AsiaPharm Group Annual Report 2008

Luye Pharma Group LTD.
Leading
The
Edge
ANNUAL REPORT 2008
ANNUAL REPORT 2008 1

contents
02 company profile
03 our presence in china
05 chairman's statement
08 board of directors
11 key management
13 group structure
15 newly aquired products
16 key products
18 five-year financial overview
19 growth driver
21 operation review and development
24 corporate information
25 corporate governance

A Revitalised Identity, A Long-standing Commitment
At the heart of our business is an unwavering commitment to discover and develop new technologies
and treatments that address a broad spectrum of important, rapidly growing areas of medical need.
We have chosen to participate in a business with a high degree of relevance for the future of medicine,
where technological and scientific superiority can advance the state of care and provide our Group
with competitive advantage.
As part of our continuing journey to grow as a company, we have adopted a new name, Luye
Pharma Group Ltd., to better represent our aspiration to venture beyond borders and deliver
products of exceptional quality in the service of healthcare.

company profile
Established in 1994, we are today one of the leading specialty pharmaceutical groups in the
PRC. We specialise in the research, development, production and sale of pharmaceutical drugs
and new formulations for chemical drugs, the sale of R&D results and patents for new drugs,
and the provision of research services on a contract basis.
Our ultra modern facilities in Yantai and Nanjing are fully equipped with leading edge
technology, fully integrated and GMP certified, enabling us to carry out all aspects of
pre-clinical evaluation; from pharmaceutical to pharmacology research, drug safety evaluation
and clinical trials; to the full production of our natural drugs. We currently employ approximately
150 researchers and have close collaborative relationships with renowned universities and
research institutions to drive our R&D efforts, enabling us to stay at the forefront of specialty
pharmaceutical developments.
To reach our customers, we have established an extensive distribution network of 35 sales support
offices, covering 30 provinces, municipals, and autonomous regions, reaching approximately
3,000 hospitals. This is further supported by a strong network of over 300 distributors and 500
sales and marketing personnel.
2 Luye Pharma Group Ltd

our presence in china
Inner Mongolia
Shandong Luye Pharmaceutical Co., Ltd.
Nanjing Kanghai Pharmaceutical Co., Ltd.

Nanjing Sike Pharmaceutical Co., Ltd.
Beijing WBL Peking University Biotech Co., Ltd.

performance driven
4 Luye Pharma Group Ltd.

chairman’s statement
A Steady Run
delivering positive results
amidst trying times
Dear Shareholders, In FY2008, we achieved outstanding line with the Group’s strategic placement
results within the PRC pharmaceutical we continue to retain R & D results for
It is with great pleasure that I present sector. Revenue grew 27.9% year-on- the development of our own unique
to you Luye Pharma Group Ltd.’s (formerly year (“y-o-y”) to RMB 651.0 million on proprietary drugs. Reflecting the
known as Asiapharm Group Ltd.) (“the contributions from our proprietary drugs. continued recognition of the Group’s
Group” or “Luye Pharma”) annual report In tandem with the increase in revenue, achievements in the development of new
for the financial year ended 31 December profit before tax rose 26.3% to RMB 82.8 pharmaceutical drugs, Luye Pharma was
2008 (“FY2008”). I would like to take million while net profit attributable to awarded a “National Science Award for
this opportunity to share with our ordinary equity holders of the company Scientific Development (2nd Class)” by
shareholders my views on the outlook grew 6.8% y-o-y to RMB 62.1 million. the PRC national science institute.
of the pharmaceutical industry and the Sales of the Group’s pharmaceutical
Group’s future development plans. drugs continue to be a key revenue Our expansion initiative promulgated in
generator. In FY2008, the Group actively 2006 for the international expansion of
Year in Retrospect sought to build on its existing presence the Group’s core businesses continues
to expand its domestic distribution to bear fruit. We have successfully
FY2008 has been a challenging year established our presence within markets
network. In addition the Group actively
for global industries as the economic like Vietnam, Philippines, Pakistan and
pursued enhancements to its existing
downturn and credit crunch impacted Singapore over the past two years and
sales methodologies to streamline
global economies, including the PRC. will continue to seek out new markets to
processes and increase operational
However, amidst such unfavorable further expand our distribution network.
efficiencies to ensure the sustainable
operating conditions and the prospect of
development of the Group.
an economic slowdown, our experienced In FY2008, the Groups successfully
and competent management team was Investment in research and development initiated the sale of its proprietary anti-
successful in executing our business of new drugs remains an integral aspect cholesterol drug Xuezhikang under the
strategies to achieve yet another year of our business development strategy. In brand names HypoCol® and Lipascor®
of growth.

chairman’s statement (cont’d)
in Singapore and Malaysia. Reflecting we will focus on the development of new time where the Group’s current facilities
the support for this product from the proprietary drugs utilizing internationally has been fully developed and utilized and
mass consumer market, inaugural sales recognized standards to complement will be insufficient to meet the demands
contribution from HypoCol® reached our existing product portfolio and of the Group’s growing business. Based
RMB 13.2 million in FY2008. explore additional opportunities on preliminary estimates, the Group
to further expand our distribution expects the new site to adequately meet
The Group continues to explore networks. Through these efforts, we will the future expansion requirements of
opportunities within the international seek to further enhance the value of the Group.
markets. Our proprietary Oncology our products and increase the market
drug, CMNa® is currently undergoing penetration for our new products. Building the international profile of the
clinical studies to comply with approval Group and our subsidiaries remains
requirements from the South Korean Merger and acquisition (“M&A”) an integral aspect of our business
authorities. remains one of the Group’s key growth strategy. While conditions across global
drivers. The Group will continue to markets continue to affect the business
Outlook source for suitable M&A opportunities environment, the Group will continue
with domestic and international to maintain sound fiscal policies and
In view of the global financial crisis and pharmaceutical companies to prudent investment strategies to
its effect on the PRC economy, the central complement and grow our current enhance our technological capabilities,
government has promulgated a broad business with a view to generate better improve personnel management and
array of economic stimulus plans such as returns for our shareholders. achieve greater success in product
the RMB 4.0 trillion stimulus package to development. This will enable the Group
spur domestic consumption. In addition, On 6th March 2009, the Group to better compete against other global
the PRC central government has also successfully obtained the approval pharmaceutical players and ensure the
invested over RMB 850 billion for major of shareholders at a Special General long-term benefits of our shareholders.
revamps to its existing healthcare system. Meeting pertaining to several matters,
A major portion of the RMB 850 billion including 1) the proposed name change In appreciation
investments will go into strengthening of the Company to Luye Pharma Group
several key aspects of healthcare in Ltd. and 2) the acquisition and relocation The Group was able to remain resilient
the PRC, including medical equipment of the Group’s facilities. against the effects of the economic
and technology, generic drugs and downturn and weakening of consumer
pharmaceutical businesses. According Following the shareholders’ approval, demand to report yet another year of
to the National Development and the Company has changed its name growth. Our success would not have
Reform Commission, annual subsidies from Asiapharm Group Ltd. to Luye been possible if not for the unyielding
provided for the basic healthcare of rural Pharma Group Ltd. with effect from support of our stakeholders. Therefore,
and urban residents will be increased 17 March 2009. We firmly believe that on behalf of the Group, I would like
to RMB 120 per resident. While this the name change will better align various express my sincerest appreciation to all
RMB 100 billion initiative, along with segments of the Group’s business under Luye employees, directors, shareholders,
the RMB 850 billion investments in the Luye brand name. The change will suppliers and business partners. As we
healthcare restructuring, is expected to also be beneficial in strengthening enter yet another year ahead, I look
impact players within the healthcare and the Group’s brand equity and further forward to your continued support
pharmaceutical industry significantly, streamline the Group’s dealings with and the greater heights that we will
we stand poised to face and overcome external business partners. scale together.
any potential challenges that may arise.
In FY2008, the Group received
Sales of our patented drugs remain a key notification from the PRC government
driving force behind the Group’s business about the rezoning of land usage and
developments. In FY2008, the Group the concessionary offer for a larger plot
continued to place great emphasis on the of land within Yantai, Shandong, PRC Liu Dian Bo
development of our local and overseas to relocate Luye’s existing production Executive Chairman
distribution networks. Moving forward, facilities. This offer came at an opportune 20 March 2009

board of directors
Mr Liu Dian Bo Mr Yuan Hui Xian Mr Yang Rong Bing

Executive Chairman Executive Director Executive Director
Mr Liu Dian Bo is our Executive Chairman Mr Yuan Hui Xian is our Executive Director Mr Yang Rong Bing is our Executive
and one of the founders of our Group. and one of the founders of our Group. Director and one of the founders of our
He was appointed as our Director on Mr Yuan Hui Xian was appointed as our Group. Mr Yang Rong Bing has been
9 July 2003. As our Executive Chairman, Director on 9 July 2003 and is in charge appointed as our Executive Director since
Mr Liu Dian Bo is responsible for the of our Group’s public relations. Mr Yuan is 1 March 2007 and was previously our
overall management, operations and also the Executive Chairman of Nanjing Non-Executive Director since 9 July 2003.
the charting and reviewing of corporate Sike Pharmaceuticals Co., Ltd.. Prior to He is currently the Executive Chairman
directions and strategies of our Group. joining our Group in 1994, Mr Yuan Hui of Nanjing Kanghai Pharmaceutical Co.,
Prior to founding our Group in 1994, Xian was a doctor with Shengli, from Ltd.. Mr Yang Rong Bing is also currently
Mr Liu Dian Bo was a teacher at Yantai 1980 to 1994, where he was in charge of the General Manager and an Executive
Teacher’s College from 1985 to 1989. radiation diagnosis. From 1994 to 1999, Director of Wuhu Luye, a position he
From 1989 to 1993, Mr Liu Dian Bo was Mr Yuan Hui Xian was a Deputy General has assumed since March 2001. Mr Yang
the General Manager of Penglai Huatai Manager with Yantai Luye. From 1999 Rong Bing has also been a Non-Executive
Pharmaceutical Co., Ltd where he was to the incorporation of our Company in director of Shandong Luye since 2000.
overall in-charge of operations. From 2003, Mr Yuan Hui Xian was the Vice- Prior to that, Mr Yang Rong Bing was
1994 to 1999, Mr Liu Dian Bo was the President and executive director of with Jiangsu Xuzhou Bio-Chemical
Chairman cum General Manager of Yantai Shandong Luye. Mr Yuan Hui Xian holds Pharmaceutical Factory from 1988 to
Luye. From 1999 to the incorporation a medical diploma from the Shengli Oil 1993 where he worked his way up from a
of our Company in 2003, Mr Liu Dian Medical School. He has also received a technician to assistant factory head. From
Bo was the Chairman cum President of post-graduate certificate in Economics 1993 to 1997, Mr Yang Rong Bing was a
Shandong Luye Pharmaceutical Co., Ltd. from the China People’s University. Deputy General Manager with Yantai Bio-
(“Shandong Luye”). Mr Liu Dian Bo holds tech. In 1994, Mr Yang Rong Bing joined
a medical diploma from the Yishui Special Yantai Luye as a Deputy General Manager
Medical College. and from 1999 to 2000, he was the Chief
Sales Executive and Executive Director of
Shandong Luye. Mr Yang Rong Bing holds
a Bachelor of Science degree from the
Beijing Normal University.

board of directors
Mr Tan Soo Kiat Associate Professor Dr Hong Hai

Independent Non-Executive Director Tan Chong Huat Independent Non-Executive Director
Independent Non-Executive Director
Mr Tan Soo Kiat is our Independent Non- Mr Tan Chong Huat is our Independent Dr Hong Hai is our Independent Non-
Executive Director and was appointed a Director and was appointed on 31 March Executive Director and was appointed
Director on 31 March 2004. He is currently 2004. Currently, Mr Tan is Managing on 1 August 2007. Currently, Dr Hong
the Director of Corporate Advisory of Partner of KhattarWong, a firm of Hai is a Professor at Nanyang Business
Intergate Pte Ltd., a company engaged advocates and solicitors. He also heads School, Nanyang Technological University
in the provision of corporate advisory its Corporate and Securities department. in Singapore. He is a director of PTC
services. Mr Tan Soo Kiat was formerly Logistics Ltd, Singapore Deposit Insurance
the Chief Operating Officer and Executive Mr Tan graduated with a degree and Corporation Ltd, China Merchant Pacific
Director of Goodpack Limited (from master degree in law respectively from Holding Ltd and Starhill Global Reit
July 1999 to November 2000 and was National University of Singapore and Management Limited.
responsible for the financial functions University of London. He is an advocate
of the company. He also assisted the and solicitor of the Supreme Court of He was previously Dean of NTU’s Business
managing director of the company in its Singapore, a solicitor in England and School (2004-07) and President and Chief
dayto- day business operations. Mr Tan Wales, solicitor in Supreme Court of New Executive Officer of Haw Par Corporation
Soo Kiat was formerly a General Manager South Wales, Australia, a Notary Public Ltd (1990-2003). He is an Honorary
and Executive Director of Progen Holdings and a Commissioner for Oaths. He is also Council Member of the Singapore Chinese
Ltd. (from July 1997 to April 1999), Vice- a member of the Singapore Institute of Chamber of Commerce & Industry.
President (Finance) of Pacific Century Arbitration, the Chartered Institute of
Regional Developments Limited (from Arbitrators, and an accredited arbitrator
March 1996 to July 1997) and a Treasurer with China International Economic and
with the investment banking arm of DBS Trade Arbitration Commission and a
Bank (from April 1994 to March 1996). full member of Singapore Institute of
Mr Tan Soo Kiat has more than 14 years Directors. He has extensive experience
of experience in the banking and finance in corporate, banking and project
industry. Prior to working in Singapore, finance law in Singapore and the region,
he was Senior Internal Auditor and and acted in numerous significant
Marketing/Loans Manager for Bank of corporate transactions. He has been
Western Australia Ltd. in Australia (from named a leading practitioner in many
June 1990 to April 1994) and Senior reputable professional publications,
Internal Auditor for Challenge Bank Ltd. in including Asia Pacific Legal 500, Asia Law
Australia (from June 1988 to June 1990). Leading Lawyers.
Mr Tan Soo Kiat obtained a degree in
Commerce (Accounting) from University Mr Tan is an adjunct associate professor
of Otago, New Zealand in 1983. He is a of the Law Faculty and the Business
chartered accountant with the Institute of School, National University of Singapore
Chartered Accountants of New Zealand. and the Nanyang Business School,
Mr Tan Soo Kiat is also an Independent Nanyang Technology University.
Director of a number of companies listed
on the Singapore Exchange.

board of directors
Mr Kung Kuo Chuan Mr Wang Xin Yu

Non-Executive Director Non-Executive Director
Mr Kung Kuo Chuan is our Non-Executive Mr Wang Xin Yu is our Non-Executive

Director and was appointed on 11 August Director and was appointed on
2008. Mr Kung is a co-founder and 11 August 2008. Currently, Mr Wang
Partner of MBK Partners, a major private is a director of MBK Partners, a major
equity firm focused on making buyout private equity fund focused on making
investments in North Asia – Greater buyout investments in North Asia –
China, Korea, and Japan. Mr Kung is also Greater China, Korea, and Japan.
a director of a number of MBK Partners’
portfolio companies in the region. He was previously a Director with
with UBS investment banking in Hong
He was previously a Managing Director Kong, covering Asian industrial sectors.
with The Carlyle Group (1998-2005) and Before joining UBS, Mr Wang worked
an Engagement Manger with McKinsey at JPMorgan investment banking for
& Company (1991-1998). Mr Kung holds 4 years in New York and Hong Kong.
a B.A. from Dartmouth College and an He also worked for China Minmetals
M.B.A. from Harvard Business School. Group for 4 years as a financial analyst.
Mr Wang holds a B.A. from University of
International Business and Economics
and graduated with honors, Beta
Gamma Sigma in M.B.A. from University
of Chicago.

key management
Mr Diao Hai Peng Mr Chong Chin Fan Dr Li You Xin

Vice-President Chief Financial Officer Executive Vice-President of Research
and Development
Mr Diao Hai Peng is our Vice-President Mr Chong Chin Fan is our Chief Dr Li You Xin is our Vice-President
and the General Manager of Nanjing Financial Officer. Mr Chong Chin Fan in charge of group research and
Sike Pharmaceuticals Co., Ltd.. Prior to joined our Group in February 2004 development center. Prior to his
joining our Group in 1996, Mr Diao Hai and is responsible for all financial and appointment in AsiaPharm, from year
Peng was a R&D technician with Xuzhou accounting matters of our Group. Prior 1998, Dr Li You Xin served as the Scientific
Biochemical Pharamaceutical Co., Ltd to joining our Group, Mr Chong Chin Director, Senior Scientist and Head
from 1988 to 1995. From 1995 to 1996, Fan was the Group Financial Controller of Polymer Chemistry and Parenteral
Mr Diao Hai Peng was a Sales Manager and Company Secretary of the Econ Delivery System at Schwarz Pharma
with Hainan Jizhong Medical Technology International Group from 1991 to 2004. AG. Dr Li You Xin was also the Senior
Development Co., Ltd.. Mr Diao Hai After graduation in the United Kingdom Scientist at Hoechst AG/Aventis
Peng joined Shandong Luye as a sales in 1976 as a Certified Accountant, he responsible for researching and
manager in 1996 and was promoted to worked in London from 1976 to 1978. He developing Polymer Chemistry and Drug
Head of International Business in 2000. then joined KPMG Singapore from 1979 Delivery Systems from year 1994 to year
In 2002, he was further promoted to to 1981. In 1981, he joined Wah-Chang 1998. After obtaining his PH.D.S degree
Vice-President, Sales and Marketing. In International Group, Singapore, as the in Chemistry from Beijing University
2007, Mr Diao also assumed the position Group Accountant and later became in 1988, Dr Li You Xin joined the PRC
of General Manager of Nanjing Sike Group Accounting and Administrative Institute of Chemistry Chinese Academy
Pharmaceuticals Co., Ltd.. Mr Diao Hai Manager, a position he held until 1991. of Sciences, and later moved on to
Peng holds a Bachelor of Science degree Mr Chong Chin Fan is a Certified Public the Institute of Polymer and Institute
from the Xiamen University. Accountant and a Member of The of pharmaceutics and Biopharmacy,
Institute of Certified Public Accountants Philipps University in 1991; to conduct
of Singapore, and is a Fellow Member of advanced research in polymer chemistry
The Association. and parenteral delivery system with
funding from the Alexander von
Humboldt Foundation. To-date,
Dr Li You Xin has published over 50
papers in biomaterials, drug delivery
and gene transfection.

key management
Ms Xue Yun Li Mr Fan Zhi Cheng Mr Li Shi Xu

Vice-President, Research and Chief Engineer Senior Director of Manufacturing
Development
Ms Xue Yun Li is our Vice-President, Mr Fan Zhi Cheng is our Chief Engineer Mr Li Shi Xu is our Senior Director of
Research and Development at Shandong at Shandong Luye and is responsible Manufacturing, and is responsible for the
Luye. Responsible for the successful for the drafting, construction and supervision of our manufacturing and
development of AsiaPharm’s key maintenance of our Group’s new and warehousing operations at Shandong
products, Sodium Aescinate for Injection existing GMP standard production lines Luye. Prior to joining our Group in 1994,
(“Maitongna”) and Sodium Pantoprazole and facilities in Shandong and Nanjing. Mr Li was a Sales Executive at Yantai
for Injection (“Nuosen”), she has played Mr Fan has in-depth understanding Traditional Chinese Medicine Station.
a decisive role in the modernisation of the engineering and operational Mr Li is a certified pharmacist and
of Traditional Chinese Medicine. requirements of pharmaceutical joined Shandong Luye in 1994 as an
Accredited with numerous professional companies, which he garnered from over operation staff. Through his exemplary
and provincial accolades including the 25 years of operational experience in the performance, Mr Li progressed on to hold
“Shandong Province Scientific Techniques pharmaceutical industry. Prior to joining various key appointments within our
Award “First Grade” and the “Yantai City the Group in 1997, Mr Fan was Deputy Group including Production Manager,
Professional Technique Prominence Chief Engineer at Hohhot Specialty Product Quality Controller and now
Award” from 2003-2005, Ms Xue holds Medicines Company From 1982 to heads our Manufacturing department
the patent for the new drug “Keweijia” 1995. From 1995 to 1997, Mr Fan Zhi as Senior Director of Manufacturing.
which is used in the treatment of blood Cheng was Chief Engineer at China Mr Li Shi Xu holds a degree in Traditional
potassium deficiency. Prior to joining our National Pharmaceutical Industry Chinese Medicine from the Chinese
Group, Ms Xue was the R&D Section Chief Corporation and as General Manager Pharmaceutical University.
in Shenyang Liao He Pharmaceutical in its subsidiaries. Mr Fan joined us as
Co.. Ms Xue joined Shandong Luye as Engineer in 1997 before being promoted
the Product Development Manager in to Chief Engineer. Mr Fan holds a
1994 as one of the pioneers of Shandong Bachelor of Science degree.
Luye. She subsequently held various
positions such as Project Development
Director and Vice-Head of Research and
Development of Shandong Luye in her
11 years of exemplary performance
with Shandong Luye. After graduating
with a degree in Medicinal Chemistry
from Jiamusi University in 1988,
Ms Xue continued with her post-graduate
education, and obtained her Masters in
Business Administration from University
of Greenwich in 2002.

group structure
Luye Pharma Group Ltd.

( formerly known as AsiaPharm Group Ltd.)
43% AsiaPharm Investments Ltd. AsiaPharm Biotech Pte. Ltd.

