7081 - 0341389667530

Annual Report

PHARM

ANIAGA BERH

AD 467709-M AN

NUAL REPO

RT 2014

PHARMANIAGA BERHAD (467709-M) No 7, Lorong Keluli 1BKawasan Perindustrian Bukit Raja SelatanSeksyen 740000 Shah AlamSelangor Darul EhsanMalaysia

Tel : +603 3342 9999Fax : +603 3341 7777

www.pharmaniaga.com

At a Glance

n At a Glancen About Pharmaniagan Five-Year Financial Highlights n Corporate Information n Financial Calendar n Board of Directorsn ProfileofDirectorsn Senior Management Team n Awards n Chairman’s Statement n Managing Director’s Review n Operations Review n Corporate Values

12689

1012182328344052

n Statement on Corporate Governance 60n Statement on Risk Management and

Internal Control 72n Audit Committee Report 80n Statement of Directors’ Responsibility

for Preparation of Financial Statements 85n Financial Statements 86n Additional Disclosures 184n Analysis of Shareholdings 185 n Distribution of Shareholdings 185 n 30 Largest Shareholders 185 n Substantial Shareholders 187 n Directors’ Shareholdings 187n Group Property List 188n Group Corporate Directory 192n Notice of Annual General Meeting 194n Statement Accompanying Notice of

Annual General Meeting 197

*Form of Proxy

Inside This Report

EBITDA

RMMILLION191

12% year-on-year jump

Revenue

RMBILLION2.1

9% year-on-year growth

ProfitAfterTax

RMMILLION94

6.1% dividend yield on closing price at year end

ProfitBeforeTax

MILLION126

2013 : RM 93 million

RM

RATIONALE

The seamless strokes of lines on the cover embodies the interlacing elements of our key businesses, breakthrough research, compliant processes and passionate people.

We at Pharmaniaga are Surging Ahead with our commitment to ensuring swift delivery of our products and services to customers everywhere!

Total Assets

RMBILLION1.2

12% growth year-on-year

Acquisition

RMMILLION74

Completed on 18 February 2014

Key Developments 2014

n 75% equity acquired in PT Errita Pharma

n MS2424:2012 Halal certification for SungaiPetaniandPuchongplants

n Sevennewproductsregistered

n 12 new health supplements launchedundertheCitrexproductrange

n 62productswithbioequivalencestatus

n Three new RoyalePharma pharmacyoutlets

Employees

2,972Total workforce

Dividend

28SEN

2013: 16 sen

2014 Annual Report1

Pharmaniaga Berhad,oneofthelargestintegratedlocal healthcare companies in Malaysia, is apublic listed company on themainmarket of theBursaMalaysiaSecuritiesBerhad. Pharmaniaga’sprincipalactivitiesincludemanufacturingofgenericpharmaceuticals, logistics & distribution, sales &marketing, supply ofmedical products& servicesincluding hospital equipment and communitypharmacy.

The essence of Pharmaniaga is the seamlessamalgamationof theseareasofbusinesses. Theintegrated group of companies, processes andpeople uphold its commitment to deliver qualityproductsandservicesatalltimes.

Committedtoenrichinglifetogether,Pharmaniagaisdrivenbyitspassionforpatientsandguidedbyitsphilosophyofdoingbusinesswithconscienceinitsjourneytowardsbecomingaglobaltotalintegratedhealthcaresolutionsprovider.

About Pharmaniaga

2

Thepreferredpharmaceuticalbrandinregionalmarkets

Providequalityproductsandsuperiorservicesbyprofessional,committedandcaringemployees

Our Vision

Our Mission

Our Core Values

Respect

Integrity

Teamwork

Excellence

2014 Annual Report

Pantone Color: Orange Pantone 1375C Dark Blue Pantone 281C

CMYK Color: Orange : M = 40 Y = 90 Dark Blue: C = 100 M = 72 Y = 32

3

DEVELOPMENT THROuGH DISCOVERY

With a focus towards innovation, our

research and development teams

continue to push boundaries to

create breakthrough pharmaceutical

products using leading science and

technological platforms.

