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1 Annual Results 2005 March 2006. 2 Content Major Accomplishments in 2005 Financial Highlights Business Review Future Plans and Strategies.

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Presentation on theme: "1 Annual Results 2005 March 2006. 2 Content Major Accomplishments in 2005 Financial Highlights Business Review Future Plans and Strategies."— Presentation transcript:

1 1 Annual Results 2005 March 2006

2 2 Content Major Accomplishments in 2005 Financial Highlights Business Review Future Plans and Strategies

3 3 Major Accomplishments in 2005

4 4 Trademark recognised as a Well-Known Trademark, the ONLY medical device company with the recognition Formed Weigao Bone for R&D, production and sale of orthopedic products. Orthopedic products launched in 4Q well received by the market Weigao Blood formed Weigao Huading to produce dialysis products Successfully developed world class drug eluting heart stent and obtained product registration certificate in Dec 2005

5 5 Major Accomplishments in 2005 (Contd) Weigao became the 1 st company to obtain both patent for pre-filled syringes in the PRC and registration certificate in Nov 2005 Successfully developed non-PVC based materials which is classified as 2005 State Torch Plan – Hi-tech Industry Model Project by the Ministry of Science and Technology Needle production capacity reached 3 billion pcs per annum Placement of 52,900,000 new H shares in Nov 2005

6 6 Shareholders of H shares** 59.88%32.87% Latest Group Structure * Weigao Holding is held by 14 holders and the largest shareholder is Mr. Chen Xue Li who holds 30% shares of Weigao Holding ** Including over 10 well-known investment funds Senior Management 7.25% 4% 96% Jierui Subsidiary JW Medical 50% Weigao Jinbao 51%51% 70% Weigao Bone Weigao Mould Weigao Huading 53% 90% 51.6% The Company Weigao Blood Weigao Holding* Fuzhou Fanzhun 95%

7 7 Financial Highlights

8 8 Results Summary Gross margin and net margin improved: Increased in the proportion of high value added products Enhanced operation efficiency For the year ended 31 Dec 2005 For the year ended 31 Dec 2004 Change RMB m Turnover570.0407.8+39.8% Gross profit234.3163.0+43.7% - Conventional products144.8110.5+ 31.1% - High value added products89.452.5+ 70.3% Gross profit margin41.1%40.0%+ 1.1 pts - Conventional products33.2%33.6%- 0.4 pts - High value added products67.1%66.2%+ 0.9 pts Operating profit121.681.7+ 48.8% - Operating profit margin21.3%20.0%+ 1.3 pts Net profit101.265.9+ 53.6% - Net profit margin17.8%16.2%+ 1.6 pts

9 9 High Growth in Turnover and Net Profit 02 – 05 CAGR of Turnover: 27.0% 02 – 05 CAGR of Net Profit: 32.5% 278.2 43.5 317.9 50.5 407.8 65.9 570.0 101.2 RMB million For the year ended 31 December

10 10 Turnover Breakdown by Products - High Value-added Products/Conventional Products High value-added products Turnover Gross Profit Margins 36.8 38.9 33.6 61.2 62.2 66.2 Conventional products 67.1 33.2

11 11 Turnover Breakdown by Products For the year ended 31 Dec 20052004 ProductsRMB m% to turnoverRMB m% to turnoverChange Self-produced products Infusion sets187.732.9150.436.9+ 24.9% Syringes156.827.5135.433.2+ 15.8% Blood bags73.612.943.010.5+ 71.1% Dental & anaesthetic products9.91.77.71.9+ 28.6% Blood sampling products10.21.85.61.4+ 82.0% PVC granules49.68.736.79.0+ 35.1% Needles18.03.24.21.0+326.4% Other products33.35.824.86.1+ 34.4% Trading Medical instruments29.65.20.0 -- Other products1.20.30.10.0-- Total570.0100.0407.8100.0+39.8%

12 12 Turnover Breakdown by Geographical Regions For the year ended 31 Dec 20052004 RegionsRMB m% to turnoverRMB m% to turnoverChange Northeastern China118.820.980.319.7+ 47.9% Northern China144.225.3116.128.5+ 24.2% Eastern and Central China 147.125.8110.927.2+ 32.7% Southwestern China30.45.320.65.0+ 47.6% Northwestern China20.33.615.53.8+ 30.5% Southern China73.612.947.311.6+ 55.7% Overseas*35.66.217.14.2+ 108.2% Total570.0100.0407.8100.0+ 39.8% * Over 30 countries including US, Germany, Romania, Australia and UK

13 13 Cost Analysis For the year ended 31 Dec % to turnover 20052004% change20052004 RMB m Raw materials - PVC/PP/PE/ABS 86.3 72.5+19.015.117.8 - Others 135.2 88.9+52.123.721.8 Staff costs 73.4 56.3+30.412.913.8 Depreciation 23.9 14.9+59.84.23.7 Other operating expenses 144.4 102.5+40.925.325.1 - Distribution cost*63.944.7+43.111.210.9 - Administration cost*23.618.2+29.74.14.5 - Others (Production cost)56.939.6+43.710.09.7 463.2335.1+38.2 *excluding staff costs and depreciation