Beijing WBL Peking
University Biotech Co., Ltd.**
65% 36%
Shandong Luye Solid Success SmartMedicine Steward Cross

Pharmaceutical Co., Ltd. Holding Limited Pte. Ltd. Pte. Ltd.**
75%
25%
Nanjing Sike Apex Group
Pharmaceutical Holding Limited
Co., Ltd.
75%
25%
Nanjing Kanghai Kang Hai
Pharmaceutical Pharmaceutical
Co., Ltd. Technology
Development
Limited
Yantai Luye
Drugs Trading
Co., Ltd.
69%
Shandong Luye
Natural Drug Research
and Development
Co., Ltd.
* All 100% owned, unless otherwise stated

** Associated Companies

thoroughly
inquisitive mindset

newly acquired products
New milestones in R&D

enhanced capabilities
complementing new
product acquisitions
The collaborative nature of our R&D efforts coupled with strategic
investment in technology give us a sharper competitive edge.
Apart from capitalizing on the emphasis on healthcare in the PRC,
we continue to explore opportunities to expand our existing
distribution networks and R&D platform.
As a mitotic inhibitor, coupled with its liposome delivery system, Lipusu targets and
inhibits rapidly growing cancer cells and is most commonly used to treat ovarian,
breast and non-small cell lung cancer. Lipusu works by attaching itself to structural
supports called microtubules, which form the framework inside living cells. In order
to divide, cells must break down their internal framework, and the product stops this
process by locking the support into place.

key products
Tiandida Tiandixin
Tiandida is a selective cytoprotective adjuvant used to reduce Tiandixin, an anti-tumour polysaccharide from the Shiitake
toxicities associated with certain cancer chemotherapy and mushroom, is one of the host-mediated anti-cancer drugs which
radiotherapy. It can help to reduce the incidence of dry mouth have been shown to affect host immune systems. The product
problems in patients undergoing post-operative radiation seems to enhance T-helper cell function, increase stimulation
treatment for head and neck cancer. In women with advanced of interleukin, interferon, and normal killer cells. In addition to
ovarian cancer, who are receiving repeated doses of the antitumour activity, it also possesses immuneregulatory effects,
chemotherapy drug cisplatin, Tiandida reduces the harmful anti-viral activity, antimicrobial properties.
effects of chemotherapy on the kidneys.
Hypocol CMNa
(Standardized Red Yeast Rice Extract in Capsule)
CMNa is a novel nitroimidazole radio-sensitizer, which
HypoCol capsule is scientifically prepared using the proprietary targets hypoxic tumour cells, with high efficacy and low
ingredient Red Yeast (known in Chinese as “Hong Qu”) of the toxicity. In 2002, CMNa was approved as a Class One New
species Monascus purpureus Went fermented on premium Drug, by the SFDA, and listed as one of the Top 10 Medical
rice. The use of Hong Qu as traditional Chinese health food for Science News in China. Used as an adjuvant to radiotherapy,
circulatory health is well documented in the ancient Chinese CMNa has been clinically proven to significantly enhance
Pharmacopoeia, “Ben Cao Gang Mu – Dan Shi Bu Yi”, first the sensitivity of tumour cells to radiotherapy. In addition,
published during the Ming Dynasty (A.D. 1368 - A.D. 1644). This CMNa has demonstrated promising sensitizing effects with
knowledge combined with thorough understanding of modern chemotherapy in other clinical trials.
pharmacology and biotechnology led to the development of
HypoCol capsule, an all-natural cholesterol balancing product
of clinical proven efficacy. HypoCol is available over-the-
counter at pharmacy stores and Chinese medical halls and is
recommended for consumers who have mildly or moderately
elevated levels of serum total cholesterol, who prefer to take
natural products and who are concern with side effect of
cholesterol-lowering drugs.

key products
Maitongna Lutingnuo Nuosen

(Sodium Aescinate for Injection) (Reduced Glutathione for Injection) (Sodium Pantoprazole for Injection)
Since its market launch in 1995, sales Launched in February 2003, our fastest Launched in 1999, Nuosen is a chemical
of Maitongna, our main natural drug, growing drug is a natural drug with drug with naew formulation,
have been increasing steadily. The main new formulation, manufactured from manufactured from Sodium Pantoprazole,
component of Maitongna is Sodium a natural active ingredient, reduced through the freeze dry process. Nuosen
Aescinate, a natural active ingredient glutathione synthetase, through the was admitted to the\ “National Health
extracted from SuoLuoZi a fruit of the freeze dry process. It is a prescriptive Insurance List” in September 2004. This
“Aesculus Chinensis Bge” tree. This drug used mainly in the field of prescriptive drug is mainly used to treat
natural drug is commonly used in the hepatology, to treat liver aliments such gastroenterological ailments, such as
fields of orthopaedics and neurology to as acute alcoholic hepatitis, alcoholic duodenum ulcers, gastric ulcers and acute
treat inflammation and swelling, resulting hepatic fibrosis and liver cirrhosis. It also pathologic of gastric mucosa, compound
from ailments such as hydrocephalus, reduces toxics from chemical treatments gastric ulcer and acute haemorrhage of
intracephalic hematoma, chronic venous on patients with tumours. the upper digestive tract.
insufficiency, burns, traumas, fractures
and wounds.
Okai Sidinuo Olai

(Compound Sodium Tablet) (Elcatonin for Injection) (Compound Sodium Aescinate)
Developed in-house and launched in Sidinuo is a synthesized peptide derivative Developed in-house and launched in
March 2004, Okai is a tablet form of of eel calcitonin, preapred in a sterile water August 2002, Olai is newly-formulated
our main product, Maitongna. Its main solution. It inhibits osteoclasts, decreases over-the-counter (OTC) drug, with the
bone resorption, prevents calcium loss of main active ingredients - Sodium
components are Sodium Aescinate and
the bone while improving bone mineral Aescinate and Diethylamine Salicylate. It
Diethylamine Salicylate. It is principally
density, increases the density of the is an antiinflammatory agent used to relief
used to treat inflammation, caused bone cortex as well as the content of pain caused by dropsy and haematoma;
by dropsy and haematoma. It also the bone calcium and mineral density. and the symtomatic treatment of
relieves symptoms of the veins, caused It is used in the field of orthopaedics to phlebitis. The product is available as a
by vein transfusion and phlebitis, helps relieve pain resulting from oesteoporosis, topical gel, with excellent transdermal
to maintain the normal functions of hypercalcaemia and metastasis bone absorption properties, and is non-staining
the veins tumors. In 2004, we have secured formula.
manufacturing and distribution
rights from the State Food and Drugs
Administration of the PRC (SFDA) and was
admitted to the “National Health Insurance
List” in December 2004.

five-year financial overview
Year ended 31 December (Rmb Million)

2004 2005 2006 2007 2008
Revenue 315.4 344.3 308.3 508.9 651.0
Profit Before Taxation And 75.7 90.4 85.5 65.6 82.8
Minority Interest
Taxation 0.5 (0.2) (4.6) (8.0) (20.7)
Profit After Taxation Before 76.2 90.1 80.9 57.6 62.1
Minority Interest
Minority Interest (4.4) (0.5) 2.8 0.5 0.0
Profit Attributable to 71.8 89.6 83.7 58.1 62.1
Shareholders
5-Year Revenue 5-Year Profit After Tax and Minority Interests

(Rmb Million) (Rmb Million)
89.6
700 90
651.0
80 83.7
600 71.8
70
508.9
500 62.1
60 57.6
400 344.3 50
315.4
308.3
300 40
4
200
3
100
2
0 0
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008

growth driver
Revenue By Sector
0.4% 0.2%
0.4% 0.0%
99.2% 99.8%
FY2007 FY2008
Sales of Pharmaceutical Drugs
Sales of R&D/Patents
Sales of Active Ingredients
Revenue by Specialisation
6.8%
8.0%
2.0%
5.7%
7.0%
45.8% 52.0%
FY2007 FY2008
16.0%
19.9%
16.1%
20.6%
Oncology
Orthopedic
Hepatology
Gastroenterology
Cardio Vascular
Others

solutions that work

operation review and development
quality
the key to our success
FY2008 was a year of challenges and strategically important developments for Luye
Pharma Group Ltd. (formerly known as Asiapharm Group Ltd.) as we continued to build
on our successful business strategies and seek to further enhance our position as a
leading specialty drugs manufacturer within the PRC pharmaceutical industry.
In line with the continued revenue

growth, selling and distribution expenses
grew by 47.6% to RMB 364.3 million
mainly attributable to the recruitment
of a larger sales force and traveling and
meeting expenses. Other expenses
increased by 55.0% to RMB 45.6 million
due mainly to an increase in R&D
expenses as the Group continued to
increase its focus on its own product
development and a fair value adjustment
of an available-for-sale investment of
RMB 4.3 million as a result of a decrease
in the value of our investments. Despite
higher expenses and an increase in
taxation due mainly to a deferred tax of
RMB 8.4 million for withholding tax on
retained profits of the PRC subsidiaries,
the Group’s FY2008 net profit attributable
Overview and Financial Following our successful acquisitions
to equity holders of the parent grew
Performance in FY2007, we continued our efforts to
6.8% to RMB 62.1 million from RMB 58.1
amalgamate the acquired assets with
FY2008 was a year of challenges and million in FY2007.
our existing operations. Reflecting the
strategically important developments success of our efforts, Group revenue rose
Our financial position remains strong.
for Luye Pharma Group Ltd. (formerly 27.9% to RMB 651.0 million in FY2008
As at 31 December 2008, our cash and
known as Asiapharm Group Ltd.) as we from RMB 509.0 million in FY2007,
cash equivalent balance stood at RMB
continued to build on our successful bolstered by sales of its proprietary
118.5 million.
business strategies and seek to further pharmaceutical products such as Lipusu,
enhance our position as a leading Nuosen, Lutingnuo, CMNa and maiden
specialty drugs manufacturer within the contributions from recently acquired
PRC pharmaceutical industry. product Hypocol®.

Segmental Contribution decreased by RMB 0.5 million to RMB 1.6 Malaysia with maiden contribution from
million in FY2008 from RMB 2.1 million its recently acquired Xuezhikang product
Sales of Group’s Pharmaceutical Drugs in FY2007. – marketed in South East Asia under the
Underscored by the Group’s strategic brand names HypoCol® and Lipascor® For
initiative to focus on the sale of its Sales of R&D Results FY2008, HypoCol® contributed RMB 13.2
proprietary drugs, contribution from the million to the Group’s total revenue.
In line with the Group’s decision to
sale of pharmaceutical drugs in FY2008 retain economically viable research
grew 28.7% to RMB 649.7 million from Moving forward, the Group will seek to
findings and divert more R&D resources
RMB 504.8 million. The commendable further extend its international market
for development of its own drugs, sales
growth was achieved against the presence and has identified various
of R&D results declined to a negative
backdrop of a challenging operating potential markets in South East Asia for
amount of RMB 0.3 million in FY2008
environment brought about by tighter its proprietary pharmaceutical products.
due to a write-back of R&D income
PRC regulatory policies to contain resulting from the cancellation of
rising healthcare costs and a general Significant Developments
existing contracts.
slowdown in the global economic
Subsequent to FY2008, the Group
climate. Contributing to the growth was Contribution by Geographical received a mandate from shareholders
exceptional demand for key products Regions through a Special General Meeting
Lipusu, Okai, Elcatonin, CMNa and
convened on March 6 2009 for 1) the
Nuosen which recorded sales growth Building on the success of its
proposed name change of the Group
of 106.6%, 37.1%, 29.9%, 23.2% and international expansion strategy
to Luye Pharma Group Ltd and 2) the
12.2% respectively. which began in FY2005, the Group has
acquisition and relocation of the
established a significant market presence
Group’s facilities.
Export Sales of Active Ingredients in the growing markets of Vietnam,
Pakistan and Korea.
As part of the Group’s decision to On 17th March 2009, the Company’s name
reduce export sales of active ingredients was changed from Asiapharm Group
In FY2008, the Group further extended
due to its low margins and higher credit Ltd. to Luye Pharma Group Ltd. to better
the success of the above strategy
risks, export sales of active ingredients align various segments of the Group’s
through entry into Singapore and

business under the Luye brand name at a concessionary price. This land parcel the PRC central government has also
and complement the Group’s effort to – which has an approximate gross area committed to increase healthcare
build a stronger and more recognisable of 216.6mu – is bigger than the existing expenditure by RMB 850 billion over
brand name for its products. The change premises and will house a new facility three years to deliver universal healthcare
will also serve to streamline the Group’s that caters to the Group’s future growth to all its citizens and to expand the
dealings with external business partners. requirements. Based on preliminary participation rate of both urban and rural
estimates, the new facility will boost the populace in the basic national medical
In FY2008, the Group received Group’s annual production capacity for insurance system to beyond 90 per cent.
notification from the PRC government Lyophilised powder for injection from 2 We believe these measures will benefit
about the rezoning of land usage and billion vials to 4 billion vials. the PRC healthcare sector and reflects
the concessionary offer for a larger plot the central government’s commitment
of land within Yantai, Shandong, PRC Following the relocation of production to the sustained development of the
to relocate Luye’s existing production facilities to the new site in 2014, the healthcare sector.
facilities. This offer came at an opportune existing premises will be converted
time as the Group’s existing facilities – into commercial use land and the Leveraging on our experience in drug
which were constructed in 1999 – had Group may choose to either lease out development and strong financial
reached their maximum growth potential or sell the premises. position, Luye Pharma stands poised to
due to space constraints and could not capitalise on opportunities for selective
handle the projected increase in capacity Forging Ahead and synergistic mergers and acquisitions.
that was necessary to meet the Group’s Going forward, the Group will continue to
future development plans. In view of the global financial crisis review and evaluate prospective targets
and its effect on the PRC economy, the that meet Luye Pharma’s set criteria and
With the approval from shareholders for central government has promulgated seek to deliver long-term value to our
the acquisition, the Group will invest in a broad array of initiatives including valued shareholders.
total approximately RMB 293.5 million, a RMB 4.0 trillion economic stimulus
including the purchase of a plot of package to spur domestic consumption.
new land in Yantai, Shandong for the Acknowledging the growing importance
construction its new production facilities of a comprehensive healthcare system, 20 March 2009

corporate information
Board of Directors Manufacturing Facilities

Liu Dian Bo Shandong Luye Pharmaceutical Co., Ltd
Executive Chairman No. 9 Baoyuan Road
Yuan Hui Xian Laishan District
Executive Director Yantai 264003, Shandong
Yang Rong Bing PRC
Executive Director
Nanjing Kanghai Pharmaceutical Co., Ltd
Tan Soo Kiat Nanjing Sike Pharmaceutical Co., Ltd
Independent Non-Executive Director Nanjing New High Technology Industry
Tan Chong Huat Developing Zone
Independent Non-Executive Director Nanjing 210061
Hong Hai PRC
Independent Non-Executive Director
Singapore Correspondence Office
Kung Kuo Chuan
Non-Executive Director 133 Cecil Street
(Appointed on 11 August 2008) #12-02
Keck Seng Tower
Wang Xin Yu Singapore 069535
Non-Executive Director Tel : (65) 6220 0119
(Appointed on 11 August 2008) Fax : (65) 6220 0282
www.asiapharm.biz
Audit Committee
Tan Soo Kiat Share Transfer Agent
Chairman Boardroom Corporate &
Tan Chong Huat Advisory Service Pte. Ltd.
Hong Hai 3 Church Street, #08-01
Samsung Hub
Nominating Committee Singapore 049483
Hong Hai
Chairman Auditors
Tan Soo Kiat Ernst & Young Hong Kong
Tan Chong Huat Certified Public Accountants
18th floor, Two International Finance Centre
Remuneration Committee 8 Finance Street
Tan Chong Huat Central
Chairman Hong Kong
Tan Soo Kiat Partner-In-Charge:
Hoffman Cheong
Hong Hai
Appointment since FY 2008
Company Secretaries Solicitors
Yeo Poh Noi, Caroline
Khattar Wong
Loh Li Ping, Angelin 80 Raffles Place,
Assistant Company Secretary #25-01, UOB Plaza 1,
(Appointed on 1 December 2008) Singapore 048624
Richard J Evans
Assistant Company Secretary, Bermuda Shook Lin & Bok
(Appointed on 1 December 2008) 1 Robinson Road
#18-00 AIA Tower
Registered Office Singapore 048542
Clarendon House Principal Bankers
2 Church Street
Hamilton HM 11 Bank of China (PRC)
Bermuda Citibank, N.A. Singapore

corporate governance
Luye Pharma Group Ltd. (formerly known as Asiapharm Group Ltd.) or (the “Company”) is committed to maintaining a
high standard of corporate governance. Good corporate governance establishes and maintains an ethical environment
and enhances the interests of all shareholders. This report describes the Company’s corporate governance processes and
activities with specific reference to the Code of Corporate Governance 2005 (the “Code”).
BOARD OF DIRECTORS (Principles 1, 2, 3 and 6)

The primary role of the Board of Directors (the “Board”) is to lead and control the Company’s operations and affairs and
to protect and enhance long-term shareholder value. The Board sets the overall strategy for the Group and supervises
executive management. To fulfill this role, the Board is responsible for the overall corporate governance of the Group
including setting its strategic direction, establishing goals for management and monitoring the achievement of
these goals.
The Board consists of eight directors and the Board is of the view that the current board size is appropriate, taking into
account the nature and scope of the Company’s operations. The Company’s board composition and balance comprise
three independent directors making up more than one - third of the Board. The objective judgement of the independent
and non-executive directors on corporate affairs and their collective experience and contributions are valuable to
the Company.
The Board members comprise businessmen and professionals with accounting and financial background and business/
management experience, all of whom as a group, provides the Board with the necessary experience and expertise to direct
and lead the Group:
Directors Designation Date First Appointed Date Last Re-elected

Liu Dian Bo Group Executive Chairman 9 July 2003 28 April 2006
Yuan Hui Xian Executive Director 9 July 2003 28 April 2006
Yang Rong Bing Executive Director 9 July 2003 28 April 2006
Tan Soo Kiat Independent Non-Executive Director 31 March 2004 27 April 2007
Tan Chong Huat Independent Non-Executive Director 31 March 2004 27 April 2007
Hong Hai Independent Non-Executive Director 1 August 2007 28 April 2008
Kung Kuo Chuan Non-Executive Director 11 August 2008 N.A. (*)
Wang Xin Yu Non-Executive Director 11 August 2008 N.A. (*)
(*) Under the Company’s bye-laws, both Directors are due for retirement and re-election at the next Annual General Meeting (“AGM”) of the Company
scheduled for 24 April 2009.
The Board meets at least four times a year, to review and approve the announcements of the quarterly, half-year and full-year
results for release to the Singapore Exchange Securities Trading Limited (“SGX-ST”). Ad-hoc meetings are convened as and
when necessary to address any specific significant matters that may arise. Frequency of Board meetings and Committee
meetings held during the financial year are set out in Table “A”. The Board considers the present size and composition
appropriate for the current nature and scope of the Group’s operations.
The Board meets to consider the following corporate events and actions:
• To review with the management the business and affairs of the Group;
• To review the financial performance of the Group;
• To review and approve the broad policies, strategies and financial objectives of the Company;
• To review the processes for evaluation of the adequacy of internal controls, risk management, financial reporting
and compliance;
• To review and approve the nominations of board directors and appointment of key personnel;
• To approve annual budgets, major funding proposals, investment and divestment proposals, including material capital
investment; and
• To monitor and review the performance of Management.

corporate governance (cont’d)
The Board has adopted a set of guidelines on matters that require its approval. Matters which are specifically reserved to
the Board for decision include those involving business plans and budgets, material acquisitions and disposal of assets,
corporate or financial restructuring, corporate strategy, share issuances, dividends, and other returns to shareholders.
Specific board approval is required for any investments or expenditures involving merger and acquisition.
The Board is supported in its tasks by Board committees, namely the Audit Committee, Nominating Committee and
Remuneration Committee, which had been established to assist in the execution of its responsibilities.
The Board is furnished with detailed information concerning the Group from time to time, to enable the Board to fulfill
its responsibilities and to be fully cognizant of the decisions and actions of the Group’s executive management. All the
directors have unrestricted access to the Company’s records and information. Detailed Board papers are prepared for
each meeting of the Board and include sufficient information from Management on financial, business and corporate
issues to enable the directors to be properly briefed on issues to be considered at Board meetings. All the independent
directors have access to all levels of senior executives in the Group, and are encouraged to speak to other employees to
seek additional information if they so require.
Should the directors, whether as a group or individually, need independent professional advice, the Company will, upon
direction by the Board, appoint a professional advisor selected by the group or the individual to render the advice, at the
expense of the Company. Newly appointed directors are given briefings by the Management on the business activities of
the Group and its strategic directions and will also be updated on major events of the Company.
Although the roles of the Executive Chairman and the Executive Directors are separate, with a clear division of responsibilities
between the Executive Chairman and the two Executive Directors, both Executive Chairman and the Executive Directors
oversee the overall management of the Group. The Executive Chairman, who is a substantial shareholder of the Company,
also plays a pivotal role in steering the strategic direction and growth of the business, since he has considerable industry
experience, and ensures information flow between Management and the Board. The Board believes that there are sufficient
safeguards and measures in place to ensure decision-making are based on collective information and no concentration of
power and authority in a single person.
The Executive Chairman also monitors communications and relations between the Company and its shareholders and
between the Board and Management with a view of encouraging construction relations and dialogue amongst them.
The Board has independent access to the Company Secretary and the Assistant Company Secretary (appointed on
1 December 2008), who provide the Board with regular updates on the rules and regulations of the Singapore Exchange
Securities Trading Limited (“SGX-ST”) and other relevant regulations applicable to the Company. Either the Company
Secretary or the Assistant Company Secretary attend all Board meetings and assist the Chairman in ensuring that Board
procedures are followed and reviewed such that the Board functions effectively.

TABLE “A”
DIRECTORS’ ATTENDANCE AT BOARD AND COMMITTEE MEETINGS
Audit Nominating Remuneration
Meeting of Board
Committee Committee Committee
Total held in FY2008 4 4 1 2
Liu Dian Bo 4 - - -
Yuan Hui Xian 1 - - -
Yang Rong Bing 2 - - -
Tan Soo Kiat 4 4 1 2
Tan Chong Huat 3 3 0 1
Hong Hai 4 4 1 2
Kung Kuo Chuan 1 - - -
(Appointed w.e.f. 11.08.2008)
Wang Xin Yu 1 - - -
(Appointed w.e.f. 11.08.2008)

NOMINATING COMMITTEE (Principles 4 and 5)
The Nominating Committee (“NC”) comprises all independent directors. Dr Hong Hai was appointed as Chairman of the NC
with effect from 14 August 2007. The other members of the NC are Messrs Tan Soo Kiat and Tan Chong Huat.
The NC is regulated by a set of written Terms of Reference and its key functions include:
(a) To make recommendations to the Board on all Board appointments and re-appointments;
(b) To determine the criteria for identifying candidates and to review nominations for new appointments;
(c) To review and to determine on an annual basis the independence of each director;
(d) To determine/propose the objective performance criteria for the Board’s approval and to review the Board’s
performance in terms of the performance criteria;
(e) To conduct a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to
the effectiveness of the Board, particularly when a director serves on multiple Boards.
The NC has formulated evaluation procedures and the performance criteria for the assessment of the Board’s performance
as a whole. In evaluating a director’s contribution and performance for purposes of re-nomination, the NC takes into
consideration a variety of factors such as attendance, preparedness, participation and candour. It had conducted a board
performance evaluation for the financial year ended 31 December 2008.
The Directors submit themselves for re-nomination and re-election at regular intervals of at least once every three years.
The Company’s bye-laws also provides for newly appointed directors to submit themselves for re-nomination and re-
election at the next AGM of the Company.
REMUNERATION COMMITTEE (Principles 7 and 8)

The Remuneration Committee (“RC”) comprises all independent directors. The RC is chaired by Mr Tan Chong Huat and the
other members are Mr Tan Soo Kiat and Dr. Hong Hai.

