HONG KONG, May 31, 2012 /PRNewswire-Asia/ -- Shanghai Pharmaceuticals Holding Co., Ltd. ("Shanghai Pharmaceuticals Group" or the "Company" and, together with its subsidiaries, the "Group; stock code: 601607.SH; 2607.HK), today called its 2011 annual general meeting (AGM). The number of attendees reached 140. The shareholders passed all the 17 resolutions including the election of Zhou Jie as Board Director, Zhang Zhenbei as the Company's supervisor, Li Zhenfu as Independent Non-executive Director (INED) and the adjustment of the use of proceeds from the H-share listing and the profit allocation proposal of 2011.
New Appointment: SIIC's Executive Director May Become Chairman of Shanghai Pharmaceuticals Group
A change in the Board of Directors attracted special attention among the 17 resolutions passed today. Zhou Jie, President of Shanghai Industrial Investment (Holdings) Co., Ltd. ("SIIC", the controlling shareholder of Shanghai Pharmaceuticals Group) and former Supervisor of Shanghai Pharmaceuticals Group, has been appointed Director of the Company. He is expected to become the new Chairman of Shanghai Pharmaceuticals Group after gaining approval at the AGM for joining the board. Zhou Jie has previously been the Executive Vice President of SIIC, Deputy Chief Executive Officer of Shanghai Industrial Holdings Limited and Chairman and General Manager of Shanghai SIIC Asset Management Co., Ltd. The move shows that SIIC greatly values and supports Shanghai Pharmaceuticals Group.
As the only dual-listed company of SIIC, Shanghai Pharmaceuticals Group has the largest contribution to the revenue of SIIC with the biggest number of employees and the largest coverage of services. Moreover, the Shanghai government proposed an "innovation-driven transition" strategy during the 12th Five-year Plan period. As an emerging industry, the pharmaceutical sector is embracing the five crucial years. Amid major changes in China's pharmaceutical market, Shanghai Pharmaceuticals Group and SIIC consider business growth and shareholder value maximization as their mission. How to implement the strategy by consolidating and coordinating business segments, reasonably allocating resources and making use of team spirit will become an important part of the Chairman's duties in the future.
As the Supervisor of the former A-share listed company Shanghai Industrial Pharmaceutical Investment Co. Ltd. (stock code 600607.SH) and the Director of Chiatai Qingchunbao Pharmaceutical Co., Ltd., a subsidiary of Shanghai Pharmaceuticals Group, Zhou Jie is good at operational management in pharmaceutical companies. He worked for renowned investment banks and put forward the capitalization of the former listed company SIIC Medical Science and Technology (stock code: 8018.HK) after joining SIIC. The new appointment will bring Shanghai Pharmaceuticals Group to a new height in terms of corporate and capital operations. According to Zhou Jie, Shanghai Pharmaceuticals Group will continue to focus on the following areas:
First, develop a corporate culture. "Innovation, cooperation and respect" will be the major principle in the corporate culture of Shanghai Pharmaceuticals Group. Internal cohesion and external competitiveness will be enhanced to clear up speculations of conflict within Shanghai Pharmaceuticals Group. As the establishment of a corporate culture takes time, Shanghai Pharmaceuticals Group will instill the principle across operations to achieve this goal.
Second, strengthen the M&A team. Shanghai Pharmaceuticals Group spent nearly RMB5 billion in several M&A deals in 2011. This year Shanghai Pharmaceuticals Group will increase efforts in M&As of manufacturing businesses, and a dedicated M&A team is thus the key to success.
Third, step up R&D efforts. R&D is a driver of the pharmaceutical industry and Shanghai Pharmaceuticals Group has always focused on this area. According to its 2011 annual report, among the 10 major national science and technology projects for the development of major new drugs in the 11th Five-year Plan undertaken by Shanghai Pharmaceuticals Group, the first two batches of projects were accepted and granted special funds. There were also more approvals for a number of drugs and projects under development. This year Shanghai Pharmaceuticals Group plans to allocate over 4% of manufacturing revenue to R&D, a leading level compared to its domestic peers. It will also further collaborate with R&D institutes at home and overseas to seek opportunities for new products and broaden its horizon.
Former President of Novartis China Named INED
Li Zhenfu was appointed Independent Non-executive Director of the Company at the AGM.
Li Zhenfu has a bachelor degree of science from Beihang University and a master degree of science from Illinois Institute of Technology in the United States of America. He is the founder and currently the CEO of GL Capital Group.
Between 2004 and 2010, Li Zhenfu was the President of Novartis China, a leading enterprise in global pharmaceutical and consumer health industry. During his tenure, Li achieved significant contribution to Novartis for the growth and development in the China market. With the engagement of Li as the Independent Non-executive Director, the Company will rely on his professional knowledge in the pharmaceutical industry as well as corporate and capital operation, thus providing more valuable and independent judgments and opinions for the future operation and development of Shanghai Pharmaceuticals Group.