14 14 Balance Sheet As at 31 Dec 2005 As at 31 Dec 2004Change RMB m Non-current assets* 584.9 375.2+ 55.9% Current assets** 547.3 360.8+ 51.7% Cash and bank balances 171.6 111.7+ 53.6% Capital and reserves 566.4 368.6+ 53.7% Bank and other borrowing*** 337.9 253.3+ 33.4% * The increase in non-current assets was mainly resulted from the increase of the Groups new investment in machinery and production facilities ** The increase in current assets was mainly resulted from the proceeds received for the placing of new H shares and the significant increase in the Groups turnover in 2005 *** The increase in the bank and other loans was mainly resulted from the expansion of the Companys production and operation

15 15 Other Financial Figures As at 31 Dec 2005As at 31 Dec 2004 Current ratio1.691.71 Net debts to equity ratio29.4%38.4% Acid ratio1.321.39 ROE17.9% For the year ended 31 Dec 2005 For the year ended 31 Dec 2004 Inventory turnover (days)*10292 Account receivable (days)106105 Final dividend (RMB/share)2 cents1.3 cents Total Dividend for the year (RMB/share)3 cents2 cents * The increase of the inventory turnover days was mainly due to the Companys more stringent quality control procedures, its expansion in its sales network and the increase in the total number of products it carries

16 16 Business Review

17 17 Product Diversification to High-end Area Major Products Orthopedic Products -Medulla nail -Steel plate -Bone connecting screw -Spine fixing products Blood Purification i) Products - Dialyzers - Adsorption column ii) Service - To establish blood purification centers Consumables - Syringes - Blood bags - Infusion sets - Needles - Dentals Medication Package Material - Pre-filled syringes Stents - Drug eluting heart stent - Catheters - Other stents (under development)

18 18 Increasing Production Scale For the year ended 31 Dec ProductsUnit20052004% Change Infusion setsPieces209,110,000183,500,000+ 14.0 Blood transfusion consumablesSets10,440,0008,610,000+ 21.3 SyringesPieces310,690,000281,240,000+ 10.5 Dental & anaesthetic productsSets1,820,0001,630,000+ 11.7 Blood sampling productsPieces35,470,00018,480,000+ 91.9 PVC granulesTons9,4767,607+ 24.6 - PVC granules for medical usesTons3,7023,279+ 12.9 Needle productsPieces951,980,000487,170,000+ 95.4 Other productsSets48,830,00034,140,000+ 43.0

19 19 Expanding Customer Base CategoryTotal no. in the PRC No. of customers as at 31 Dec 2004 No. of new customers in 2005 No. of customers as at 31 Dec 2005 % ChangeCurrent coverage Hospital - Grade 3 (Top tier) - Grade 2 >=100 beds - Grade 1 >=20 beds 934 5,173 2,673 2,373 712 1,145 293 356 71 183 102 2,729 783 1,328 395 + 15.0 + 10.0 + 16.0 + 34.8 84% 26% 15% Blood centre57636535400+ 9.669% Other medical units9,614611112723+ 18.38% Trading company1,2732551,528+ 20.0 Total4,6227585,380+ 16.4 Source: and Weigao

20 20 Expanding Sales Network As at 31 Dec 2005 As at 31 Dec 2004 % Change Sales office1512+25 Customer service centre2018+11 No. of cities with sales representatives10574+42 No. of sales staff (note 1)636345+84.3 Note 1: Increase in sales staff due to launching new projects and enlarging sales network

21 21 New Product Development CategoryNo. of products as at 31 Dec 2005 New products With patents589 Under application for relevant patents 16 With registration certificates11031 Under application for registration certificates 17

22 22 Future Plans and Strategies

23 23 Corporate Strategies – 3 Enhancement and 1 Expansion 3 Enhancement:- Strive to develop high-tech products Increase the proportion of high value-added products Strengthen services to high-end customers 1 Expansion:- Expansion in market share of conventional products

24 24 Future Plans and Strategies High-end Market Orthopedic Products PRC market size: RMB8.8 billion Intensive marketing in 2006 Pre-filled syringes PRC market size: over 30 million pcs World market size: 3 billion to 3.5 billion pcs Blood purification To establish dialysis centre in the PRC Drug eluting stent PRC market size: approx. 100,000 pcs per annum Expand overseas market in SE Asia Consumable Market Pursue M&A opportunities

25 25 Future Plans and Strategies Pursue Strategic Alliance with International leading industry players:- What Weigao can do:- OEM for partner Sales of partners product through Weigaos nationwide sales network What partner can do:- Sales of Weigaos products overseas Objective: Leading medical device manufacturer in Asia


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