The RC is regulated by a set of written Terms of Reference. Its key functions include:
• To recommend to the Board a framework of remuneration for directors’ fees of the Board, as well as remuneration of
executive directors and key executives. For executive directors and key executives, the framework covers all aspect
of executive remuneration and is competitive and sufficient to attract, retain and motivate the key executives of the
required quality to run the company successfully.
• To review and determine the specific remuneration packages and terms of employment for each director and senior
executives.
The Company adopts a remuneration policy for employees comprising a fixed component and a variable component. The
fixed component is in the form of a base salary. The variable component is in the form of a variable bonus that is linked to
the Company’s and the individual’s performance.
For the year under review, the RC had met to review and determine the remuneration packages of the executive directors
and key executives and had ensured that the directors are adequately but not excessively remunerated. The RC had also
considered, in consultation with the Executive Chairman, amongst other things, the responsibilities, skills, expertise and
contribution to the Company’s performance and whether the remuneration packages are competitive and sufficient to
ensure that the Company is able to attract and retain the best available executive talent.
No individual director is involved in fixing his own remuneration. Non-executive directors are paid directors’ fees annually
subject to approval of shareholders at general meeting.
The RC will also review the service agreements of Mr Liu Dian Bo (Executive Chairman), Mr Yuan Hui Xian and Mr Yang Rong
Bing (both of whom are Executive Directors), upon the expiry of their agreements. The Company does not have any other
service agreement with its staff.
In addition the RC has been designated as the Scheme Committee responsible for the administration of the Asiapharm
Share Award Scheme (the “Scheme”) approved and adopted by the shareholders at the Special General Meeting of the
Company held on 27 April 2007.
DISCLOSURE ON REMUNERATION (Principles 8 and 9)

Remuneration of Directors
A breakdown showing the level and mix of each individual director’s remuneration payable for FY2008 is as per the
table below.
Bonuses/Profit
Salary Including CPF Fees
Sharing
S$500,000 and above NIL
S$250,000 to below S$500,000 Liu Dian Bo 71% 16% 13%
Below S$250,000 Yuan Hui Xian 59% 25% 16%
Yang Rong Bing 55% 23% 22%
Tan Soo Kiat 0% 14% 86%
Tan Chong Huat 0% 17% 83%
Hong Hai 0% 17% 83%
Kung Kuo Chuan 0% 0% 100%
Wang Xin Yu 0% 0% 100%

Remuneration of Top 5 Key Executives who are not Directors

S$500,000 and above Nil
S$250,000 to below S$500,000 Nil
Below S$250,000 Chong Chin Fan
Diao Hai Peng
Fan Zhi Cheng
Li You Xin
Xue Yun Li
None of the employees whose remuneration exceeds S$150,000 during the year are immediate family members of the
directors or substantial shareholders.
AUDIT COMMITTEE (Principle 11)

The Audit Committee (“AC”) comprises three members, all of whom are independent directors. The Chairman of the AC is
Mr Tan Soo Kiat, who is a Chartered Accountant by profession. The other members are Mr Tan Chong Huat and Dr Hong Hai.
The members of the Audit Committee have relevant accounting and financial management experience.
The key responsibilities of the AC include the following:
• To review with the external auditors the audit plans, including the nature, scope and effectiveness of the audit before
the commencements of each audit, the evaluation of the Company’s system of internal accounting controls, the audit
reports and management letters issued by the external auditors and Management’s response to the letters;
• To review with the internal auditors the internal audit plan and effectiveness of the internal audit functions
• To evaluate the adequacy of the Group’s system of internal controls with the internal auditor;
• To review significant financial reporting issues including the quarterly, half-year and annual financial statements,
focusing in particular on the changes in accounting policies and practices, major risk areas, significant adjustments
resulting from the audit and compliance with accounting standards so as to ensure the integrity of the financial
statements and to review announcements of the results and any formal announcements relating to the Company’s or
Group’s financial performance, before submission to the Board for approval for release to the SGX-ST;
• To review interested person transactions in accordance with the requirements of the Listing Rules of the SGX-ST;
• To review all non-audit services provided by the external auditors to determine if the provision of such services would
affect the independence of the external auditors;
• To review and recommend the re-appointment of the external auditors; and
• To undertake such other functions, duties, reviews and projects as may be requested by the Board or as may be
required by statute or the Listing Manual.
The AC may also examine any other aspects of the Company’s affairs, as it deems necessary where such matters relate
to exposures or risks of regulatory or legal nature, and monitor the Company’s compliance with its legal, regulatory and
contractual obligations.
The AC meets at least four times a year. For the year under review, the AC has also met with the external auditors without
the presence of the Company’s Management.

The Company has in place a whistle-blowing framework, which provides an avenue for the staff of the Company to access
the AC Chairman to raise concerns about improprieties and the independent investigation of such matters by the AC.
Contact details of the AC have been made available to all staff. The AC has not received any complaints up to the date of
this report.
The AC has reviewed the non-audit services provided by the external auditors, Messrs Ernst & Young, Hong Kong, and is
of the opinion that the provision of such services does not affect their independence. The AC has recommended the re-
appointment of Messrs Ernst & Young, Hong Kong as external auditors at the forthcoming Annual General Meeting.
INTERNAL CONTROLS AND INTERNAL AUDIT (Principles 12 and 13)

The Board believes in the importance of maintaining a sound system of internal controls to safeguard the interests of
the shareholders and the Company’s assets. To achieve this, the Company has outsourced the internal audit function to
a professional firm and has implemented internal reviews, to ensure that the system of internal controls maintained by
the Company is sufficient to provide reasonable assurance that the Company’s assets are safeguarded against loss from
unauthorised use or disposal; transactions are properly authorised and proper financial records are being maintained.
The AC is satisfied that the outsourced internal audit function is adequately resourced and has appropriate standing
within the Company.
The AC and the Board have reviewed the Company’s risk assessment based on the reports of the internal auditors and
external auditors and are assured that adequate internal controls, including financial, operational and compliance control
and risk management, are in place.
COMMUNICATION WITH SHAREHOLDERS (Principles 10, 14 and 15)

The Board does not practice selective disclosure, as it is mindful of its obligation to provide timely and fair disclosure of
material information. The Board is accountable to the shareholders while Management is accountable to the Board.
Results and other material price-sensitive information are released through the SGXNet system on a timely basis for
the dissemination to shareholders and the public in accordance with the requirements of the SGX-ST. In addition, all
shareholders of the Company receive a copy of the Annual Report and Notice of the AGM. The Notice is also advertised in
the newspapers and made available on the SGXNet.
At AGMs, shareholders are given opportunities to air their views and to ask questions or seek clarifications from the directors
or Management concerning the Company. The Chairmen of the various Board committees and the external auditors are or
would be present at every AGM to address any relevant questions that may be raised by the shareholders.
The website (www.asiapharm.biz) has information on the Group’s financial and operational performance, portfolio
and products. Visitors can visit the website and may download announcements, press releases, annual reports
and presentations.
DEALINGS IN THE COMPANY’S SECURITIES

The Company has adopted its own Internal Code of Conduct to provide guidance to all directors and officers of the Company
and its subsidiaries with regard to dealings in the Company’s securities. Directors of the Company and executives of the
Group should not deal in the Company’s shares on short-term considerations and they are prohibited from dealing in the
Company’s shares during the periods commencing two weeks prior to the announcement of the Group’s quarterly results
and one month prior to the announcement of the Group’s full year results; and ending on the date of the announcement
of the relevant results.
Directors and all officers are also expected to observe insider-trading laws at all times even when dealing with securities
within the permitted trading period.

financial contents
directors’ report 32
statement by directors 37
independent auditors’ report 38
consolidated income statement 39
balance sheets 40
consolidated cash flow statement 42
statements of changes in equity 44
notes to financial statements 47
statistics of shareholdings 98
notice of annual general meeting 100
directors’ report
year ended 31 december 2008
The directors present their report and the audited financial statements of the Company and of the Group for the year
ended 31 December 2008.
Directors
The directors of the Company in office during the year and up to the date of this report are:
Liu Dian Bo - Executive Chairman
Yuan Hui Xian - Executive Director
Yang Rong Bing - Executive Director
Tan Soo Kiat - Independent Non-Executive Director
Tan Chong Huat - Independent Non-Executive Director
Hong Hai - Independent Non-Executive Director
Kung Kuo Chuan - Non-Executive Director (Appointed 11 August 2008)
Wang Xin Yu - Non-Executive Director (Appointed 11 August 2008)
Principal Activities
The principal activity of the Company is investment holding. Details of the principal activities of the subsidiaries are set out
in note 1 to the financial statements. There were no significant changes in the nature of the subsidiaries’ principal activities
during the year.
Results for the Year

Details of results of the Company and of the Group for the year ended 31 December 2008 and the state of affairs of the
Company and of the Group at that date are set out in the financial statements on pages 39 to 97.
No final dividend has been recommended by the Directors for the year ended 31 December 2008.
Material Movements in Reserves and Provisions

Material transfers to and from reserves are set out in the statements of changes in equity. There were no other material
transfers to or from provisions during the year except for normal amounts recognised as an expense for such items as
depreciation of fixed assets and amortisation of intangible assets as disclosed in the financial statements.
Acquisition and Disposal of Subsidiaries

Disposal of Guangzhou Lifetech Jiuzhoutong New/Special Drug Company
On 10 October 2008, the Group has entered into a sale and purchase agreement to divest its 100% equity interest in
Guangzhou Lifetech Jiuzhoutong New/Special Drug Company (“Jiuzhoutong”) to an independent party for an aggregate
cash consideration of Rmb3,312,882.32. Following the divestment, Jiuzhoutong has ceased to be a subsidiary company of
the Group.
There is no acquisition during the year.
Issue of Shares and Debentures

No shares or debentures were issued during the year.
Arrangements to Enable Directors to Acquire Shares and Debentures

Currently, there is no arrangement to enable the directors to acquire shares and debentures.

directors’ report (cont’d)
Directors’ Interests in Shares and Debentures

The directors of the Company holding office at the end of the financial year had no interests in shares and debentures of
the Company and related corporations, as recorded in the register of directors’ shareholdings kept by the Company, except
as follows:
Name of director and Direct Interest Deemed Interest

Company in which 1.1.2008 or date of 31.12.2008 1.1.2008 or date of 31.12.2008
interests is held appointment, if later appointment, if later
The Company
Ordinary shares of
US$0.02 each
Liu Dian Bo 11,019,950 - 193,380,900 381,439,877 (1)
Yuan Hui Xian 6,588,900 34,000 - -
Yang Rong Bing - - 6,588,900 -
Tan Soo Kiat - 17,000 - -
Tan Chong Huat - 17,000 - -
Hong Hai - 17,000 - -
Kung Kuo Chuan - - - -
Wang Xin Yu - - - -
Note:
1. Mr Liu Dian Bo’s deemed interest arises from his controlling interest in Asiapharm Holdings Ltd. which is deemed to be
interested in the shares held by LuYe Pharmaceutical International Co., Ltd. (“LuYe International”). LuYe International is
the holding company of LuYe Pharmaceutical Investment Co., Ltd..
There were no movements in the interest of directors in shares from the end of the financial year to 21 January 2009.
Bad and Doubtful Debts

Before the financial statements of the Company and of the Group were made out, the directors took reasonable steps
to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision
for doubtful debts, and have satisfied themselves that all known bad debts, if any, have been written off and that, where
necessary, adequate provision has been made for doubtful debts in these financial statements.
At the date of this report, the directors are not aware of any circumstances which would render any amount written off or
provided for bad and doubtful debts in the Group inadequate to any substantial extent.
Property, plant and equipment

Details of movements in the property, plant and equipment of the Group are set out in note 14 to the
financial statements.

Current Assets
Before the financial statements of the Company and of the Group were made out, the directors took reasonable steps to
ascertain that any current assets which were unlikely to realise their book values in the ordinary course of business have
been written down to their estimated realisable values or adequate provision has been made for the impairment in the
value of such current assets in these financial statements.
At the date of this report, the directors are not aware of any circumstances which would render the values attributed to
current assets in the consolidated financial statements of the Group misleading.
Charges on Assets and Contingent Liabilities

Since the end of the year, and up to the date of this report, no charge on the assets of the Company or any companies in the
Group has arisen which secures the liabilities of any other person and no contingent liability has arisen.
Ability to Meet Obligations

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve
months after the end of the year which, in the opinion of the directors, will or may substantially affect the ability of the
Company and of the Group to meet their obligations as and when they fall due.
Other Circumstances Affecting the Financial Statements

At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or in
the financial statements which would render any amount stated in the financial statements of the Company and of the
Group misleading.
Unusual Items
In the opinion of the directors, the results of the operations of the Company and of the Group during the year have not
been substantially affected by any item, transaction or event of a material and unusual nature.
Post balance sheet events

Subsequent to the balance sheet date, the Company would be convening a Special General Meeting on 6 March 2009 to
seek shareholders’ approval to the following:
i) The proposed change of the Company’s name to “Luye Pharma Group Ltd.” with a secondary name in Chinese as
;
ii) The proposed amendments to Memorandum of Association and Bye-Laws of the Company;
iii) The proposed Share Purchase Mandate of the Company; and
iv) The proposed acquisition of land, construction of new production plant and purchase of new equipment.
Directors’ Service Contracts

The Company did not enter into any new service contracts with the directors during the year.
Options
At the moment, the Company does not have any share option scheme.

AsiaPharm Share Award Scheme

At a Special General Meeting held on 27 April 2007, the shareholders of the Company had approved the AsiaPharm Share
Award Scheme (“ASAS” or “the Scheme”).
The committee administering the ASAS is the Remuneration Committee, which comprise three independent non-executive
directors, Tan Chong Huat, Tan Soo Kiat and Hong Hai.
Details of shares awarded to directors of the company under the Scheme are as follows:
Aggregate number of Aggregate number of

shares awarded during shares awarded since
the financial year ended commencement of scheme
Name of participant 31.12.2008 to 31.12.2008
Yuan Hui Xian 34,000 34,000
Yang Rong Bing 34,000 34,000
Tan Soo Kiat 17,000 17,000
Tan Chong Huat 17,000 17,000
Hong Hai 17,000 17,000
There are no shares awarded to the controlling shareholders and their associates under the Scheme. No participant has
received 5% or more of the total number of shares available under the Scheme. In aggregate, 685,000 treasury shares
purchased in FY2007 were awarded to the scheme participants during the financial year.
Aggregate Number of Shares Vested Under the ASAS

Since the commencement of the Scheme, 685,000 treasury shares purchased under the Share Buyback Mandate in FY2007
were vested in FY2008.
Issue of New Shares Under the ASAS

During the financial year, no new shares were issued under the ASAS.
Unreleased Shares Under the ASAS

At the end of the financial year, there were no unreleased shares under the ASAS.

Audit Committee
The Audit Committee performed the functions as set out in the Singapore Companies Act. The functions performed are
detailed in the Report of Corporate Governance.
Directors’ Interests in Contracts

Except for the service contracts signed in 2007 and the transactions disclosed in note 37 to the financial statements,
no director received or became entitled to receive a benefit by reason of a contract made by the Company or a related
corporation with the director, or with a firm of which the director is a member or with a company in which the director has
a substantial financial interest.
Auditors
Ernst & Young, Certified Public Accountants, Hong Kong were appointed as the auditors of the Company during the year.
The auditors, Ernst & Young, Certified Public Accountants, Hong Kong, have expressed their willingness to accept
reappointment as auditors.
ON BEHALF OF THE BOARD
Liu Dian Bo Yuan Hui Xian

Executive Chairman Executive Director
5 March 2009

statement by directors
In the opinion of the directors, the financial statements set out on pages 39 to 97 are drawn up so as to give a true and fair
view of the state of affairs of the Company and of the Group and the cash flows of the Group for the financial year then
ended, and at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they fall due.
ON BEHALF OF THE BOARD
Liu Dian Bo Yuan Hui Xian

Executive Chairman Executive Director
5 March 2009

independent auditors’ report
To the shareholders of AsiaPharm Group Ltd.

(Incorporated in Bermuda with limited liability)
We have audited the financial statements of AsiaPharm Group Ltd. (the “Company”) and its subsidiaries (collectively
referred to as the “Group”) set out on pages 39 to 97, which comprise the consolidated and company balance sheets as
at 31 December 2008, and the consolidated income statement, the consolidated and company statements of changes
in equity and the consolidated cash flow statement for the year then ended, and a summary of significant accounting
policies and other explanatory notes.
Directors’ responsibility for the financial statements

The directors of the Company are responsible for the preparation and the true and fair presentation of these financial
statements in accordance with International Financial Reporting Standards. This responsibility includes designing,
implementing and maintaining internal control relevant to the preparation and the true and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. Our report is made solely
to you, as a body, in accordance with Section 90 of the Bermuda Companies Act 1981, and for no other purpose. We do
not assume responsibility towards or accept liability to any other person for the contents of this report.
We conducted our audit in accordance with International Standards on Auditing. Those standards require that we
comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors
consider internal control relevant to the entity’s preparation and true and fair presentation of the financial statements
in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the state of affairs of the Company and of the
Group as at 31 December 2008 and of the Group’s profit and cash flows for the year then ended in accordance with
International Financial Reporting Standards.
Ernst & Young

Certified Public Accountants
Hong Kong
5 March 2009

consolidated income statement
Group
2008 2007
(Restated)*
Notes Rmb’000 Rmb’000
Revenue 7 650,976 508,980

Cost of sales (85,887) (80,169)
Gross profit 565,089 428,811

Other income 7 10,680 1,185
Selling and distribution costs (364,291) (246,827)
Administrative expenses (85,059) (76,796)
Other expenses 8 (45,572) (29,405)
Profit from operating activities 8 80,847 76,968

Finance revenue 9 3,168 6,634
Finance costs 10 (14,208) (17,666)
Share of profit/(loss) of associates 17 12,978 (377)
Profit before income tax 82,785 65,559
Income tax 11 (20,704) (7,985)
Profit for the year 62,081 57,574
Attributable to:
Equity holders of the parent 62,089 58,132
Minority interests (8) (558)
62,081 57,574
Dividend
Proposed final 12 - 14,398
Earnings per share (Rmb cents) 13
Basic
- For profit for the year attributable to
ordinary equity holders of the parent 12.60 11.81
* Certain numbers shown here do not correspond to the 2007 financial statements and reflect adjustments made as detailed in note 4.
The accounting policies and explanatory notes on pages 47 to 97 form an integral part of the financial statements.

balance sheets
Group Company
2008 2007 2008 2007
(Restated)* (Restated)*
Notes Rmb’000 Rmb’000 Rmb’000 Rmb’000
ASSETS
Non-current assets
Property, plant and equipment 14 150,311 147,127 - -
Construction in progress 15 2,123 2,179 - -
Investments in subsidiaries 16 - - 10,537 11,262
Investments in associates 17 89,776 98,002 88,166 96,891
Intangible assets 18 187,423 212,126 - -
Land use rights 19 12,973 13,345 - -
Available-for-sale investments 20 2,184 7,176 - -
Long term deferred expenditure 21 2,792 3,292 - -
Goodwill 22 165,936 165,936 - -
Deferred tax assets 11 6,936 5,052 - -
620,454 654,235 98,703 108,153
Current assets
Inventories 23 56,028 42,250 - -
Contracts for services 24 2,225 9,491 - -
Trade and notes receivables 25 221,285 231,185 - -
Prepayments, deposits and other receivables 26 38,597 15,313 36,887 69,404
Cash and cash equivalents 27 118,469 142,886 9,976 13,315
Pledged short-term deposits 27 - 20,480 - -
Due from the holding company 28 - 917 - 1
Due from related parties 29 9,662 2,754 - -
Due from subsidiaries 30 - - 451,207 472,624
446,266 465,276 498,070 555,344
TOTAL ASSETS 1,066,720 1,119,511 596,773 663,497

balance sheets (cont’d)
Group Company
2008 2007 2008 2007
(Restated)* (Restated)*
EQUITY AND LIABILITIES

Capital and reserves
Issued capital 31 81,180 81,180 81,180 81,180
Share premium 428,005 428,005 427,980 427,980
Treasury shares - (2,011) - (2,011)
Reserves/(loss) 32 312,101 249,948 (27,419) (6,988)
Proposed final dividend 12 - 14,398 - 14,398
821,286 771,520 481,741 514,559
Minority interests 578 622 - -
Total equity 821,864 772,142 481,741 514,559
Non-current liabilities
Interest-bearing loans and borrowings 34 74,925 115,781 74,925 115,781
Government grants 33 - 1,027 - -
Deferred tax liabilities 11 31,175 26,406 - -
106,100 143,214 74,925 115,781
Current liabilities
Interest-bearing loans and borrowings 34 65,849 137,278 33,406 24,747
Trade payables 11,735 8,253 - -
Accrued liabilities and other payables 35 54,961 53,134 3,391 3,161
Income tax payable 3,596 1,038 10 6
Due to the holding company 28 1,096 2,839 105 1,174
Due to related parties 29 1,519 1,613 - 709
Due to subsidiaries 30 - - 3,195 3,360
138,756 204,155 40,107 33,157
Total liabilities 244,856 347,369 115,032 148,938
TOTAL EQUITY AND LIABILITIES 1,066,720 1,119,511 596,773 663,497

consolidated cash flow statement
2008 2007
(Restated)*
Cash flows from operating activities

Adjustments for:
Depreciation of items of
property, plant and equipment 8 17,371 16,109
Amortisation of intangible assets 8 23,553 24,830
Amortisation of land use rights 8 372 277
Amortisation of long term deferred expenditure 8 500 500
Loss on disposal of items of
property, plant and equipment 8 194 188
Gain on disposal of intangible assets 7 (2,320) -
Impairment of available-for-sale investments 8 4,339 -
Share compensation expense 2,011 -
Gain on disposal of a subsidiary 7 (400) -
Construction in progress transferred to others 15 730 717
Interest income 9 (3,168) (6,634)
Interest expense 10 12,787 16,375
Share of net (profit)/loss of associates 17 (12,978) 377
Write-back of liabilities no longer payable 7 (2,939) (230)
Working capital adjustments: 122,837 118,068

Decrease/(increase) in trade and notes receivables 9,900 (6,758)
(Increase)/decrease in prepayments, deposits and
other receivables (2,556) 40,173
Decrease/(increase) in an amount
due from the holding company 917 (1)
(Increase)/decrease in amounts due from related parties (6,908) 3,631
(Increase)/decrease in inventories (13,778) 3,540
Decrease in contracts for services 7,266 1,546
Decrease in government grants (1,027) (790)
Increase/(decrease) in trade payables 6,472 (1,126)
Increase in accrued liabilities and other payables 3,568 9,599
Decrease in an amount due to the holding company (1,743) (1,627)
(Decrease)/increase in amounts due to related parties (94) 1,516
Exchange difference on consolidation 9,097 (4,837)
Cash generated from operations 133,951 162,934

Interest paid 10 (12,787) (16,375)
Income tax paid (15,261) (10,336)
Net cash inflow from operating activities 105,903 136,223

consolidated cash flow statement (cont’d)
2008 2007
(Restated)*
Net cash inflow from operating activities 105,903 136,223
Cash flows from investing activities