New Supervisor: Aiming at Optimizing Human Resources
Zhang Zhenbei was also elected as Supervisor of the Company at the annual general meeting.
Zhang was the Assistant President of Shanghai Industrial Investment (Holdings) Co. Ltd. and the Vice Executive President of Shanghai Industrial Holdings Limited. Since January 2010, he has been the Vice President of Shanghai Shangshi (Group) Co., Ltd. He had held the positions of Deputy Director for personnel training of Shanghai Foreign Economic Relations & Trade Commission, Personnel Director of Shanghai Overseas Company, Vice President of Shanghai International Holding Corp. GMBH (Europe) and Vice President of Shanghai Overseas Company. He possesses substantial experience in human resources management. Zhang also held the position of Secretary of the Party committee in Shanghai Pharmaceuticals Group, facilitating the Company in the planning, coordination and allocation of human resources.
The new appointment will strengthen the human resources management and team building of the Company and further enhance human resources development and allocation, facilitating the Company to realize strategic advancement and boost profit. This demonstrated the Company's efforts and determination to strengthen its internal management and establish a strong team.
Annual Dividend: RMB1.6 for Every 10 Shares
The profit scheme of 2011 approved at the AGM has been widely recognized by the investors. The Group proposes distributing cash bonus RMB1.6 (included tax) for every 10 shares to shareholders based on the total number of share capital of 2.68 billion shares as at 31 December 2011, which amounted to a total of RMB430 million of cash bonus. The amount represents 21.07% of profit after tax. The Group has adhered to the cash dividend tradition.
Figures show that, since the Group entered the capital market in 1994, the Group distributed RMB2.18 cash bonus (including tax) for every 10 shares to shareholders. Since then, cash dividend has become a key part of the Group's dividend distribution. In 2010, the Group completed its listing and continued the cash dividend policy of distributing RMB1.4 (including tax) for every 10 shares.
Listed for nearly 20 years, the Group has completed 16 cash dividend distributions with large payout ratios. In addition to the cash dividend policy, the Group also implemented other dividend policies such as capital reserve increase, bonus share etc. showing a strong and sustainable dividend distribution capacity, high profitability and the great importance attached to the returns for shareholders. This is uncommon in the capital market where financing is of greater weight than returns.
As new dividend policies and investment concepts are becoming mature in the A-share market, investors will focus more on the dividend distribution capacity of companies. A company with a sustainable dividend distribution capacity like Shanghai Pharmaceuticals Group will be well received by more investors.
Adjustment to Use of Proceeds and Investment Projects - Strengthen Pharmaceutical Manufacturing and Distribution Business
According to the 2011 annual report, the Group's pharmaceutical business grew steadily and the sales revenue amounted to RMB9.088 billion, representing a growth of 8.47% year-on-year. The Group also recorded robust growth in its pharmaceutical distribution business, with the sales revenue of RMB46.530 billion, up 57.08% year-on-year. Strengthening pharmaceutical manufacturing and distribution, the two major businesses, has become an important strategy of enhancing profitability and core competitiveness.
Today's AGM has passed the proposal of the adjustment of use of proceeds from the H Share listing. To adapt to changes in the pharmaceutical industry, the Group will further invest in pharmaceutical manufacturing and distribution in line with the overall development plan.
The Group has increased the proportion of investment in strengthening the distribution network and consolidating the existing distribution network from 40% to 46% and increased the investment by HK 929 million to further expand the distribution network coverage based on its major presence in eastern, northern and southern China. The Group also increased the proportion of investment in the strategic acquisitions of domestic and overseas pharmaceutical manufacturing business and the internal consolidation of existing manufacturing business from 30% to 39% and increased the investment by HK1.39 billion to further strengthen the acquisition of manufacturing business, new business development and internal consolidation and enhancement of capital structure. The Group will also reduce the costs of technology and operation.
The board reshuffle has created new momentum for the Group. The adjustment of use of proceeds is in line with the future development of the Group. Therefore, the Group is confident in strengthening profitability and enhancing core competitiveness along with the implementation of new strategies, new management team and new use of proceeds.
About Shanghai Pharmaceuticals Holding Co., Ltd.
Shanghai Pharmaceuticals is the only integrated pharmaceutical company in the PRC that has leading positions in both pharmaceutical product and distribution markets. It was China's second-largest pharmaceutical distributor and third-largest pharmaceutical producer in terms of revenue from the pharmaceutical business in 2009. The Group adopts an integrated vertical business model and provides solutions in pharmaceutical manufacturing, distribution, logistics storage and retail.
Disclaimer:
This Press Release is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for securities of Shanghai Pharmaceuticals.
