Aug July Aug July Aug July Aug July May -30 June June -21 June 2008 Total amount occurred 0.00 Total balance of guaranties 0.00 Including: total balance of guaranties to connected parties Total amount of guaranties in violation of regulations Total amount of guaranties as a percentage of the Company's net assets(%) Total amount occurred for guaranties granted to subsidiaries by the Company , Loans due to or from connected parties As at 30 June, Shenzhen Haibin Pharmaceutical, a subsidiary of Joincare Pharmaceutical Industry (Group) which is a controlling shareholder of the Company, occupied 1,464 (RMB 000)in the Company s capital. (In addition, the payables to subsidiaries of the Company s controlling shareholder amounted to 1,138.1(RMB 000).) The said balances were all open accounts in the ordinary course of business. 6.4 Material litigation and arbitration 11

12 6.5 Explanation on other significant events and influence therefrom and solution thereon Reanda Certified Public Accountants, the Company's auditors, prepared the Special Explanation on Capital of Livzon Pharmaceutical Group Inc. Occupied by its Controlling Shareholder and Other Connected Parties (Reanda Zong Zi []B-2088), details of which are set out as follows: As at 31December 2003, Shenzhen Haibin Pharmaceutical, a subsidiary of Joincare Pharmaceutical Industry (Group) which is a controlling shareholder of the Company, occupied 1,778.7 (RMB 000)in the Company s capital. (In addition, the prepayment from and payables to the Company s controlling shareholder and its subsidiaries totalled 1,305.3 (RMB 000). In 2003, the accumulated capital occupied by Shenzhen Haibin Pharmaceutical amounted to 5,306 (RMB 000). The said balances were all open accounts in the ordinary course of business. As at 31 December 2003, 6,507(RMB 000) of the Company was occupied by other connected parties, including 5,025.3(RMB 000) by Livzon Group Suzhou Xinbao Pharmaceutical Factory (a subsidiary not included in scope of consolidation), 823.1(RMB 000) by Shanghai Livzon Dongfeng Biotechnical (an associate), and 658.6(RMB 000) by Guangdong Lanbao Pharmaceutical (an associate). For 2003, an accumulated amount of 12,622.5(RMB 000) of the Company was occupied by other connected parties, including 5,025.3(RMB 000) by Livzon Group Suzhou Xinbao Pharmaceutical Factory (a subsidiary not included in scope of consolidation), 6,473.3(RMB 000) by Guangdong Lanbao Pharmaceutical (an associate) and.1,123.8(rmb 000) by Shanghai Livzon Dongfeng Biotechnical (an associate). According to the special representation by the Independent Directors for the Company's outward guaranties, the Company has made a strict control on exposure to guaranty risks, and none of outward guaranty or any guaranty to the Company's controlling shareholder or other connected parties in which the Company holds interests no more than 50% was granted by the Company. 7 FINANCIAL STATEMENTS 7.3 tes to financial statements During the reporting period, there is no change in accounting policies or estimation basis or correction to material accounting errors as compared with the latest annual report Explanation on material change in scope of consolidation for the reporting period as compared with the latest annual report. The change in scope of consolidation was attributable to the disposal of equity interests in Hubei Liyi Pharmaceutical Technology and Hubei Keyi Pharmaceutical Holdings tes to relevant events for any non-standard unqualified opinion 12

13 10 August The board of directors Livzon Pharmaceutical Group Inc. 13