Purchases of items of property, plant and equipment,
construction in progress (39,665) (14,673)
Purchases of land use rights (4,600) -
Proceeds from disposal of items of property, plant
and equipment 209 454
Proceeds on disposal of a subsidiary 5 401 -
Proceeds on disposal of intangible assets 3,470 -
Dividend from an associate 17 12,900 -
Acquisitions of CMNa business, net of cash acquired - (38,000)
Acquisition of subsidiaries - (26,656)
Acquisition of associates 17 - (99,400)
Decrease/(increase) in pledged short-term deposits 27 20,480 (4,419)
Interest received 9 3,168 6,634
Net cash outflow from investing activities (3,637) (176,060)
Cash flows from financing activities

Repurchase of shares - (2,011)
Repayment of loans (203,003) (161,799)
Proceeds from loans 90,718 270,059
Equity dividends paid (14,398) (19,103)
Net cash (outflow)/inflow

from financing activities (126,683) 87,146
Net (decrease)/increase
in cash and cash equivalents (24,417) 47,309
Cash and cash equivalents at 1 January 27 142,886 95,577
Cash and cash equivalents at 31 December 27 118,469 142,886

statements of changes in equity

Attributable to equity holders of the parent

Share Statutory Statutory
Issued premium Treasury surplus public Reserve
capital account shares reserves welfare fund fund
Group Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000
(note 32) (note 32) (note 32)
At 1 January 2007 80,408 410,158 - 24,707 - 17,196

Fair value change on
available-for-sale investments - - - - - -
Currency realignment - - - - - -
Total income and expense for
the year recognised directly
in equity - - - - - -
Profit for the year (as restated) - - - - - -
the year - - - - - -
Final 2006 dividend declared - - - - - -
Issue of shares 772 17,847 - - - -
Share repurchase - - (2,011) - - -
Transfer to statutory reserves - - - - - 11,064
Minority interest arising on
business combination - - - - - -
Proposed final 2007 dividend - - - - - -
At 31 December 2007 (restated)* 81,180 428,005 (2,011) 24,707 - 28,260
At 1 January 2008 (restated)* 81,180 428,005 (2,011) 24,707 - 28,260

Write-back of liabilities
no longer payable - - - - - -
Currency realignment - - - - - -
the year recognised directly
in equity - - - - - -
Impairment of
available-for-sale investments - - - - - -
Profit for the year - - - - - -
the year - - - - - -
Final 2007 dividend declared - - - - - -
Share compensation expense - - 2,011 - - -
Transfer to statutory reserves - - - 13,998 - -
At 31 December 2008 81,180 428,005 - 38,705 - 28,260

statements of changes in equity (cont’d)
Minority Total
interests equity
Foreign
Enterprise Unrealised currency Proposed
expansion Retained gains translation final
fund earnings reserves reserves dividend Total
Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000
(note 32) (note 12)
4,730 179,700 4,559 (13,004) 19,103 727,557 558 728,115
- - (4,188) - - (4,188) - (4,188)

- - - (7,486) - (7,486) (7) (7,493)
- - (4,188) (7,486) - (11,674) (7) (11,681)

- 58,132 - - - 58,132 (558) 57,574
- 58,132 (4,188) (7,486) - 46,458 (565) 45,893

- - - - (19,103) (19,103) - (19,103)
- - - - - 18,619 - 18,619
- - - - - (2,011) - (2,011)
- (11,064) - - - - - -
- - - - - - 629 629
- (14,398) - - 14,398 - - -
4,730 212,370 371 (20,490) 14,398 771,520 622 772,142
4,730 212,370 371 (20,490) 14,398 771,520 622 772,142
- 51 - - - 51 - 51
- - - 384 - 384 (36) 348
- 51 - 384 - 435 (36) 399
- - (371) - - (371) - (371)

- 62,089 - - - 62,089 (8) 62,081
- 62,140 (371) 384 - 62,153 (44) 62,109

- - - - (14,398) (14,398) - (14,398)
- - - - - 2,011 - 2,011
- (13,998) - - - - - -
4,730 260,512 - (20,106) - 821,286 578 821,864

statements of changes in equity (cont’d)
Foreign
Share currency Proposed
Issued premium Treasury Retained translation final
capital account shares earnings reserves dividend Total
Company Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000
(note 12)
At 1 January 2007 80,408 410,133 - 18,659 (17,563) 19,103 510,740

Currency realignment - - - - (36,374) - (36,374)
Total income and expense
for the year recognised
directly in equity - - - - (36,374) - (36,374)
Profit for the year
(as restated) - - - 42,688 - - 42,688
for the year - - - 42,688 (36,374) - 6,314
Final 2006 dividend
declared - - - - - (19,103) (19,103)
Issue of shares 772 17,847 - - - - 18,619
Share repurchase - - (2,011) - - - (2,011)
Proposed final 2007 dividend - - - (14,398) - 14,398 -
At 31 December 2007
and 1 January 2008
(restated)* 81,180 427,980 (2,011) 46,949 (53,937) 14,398 514,559
Currency realignment - - - - (33,082) - (33,082)
for the year recognised
directly in equity - - - - (33,082) - (33,082)
Profit for the year - - - 12,651 - - 12,651
for the year - - - 12,651 (33,082) - (20,431)
Final 2007 dividend declared - - - - - (14,398) (14,398)
Share compensation expense - - 2,011 - - - 2,011
At 31 December 2008 81,180 427,980 - 59,600 (87,019) - 481,741

notes to financial statements
1. Corporate information
AsiaPharm Group Ltd. (the “Company”) was incorporated in Bermuda as an exempted company with limited liability
under the Bermuda Companies Act on 9 July 2003. Its shares have been listed on the Singapore Exchange Securities
Trading Limited (the “SGX-ST”) since 5 May 2004.
The Company is an investment holding company. The Company’s subsidiaries are principally engaged in the
development, manufacture and distribution of pharmaceutical products.
The registered office of the Company is located at Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda. The
correspondence office of the Company is located at 133 Cecil Street, #12-02 Keck Seng Tower, Singapore 069535.
2.1 Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRSs”) issued by the International Accounting Standards Board (“IASB”). They have been prepared under the
historical cost convention, except for available-for-sale investments that have been measured at fair value. These
financial statements are presented in Renminbi (“Rmb”) and all values are rounded to the nearest thousand (Rmb’000)
except when otherwise indicated.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries
(collectively referred to as the “Group”) as at 31 December each year. The financial statements of the subsidiaries are
prepared for the same reporting year as the parent company, using consistent accounting policies.
All intragroup balances, transactions, income and expenses, and profits and losses resulting from intragroup
transactions that are recognised in assets, are eliminated in full.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control,
and continue to be consolidated until the date that such control ceases.
Minority interests represent the portion of profit or loss and net assets not held by the Group and are presented
separately in the income statement and within equity in the consolidated balance sheet, separately from parent
shareholders’ equity. Acquisitions of minority interests are accounted for using the parent entity extension method,
whereby, the difference between the consideration and the book value of the share of the net assets acquired is
recognised as goodwill.
2.2 Impact of new and revised IFRSs

The accounting policies adopted are consistent with those of the previous financial year except as follows:
The Group has adopted the following new and amended IFRS and IFRIC interpretations as of 1 January 2008.
• IAS 39 and IFRS 7 Amendments to IAS 39 Financial Instruments: Recognition and

Measurement and IFRS 7 Financial Instruments: Disclosure – Reclassification
of Financial Assets
• IFRIC 11 IFRS 2 – Group and Treasury Share Transactions
• IFRIC 12 Service Concession Arrangements
• IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction

notes to financial statements (cont’d)
2.2 Impact of new and revised IFRSs (Cont’d)

The Group has also early adopted the following IFRIC interpretation as of 1 Janaury 2008.
• IFRIC 13 Customer Loyalty Programmes
Adoption of these standards and interpretations did not have any effect on the financial performance or position of
the Group. They did however give rise to additional disclosures on these financial statements.
The principal effects of adopting these changes are as follows:
(a) IAS 39 and IFRS 7 Amendments to IAS 39 Financial Instruments: Recognition and Measurement and IFRS 7
Financial Instruments: Disclosure – Reclassification of Financial Assets
The amendments to IAS 39 permit an entity to reclassify a non-derivative financial asset classified as held for
trading, other than a financial asset designated by an entity as at fair value through profit or loss upon initial
recognition, out of the fair value through profit or loss category if the financial asset is no longer held for the
purpose of selling or repurchasing in the near term, if specified criteria are met.
A debt instrument that would have met the definition of loans and receivables (if it had not been required to
be classified as held for trading at initial recognition) may be classified out of the fair value through profit or
loss category or (if it had not been designated as available for sale) may be classified out of the available-for-
sale category to the loans and receivables category if the entity has the intention and ability to hold it for the
foreseeable future or until maturity.
In rare circumstances, financial assets that are not eligible for classification as loans and receivables may be
transferred from the held-for-trading category to the available-for-sale category or to the held to maturity
category (in the case of a debt instrument), if the financial asset is no longer held for the purpose of selling or
repurchasing in the near term.
The financial asset shall be reclassified at its fair value on the date of reclassification and the fair value of
the financial asset on the date of reclassification becomes its new cost or amortised cost, as applicable. The
amendments to IFRS 7 require extensive disclosures of any financial asset reclassified in the situations described
above. The amendments are effective from 1 July 2008.
As the Group has not reclassified any of its financial instruments, the amendments have had no impact on the
financial position or results of operations of the Group.
(b) IFRIC 11 IFRS 2 – Group and Treasury Share Transactions
As at 1 January 2008, the Group adopted IFRIC Interpretation 11. This interpretation requires arrangements
whereby an employee is granted rights to an entity’s equity instruments to be accounted for as an equity-settled
scheme, even if the entity buys the instruments from another party, or the shareholders provide the equity
instruments needed. As the Group has not entered into any of such arrangements, the interpretation had no
impact on the financial position or performance of the Group.

2.2 Impact of new and revised IFRSs (Cont’d)

The principal effects of adopting these changes are as follows:
(c) IFRIC 12 Service Concession Arrangements
As at 1 January 2008, the Group adopted IFRIC Interpretation 12. This interpretation applies to service concession
operators and explains how to account for the obligations undertaken and rights received in service concession
arrangements. No member of the Group is an operator and, therefore, this interpretation has no impact on
the Group.
(d) IFRIC 13 Customer Loyalty Programmes
As at 1 January 2008, the Group early adopted IFRIC Interpretation 13. This interpretation requires customer
loyalty credits to be accounted for as a separate component of the sales transaction in which they are granted. A
portion of the fair value of the consideration received is allocated to the award credits and deferred. This is then
recognised as revenue over the period that the award credits are redeemed. As the Group does not maintain any
such programmes, the interpretation had no impact on the financial position or performance of the Group.
(e) IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction
As at 1 January 2008, the Group adopted IFRIC Interpretation 14. This interpretation provides guidance on how
to assess the limit on the amount of surplus in a defined benefit scheme that can be recognised as an asset under
IAS 1 Employee Benefits. The Group does not have any defined benefit scheme, therefore the adoption of this
interpretation had no impact on the financial position or performance of the Group.
2.3 Future changes in accounting policies

The Group has not applied the following new and revised IFRSs and IFRIC interpretations, that have been issued but
are not yet effective, to these financial statements.
• IFRS 1 and IAS 27 Amendments – IFRS 1 First-time Adoption of International

Financial Reporting Standards and IAS 27 Consolidated and Separate
Financial Statements – Cost of an Investment in a Subsidiary, Jointly
Controlled Entity or Associate
• IFRS 2 Amendments – Share-based Payment – Vest Conditions and Cancellation
• IFRS 3 (Revised) Business Combinations
• IFRS 8 Operating Segments
• IAS 1 (Revised) Presentation of Financial Statements
• IAS 23 (Revised) Borrowing Costs
• IAS 27 (Revised) Consolidated and Separate Financial Statements
• IAS 32 and IAS 1 Amendments – IAS 32 Financial Instruments: Presentation and
IAS 1 Presentation of Financial Statements – Puttable Financial Instruments
and Obligations Arising on Liquidation
• IAS 39 Amendment – Financial Instruments: Recognition and
Measurement – Eligible Hedged Items
• IFRIC 15 Agreement for the Construction of Real Estate
• IFRIC 16 Hedges of a Net investment in a Foreign Operation
• IFRIC 17 Distributions of Non-Cash Assets to Owners
• IFRIC 18 Transfers of Assets from Customers

2.3 Future changes in accounting policies (Cont’d)

Apart from the above, the IASB has issued Improvements to IFRSs on May 2008, a collection of 35 amendments to
20 IFRSs (including the related bases for conclusions and guidance). These amendments are the result of conclusions
reached by the IASB made in its annual improvements projects, which provides a vehicle for making non-urgent but
necessary amendments to IFRSs. Unless otherwise specified, the amendments are generally effective for financial
years beginning on or after 1 January 2009, although these amendments are permitted for early adoption.
The amendments to IFRS 1 allows an entity to determine the ‘cost’ of investments in subsidiaries, jointly controlled
entities or associates in its opening IFRS financial statements in accordance with IAS 27 or using a deemed cost. The
amendment to IAS 27 requires all dividends from a subsidiary, jointly controlled entity or associate to be recognised in
the income statement in the separate financial statement. Both revisions will be effective for financial years beginning
on or after 1 January 2009. The revision to IAS 27 will have to be applied prospectively. The new requirements affect
only the parent’s separate financial statement and do not have an impact on the consolidated financial statements.
The IFRS 2 Amendments was issued in January 2008 and becomes effective for financial years beginning on or after
1 January 2009. This amendment clarifies the definition of a vesting condition and prescribes the treatment for an
award that is effectively cancelled.
IFRS 3 (Revised) was issued in January 2008 and becomes effective for financial years beginning on or after 1 July 2009.
The revised standard introduces a number of changes in the accounting for business combinations occurring after
this date that will impact the amount of goodwill recognised, the reported results in the period that an acquisition
occurs, and future reported results.
IFRS 8 was issued in November 2006 and becomes effective for financial years beginning on or after 1 January 2009.
IFRS 8, which will replace IAS 14 Segment Reporting, specifies how an entity should report information about its
operating segments, based on information about the components of the entity that is available to the chief operating
decision maker for the purposes of allocating resources to the segments and assessing their performance. The
standard also requires the disclosure of information about the products and services provided by the segments, the
geographical areas in which the Group operates, and revenue from the Group’s major customers.
IAS 1 (Revised) was issued in September 2007 and becomes effective for financial years beginning on or after
1 January 2009. The standard separates owner and non-owner changes in equity. The statement of changes in equity
will include only details of transactions with owners, with non-owner changes in equity presented as a single line. In
addition, the standard introduces the statement of comprehensive income: it presents all items of recognised income
and expense, either in one single statement, or in two linked statements.
IAS 23 (Revised) was issued in March 2007 and becomes effective for financial years beginning on or after 1 January
2009. The standard has been revised to require capitalisation of borrowing costs related to a qualifying asset. A
qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale.
In accordance with the transitional requirements in the standard, the Group will adopt this as a prospective change.
Accordingly, borrowing costs will be capitalised on qualifying assets with a commencement date after 1 January 2009.
No changes will be made for borrowing costs incurred to this date that have been expensed.
IAS 27 (Revised) requires that a change in the ownership interest of a subsidiary (without loss of control) is accounted
for as an equity transaction. Therefore, such transactions will no longer give rise to goodwill, nor will it give rise to a
gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well
as the loss of control of a subsidiary. Other consequential amendments were made to IAS 7 Statement of Cash Flows,
IAS 12 Income Taxes, IAS 21 The Effects of Changes in Foreign Exchange Rates, IAS 28 Investments in Associates and
IAS 31 Interests in Joint Ventures. The changes by IFRS 3 (Revised) and IAS 27 (Revised) will affect future acquisitions
or loss of control and transactions with minority interests.

2.3 Future changes in accounting policies (Cont’d)

The amendments to IAS 32 and IAS 1 were issued in February 2008 and become effective for financial years beginning
on or after 1 January 2009. The revisions provide a limited scope exception for puttable instruments to be classified as
equity if they fulfil a number of specified features.
The amendments to IAS 39 were issued in August 2008 and become effective for financial years beginning on or after
1 July 2009. The amendment addresses the designation of a one-sided risk in a hedged item, and the designation
of inflation as a hedged risk or portion in particular situations. It clarifies that an entity is permitted to designate a
portion of the fair value changes or cash flow variability of a financial instrument as hedged item.
IFRIC Interpretation 15 clarifies when and how revenue and related expenses from the sale of a real estate unit should
be recognised if an agreement between a developer and a buyer is reached before the construction of the real estate
is completed. Furthermore, the interpretation provides guidance on how to determine whether an agreement is
within the scope of IAS 11 or IAS 18.
IFRIC Interpretation 16 provides guidance on the accounting for a hedge of a net investment. As such it provides
guidance on identifying the foreign currency risks that qualify for hedge accounting in the hedge of a net investment,
where within the group the hedging instruments can be held in the hedge of a net investment and how an entity
should determine the amount of foreign currency gain or loss, relating to both the net investment and the hedging
instrument, to be recycled on disposal of the net investment.
IFRIC Interpretation 17 standardises practice in the accounting for non-reciprocal distributions of non-cash assets to
owners. The Group expects to apply the interpretation from 1 January 2010 prospectively. The interpretation clarifies
that (i) a dividend payable should be recognised when the dividend is appropriately authorised and is no longer at
the discretion of the entity; (ii) an entity should measure the dividend payable at the fair value of the net assets to be
distributed; and (iii) an entity should recognise the difference between the dividend paid and the carrying amount
of the net assets distributed in profit or loss. Other consequential amendments were made to IAS 10 Events after the
Balance Sheet Date and IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.
IFRIC Interpretation 18 provides additional guidance on the accounting for transfers of assets from customers and
clarifies the requirements of IFRSs for agreements in which an entity receives from a customer an item of property,
plant and equipment that the entity must then use either to connect the customer to a network or to provide the
customer with ongoing access to a supply of goods or services (such as a supply of electricity, gas or water).
The Group is in the process of making an assessment of the impact of these new and revised IFRSs and IFRIC
interpretations upon initial application. So far, it has concluded that while the adoption of the IFRS 1, IFRS 3, IFRS 8,
IAS 1 and IAS 27 may result in new or amended disclosures, these new and revised IFRSs and IFRIC interpretations are
unlikely to have a significant impact on the Group’s results of operations and financial position.
2.4 Significant accounting judgements, estimates and assumptions

The preparation of the Group’s financial statements requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of
contingent liabilities, at the reporting date. However, uncertainty about these assumptions and estimates could result
in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected in
the future.
Judgements
There is no significant effect on the amounts recognised in the financial statements arising from the judgements,
apart from those involving estimations, made by management in the process of applying the Group’s
accounting policies.

2.4 Significant accounting judgements, estimates and assumptions (Cont’d)

Estimation and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date
that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next financial year are discussed below.
Impairment of non-financial assets

The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting
date. Goodwill and other indefinite life intangibles are tested for impairment annually and at other times when such
indicators exist. Other non-financial assets are tested for impairment when there are indicators that the carrying
amounts may not be recoverable. When value in use calculations are undertaken, management must estimate the
expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to
calculate the present value of those cash flows. Further details are given in note 22.
3. Summary of significant accounting policies

Subsidiaries
A subsidiary is an entity in which the Company, directly or indirectly, controls more than half of its voting power or
issued share capital or controls the composition of its board of directors; or over which the Company has a contractual
right to exercise a dominant influence with respect to that entity’s financial and operating policies.
The results of subsidiaries are included in the Company’s income statement to the extent of dividends received and
receivable. The Company’s investments in subsidiaries that are not classified as held for sale in accordance with IFRS 5
are stated at cost less any impairment losses.
Foreign currencies translation

The consolidated financial statements are presented in Rmb. Each entity in the Group determines its own functional
currency and items included in the financial statements of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the dates of the
transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional
currency rates of exchange ruling at the balance sheet date. All differences are taken to the income statement. Non-
monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange
rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value was determined.
Prior to 1 January 2005, the Group treated goodwill and any fair value adjustments to the carrying amounts of assets
and liabilities arising on the acquisition are treated as assets and liabilities of the parent. Therefore, those assets and
liabilities are already expressed in the reporting currency or are non-monetary items and hence no further translation
differences occur.
Any goodwill arising on the acquisition of a foreign operation subsequent to 1 January 2005 and any fair value
adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as assets and
liabilities of the foreign operation and translated at the closing rate.
The functional currency of the Company, AsiaPharm Investments Ltd. (“AsiaPharm Investments”) and Solid Success
Holdings Limited (“Solid Success”), is the United States dollar (“US$”). The functional currency of AsiaPharm Biotech
Pte. Ltd. (“ABPL”) (formerly known as Wearnes Biotech & Medicals (1998) Co., Ltd. (“WBM”)) and SmartMedicine Pte.
Ltd. (“SmartMedicine”) is the Singapore dollar (“S$”). The functional currency of Kanghai Pharmaceutical Technology
Development Limited (“Kanghai”) and Apex Group Holdings Limited (“Apex”) is the Hong Kong dollar (“HK$”). As at the
reporting date, the assets and liabilities of the Company, AsiaPharm Investments, Solid Success, ABPL, SmartMedicine,
Kang Hai and Apex are translated into the presentation currency of the Group at the rate of exchange ruling at the
balance sheet date and their income statements are translated at the weighted average exchange rates for the year.
The exchange differences arising on the translation are taken directly to a separate component of equity.

3. Summary of significant accounting policies (Cont’d)

Property, plant and equipment and depreciation
Property, plant and equipment, other than construction in progress, are stated at cost less accumulated depreciation
and any impairment losses. The cost of an item of property, plant and equipment comprises its purchase price and any
directly attributable cost of bringing the asset to its working condition and location for its intended use. Expenditure
incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance,
is normally charged to the income statement in the period in which it is incurred. In situations where it can be clearly
demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be
obtained from the use of an item of property, plant and equipment and the cost of the item can be measured reliably,
the expenditure is capitalised as an additional cost of that asset or as a replacement.
Depreciation is calculated on the straight-line basis to write off the cost of each item of property, plant and equipment
to its residual value over its estimated useful life. The estimated useful lives of property, plant and equipment are as
follows:

Buildings 10 - 40 years
Machinery and equipment 5 - 10 years
Motor vehicles 10 years
Computer and office equipment 5 - 10 years
The residual values, useful lives and the depreciation method of property, plant and equipment are reviewed, and
adjusted if appropriate, at least at each balance sheet date.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss on disposal or retirement recognised in the income statement in
the year the asset is derecognised is the difference between the net disposal proceeds and the carrying amount of
the relevant asset.
Construction in progress
Construction in progress represents property, plant and equipment under construction, which is stated at cost less
any impairment losses, and is not depreciated. Cost comprises the direct costs of construction during the period of
construction. Construction in progress is transferred to the appropriate category of property, plant and equipment
when completed and ready for use.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, i.e., assets
that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of
the cost of those assets. The capitalisation of such borrowing costs ceases when the assets are substantially ready for
their intended use or sale. Borrowing costs are recognised as expenses in the income statement in the period in which
they are incurred.
Goodwill
Business combinations are accounted for using the acquisition accounting method. This involves recognising
identifiable assets (including previously unrecognised intangible assets) and liabilities (including contingent
liabilities and excluding future restructuring) of the acquired business at fair value.
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of the business
combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities.
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is
reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying
value may be impaired.


Goodwill (Cont’d)
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to
benefit from the combination’s synergies, irrespective of whether other assets or liabilities of the Group are assigned
to those units or groups of units.
Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating
units), to which the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cash-
generating units) is less than the carrying amount, an impairment loss is recognised. Where goodwill forms part of
a cash-generating unit (group of cash-generating units) and part of the operation within that unit are disposed of,
the goodwill associated with the operation disposed of is included in the carrying amount of the operation when
determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured on
the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained.
An impairment loss recognised for goodwill is not reversed in a subsequent period.
Land use rights

Land use rights represent prepaid land lease payments under operating leases, which are initially stated at cost and
subsequently measured at cost less accumulated amortisation and accumulated impairment losses. The land use
rights are amortised over the lease term of 50 years.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired
in a business combination is fair value as at the date of acquisition. Following the initial recognition, intangible assets
are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated
intangible assets, excluding capitalised development costs, are not capitalised and expenditure is reflected in the
income statement in the year in which the expenditure is incurred.
The useful lives of intangible assets of the Group are assessed to be finite. Intangible assets with finite lives are
amortised over the useful economic life and assessed for impairment whenever there is an indication that the
intangible asset may be impaired. The amortisation period and amortisation method for an intangible asset with a
finite useful life is reviewed at least at each financial year-end. Changes in the expected useful life or expected pattern
of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation
period or method, as appropriate, and treated as changes in accounting estimates. The amortisation expense on
intangible assets with finite lives is recognised in the income statement in the expense category consistent with the
function of the intangible asset.
Intangible assets are amortised on the straight-line basis over the following useful economic lives:
Trademarks 10 years
Patents and technology know-how 5 - 20 years
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognised in the income statement when the asset
is derecognised.


Intangible assets (Cont’d)
Research and development (“R&D”) costs
All research costs are charged to the income statement as incurred.
Expenditure incurred on projects to develop new products is capitalised and deferred only when the Group can
demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its
intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits,
the availability of resources to complete the project and the ability to measure reliably the expenditure during the
development. Product development expenditure which does not meet these criteria is expensed when incurred.
Deferred development costs are stated at cost less any impairment losses and amortised using the straight-line basis
over the commercial lives of the underlying products not exceeding ten years commencing from the date when the
products are put into commercial production.
Investments in associates
The Group’s investment in its associates is accounted for using the equity method of accounting. An associate is an
entity in which the Group has significant influence and which is neither a subsidiary nor a joint venture.
Under the equity method, the investments in the associates are carried in the balance sheet at cost plus post
acquisition changes in the Group’s share of net assets of the associate. Goodwill relating to the associates is included
in the carrying amount of the investment and is not amortised. The income statement reflects the share of the results
of operations of the associate. Where there has been a change recognised directly in the equity of the associates, the
Group recognises its share of any changes and discloses this, when applicable, in the statement of changes in equity.
Profits and losses resulting from transactions between the Group and the associates are eliminated to the extent of
the interest in the associates.
The financial statements of the associates are prepared for the same reporting period as the parent company. Where
necessary, adjustments are made to bring the accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary to recognise an additional
impairment loss on the Group’s investment in its associates. The Group determines at each balance sheet date whether
there is any objective evidence that the investment in the associate is impaired. If this is the case the Group calculates
the amount of impairment as the difference between the recoverable amount of the associate and its carrying value
and recognises the amount in the income statement.
Impairment of non-financial assets other than goodwill

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such
indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the
asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair
value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate
cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount
of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable
amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment losses of continuing operations are recognised in the income statement in those expense categories
consistent with the function of the impaired asset.


Impairment of non-financial assets other than goodwill (Cont’d)
An assessment is made at each reporting date as to whether there is any indication that previously recognised
impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable amount is
estimated. A previously recognised impairment loss other than goodwill is reversed only if there has been a change
in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised.
If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount
cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss
been recognised for the asset in prior years. Such a reversal is recognised in profit or loss. After such a reversal the
depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual
value, on a systematic basis over its remaining useful life.
Investments and other financial assets

Financial assets in the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments or available-for-sale financial assets, as appropriate. When financial assets
are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through
profit or loss, directly attributable transaction costs. The Group considers whether a contract contains an embedded
derivative when the Group first becomes a party to it.
The Group determines the classification of its financial assets after initial recognition and, where allowed and
appropriate, reevaluates this designation at each financial year-end.
All regular way purchases and sales of financial assets are recognised on the trade date, that is, the date that the Group
commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets that require
delivery of assets within the period generally established by regulation or convention in the marketplace.
Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets
designated upon initial recognition as at fair value through profit or loss. Financial assets are classified as held for
trading if they are acquired for the purpose of sale in the near term. Gains or losses on investments held for trading
are recognised in the income statement.
Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. Such assets are subsequently carried at amortised cost using the effective interest method. Amortised
cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral
part of the effective interest rate and transaction costs. Gains and losses are recognised in the income statement when
the loans and receivables are derecognised or impaired, as well as through the amortisation process.
Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-
maturity when the Group has the positive intention and ability to hold to maturity. Held-to-maturity investments are
subsequently measured at amortised cost less any allowance for impairment. This cost is computed as the amount
initially recognised minus principal repayments, plus or minus the cumulative amortisation using the effective interest
method of any difference between the initially recognised amount and the maturity amount. This calculation includes
all fees and points paid or received between parties to the contract that are an integral part of the effective interest
rate, transaction costs and all other premiums and discounts. Gains and losses are recognised in income when the
investments are derecognised or impaired, as well as through the amortisation process.


Investments and other financial assets (Cont’d)
Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as available for sale or
are not classified in any of the three preceding categories. After initial recognition, available-for-sale investments are
measured at fair value with gains or losses being recognised as a separate component of equity until the investment
is derecognised or until the investments is determined to be impaired at which time the cumulative gain or loss
previously reported in equity is included in the income statement. Interest and dividends earned are reported as
interest income and dividend income, respectively and are recognised in the income statement as “Other income”
in accordance with the policies set out for “Revenue recognition” below. Losses arising from the impairment of such
investments are recognised in the income statement as “Impairment losses on available-for-sale financial assets” and
are transferred from the available-for-sale investment revaluation reserve.
When the fair value of unlisted equity securities cannot be reliably measured because (a) the variability in the range of
reasonable fair value estimates is significant for the investment, or (b) the probabilities of the various estimates within
the range cannot be reasonably assessed and used in estimating fair value, such securities are stated at cost less any
impairment losses.
Fair value
The fair value of investments that are actively traded in organised financial markets is determined by reference to
quoted market bid prices at the close of business at the balance sheet date. For investments where there is no active
market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length
market transactions; reference to the current market value of another instrument which is substantially the same; a
discounted cash flow analysis; and option pricing models.
Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location and conditions are accounted for as follows:
Raw materials purchase cost on a weighted average basis
Finished goods and work in progress cost of direct materials and labour and a proportion of manufacturing
overheads based on normal operating capacity but excluding borrowing costs
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion
and the estimated costs necessary to make the sale.
Contracts for services

Contracts for services revenue comprise the agreed contract amount and appropriate amounts from variation
requests. Contract costs incurred comprise the costs of personnel engaged in providing the services, direct materials
and attributable overheads.
Revenue from fixed price contracts for services is recognised on the percentage of completion method, measured
with reference to the surveys of work performed. Where the outcome of a contract cannot be measured reliably,
revenue is recognised only to the extent that the expenses incurred are eligible to be recovered.
Provision is made for foreseeable losses as soon as they are anticipated by management.


Contracts for services (Cont’d)
Where contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the
surplus is treated as an amount due from contract customers.
Where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the
surplus is treated as an amount due to contract customers.
Trade and other receivables

Trade receivables, which generally have terms of 90 to 180 days, are recognised and carried at original invoice amount
less an allowance for any uncollectible amounts, which is considered as the fair value of the consideration to be
received. Provision is made when there is objective evidence that the Group will not be able to collect the debts. Bad
debts are written off when identified.
Treasury shares
Own equity instruments which are reacquired (treasury shares) are deducted from equity. No gain or loss is recognised
in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments.
Cash and cash equivalents

For the purpose of the consolidated cash flow statement, cash and cash equivalents comprise cash on hand and
demand deposits, and short term highly liquid investments which are readily convertible into known amounts of cash
and which are subject to an insignificant risk of changes in value, and have a short maturity of generally within three
months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Group’s
cash management.
For the purpose of the balance sheets, cash and cash equivalents comprise cash on hand and at banks, including term
deposits, which are not restricted as to use.
Derecognition of financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
derecognised where:
• the rights to receive cash flows from the asset have expired;
• the Group retains the rights to receive cash flows from the asset, but has assumed an obligation to pay them in
full without material delay to a third party under a “pass-through” arrangement; or
• the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially
all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the asset.
Where the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained
substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the
extent of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee
over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum
amount of consideration that the Group could be required to repay.
Where continuing involvement takes the form of a written and/or purchased option (including a cash-settled option
or similar provision) on the transferred asset, the extent of the Group’s continuing involvement is the amount of the
transferred asset that the Group may repurchase, except in the case of a written put option (including a cash-settled
option or similar provision) on an asset measured at fair value, where the extent of the Group’s continuing involvement
is limited to the lower of the fair value of the transferred asset and the option exercise price.


Financial liabilities at amortised cost (including interest-bearing loans and borrowings)
Financial liabilities including trade and other payables, amounts due to the ultimate holding company and related
parties and interest-bearing loans and borrowings are initially stated at fair value less directly attributable transaction
costs and are subsequently measured at amortised cost, using the effective interest method unless the effect of
discounting would be immaterial, in which case they are stated at cost. The related interest expense is recognised
within “Financial cost” in the income statement.
Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the
amortisation process.
Derecognition of financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms,
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and a recognition of a new liability, and the difference between the respective
carrying amounts is recognised in the income statement.
Impairment of financial assets

The Group assesses at each balance sheet date whether a financial asset or a group of financial assets is impaired.
Assets carried at amortised cost

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been
incurred, the amount of loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the
financial asset’s original effective interest rate (i.e., the effective interest rate computed at initial recognition). The
carrying amount of the asset shall be reduced either directly or through use of an allowance account. The amount of
the loss shall be recognised in the income statement. Loans and receivables together with any associated allowance
are written off when there is no realistic prospect of future recovery.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively
to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed
by adjusting the allowance account. Any subsequent reversal of an impairment loss is recognised in the income
statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.
In relation to trade receivables, a provision for impairment is made when there is objective evidence (such as the
probability of insolvency or significant financial difficulties of the debtor) that the Group will not be able to collect all
of the amounts due under the original terms of an invoice. The carrying amount of the receivables is reduced through
the use of an allowance account. Impaired debts are derecognised when they are assessed as uncollectible.
Assets carried at cost

If there is objective evidence that an impairment loss on an unquoted equity instrument that is not carried at fair
value because its fair value cannot be reliably measured, or on a derivative asset that is linked to and must be settled
by delivery of such an unquoted equity instrument, has been incurred, the amount of the loss is measured as the
difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at
the current market rate of return for a similar financial asset. Impairment losses on these assets are not reversed.


Impairment of financial assets (Cont’d)
Available-for-sale investments
If an available-for-sale asset is impaired, an amount comprising the difference between its cost (net of any principal
payment and amortisation) and its current fair value, less any impairment loss previously recognised in the income
statement, is transferred from equity to the income statement. A provision for impairment is made for available-
for-sale equity investments when there has been a significant or prolonged decline in the fair value below its cost
or where other objective evidence of impairment exists. The determination of what is “significant” or “prolonged”
requires judgement. In addition, the Group evaluates other factors, such as the share price volatility. Impairment
losses on equity instruments classified as available for sale are not reversed through the income statement; increases
in their fair value after impairment are recognised directly in equity.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and
a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision
to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but
only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income
statement net of any reimbursement. If the effect of the time value of money is material, provisions are discounted
using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is
used, the increase in provision due to the passage of time is recognised as a finance cost.
Retirement benefits
Contributions made to the government retirement benefit fund under defined contribution retirement plans are
charged to the income statement as incurred.
The Group participates in the national pension schemes as defined by the laws of the countries in which it
has operations.
The Company makes contributions to the Central Provident Fund (“CPF”) Scheme in Singapore, a defined contribution
pension scheme, for its employees in Singapore.
The subsidiaries incorporated and operating in Mainland China are required to provide certain staff pension benefits
to their employees under existing regulations of the People’s Republic of China (“PRC”). Pension scheme contributions
are provided at rates stipulated by PRC regulations and are made to a pension fund managed by government agencies,
which are responsible for administering the contributions for the subsidiaries’ employees.
Government grants
Government grants are recognised where there is reasonable assurance that the grant will be received and all
attaching conditions will be complied with. When the grant relates to an expense item, it is recognised as income over
the period necessary to match the grant on a systematic basis to the costs that it is intended to compensate. Where
the grant relates to an asset, the fair value is credited to a deferred income account and is released to the income
statement over the expected useful life of the relevant asset by equal annual instalments.
Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement
and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset
or assets and the arrangement conveys a right to use the asset.


Leases (Cont’d)
Group as a lessee
Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are accounted for
as operating leases.
Operating lease payments are recognised as an expense in the income statement on the straight-line basis over the
lease term.

Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the
revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is
recognised:
(a) from the sale of goods, when the significant risks and rewards of ownership have been transferred to the buyer,
provided that the Group maintains neither managerial involvement to the degree usually associated with
ownership, nor effective control over the goods sold;
(b) from contract for services, on the percentage of completion basis, as further explained in the accounting policy
for “Contract for services” above;
(c) interest income, on an accrual basis using the effective interest method by applying the rate that discounts the
estimated future cash receipts through the expected life of the financial instrument to the net carrying amount
of the financial asset; and
(d) dividend income, when the shareholders’ right to receive payment has been established.
Income taxes
Income tax comprises current and deferred tax. Income tax is recognised in the income statement, or in equity if it
relates to items recognised directly in equity.
Current tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted by the balance sheet date.
Deferred tax
Deferred tax is provided using the liability method on temporary differences at the balance sheet date between the
tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary difference, except:
• where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; and
• in respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the
reversal of the temporary differences can be controlled and it is probable that the temporary differences will not
reverse in the foreseeable future.


Income taxes (Cont’d)
Deferred tax (Cont’d)
Deferred tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilised except:
• where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of
an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries, deferred tax assets
are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable
future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be
utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent
that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset
is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted
at the balance sheet date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to offset current
tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same
taxation authority.
Dividends
Final dividends proposed by the directors are classified as a separate allocation of retained profits within the equity
section of the balance sheet, until they have been approved by the shareholders in a general meeting. When these
dividends have been approved by the shareholders and declared, they are recognised as a liability.
Related parties
A party is considered to be related to the Group if:
(a) directly, or indirectly through one or more intermediaries, the party (i) controls, is controlled by, or is under
common control with, the Group; (ii) has an interest in the Group that gives it significant influence over the
Group; or (iii) has joint control over the Group;
(b) the party is an associate;
(c) the party is a jointly-controlled entity;
(d) the party is a member of the key management personnel of the Company or its parent;
(e) the party is a close member of the family of any individual referred to in (a) or (d); or
(f ) the party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant
voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e).

4. Business combinations and acquisition of minority interests

Acquisitions in 2007
Acquisitions of ABPL and its subsidiary (collectively, the “ABPL Group”)
On 23 November 2007, the Group acquired 100% of the ordinary shares of ABPL and its 65% owned subsidiary,
SmartMedicine, both of which are incorporated in Singapore, for an aggregate consideration of S$2,060,000
(equivalent to approximately Rmb10,520,000).
The fair value of the identifiable assets and liabilities of the ABPL Group as at the date of acquisition and the
corresponding carrying amounts immediately before the acquisition were:
Fair value
recognised Previous
on acquisitions carrying
(Restated) value
Rmb’000 Rmb’000
Property, plant and equipment 52 52

Intangible assets 3,403 -
Inventories 407 407
Investment in associates (note 17) 1,224 1,224
Due from related parties 1,585 1,585
Available-for-sale investments 2,682 2,682
Cash and cash equivalents 2,269 2,269
Interest-bearing loans and borrowings (5,866) (5,866)
Trade payables (376) (376)
Income tax payable (15) (15)
Accrued liabilities and other payables (956) (956)
Deferred tax liability (613) -
Minority interest (629) (629)

Net assets 3,167 377
Goodwill arising on acquisitions (note 22) 7,353 10,143
Total consideration, satisfied by cash 10,520 10,520

Cash outflow on acquisitions:
Net cash acquired with the subsidiaries 2,269 2,269

Cash paid on acquisitions of ABPL Group in 2007 (10,520) (10,520)
Net cash outflow on acquisitions of ABPL Group in 2007 (8,251) (8,251)
The ABPL Group business combination has been accounted for only provisionally in the 31 December 2007 financial
statements as the Group had sought an independent valuation for the assets and liabilities of ABPL Group. The results
of this valuation had not been received at the date the 2007 accounts were approved for issue by management.
The valuation of the assets and liabilities was completed in February 2009 and showed that the fair value of the
identifiable assets and liabilities of ABPL Group at the date of acquisition was Rmb3,403,000 higher than the
provisional value.

4. Business combinations and acquisition of minority interests (Cont’d)

Acquisitions in 2007 (Cont’d)
Acquisitions of ABPL and its subsidiary (collectively, the “ABPL Group”) (Cont’d)
The 2007 comparative information has been restated to reflect this adjustment. The value of the assets increased by
Rmb3,403,000 and there was an increases in the deferred tax liability of Rmb613,000. There was also a corresponding
reduction in goodwill of Rmb2,790,000, to give total goodwill arising on the acquisition of Rmb7,353,000. The increased
amortisation charge on the intangible assets from the acquisition date to 31 December 2007 was Rmb30,000.
ABPL Group contributed Rmb204,776 from the date of acquisition (23 November 2007) to 31 December 2007 to the
profit of the Group. If the combination had taken place at the beginning of the year, the profit and revenue of the
Group for 2007 would have been Rmb57,180,000 and Rmb514,402,000, respectively.
The goodwill of Rmb7,353,000 comprises the fair value of expected synergies arising from acquisition.
5 Disposal of a subsidiary
On 10 October 2008, the Group disposed 100% of the ordinary shares of Guangzhou LifeTech Jiuzhoutong New/
Special Drug Co., Ltd. (“Jiuzhoutong”), which was incorporated in Mainland China, to Guangzhou Shixin Decoration
Co., Ltd. for a total consideration of Rmb3,311,000.

2008
Rmb’000
Net assets disposed of:
Property, plant and equipment (note 14) 1
Prepayments, deposits and other receivables 2,871
Cash and bank balances 39

Net assets 2,911
Gain on disposal of a subsidiary 400

3,311
Satisfied by:
Cash 440
Exemption of prepayments, deposits and other receivables 2,871
3,311

An analysis of the net inflow of cash and cash equivalents in respect of the disposal of a subsidiary is as follows:
2008
Rmb’000

Cash consideration 440
Cash and bank balances disposed of (39)

Net inflow of cash and cash equivalents
in respect of the disposal of a subsidiary 401

6. Segment information
Segment information is presented by way of two segment formats:
(i) on a primary segment reporting basis, by business segment; and
(ii) on a secondary segment reporting basis, by geographical segment.
The Group’s operating business is structured and managed separately according to the nature of their operations
and the products and services they provide. Each of the Group’s business segments represents a strategic business
unit that offers products and services which are subject to risks and returns that are different from those of the other
business segments.
Summary details of the business segments are as follows:
(i) research, development, production and sale of drugs comprising mainly medicines manufactured from natural
active ingredients extracted from plants, and newly formulated drugs for the fields of orthopaedics, neurology,
gastroenterology, hepatology and oncology;
(ii) sale of research and development results and/or patents for new drugs and provision of research services on a
contract basis; and
(iii) sale of active ingredients for the manufacture of drugs.
In determining the Group’s geographical segments, revenues are attributed to the segments based on the location
of the customers. As the Group’s assets and liabilities are mainly based in and arise out of Mainland China, there is no
geographical segmentation for assets and liabilities.
Business segments
Intersegment sales and transfers are transacted with reference to the selling prices used for sales made to third parties
at the then prevailing market prices.
Year ended 31 December 2008

Sale of Sale of
Sale of R&D active
drugs results ingredients Total
Rmb’000 Rmb’000 Rmb’000 Rmb’000
Segment revenue 649,683 (269) 1,562 650,976
Segment results 137,933 (4,396) 153 133,690
Unallocated corporate expenses (63,523)

Other income 10,680
Finance revenue 3,168
Finance costs (14,208)
Share of profit of associates 12,978
Profit before income tax 82,785
Income tax (20,704)
Minority interests 8
Profit attributable to
equity holders of the parent 62,089

6. Segment information (Cont’d)

Business segments (Cont’d)
Sale of Sale of
Sale of R&D active
Rmb’000 Rmb’000 Rmb’000 Rmb’000
Assets and liabilities

Segment assets 509,699 12,009 303 522,011
Unallocated corporate assets 544,709
Total assets 1,066,720
Segment liabilities 201,930 3,353 - 205,283

Unallocated corporate liabilities 39,573
Total liabilities 244,856
Other segment information

Depreciation of items of property,
plant and equipment 16,561 807 3 17,371
Amortisation of intangible assets 23,553 - - 23,553
Amortisation of land use rights 372 - - 372
Capital expenditure 39,169 496 - 39,665
Impairment losses recognised
in the income statement 1,517 3,575 - 5,092
Unallocated corporate expenses include:
Amortisation of long term deferred expenditure 500
Segment revenue 504,801 2,116 2,063 508,980
Segment results 119,740 (20,581) 437 99,596
Unallocated corporate expenses (23,813)

Other income 1,185
Finance revenue 6,634
Finance costs (17,666)
Share of loss of associates (377)
Profit before income tax 65,559
Income tax (7,985)
Minority interests 558
Profit attributable to equity holders of the parent 58,132

6. Segment information (Cont’d)

Business segments (Cont’d)
Sale of Sale of
Sale of R&D active
Rmb’000 Rmb’000 Rmb’000 Rmb’000
Assets and liabilities

Segment assets 875,897 21,656 380 897,933
Unallocated corporate assets 221,578
Total assets 1,119,511
Segment liabilities 230,273 1,486 40 231,799

Unallocated corporate liabilities 115,570
Total liabilities 347,369
Other segment information

plant and equipment 15,233 871 5 16,109
Amortisation of intangible assets
(2007 restated see note 4) 24,830 - - 24,830
Amortisation of land use rights 277 - - 277
Capital expenditure 256,808 288 - 257,096
Impairment losses recognised
in the income statement 3,352 4,740 - 8,092
Unallocated corporate expenses include:
Amortisation of long term deferred expenditure 500
Geographical segments
The following table presents revenue for the Group by geographical segments:
PRC Non-PRC Total

Rmb’000 Rmb’000 Rmb’000
Revenue 633,075 17,901 650,976
Revenue 506,506 2,474 508,980

7. Revenue and other income
Group
2008 2007
Rmb’000 Rmb’000
Revenue
Sale of drugs 649,734 504,931
Sale of R&D results (263) 2,122
Sale of active ingredients 1,562 2,063

651,033 509,116
Less: business tax and government surcharges (57) (136)

650,976 508,980
Other income
Government grants 3,748 642
Write-back of liabilities no longer payable 2,939 230
Gain on disposal of intangible assets 2,320 -
Gain on disposal of a subsidiary 400 -
Royalty income 346 -
Others 927 313

10,680 1,185

661,656 510,165
8. Profit from operating activities

Profit from operating activities is arrived at after charging/(crediting):

Group Company
2008 2007 2008 2007

plant and equipment 14 17,371 16,109 - -
Amortisation of intangible assets
(2007 restated see note 4) * 18 23,553 24,830 - -
Amortisation of land use rights * 19 372 277 - -
Amortisation of long term
deferred expenditure * 21 500 500 - -
Write-down of inventories to net
realisable value 23 1,158 600 - -
Impairment of amount due
from contract customers 24 3,575 1,000 - -
Impairment of trade receivables 25 597 6,321 - -
Impairment of other receivables 26 3 771 - -
Operating lease expenses 1,961 1,430 - -


8. Profit from operating activities (Cont’d)

Profit from operating activities is arrived at after charging/(crediting):
Group Company
2008 2007 2008 2007

Directors’ remuneration:
Fees 1,068 1,058 1,068 1,058
Pension 26 66 - -
CPF 65 63 65 63
Other emoluments 5,857 4,676 3,422 1,540
7,016 5,863 4,555 2,661

Employee benefit expense
(excluding directors’ remuneration):
Wages and salaries 64,615 57,671 7,369 2,320
Pension 4,728 3,977 44 -
CPF 219 228 219 228
Staff welfare expenses 2,342 2,376 271 333

71,904 64,252 7,903 2,881
Other expenses:
Research and development costs 36,782 25,261 - -
Impairment of available-for-sale
investments 4,339 - - -
Net foreign exchange loss 2,652 3,339 2,141 1,619
Donation 763 524 - -
Loss on disposal of items of property,
plant and equipment 194 188 - -
Others 842 93 104 -

45,572 29,405 2,245 1,619
Research and development costs:

Amounts incurred 44,395 28,667 - -
Government grants released 33 (6,907) (3,090) - -

37,488 25,577 - -
Cost of inventories sold 51,312 53,047 - -
The “cost of sales” amount

includes the following expenses
which are also included in the
respective total amounts
separately disclosed above
for each of these expenses:
Depreciation 12,396 12,245 - -

Staff costs 15,084 13,835 - -
* The amortisation of intangible assets, land use rights and long term deferred expenditure for the year is included in “Administrative expenses”
on the face of the consolidated income statement.

8. Profit from operating activities (Cont’d)

Remuneration of directors
Group
2008 2007
Rmb’000 Rmb’000
Directors’ remuneration:
Directors of the Company 4,093 3,691
Directors of the subsidiaries 2,923 2,172
7,016 5,863
9. Finance revenue
Group
2008 2007
Bank interest income 3,118 6,634

Interest income on loan to an associate 37 50 -

3,168 6,634
10. Finance costs
Group
2008 2007
Rmb’000 Rmb’000
Interest on bank loans 12,787 16,375

Bank charges and others 1,421 1,291
14,208 17,666
11. Income tax

The major components of income tax expense for the years ended 31 December 2008 and 2007 are:
Group
2008 2007
(Restated)
Rmb’000 Rmb’000
Current income tax charge 17,819 10,802

Deferred tax, net 2,885 (2,817)

20,704 7,985

11. Income tax (Cont’d)

A reconciliation of the tax expense applicable to profit before income tax using the statutory rate in Mainland China
to the tax expense to the applicable tax rate is as follows:
Group
2008 2007
Rmb’000 Rmb’000


At the PRC’s statutory income tax rate of 25% (2007: 33%) 20,696 21,634
Effect of tax rate difference in other countries 4,412 7,997
Lower tax rate for specific province or local authority (11,989) (23,144)
Effect of tax concessions and allowances (1,360) (1,543)
Effect of tax levied on a deemed income basis 3,235 1,938
Effect of non-deductible expenses 148 1,053
Utilisation of tax loss previously not recognised 6 (134)
Deferred tax benefit previously not recognised (1,853) (9)
Effect of withholding tax at 5% and 10% on the
distributable profit of the Group’s PRC subsidiaries 8,366 -
Effect on deferred tax balances due to change
in income tax rate (957) 193
Tax charge at the Group’s effective rate 20,704 7,985
Under the laws of Bermuda, no withholding tax on dividends or other distributions, nor any tax computed on profits
or income or on any capital asset, gain or appreciation will be payable by an exempted company or its operations.
Accordingly, the Company and its subsidiary, AsiaPharm Investments, are not subject to tax.
Pursuant to the International Business Companies Act, 1984, (“IBC Act”) of the BVI, international business companies
incorporated pursuant to the IBC Act enjoy a complete exemption from income tax. This includes an exemption from
capital gains tax and all forms of withholding tax. Accordingly, Solid Success is not subject to tax.
Pursuant to the relevant tax law of the Hong Kong Special Administrative Region, Kanghai and Apex are subject to
profit tax on 16.5% (2007: 17.5%) of their taxable income.
Pursuant to the relevant tax law of Singapore, ABPL and SmartMedicine are subject to income tax on 18% (2007: 20%)
of their taxable income.


In accordance with the Income Tax Law of the PRC, the profits of the following subsidiaries in Mainland China are
taxed at the following tax rates:
2008 2007

Shandong Luye Pharmaceutical Co., Ltd.
(“Shandong Luye”) (a) 15% 7.5%
Yantai Luye Drugs Trading Co., Ltd.

(“Luye Trading”) (b) 25% 33%
Shandong Luye Natural Drug Research

and Development Co., Ltd.
(“Luye R&D”) (c) 20% 27%
Nanjing Kanghai Pharmaceutical Co., Ltd.

(“Nanjing Kanghai”) (d) 15% 13.78%

Nanjing Sike Pharmaceutical Co., Ltd.
(“Nanjing Sike”) (e) 12.5% 7.5%
(a) Shandong Luye obtained approval from the relevant tax authorities as an advanced technology enterprise.
Pursuant thereto, Shandong Luye is subject to a corporate income tax rate of 15% with effect during 2008.
In accordance with the relevant tax laws in the PRC, Shandong Luye is exempted from corporate income tax for
its first two profit-making years (after deducting losses incurred in previous years) and is entitled to a 50% tax
reduction for the succeeding three years. Shandong Luye was eligible to pay a reduced tax rate of 7.5% until
31 December 2007. As the current year is the sixth profit-making year after deducting the prior years’ carry-
forward losses, the applicable corporate income tax rate of Shandong Luye for 2008 is 15% (2007: 7.5%).
In addition, according to the PRC tax regulation, Shandong Luye is entitled to enjoy the above tax holiday in
respect of profit generated from the additional capital injection of 50% or more over the existing paid up capital.
On 23 August 2007, Shandong Luye had obtained tax approval from the relevant tax authorities via its additional
capital injection of Rmb91,230,162 at the end of 2007, to enjoy another “exemption for first two years and 50%
tax exemption for the succeeding three years” started from 2007. Current year is the second profit-making year
for the additional capital injection and the relevant profit is exempted from corporate income tax.
(b) Luye Trading is subject to a corporate income tax rate of 25% (2007: 33%) this year.
(c) Luye R&D is subject to a corporate income tax rate of 20% (2007: 27%). With effect from 1 July 2006, Luye R&D
is taxed on a deemed income basis determined at 10% of its total revenue. The determination of the deemed
revenue and the income computation will be assessed annually by the relevant tax authorities.
(d) Nanjing Kanghai, being an advanced technology enterprise located in the Nanjing Hi-Technology Development
Zone, obtained the approvals from the relevant tax authorities to enjoy a preferential corporate income tax rate
of 15% (2007: 13.78%).


(e) Nanjing Sike, being an advanced technology enterprise located in the Nanjing Hi-Technology Development
Zone, is subject to the corporate income tax rate of 25%. In accordance with the relevant tax laws in the PRC,
Nanjing Sike is exempted from corporate income tax for its first two profit-making years (after deducting losses
incurred in previous years) and is entitled to a 50% tax reduction for the succeeding three years. In 2008, Nanjing
Sike is in the second year of the 50% tax reduction period and thus is eligible to pay a reduced tax rate of 12.5%
(2007: 7.5%).
During the Fifth Session of the Tenth National People’s Congress, which was conducted on 16 March 2007, the PRC
Corporate Income Tax Law (the “New Corporate Income Tax Law”) was approved. The New Corporate Income Tax Law
becomes effective from 1 January 2008. It introduces a wide range of changes which include, but are not limited to, the
unification of the income tax rate for domestic-invested and foreign-invested enterprises at 25% and withholding tax
on dividend distributions up to a rate of 10%. A lower withholding tax maybe applied if there is a tax treaty between
China and jurisdiction of the foreign investors. The Group is subject to withholding corporate income tax at rate of
5% and 10% on the distribution of dividends. The Group recognised deferred tax liabilities in respect of accumulated
distributable earnings from its subsidiaries established in Mainland China since 1 January 2008, no matter whether
such earnings have been declared or not by the subsidiaries at the balance sheet date.
Deferred tax
Deferred tax at 31 December relates to the following:
Consolidated Consolidated
balance sheet income statement
2008 2007 2008 2007
Rmb’000 Rmb’000 Rmb’000 Rmb’000
Deferred tax liabilities:

Effect of withholding tax at 5% and 10%
on the distributable profit of
the Group’s PRC subsidiaries (8,366) - (8,366) -
Fair value adjustment on
acquisitions (2007 restated see note 4) (22,809) (26,406) 3,597 1,623
Deferred tax liabilities (31,175) (26,406)
Deferred tax assets:

Accrued expenses 1,849 123 1,726 123
Decelerated depreciation for tax purposes 584 581 3 325
Provision for obsolete inventories 261 123 138 59
Impairment of trade and other receivables 1,885 1,384 501 687
Unrealised profit from
inter-company transaction 2,357 - 2,357 -
Fair value adjustment on
acquisitions - 2,841 (2,841) -

Deferred tax income (2,885) 2,817

Deferred tax assets 6,936 5,052
There are no income tax consequences attaching to the payment of dividends by the Company to its shareholders.

12. Dividend
Group
2008 2007
Rmb’000 Rmb’000
Proposed final - nil (FY2007: US$0.004) per ordinary share - 14,398
13. Earnings per share attributable to ordinary equity holders of the parent
Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary equity holders
of the parent by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing profit attributable to ordinary equity holders of the
parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average
number of ordinary shares assumed to have been issued at no consideration on the conversion of all potential dilutive
ordinary shares into ordinary shares.
There were no potential dilutive ordinary shares in existence for the years ended 31 December 2008 and 2007.
The following reflects the income and share data used in the basic earnings per share computation:
2008 2007
Rmb’000 Rmb’000
Earnings
Profit attributable to ordinary equity holders
of the parent, used in the basic earnings per
share calculation (2007 restated see note 4) 62,089 58,132

Number of shares
2008 2007

Shares
Weighted average number of ordinary shares
in issue during the year, used in the basic
earnings per share calculation 492,764,900 492,350,955

14. Property, plant and equipment

Machinery Computer
and Motor and office
Group Buildings equipment vehicles equipment Total
Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000
Cost:
At 1 January 2007 53,797 109,715 2,156 5,712 171,380
Acquisitions of subsidiaries 33,042 18,426 1,860 2,214 55,542
Transferred from construction
in progress (note 15) 2,073 4,145 - 429 6,647
Additions 880 7,826 1,747 571 11,024
Disposals (298) (839) (310) (501) (1,948)
At 31 December 2007
and 1 January 2008 89,494 139,273 5,453 8,425 242,645
Transferred from construction
in progress (note 15) 79 1,701 - 36 1,816
Additions 8,460 8,050 1,194 1,439 19,143
Disposal of a subsidiary (note 5) - - - (6) (6)
Disposals (181) (910) (247) (728) (2,066)
At 31 December 2008 97,852 148,114 6,400 9,166 261,532
Accumulated depreciation:
At 1 January 2007 10,726 49,360 964 3,648 64,698
Acquisitions of subsidiaries 5,568 7,774 960 1,715 16,017
Provided for the year 2,432 12,259 477 941 16,109
Disposals (254) (454) (215) (383) (1,306)
At 31 December 2007
and 1 January 2008 18,472 68,939 2,186 5,921 95,518
Provided for the year 2,681 13,096 485 1,109 17,371
Disposal of a subsidiary (note 5) - - - (5) (5)
Disposals - (836) (154) (673) (1,663)
At 31 December 2008 21,153 81,199 2,517 6,352 111,221
Net book value:

At 31 December 2008 76,699 66,915 3,883 2,814 150,311
At 31 December 2007 71,022 70,334 3,267 2,504 147,127

14. Property, plant and equipment (Cont’d)

The Group has not obtained building ownership certificates for buildings with net book values of Rmb1,871,000 as at
31 December 2008 (2007: Rmb4,153,000).
The Group has not obtained the building ownership certificate for one piece of land with a total gross area of
approximately 4040 m2 and a net book value of Rmb6,700,000 together with the building on the land as at
31 December 2008 (2007: nil).
In the absence of these certificates, the Group is not able to assign, transfer or mortgage these assets.
As at 31 December 2007, the Group’s buildings and land use rights with net book value of Rmb10,925,000 and
Rmb1,272,000, respectively, were mortgaged to secure bank loans of Rmb14,000,000 (note 34). There was no such
arrangement as at 31 December 2008.
15. Construction in progress
Group
2008 2007
Rmb’000 Rmb’000

At 1 January 2,179 2,216
Additions 2,490 7,327
Transferred to property, plant and equipment (note 14) (1,816) (6,647)
Transferred to others (730) (717)

At 31 December 2,123 2,179
16. Investments in subsidiaries
Company
2008 2007
Rmb’000 Rmb’000
Unlisted investments, at cost 10,537 11,262

16. Investments in subsidiaries (Cont’d)

Details of the subsidiaries are as follows:
Place and
date of
incorporation/ Nominal value Effective equity
establishment of issued shares/ interest held by Principal
Company and operations paid-up capital the Company activities
2008 2007
% %

Directly held:
AsiaPharm Bermuda US$ 100 100 Investment
Investments (a) 2 July 2003 0.12 million holding

ABPL (formerly
known as WBM) (b) Singapore S$ 100 100 Distribution
23 April 1991 1.70 million and sale of
pharmaceutical
drugs
Indirectly held:
Shandong Luye (c) # PRC/ Rmb 100 100 Manufacture
Mainland China 263.7 million and sale of
8 June 1994 pharmaceutical
drugs and
active
ingredients

Luye Trading (d) # PRC/ Rmb 100 100 Distribution
Mainland China 1 million and sale of
27 March 1997 pharmaceutical
drugs

Luye R&D (e) # PRC/ Rmb 69 69 Research and
Mainland China 5 million development of
31 December 2002 Chinese and
Western
medicine and
provision of
related activities

Jiuzhoutong (f ) PRC/ Rmb - 100 Distribution
28 October 2003 pharmaceutical
drugs

Onsuccess Limited (g) BVI US$1 - 100 Investment
18 October 2006 holding

Solid Success (h) BVI US$1 100 100 Investment
22 August 2002 100 holding


Place and
date of
incorporation/ Nominal value Effective equity
establishment of issued shares/ interest held by Principal
Company and operations paid-up capital the Company activities
2008 2007
% %

Kanghai (b) Hong Kong HK$ 100 100 Investment
22 June 2002 100 holding

Apex (b) Hong Kong HK$ 100 100 Investment
10 June 1993 10,000 holding

SmartMedicine (b) Singapore S$ 65 65 Distribution
19 July 1990 0.25 million and sale of
pharmaceutical
drugs

Nanjing Kanghai (i) PRC/ Rmb 100 100 Manufacture
Mainland China 60 million and
17 July 2000 sale of
pharmaceutical
drugs

Nanjing Sike (j) # PRC/ Rmb 100 100 Manufacture
22 February 2004 pharmaceutical
drugs
(a) AsiaPharm Investments is not required to be audited in accordance with the laws of the country of establishment,
however it is audited by Ernst & Young Singapore, Certified Public Accountants, for consolidation purposes.
(b) ABPL, SmartMedicine, Kanghai and Apex are audited by Ernst & Young Singapore, Certified Public Accountants,
for consolidation purposes.
(c) Shandong Luye was previously a foreign-invested joint stock limited liability company incorporated on
12 November 1999 with an infinite tenure. On 1 January 2006, the Group acquired the remaining 4.07% equity
interest from a minority equity holder in Shandong Luye. On 18 February 2006, Shandong Luye was approved as
a wholly foreign-owned enterprise, following the acquisition of equity interest from a minority shareholder.
(d) Luye Trading is a limited liability company with a tenure of 20 years commencing from 27 March 1997.
(e) Luye R&D is a limited liability company with a tenure of 20 years commencing from 31 December 2002.
(f ) Jiuzhoutong is a limited liability company with an infinite tenure from 28 October 2003. On 10 October 2008, the
Group disposed its entire equity interest to Guangzhou Shixin Decoration Company, an independent third party,
for an aggregate consideration of Rmb3,311,000 (note 5).


(g) Onsuccess Limited is not required to be audited in accordance with the laws of the country of establishment.
Onsuccess Limited has been deregistered with effect from 1 May 2008.
(h) Solid Success is not required to be audited in accordance with the laws of the country of establishment, however
it is audited by Ernst & Young Singapore, Certified Public Accountants, for consolidation purposes.
(i) Nanjing Kanghai is a limited liability company with an infinite tenure of 20 years commencing from 17 July 2000.
It is audited by a firm other than Ernst & Young. However, it is audited by Ernst & Young Hua Ming, Certified Public
Accountants, for consolidation purposes.
(j) Nanjing Sike is a limited liability company with an infinite tenure of 20 years commencing from 22 February 2004.
# The statutory consolidated financial statements of Shandong Luye and its subsidiaries, Luye Trading, Luye R&D
and Nanjing Sike have been audited by Ernst & Young Hua Ming, Certified Public Accountants.
17. Investments in associates
Group Company
Rmb’000 Rmb’000
At 1 January 2007 - -
Additions from business combination (note 4) 1,224 -
Acquisition 99,400 99,400
Share of loss (restated) (377) (289)
Foreign currency translation difference (2,245) (2,220)
At 31 December 2007 and 1 January 2008 98,002 96,891

Share of profit 12,978 12,359
Dividend received (12,900) (12,900)
At 31 December 2008 89,776 88,166
The following table illustrates summarised financial information of the Group’s aggregate investment in associates
as at 31 December 2008:
Group
2008 2007
(Restated)
Rmb’000 Rmb’000
Share of the associates’ balance sheet:

Current assets 161,002 143,548
Non-current assets 128,263 145,555
Current liabilities (55,718) (49,255)
Non-current liabilities (7,997) (14,645)
Net assets 225,550 225,203


17. Investments in associates (Cont’d)

2008 2007
(Restated)
Rmb’000 Rmb’000
Share of net assets 94,326 96,493

Goodwill on acquisition 3,754 3,754

Carrying amount of the investment 89,776 98,002

Share of associates’ revenue and profit/(loss):
Revenue 108,686 16,078
Profit/(loss) 12,978 (377)
Particulars of the principal associates as at 31 December 2008 are as follows:
Place and Nominal value Percentage of

incorporation/ of issued shares interests attributable Principal
Company registration paid-up capital to the group activities

Beijing WBL Peking PRC/ Rmb 43 Manufacture and
University Biotech Mainland 80 million sale of
Co., Ltd. (“WPU”) China pharmaceutical drugs

Steward Cross Pte. Ltd. Singapore S$ 36 Distribution and
(“Steward Cross”) 185,185 sale of
pharmaceutical drugs
The accounting for WPU in the 31 December 2007 financial statements was based on a provisional assessment of
fair value as the Group had sought an independent valuation for the land use rights, buildings, intangible assets and
inventories owned by WPU. The results of this valuation had not been received at the date the 2007 accounts were
approved for issue by management.
The valuation of land use rights, buildings, intangible assets and inventories was completed in February 2009 and
showed that the fair value at the date of acquisition was Rmb118,280,000, an increase of Rmb62,867,000 compared
to the provisional value.
The 2007 comparative information has been restated to reflect this adjustment. The value of the land use rights,
buildings, intangible assets and inventories were increased by Rmb62,867,000 and there was an increases in the
deferred tax liability of Rmb14,645,000. There was also a corresponding reduction in goodwill of Rmb33,275,000, to
give total goodwill arising on the acquisition of Rmb3,754,000. The increased amortisation and depreciation charge on
the land use rights, buildings and intangible assets from the acquisition date to 31 December 2007 was Rmb4,287,000
and the Group’s share of amortisation and depreciation charge was Rmb1,843,000.

18. Intangible assets
Group
Patents and
technology
Trademarks know-how Total
Rmb’000 Rmb’000 Rmb’000
At 1 January 2007 10,048 31,332 41,380
Acquisitions of subsidiaries
(restated see note 4) - 195,576 195,576
Amortisation (restated) (1,038) (23,792) (24,830)
At 31 December 2007
and 1 January 2008 9,010 203,116 212,126
Disposal - (1,150) (1,150)

Amortisation (1,476) (22,077) (23,553)
At 31 December 2008 7,534 179,889 187,423
19. Land use rights

The Group’s land use rights represent prepaid land lease payments under operating leases and their carrying amounts
are analysed as follows:
Group
2008 2007
Rmb’000 Rmb’000
At 1 January 13,345 6,575

Acquisitions of subsidiaries - 7,047
Amortisation (372) (277)
At 31 December 12,973 13,345

As at 31 December 2007, the Group’s land use rights and buildings with net book value of Rmb1,272,000 and
Rmb10,925,000 (note 14), respectively, were mortgaged to secure bank loans of Rmb14,000,000 (note 34). There was
no such arrangement as at 31 December 2008.
20. Available-for-sale investments
Group
2008 2007
Rmb’000 Rmb’000
Listed equity investment, at fair value - 4,023

Unlisted equity investment, at fair value 1,684 2,653
Unlisted investments, at cost 500 500
2,184 7,176

20. Available-for-sale investments (Cont’d)

Available-for-sale financial assets consist of investments in ordinary shares, and therefore have no fixed maturity
date or coupon date.
The fair value of the listed equity investment is determined by reference to published price quotations in an
active market.
The fair value of the unlisted equity investment is derived from the latest arm’s length transactions between
private investors.
The fair value of unlisted investments cannot be reliably measured because (a) the variability in the range of
reasonable fair value estimates is significant for the investment, and (b) the probabilities of the various estimates
within the range cannot be reasonably assessed and used in estimating fair value. These investments were stated
at cost less any impairment losses.
There has been a significant decline in the market value of the listed equity investment during the year. The directors
consider that such a decline indicates that the listed equity investment has been impaired and an impairment loss
was amounted to Rmb3,466,000 (2007: nil), which was included a transfer from the unrealised gains reserves of
Rmb371,000 (2007: nil), has been recognised in the income statement for the year.
During the year, the Group recognised an impairment loss of Rmb873,000 (2007: nil) pertaining to unlisted equity
investment carried at fair value, reflecting the write-down in the carrying value of this private equity investment.
21. Long term deferred expenditure
Group
2008 2007
Rmb’000 Rmb’000
At 1 January 3,292 3,792

Amortisation (500) (500)
At 31 December 2,792 3,292
Long term deferred expenditure represents the prepayment in Yantai University Pharmaceutical College (the
“College”), set up by Shandong Luye and Yantai University, primarily for the procurement of research and development
equipment and facilities for use in the laboratories of the College. It is amortised using the straight-line basis over
10 years, effective from the date of investment in July 2004.
22. Goodwill
Group
2008 2007
Rmb’000 Rmb’000
At 1 January 165,936 44,398

Acquisition of subsidiaries
(2007 restated see note 4) - 121,538

Carrying amount at 31 December 165,936 165,936

22. Goodwill (Cont’d)

The goodwill which arose in 2007 relates to the acquisitions of Solid Success Group and ABPL Group.
There was no impairment charge made against goodwill for the year ended 31 December 2008 (2007: nil).
Impairment testing of goodwill

Goodwill has been allocated to four individual cash-generating units for impairment testing as follows:
(a) CMNa cash-generating unit (“CMNa unit”);

(b) Pharmaceutical products other than the CMNa cash-generating unit (“Other products unit”);
(c) Solid Success Group cash-generating unit (“SSL unit”); and
(d) ABPL cash-generating unit (“ABPL unit”).
Carrying amount of goodwill

2008 2007
Rmb’000 Rmb’000
CMNa unit 38,444 38,444

Other products unit 5,954 5,954
SSL unit 114,185 114,185
ABPL unit (2007 restated see note 4) 7,353 7,353
Total 165,936 165,936
The recoverable amounts of the cash generating units have been determined based on a value in use calculation
using cash flow projections based on financial budgets approved by senior management covering a three-year period
for the CMNa unit and a five-year period for the other units. The pre-tax discount rate applied to cash flow projections
is 14% and no growth has been projected beyond the three-year and five-year period, respectively.
Key assumptions used in value in use calculations

The calculation of value in use is based on the following assumptions:
• Gross margins and operating expenses
• Discount rates
• Growth rates
Gross margins and operating expenses - Gross margins are based on average values achieved in the three years
preceding the start of the budget period and are increased over the budget period for anticipated efficiency
improvements. Estimates on operating expenses reflect past experience and management commitment to maintain
them at an acceptable level.
Discount rates - Discount rates reflect management’s estimate of the risks specific to each unit. This is the
benchmark used by management to assess operating performance and to evaluate future investment proposals. In
determining an appropriate discount rate for each unit, regard has been given to the yield on a ten-year government
bond at the beginning of the budgeted year.
Growth rates - Rates are based on published industry research.

23. Inventories
Group
2008 2007
Rmb’000 Rmb’000
Raw materials
- at cost 32,439 25,775
- provision (138) (115)
Work in progress
- at cost 4,265 5,823
- provision (1,117) -
Finished goods
- at cost 21,177 11,506
- provision (598) (739)
Total lower of cost or net realisable value 56,028 42,250
Analysis of provision for obsolete inventories:
Group
2008 2007
Rmb’000 Rmb’000
At 1 January 854 527

Acquisitions of subsidiaries - 223
Additions 1,158 600
Written off (159) (496)
At 31 December 1,853 854
24. Contracts for services
Group
2008 2007
Rmb’000 Rmb’000
Gross amount due from contract customers 6,475 10,491
Contract costs incurred plus recognised

profits to date 57,563 46,120
Less: progress billings (51,088) (35,629)
6,475 10,491
Less: impairment of amount due from
contract customers (4,250) (1,000)
2,225 9,491

24. Contracts for services (Cont’d)

Analysis of impairment for contracts for services:
Group
2008 2007
Rmb’000 Rmb’000
At 1 January 1,000 -
Additions 3,575 1,000
Written off (325) -
At 31 December 4,250 1,000
25. Trade and notes receivables
Group
2008 2007
Rmb’000 Rmb’000
Trade receivables 175,256 189,250

Notes receivable 52,852 48,881
At 31 December 228,108 238,131

Less: impairment of trade receivables (6,823) (6,946)
221,285 231,185
Movements in the provision for impairment of trade receivables were as follows:

Group
Individually Collectively
impaired impaired Total
Rmb’000 Rmb’000 Rmb’000
At 1 January 2007 6,475 2,104 8,579

Acquisitions of subsidiaries 499 - 499
Charge for the year 5,136 1,185 6,321
Utilised (8,453) - (8,453)
At 31 December 2007 3,657 3,289 6,946

Charge for the year 597 - 597
Utilised (487) (233) (720)
At 31 December 2008 3,767 3,056 6,823
As at 31 December 2008, the Group had discounted bank notes of Rmb2,443,000 (2007: nil) and the proceeds received
have been accounted for as short-term loans (note 34).

25. Trade and notes receivables (Cont’d)

An aged analysis of trade receivables as at the balance sheet date, based on invoice date, is as follows:
Group
2008 2007
Rmb’000 Rmb’000
Within 6 months 157,632 158,935

Between 6 and 12 months 4,887 20,313
Between 1 and 2 years 8,842 6,362
Over 2 years 3,895 3,640
At 31 December 175,256 189,250
The aged analysis of the trade receivables that are not considered to be impaired is as follows:
Group
2008 2007
Rmb’000 Rmb’000
Neither past due nor impaired 157,632 158,935

Less than 3 months past due 4,887 20,313
Over 3 months past due 5,914 3,056
168,433 182,304
Trade receivables that were neither past due nor impaired relate to a large number of diversified customers for whom
there was no recent history of default.
Trade receivables that were past due but not impaired relate to a number of independent customers that have a
good track record with the Group. Based on past experience, the directors of the Group are of the opinion that no
provision for impairment is necessary in respect of these balances as there has not been a significant change in credit
quality and the balances are still considered fully recoverable. The Group does not hold any collateral or other credit
enhancements over these balances.
26. Prepayments, deposits and other receivables
Group Company
2008 2007 2008 2007
Rmb’000 Rmb’000 Rmb’000 Rmb’000
Prepayments for
construction of buildings 19,000 - - -
Other receivables 6,493 1,111 - 62
Prepaid income tax 6,443 1,674 - -
Prepayments for land use rights 4,600 - - -
Cash advances 1,565 1,963 58 -
Prepayments 1,420 11,420 195 972
Prepaid other taxes 136 43 - -
Subsidy receivable - 423 - -
Dividend receivable - - 36,634 68,370
At 31 December 39,657 16,634 36,887 69,404

Less: impairment of other receivables (1,060) (1,321) - -
38,597 15,313 36,887 69,404

26. Prepayments, deposits and other receivables (Cont’d)

Movements in the provision for impairment of other receivables were as follows:
Group
Individually
impaired
Rmb’000
At 1 January 2007 618

Acquisitions of subsidiaries 315
Charge for the year 771
Utilised (383)
At 31 December 2007 1,321

Charge for the year 3
Utilised (264)
At 31 December 2008 1,060
The aged analysis of the prepayments, deposits and other receivables that are not considered to be impaired is as follows:
Group
2008 2007
Rmb’000 Rmb’000
Neither past due nor impaired 38,597 15,313

Receivables that were neither past due nor impaired relate to a large number of diversified customers for whom there
was no recent history of default.

27. Cash and cash equivalents and pledged short-term deposits
Group Company
2008 2007 2008 2007
Rmb’000 Rmb’000 Rmb’000 Rmb’000
Cash and bank balances 117,166 95,383 9,976 13,315

Short-term deposits 1,303 67,983 - -
118,469 163,366 9,976 13,315

Less: pledged short-term deposits
for bank loans - (20,480) - -
Cash and cash equivalents 118,469 142,886 9,976 13,315
Cash at banks earns interest at floating rates based on daily bank deposits rates. Short- term time deposits are made
for varying periods within three months depending on the immediate cash requirements of the Group, and earn
interest at the respective short-term time deposits rates. The banks balance and pledged deposits are deposited
with creditworthy banks with no recent history of default. The carrying amounts of the cash and cash equivalents
approximate to their fair values as at the balance sheet date.
As at 31 December 2008, none of short-term deposits have been pledged to secure bank loans (2007: Rmb17,531,000,
earn interest at 3.06% per annum) (note 34).

28. Due from/to the holding company

The amounts due from/to the holding company are unsecured, interest-free and are repayable on demand.
29. Due from/to related parties

The amounts due from/to related parties are unsecured, interest-free and are repayable on demand.
30. Due from/to subsidiaries

The amounts due from/to subsidiaries are unsecured, interest-free and are repayable on demand.
31. Share capital
Company
2008 2007 2008 2007
US’000 Rmb’000 US’000 Rmb’000
Authorised:
5,000,000,000 (2007: 5,000,000,000)
ordinary shares of US$0.02
(2007: US$0.02) each 100,000 828,650 100,000 828,650
Issued and fully paid:

492,764,900 (2007: 492,764,900)
ordinary shares of US$0.02
(2007: US$0.02) each 9,855 81,180 9,855 81,180
32. Reserves/(loss)
Luye R&D and Luye Trading
In accordance with the Company Law of the PRC, Luye R&D and Luye Trading are required to allocate 10% of their profit
after tax, as determined in accordance with the relevant PRC accounting standards, to the statutory surplus reserve
(“SSR”) until the reserve reaches 50% of the registered capital of the PRC subsidiaries. Subject to certain restrictions
set out in the Company Law of the PRC, part of the SSR may be converted to increase share capital, provided that the
remaining balance after the capitalisation is not less than 25% of the registered capital.
Prior to 1 January 2007, in accordance with the Company Law of the PRC, Luye R&D and Luye Trading were required to
transfer 5% to 10% of their profit after tax, as determined in accordance with the relevant PRC accounting standards,
to a statutory public welfare fund (“PWF”) which is a non-distributable reserve other than in the event of liquidation
of the PRC subsidiaries. The PWF must be used for capital expenditure on staff welfare facilities and these facilities
remain as the property of the PRC subsidiaries.
According to the revised Company Law of the PRC, effective 1 January 2007, Luye R&D and Luye Trading are no longer
required to appropriate their profit after tax to the PWF. The outstanding balance of the PWF as at 31 December 2006
was transferred to the SSR.
Shandong Luye
Prior to 1 January 2006, Shandong Luye appropriated its profit after tax to the SSR and PWF according to the Company
Law of the PRC. Shandong Luye was converted into a wholly foreign-owned enterprise (note 16) in 2006, and,
in accordance with the relevant rules applicable to a foreign investment enterprise and its articles of association,
Shandong Luye is required to appropriate 10% and 5% of its profit after tax to the statutory reserve fund and
enterprise expansion fund, respectively. In 2007, Shandong Luye amended its articles of association to discontinue
the appropriation of the enterprise expansion fund.

32. Reserves/(loss) (Cont’d)

The statutory reserve fund can be used to offset losses and increase capital as approved. The enterprise expansion
fund must be used to expand production or operations and to increase capital as approved.
Nanjing Kanghai and Nanjing Sike

In accordance with the relevant rules applicable to foreign investment enterprises and their articles of association,
Nanjing Kanghai and Nanjing Sike are required to appropriate 10% of their profit after tax to the statutory reserve fund.
The statutory reserve fund can be used to offset losses and increase capital as approved.
33. Government grants
Group
2008 2007
Rmb’000 Rmb’000
At 1 January 1,027 1,817

Grants received during the year 5,880 2,300
Amount released (6,907) (3,090)
At 31 December - 1,027
The grants relate to the reimbursement of qualifying research and development expenditures incurred for approved
projects and their utilisation are subject to the final assessment of the relevant government authorities.
34. Interest-bearing loans and borrowings
Effective
interest Group Company
2008 rate (%) Maturity Rmb’000 Rmb’000

Current
Bank loans - unsecured
Rmb20,000,000 bank loan 7.84 28 August 2009 20,000 -
Rmb10,000,000 bank loan 5.58 27 November 2009 10,000 -
30,000 -
Current portion of long term
bank loan - unsecured
US$4,888,000 bank loan SIBOR+1.25% 2 February 2009 33,406 33,406
to 2 November 2009
Discounted bank acceptances * 20 April 2009 2,443 -
to 3 June 2009
65,849 33,406
Non-current
US$10,962,000 bank loan SIBOR+1.25% 2010 74,925 74,925
140,774 108,331

34. Interest-bearing loans and borrowings (Cont’d)
Effective
interest Group Company
2007 rate (%) Maturity Rmb’000 Rmb’000
Current
Bank loans - secured **
US$2,400,000 bank loan (i) 7.64 24 May 2008 17,531 -
Rmb14,000,000 bank loan (ii) 7.29 30 October 2008 14,000 -

Rmb15,000,000 bank loan 6.43 28 February 2008 15,000 -
Rmb20,000,000 bank loan 6.84 31 July 2008 20,000 -
Rmb20,000,000 bank loan 6.39 25 March 2008 20,000 -
Rmb6,000,000 bank loan 7.29 24 November 2008 6,000 -

112,531 -
Current portion of long term
bank loan - unsecured
US$3,387,000 bank loan SIBOR+1.25% 2 February 2008 24,747 24,747
to 2 November 2008
137,278 24,747
Non-current
US$15,850,000 bank loan SIBOR+1.25% 2009 to 2010 115,781 115,781
253,059 140,528
* Bank notes that have been discounted bear interest rates ranging from 2.1% to 6% (2007: nil) per annum (note 25).
** Certain of the Group’s bank loans are secured by:

(i) the pledge of certain of the Group’s time deposits amounting to Rmb20,480,000 (note 27); and
(ii) the pledge of certain of the Group’s land use rights and mortgages over certain of the Group’s buildings, which had an aggregate carrying
value at the balance sheet date of approximately Rmb12,197,000 (note 14 and note 19).

35. Accrued liabilities and other payables
Group Company
2008 2007 2008 2007
Rmb’000 Rmb’000 Rmb’000 Rmb’000
Other payables 18,571 17,319 1,297 53

Accrued liabilities 13,047 9,700 914 2,194
Accrued payroll 8,446 8,246 1,160 891
Advances from customers 6,333 1,989 - -
Taxes other than corporate income tax 6,260 9,608 20 23
Payables for purchases of machinery
and construction of buildings 2,304 3,272 - -
Acquisition of
the CMNa business - 3,000 - -
54,961 53,134 3,391 3,161
36. Commitments
The Group leases certain of its office properties under operating lease arrangements. Leases for properties are
negotiated for terms from one to ten years. At 31 December 2008 and 2007, the Group had total future minimum
lease payments under non-cancellable operating leases falling due as follows:
Group
2008 2007
Rmb’000 Rmb’000
Operating lease commitments:

Within one year 1,277 802
In the second to fifth years, inclusive 1,538 1,251
After five years 169 169
2,984 2,222
In addition to the operating lease commitments detailed above, the Group and the Company had the following capital
commitments at the balance sheet date:
Group
2008 2007
Rmb’000 Rmb’000
Contracted, but not provided for:

Plant and machinery 1,340 2,636
New medicine certificate - 50,000
1,340 52,636
Authorised, but not contracted for:
Plant and machinery 293,586 1,620
294,926 54,256

37. Related party transactions

The Group had the following material related party transactions:
Amount
due from/
Sale Purchase (to) related
of drugs of drugs parties
2008 Rmb’000 Rmb’000 Rmb’000
AsiaPharm Holdings Ltd. (“AsiaPharm Holdings”) - - (105)

Steward Cross 9,532 - 6,658
SmartMedicine 5,050 - 1,495
WPU - 4,189 (474)
ABPL - - (741)
Wuhu Luye Pharmaceutical Co., Ltd. (“Wuhu Luye”) - - 254
Loans from/to related party
Amount
due from/
Interest (to) related
received parties
Rmb’000 Rmb’000
AsiaPharm Holdings - (991)

Steward Cross 50 951
Amount
due from/
Sale Purchase (to) related
of drugs of drugs parties
2007 Rmb’000 Rmb’000 Rmb’000
AsiaPharm Holdings - - (264)

Steward Cross 49 4 44
SmartMedicine - - 1,655
WPU - 472 (556)
AsiaPharm Singapore Pte. Ltd.
(“AsiaPharm Singapore”) - - (709)
Wuhu Luye - - (307)
AsiaPharm Holdings is a company wholly owned by certain directors of the Company.
SmartMedicine is a wholly-owned subsidiary of Steward Cross.
Asiapharm Singapore is a company wholly owned by AsiaPharm Holdings.
Wuhu Luye is significantly influenced by certain directors of the Company.

37. Related party transactions (Cont’d)

Compensation of key management personnel
Group
2008 2007
Rmb’000 Rmb’000
Short-term employee benefits 5,531 4,259

Share Award Scheme 667 -
Pension 17 42
CPF 65 98
Directors’ fees 1,068 325
7,348 4,724
Comprise amounts paid to:
Directors of the Company 4,093 2,446

Other key management personnel 3,255 2,278
7,348 4,724
Remuneration of directors
The remuneration of the directors of the Company analysed into the following bands is disclosed in compliance with
Rule 1207(11) of Chapter 12 of the SGX-ST Listing Manual:
Number of directors
Executive Non-executive Total
2008
Below S$250,000 (Rmb1,227,600) 2 5 7

S$250,000 to below S$500,000
(Rmb1,227,600 to below Rmb2,455,200) 1 - 1
3 5 8
2007
Below S$250,000 (Rmb1,267,500) 1 4 5

S$250,000 to below S$500,000
(Rmb1,267,500 to below Rmb2,535,000) 1 - 1
2 4 6
Other than the foregoing, there were no other principal related party relationships where control over financial and
operating policies existed as at the balance sheet date.
In the opinion of the directors, the above related party transactions were entered into in the ordinary course of the
Group’s business and were in accordance with the terms of arrangements governing the transactions.

38. Financial risk management objectives and policies

The Group’s principal financial instruments comprise interest-bearing loans and borrowings and cash and
short-term deposits. The main purpose of these financial instruments is to raise finance for the Group’s operations.
The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise
directly from its operations.
The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, credit
risk and liquidity risk. The board of directors reviews and agrees policies for managing each of these risks and
they are summarised below.
Interest rate risk

The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other
variables held constant, of the Group’s profit before tax (through the impact on floating rate borrowings). There is no
impact on the Group’s equity.

Increase/ Increase/
(decrease) (decrease)
in basis in profit
point before tax
Rmb’000
2008
US$ 20 (97)
US$ (20) 97
2007
US$ 20 (117)
US$ (20) 117
Foreign currency risk

Foreign currency risk is the risk of loss resulting from changes in foreign currency exchange rates. Fluctuations
in exchange rates between the Renminbi and other currencies in which the Group conducts business may affect
its financial condition and results of operations. The Group seeks to limit its exposure to foreign currency risk by
minimising its net foreign currency position.
The following table demonstrates the sensitivity at the balance sheet date to a reasonably possible change in the
US$/S$/HK$ exchange rate, with all other variables held constant, of the Group’s profit before tax (due to changes
in the fair value of monetary assets and liabilities) and the Group’s equity (due to changes in fair value of forward
currency contracts).

38. Financial risk management objectives and policies (Cont’d)

Foreign currency risk (cont’d)
Increase/ Increase/
(decrease) in (decrease) Increase/
US$/S$/HK$ in profit (decrease)
rate before tax in equity
% Rmb’000 Rmb’000
2008
If Renminbi weakens against US$ 5 (5,723) -
If Renminbi strengthens against US$ (5) 5,723 -
If Renminbi weakens against S$ 5 (213) (84)

If Renminbi strengthens against S$ (5) 213 84
If Renminbi weakens against HK$ 5 (534) -

If Renminbi strengthens against HK$ (5) 534 -
2007
If Renminbi weakens against US$ 5 (3,736) (201)
If Renminbi strengthens against US$ (5) 3,736 201
If Renminbi weakens against S$ 5 (68) (133)

If Renminbi strengthens against S$ (5) 68 133
If Renminbi weakens against HK$ 5 (871) -

If Renminbi strengthens against HK$ (5) 871 -
Credit risk
The Group trades mainly with recognised and creditworthy third parties. It is the Group’s policy that all customers
who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable balances are
monitored on an ongoing basis. For transactions that are not denominated in the functional currency of the relevant
operating unit, the Group does not offer credit terms without the specific approval of senior management.
The credit risk of the Group’s other financial assets, which comprise cash and cash equivalents, available-for-sale
financial assets and other receivables, arises from default of the counterparty, with a maximum exposure equal to the
carrying amount of these instruments.
Since the Group trades only with recognised and creditworthy third parties, there is no requirement for collateral.
Concentrations of credit risk are managed by customer/counterparty, by geographical region and by industry sector.
There are no significant concentrations of credit risk within the Group as the customer bases of the Group’s trade
receivables are widely dispersed in different sectors and industries.
Further quantitative data in respect of the Group’s exposure to credit risk arising from trade and other receivables
are disclosed in notes 25 and 26 to the financial statements.


Liquidity risk
The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool considers the
maturity of both its financial investments and financial assets (e.g. accounts receivable, other financial assets)
and projected cash flows from operations.
The Group maintains a balance between continuity of funding and flexibility through the use of interest-bearing
loans and borrowings.
The table below summarises the maturity profile of the Group’s financial liabilities at 31 December based on
contractual undiscounted payments.
On Less than 3 3 to 12 1 to 5
demand months months years Total
Year ended 31 December 2008 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000
Interest-bearing loans and borrowings - - 65,849 74,925 140,774

Trade payables - 11,735 - - 11,735
Accrued liabilities and other payables 6,260 48,701 - - 54,961
Due to the holding company 1,096 - - - 1,096
Due to related parties 1,519 - - - 1,519
8,875 60,436 65,849 74,925 210,085
Interest-bearing loans and borrowings - 35,000 102,278 115,781 253,059

Trade payables 800 7,453 - - 8,253
Accrued liabilities and other payables
(restated) 4,369 48,765 - - 53,134
Due to the holding company 2,839 - - - 2,839
Due to related parties 1,613 - - - 1,613
9,621 91,218 102,278 115,781 318,898
Capital Management
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and
healthy capital ratios in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions.
To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders less the fixed
deposit in banks. No changes were made in the objectives, policies or processes for managing capital during the
years ended 31 December 2008 and 2007.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Group’s
policy is to keep the gearing ratio below 40%. Net debt includes interest-bearing loans and borrowings, trade
payables, accrued liabilities and other payables, amounts due to the holding company and related parties, less


cash and cash equivalents and pledged short-term deposits. Capital includes equity attributable to the equity
holders of the parent less the net unrealised gains reserves. The gearing ratios as at the balance sheet dates were
as follows:
Group
2008 2007
Rmb’000 Rmb’000
Interest-bearing loans and borrowings 140,774 253,059

Trade payables 11,735 8,253
Accrued liabilities and other payables 54,961 53,134
Due to the holding company 1,096 2,839
Due to related parties 1,519 1,613
Less: cash and cash equivalents (118,469) (142,886)
Net debt 91,616 176,012
Equity 821,286 771,520

Net unrealised gains reserves - (371)
Total capital 821,286 771,149
Capital and net debt 912,902 947,161
Gearing ratio 10% 19%
39. Financial instruments

Fair values
The fair value of a financial instrument is the amount at which the instrument could be exchanged or settled between
knowledgeable and willing parties in an arm’s length transaction, other than in a forced or liquidation sale.
Financial instruments carried at fair value

The Group and the Company have carried all investment securities that are classified as available-for-sale investments
at their fair values as required by IAS 39, except for unlisted investments which were stated at cost (note 20).
Financial instruments whose carrying amounts approximate fair values

Management has determined that the carrying amounts of cash and short-term deposits, trade and notes
receivables, deposits and other receivables, amounts due from the holding company and related parties, trade
payables, accrued liabilities and other payables, amounts due to the holding company and related parties and
interest-bearing loans and borrowings, based on their notional amounts, reasonably approximate to their fair
values because these financial instruments are mostly short term in nature or are repriced frequently.
40. Events after the balance sheet date

There have been no material post balance sheet events which would require disclosure or adjustment to the
31 December 2008 financial statements.
41. Comparative amounts

Certain comparative amounts have been reclassified to conform to the current year’s presentation.
42. Approval of the financial statements

The financial statements were approved and authorised for issue by the board of directors on 5 March 2009.

statistics of shareholdings
as at 24 march 2009
Authorised share capital : US$100,000,000.00

Number of Issued Shares : 492,764,900
Class of Shares : Ordinary shares of US$0.02 each
Voting Rights : One vote per share
Number of Treasury Shares : Nil
% of Treasury Shares : Nil
STATISTICS OF SHAREHOLDINGS
Number of Number of
Size of Shareholding Shareholders % Shareholders %
1 - 999 8 0.75 1,501 0.00

1,000 - 10,000 747 69.88 4,584,538 0.93
10,001 - 1,000,000 307 28.72 12,508,674 2.54
1,000,001 and above 7 0.65 475,670,187 96.53
1,069 100.00 492,764,900 100.00
SUBSTANTIAL SHAREHOLDERS AS AT 24 MARCH 2009

(As recorded in the Register of Substantial Shareholders)
Direct Deemed
Interest % Interest %
LuYe Pharmaceutical Investment Co., Ltd 381,439,877 77.41 - -

LuYe Pharmaceutical International Co., Ltd (1) - - 381,439,877 77.41
Hygeia Holdings Ltd (2) - - 381,439,877 77.41
MBK Partners, L.P. (3) - - 381,439,877 77.41
Asiapharm Holdings Ltd (4) - - 381,439,877 77.41
Liu Dian Bo (5) - - 381,439,877 77.41
See Hoy Chan Investment Limited 35,000,000 7.10 - -
See Hoy Chan Equities Pte Ltd (6) - - 35,000,000 7.10
NOTES:
(1) LuYe Pharmaceutical International Co., Ltd (“LuYe International”) is the holding company of LuYe Pharmaceutical
Investment Co., Ltd (“LuYe Investment”) and deemed interested in the shares held by LuYe Investment.
(2) Hygeia Holdings Ltd (“Hygeia”) is the holding company of LuYe International and deemed interested in the shares
held by LuYe Investment.
(3) MBK Partners, L.P. is the holding company of Hygeia and deemed interested in the shares held by LuYe Investment.
(4) Asiapharm Holdings Ltd. (“Asiapharm Holdings”) has a controlling interest in LuYe International and is deemed
interested in the shares held by LuYe Investment.
(5) Liu Dian Bo has a controlling interest in Asiapharm Holdings and is deemed interested in the shares held by LuYe
Investment.
(6) See Hoy Chan Equities Pte Ltd is the holding company of See Hoy Chan Investment Limited (“See Hoy Chan
Investment”) and deemed interested in the shares held by See Hoy Chan Investment.

statistics of shareholdings (cont’d)
as at 24 march 2009
TWENTY LARGEST SHAREHOLDERS
No. Name No. of Shares %

1 LUYE PHARMACEUTICAL INVESTMENT CO., LTD 381,439,877 77.41
2 SEE HOY CHAN INVESTMENT LIMITED 35,000,000 7.10
3 DBSN SERVICES PTE LTD 20,000,000 4.06
4 DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 18,144,000 3.68
5 CITIBANK NOMINEES SINGAPORE PTE LTD 14,963,000 3.04
6 OVERSEA CHINESE BANK NOMINEES PTE LTD 5,000,000 1.01
7 DBS NOMINEES PTE LTD 1,123,310 0.23
8 BRIMA BTE OTHMAN NAYAH 350,000 0.07
9 MORGAN STANLEY ASIA (SINGAPORE) SECURITIES PTE LTD 314,000 0.06
10 KIM ENG SECURITIES PTE. LTD. 241,014 0.05
11 LOH LEE AIK 233,000 0.05
12 CHAN FOOK KHEONG 220,000 0.04
13 HENG NGEE KOON 215,000 0.04
14 PHO KELVIN ROBERT TZEE MING OR PHO WAN HENG ROBERT 212,000 0.04
15 HSBC (SINGAPORE) NOMINEES PTE LTD 203,368 0.04
16 RAINBOW HEALTH LIMITED 200,292 0.04
17 DAIWA SECURITIES SMBC SINGAPORE LIMITED 200,000 0.04
18 RIVA RICO PTE LTD 200,000 0.04
19 UOB KAY HIAN PTE LTD 200,000 0.04
20 WANG CHWOE WAH 200,000 0.04

TOTAL 478,658,861 97.12
PERCENTAGE OF SHAREHOLDING IN PUBLIC’S HANDS

Approximately 15.47 % of the Company’s shares are held in the hands of public. Accordingly, the Company has complied to
comply with Rule 723 of the Listing Manual of the SGX-ST.

notice of annual general meeting
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Luye Pharma Group Ltd. (“the Company”) will be held at
Connection 1, Level 3, Amara Singapore, 165 Tanjong Pagar Road, Singapore 088539 on Friday, 24 April 2009, at 2.00 p.m.
for the following purposes:
AS ORDINARY BUSINESS
1. To receive and adopt the Directors’ Report and the Audited Accounts of the Company for the year ended
31 December 2008 together with the Auditors’ Report thereon. (Resolution 1)
2. To re-elect the following Directors of the Company retiring pursuant to Bye-laws 85(6) and 86(1) of the Company’s
Bye-laws:
Mr Wang Xin Yu (Retiring under Bye-Law 85(6)) (Resolution 2)

Mr Kung Kuo Chuan (Retiring under Bye-Law 85(6)) (Resolution 3)
Mr Liu Dian Bo (Retiring under Bye-Law 86(1)) (Resolution 4)
Mr Yuan Hui Xian (Retiring under Bye-Law 86(1)) (Resolution 5)
Mr Yang Rong Bing (Retiring under Bye-Law 86(1)) (Resolution 6)
3. To approve the payment of additional Director’s fees of S$23,315 for the year ended 31 December 2008.
[See Explanatory Note (i)] (Resolution 7)

4. To approve the payment of Directors’ fees of S$325,000 for the year ending 31 December 2009 to be paid quarterly in
arrears. (2008: S$265,000) (Resolution 8)
5. To re-appoint Messrs Ernst & Young, Hong Kong as the Company’s Auditors and to authorise the Directors to fix their
remuneration. (Resolution 9)
6. To transact any other ordinary business which may properly be transacted at an Annual General Meeting.
AS SPECIAL BUSINESS
To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions, with or without any modifications:
7. Authority to issue shares
That pursuant to the provisions of the Companies Act 1981 of Bermuda and Rule 806 of the Listing Manual of the
Singapore Exchange Securities Trading Limited, the Directors of the Company be authorised and empowered to:
(a) (i) issue shares in the Company (“shares”) whether by way of rights, bonus or otherwise; and/or
(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might or would require
shares to be issued, including but not limited to the creation and issue of (as well as adjustments to)
options, warrants, d
ebentures or other instruments convertible into shares,
at any time and upon such terms and conditions and for such purposes and to such persons as the Directors
of the Company may in their absolute discretion deem fit; and
(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force) issue shares in
pursuance of any Instruments made or granted by the Directors of the Company while this Resolution was
in force,

notice of annual general meeting (cont’d)
provided that:
(1) the aggregate number of shares (including shares to be issued in pursuance of the Instruments, made or granted
pursuant to this Resolution) to be issued pursuant to this Resolution shall not exceed fifty per centum (50%)
of the total number of issued shares (excluding treasury shares) in the capital of the Company (as calculated
in accordance with sub-paragraph (2) below), of which the aggregate number of shares and Instruments to
be issued other than on a pro-rata basis to existing shareholders of the Company shall not exceed twenty per
centum (20%) of the total number of issued shares (excluding treasury shares) in the capital of the Company (as
calculated in accordance with sub-paragraph (2) below);
(2) (subject to such calculation as may be prescribed by the Singapore Exchange Securities Trading Limited) for the
purpose of determining the aggregate number of shares that may be issued under sub-paragraph (1) above, the
total number of issued shares (excluding treasury shares) shall be based on the total number of issued shares
(excluding treasury shares) in the capital of the Company at the time of the passing of this Resolution, after
adjusting for:
(a) new shares arising from the conversion or exercise of any convertible securities;
(b) new shares arising from exercising share options or vesting of share awards which are outstanding or
subsisting at the time of the passing of this Resolution; and
(c) any subsequent bonus issue, consolidation or subdivision of shares;
(3) the 50% limit in sub-paragraph (1) above may be increased to 100% for the Company to undertake pro-rata
renounceable rights issues;
(4) in exercising the authority conferred by this Resolution, the Company shall comply with the provisions of the
Listing Manual of the Singapore Exchange Securities Trading Limited for the time being in force (unless such
compliance has been waived by the Singapore Exchange Securities Trading Limited) and the Bye-Laws of the
Company; and
(5) unless revoked or varied by the Company in a general meeting, such authority shall continue in force until the
conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General
Meeting of the Company is required by law to be held, whichever is earlier.
[See Explanatory Note (ii)]
(Resolution 10)
8. Authority to issue shares other than on a pro-rata basis pursuant to the aforesaid share issue mandate at discounts
not exceeding twenty per centum (20%) of the weighted average price for trades done on the SGX-ST.
That subject to and pursuant to the aforesaid share issue mandate being obtained, the Directors of the Company be
hereby authorised and empowered to issue shares other than on a pro-rata basis at a discount not exceeding twenty
per centum (20%) to the weighted average price for trades done on the SGX-ST for the full market day on which the
placement or subscription agreement in relation to such shares is executed (or if not available for a full market day, the
weighted average price must be based on the trades done on the preceding market day up to the time the placement
or subscription agreement is executed), provided that :
(a) in exercising the authority conferred by this Resolution, the Company complies with the provisions of the
Listing Manual of the SGX-ST for the time being in force (unless such compliance has been waived by the SGX-
ST); and
(b) unless revoked or varied by the Company in general meeting, such authority shall continue in force until the
conclusion of the next Annual General Meeting of the Company or the date by which the next Annual General
Meeting of the Company is required by law to be held, whichever is earlier.
[See Explanatory Note (iii)]
(Resolution 11)

9. Authority to issue shares under the AsiaPharm Share Award Scheme
That the Directors of the Company be authorised and empowered to offer and grant awards in accordance with the
provisions of the AsiaPharm Share Award Scheme (the “Share Award Scheme”) and to issue from time to time such
number of fully-paid shares in the Company as may be required to be issued pursuant to the vesting of the awards
under the Share Award Scheme provided always that the aggregate number of shares to be issued pursuant to the
Share Award Scheme shall not exceed fifteen percent (15%) of the total number of issued shares (excluding treasury
shares) in the capital of the Company from time to time.
[See Explanatory Note (iv)]
(Resolution 12)
10. Renewal of Share Purchase Mandate
That the Directors of the Company be and are hereby authorised to make purchases or otherwise acquire issued
shares in the capital of the Company from time to time (whether by way of market purchases or off-market purchases
on an equal access scheme) of up to ten per centum (10%) of the total number of issued shares (excluding treasury
shares) in the capital of the Company (as ascertained as at the date of Annual General Meeting of the Company) at
the price of up to but not exceeding the Maximum Price as defined in the Letter to Shareholders dated 8 April 2009 as
attached, and this mandate shall, unless revoked or varied by the Company in general meeting, continue in force until
the earliest of (i) the date on which the next Annual General Meeting of the Meeting is held or required by law to be
held; or (ii) the date on which the share purchases are carried out to the full extent mandated.
[See Explanatory Note (v)]
(Resolution 13)
By Order of the Board
Yeo Poh Noi, Caroline

Company Secretary
Singapore, 8 April 2009
Explanatory Notes:
(i) Messrs Wang Xin Yu and Kung Kuo Chuan were appointed as Non-Executive Directors of the Company on 11 August 2008.
Subject to approval at the Annual General Meeting, the additional Director’s fees of S$23,315 for the year ended 31
December 2008 are payable to Messrs Wang Xin Yu and Kung Kuo Chuan.
(ii) The Ordinary Resolution 10 in item 7 above, if passed, will empower the Directors of the Company, effective until
the conclusion of the next Annual General Meeting of the Company, or the date by which the next Annual General
Meeting of the Company is required by law to be held or such authority is varied or revoked by the Company in a
general meeting, whichever is the earlier, to issue shares, make or grant instruments convertible into shares and to
issue shares pursuant to such instruments, up to a number not exceeding, in total, 50% of the total number of issued
shares (excluding treasury shares) in the capital of the Company, of which up to 20% may be issued other than on a
pro-rata basis to shareholders. The 50% limit referred to in the preceding sentence may be increased to 100% for the
Company to undertake pro-rata renounceable rights issues.

For determining the aggregate number of shares that may be issued, the total number of issued shares (excluding
treasury shares) will be calculated based on the total number of issued shares (excluding treasury shares) in the
capital of the Company at the time this Ordinary Resolution is passed after adjusting for new shares arising from the
conversion or exercise of any convertible securities or share options or vesting of share awards which are outstanding
or subsisting at the time when this Ordinary Resolution is passed and any subsequent bonus issue, consolidation or
subdivision of shares.
The 100% renounceable pro-rata rights issue limit is one of the new measures implemented by the SGX-ST as stated
in a press release entitled “SGX introduces further measures to facilitate fund raising” dated 19 February 2009 and
which became effective on 20 February 2009. It will provide the Directors with an opportunity to raise funds and avoid
prolonged market exposure by reducing the time taken for shareholders’ approval, in the event the need arises. Minority
shareholders’ interests are mitigated as all shareholders have equal opportunities to participate and can dispose their
entitlements through trading of nil-paid rights if they do not wish to subscribe for their rights shares. It is subject to the
condition that the Company makes periodic announcements on the use of the proceeds as and when the funds are
materially disbursed and provides a status report on the use of proceeds in the annual report.
(iii) The Ordinary Resolution 11 in item 8 above is pursuant to measures implemented by the SGX-ST as stated in a press
release entitled “SGX introduces further measures to facilitate fund raising” dated 19 February 2009 and which became
effective on 20 February 2009. Under the measures implemented by the SGX-ST, issuers will be allowed to undertake
non pro-rata placements of new shares priced at discounts of up to 20% to the weighted average price for trades
done on the SGX-ST for a full market day on which the placement or subscription agreement in relation to such
shares is executed, subject to the conditions that (a) shareholders’ approval be obtained in a separate resolution (the
“Resolution”) at a general meeting to issue new shares on a non pro-rata basis at discount exceeding 10% but not
more than 20%; and (b) that the resolution seeking a general mandate from shareholders for issuance of new shares
on a non pro-rata basis is not conditional upon the Resolution.
It should be noted that under the Listing Manual of the SGX-ST, shareholders’ approval is not required for placements
of new shares, on a non pro-rata basis pursuant to a general mandate, at a discount of up to 10% to the weighted
average price for trades done on the SGX-ST for a full market day on which the placement or subscription agreement
in relation to such shares is executed.
(iv) The Ordinary Resolution 12 proposed in item 9 above, if passed, will empower the Directors of the Company from
the date of this Meeting until the next Annual General Meeting, to offer and grant awards under the AsiaPharm Share
Award Scheme (the “Share Award Scheme”) in accordance with the provisions of the Share Award Scheme and to issue
from time to time such number of fully-paid shares as may be required to be issued pursuant to the vesting of the
awards granted under the Share Award Scheme provided always that the aggregate number of shares to be issued
pursuant to the Share Award Scheme shall not exceed 15% of the total number of issued shares (excluding treasury
shares) in the capital of the Company from time to time. The Share Award Scheme was adopted at the Special General
Meeting held on 25 April 2007.
(v) The Ordinary Resolution 13 proposed in item 10 above, if passed, will empower the Directors from the date of the
above Meeting until the earliest of (i) the date on which the next Annual General Meeting of the Meeting is held or
required by law to be held; (ii) the date on which the share purchases are carried out to the full extent mandated; or
(iii) the time when the authority conferred by this mandate is revoked or varied by Shareholders in general meeting
to repurchase ordinary shares of the Company by way of market purchases or off-market purchases of up to 10% of
the total number of issued shares (excluding treasury shares) in the capital of the Company at the Maximum Price
(as defined in the Letter to Shareholders as attached). The rationale for, the authority and limitation on, the sources
of funds to be used for the purchase or acquisition including the amount of financing and the financial effects of the
purchase or acquisition of ordinary shares by the Company pursuant to the Share Purchase Mandate on the audited
consolidated financial accounts of the Group for the financial year ended 31 December 2008 are set out in greater
detail in the Letter to Shareholders dated 8 April 2009 attached to this Annual Report.

Notes
1. A Member (other than a Member which is The Central Depository (Pte) Limited (the “Depository”)) entitled to attend
and vote at the Annual General Meeting (the “Meeting”) is entitled to appoint not more than two proxies to attend
and vote in his/her stead. A proxy need not be a Member of the Company.
2 A Depositor who is a natural person need not submit the Depositor Proxy Form if he is attending the Meeting in
person.
3. Where a Depositor(s) is a corporation and wishes to be represented at the Meeting, it must nominate an Appointee/
Appointees to attend and vote as a proxy of the Depository at the Meeting in respect of the number of the
Depositor(s) Shares.
4. A Depositor(s) may nominate not more than two Appointees, who shall be natural persons, to attend and vote in
his/her/its place as proxy of the Depository in respect of the number of the Depositor(s) Shares by completing the
Depositor Proxy Form and deposit the duly completed Depositor Proxy Form at the office of the Singapore Share
Transfer Agent, Boardroom Corporate & Advisory Services Pte. Ltd. at 3 Church Street #08-01, Samsung Hub, Singapore
049483, at least forty-eight (48) hours before the time of the Meeting.

Luye Pharma Group Ltd.
133 Cecil Street, #12-02, Keck Seng Tower, Singapore 069535
Tel: (65) 6220 0119 Fax: (65) 6220 0282
Website: www.asiapharm.biz

AsiaPharm Group Annual Report 2008

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Luye Pharma Group LTD.

ANNUAL REPORT 2008 1

ANNUAL REPORT 2008 1

ANNUAL REPORT 2008 1

2 Luye Pharma Group Ltd

Shandong Luye Pharmaceutical Co., Ltd.

Nanjing Kanghai Pharmaceutical Co., Ltd.

ANNUAL REPORT 2008 3

4 Luye Pharma Group Ltd.

ANNUAL REPORT 2008 5

6 Luye Pharma Group Ltd.

Mr Liu Dian Bo Mr Yuan Hui Xian Mr Yang Rong Bing

8 Luye Pharma Group Ltd.

Mr Tan Soo Kiat Associate Professor Dr Hong Hai

ANNUAL REPORT 2008 9

Mr Kung Kuo Chuan Mr Wang Xin Yu

Mr Kung Kuo Chuan is our Non-Executive Mr Wang Xin Yu is our Non-Executive

10 Luye Pharma Group Ltd.

Mr Diao Hai Peng Mr Chong Chin Fan Dr Li You Xin

ANNUAL REPORT 2008 11

Ms Xue Yun Li Mr Fan Zhi Cheng Mr Li Shi Xu

12 Luye Pharma Group Ltd.

Luye Pharma Group Ltd.

43% AsiaPharm Investments Ltd. AsiaPharm Biotech Pte. Ltd.

Shandong Luye Solid Success SmartMedicine Steward Cross

* All 100% owned, unless otherwise stated

ANNUAL REPORT 2008 13

14 Luye Pharma Group Ltd.

New milestones in R&D

ANNUAL REPORT 2008 15

16 Luye Pharma Group Ltd.

Maitongna Lutingnuo Nuosen

Okai Sidinuo Olai

ANNUAL REPORT 2008 17

Year ended 31 December (Rmb Million)

5-Year Revenue 5-Year Profit After Tax and Minority Interests

18 Luye Pharma Group Ltd.

Sales of Pharmaceutical Drugs

Sales of Active Ingredients

ANNUAL REPORT 2008 19

20 Luye Pharma Group Ltd.

In line with the continued revenue

ANNUAL REPORT 2008 21

22 Luye Pharma Group Ltd.

ANNUAL REPORT 2008 23

Board of Directors Manufacturing Facilities

24 Luye Pharma Group Ltd.

BOARD OF DIRECTORS (Principles 1, 2, 3 and 6)

Directors Designation Date First Appointed Date Last Re-elected

ANNUAL REPORT 2008 25

26 Luye Pharma Group Ltd.

REMUNERATION COMMITTEE (Principles 7 and 8)

ANNUAL REPORT 2008 27

DISCLOSURE ON REMUNERATION (Principles 8 and 9)

28 Luye Pharma Group Ltd.

Remuneration of Top 5 Key Executives who are not Directors

AUDIT COMMITTEE (Principle 11)

The key responsibilities of the AC include the following:

• To review and recommend the re-appointment of the external auditors; and

ANNUAL REPORT 2008 29

INTERNAL CONTROLS AND INTERNAL AUDIT (Principles 12 and 13)

COMMUNICATION WITH SHAREHOLDERS (Principles 10, 14 and 15)

DEALINGS IN THE COMPANY’S SECURITIES