FIVE-YEAR FINANCIAL HIGHLIGHTS

AllfiguresareinRMMillionunlessotherwisestated 2014 2013 2012 2011 2010

FINANCIAL PERFORMANCE

Revenue 2,122.9 1,946.6 1,812.3 1,521.0 1,378.3

Profitbeforetaxation 125.6 93.0 103.3 73.2 45.5

Profitaftertaxation 94.2 56.8 63.2 52.8 30.3

Netattributableprofit 93.8 55.2 61.7 52.2 30.4

Earningspershare sen 36.2 21.3 23.8 20.2 11.7

Returnonequity % 18.5 11.5 13.2 11.8 7.1

Returnonassets % 12.0 9.2 10.0 8.0 6.1

Returnonrevenue % 6.6 5.5 6.5 5.1 3.6

DIVIDENDS

Dividendpayout % 77.2 75.1 66.8 61.1 26.3

Dividendpayment 72.5 41.5 41.2 31.9 8.0

Netdividendpershare sen 28.0 16.0 15.9 12.3 3.1

Dividend yield % 6.1 3.6 4.3 4.7 1.4

Dividendcover times 1.3 1.3 1.5 1.6 3.8

GEARING

Borrowings 201.1 199.9 341.0 188.3 33.1

Gearing times 0.4 0.4 0.7 0.4 0.1

Interestcover times 8.4 7.3 7.9 18.6 12.2

OTHER FINANCIAL STATISTICS

Netassetspershare sen 203 188 182 180 163

Priceearningratio times 12.6 20.9 15.4 13.3 21.1

Paidupsharecapital 129.4 129.4 117.7 117.7 107.0

Shareholders’equity 526.5 487.6 472.0 466.0 421.6

Totalequity 552.0 503.3 487.9 481.7 437.0

Totalassets 1,242.7 1,111.1 1,222.8 1,133.5 801.9



6

REVENuE(RM billion)

EARNINGS PER SHARE(sen)

201413121110

201413121110 201413121110 201413121110

0.5

5

10

15

20

25

30

35

1.0

1.5

2.0

2.5

PROFIT BEFORE TAXATION(RM million)

201413121110 201413121110

30

5

60

10

90

15

120

20

150

25

30

NET DIVIDEND PER SHARE(sen)

SHAREHOLDERS’ EQuITY(RM million)

100

50

200

100

300

150

400

200

500

250

600

NET ASSETS PER SHARE(sen)

1.91.8

1.5

1.4

2.1 125.6

93.0103.3

73.2

45.5

526.5487.6

472.0466.0 421.6

36.2

21.3 20.2

11.7

23.8

3.1

28.0

16.0 15.9

12.3

203

188 182 180163

2014 Annual Report



7

CORPORATE INFORMATION

BOARD OF DIRECTORS

Tan Sri Dato’ Seri Lodin Wok Kamaruddin Non-IndependentNon-ExecutiveChairman

Dato’ Farshila EmranManagingDirector

Daniel EbinesanNon-IndependentNon-ExecutiveDirector

MohdSuffianHajiHaronSeniorIndependentNon-ExecutiveDirector

Izzat OthmanIndependentNon-ExecutiveDirector

Lieutenant General Dato’ Seri Panglima Dr Sulaiman Abdullah (Retired) IndependentNon-ExecutiveDirector

COMPANY SECRETARYTasneemMohdDahalan(LS0006966)

STOCK EXCHANGE LISTINGBursaMalaysiaSecuritiesBerhad MainMarket-Trading/Services

REGISTERED ADDRESS28thFloor,MenaraBousteadNo.69JalanRajaChulan50200KualaLumpurTel :+603-21419044Fax:+603-21419750

BuSINESS ADDRESSNo.7,LorongKeluli1BKawasanPerindustrianBukitRajaSelatanSeksyen7 40000 Shah Alam SelangorDarulEhsanTel:+603-33429999Fax:+603-33417777

PRINCIPAL BANKERSAffinIslamicBankBerhadBankIslamMalaysiaBerhadCIMBBankBerhadHongLeongIslamicBankBerhadStandardCharteredBankMalaysiaBerhadTheBankofNovaScotiaBerhad

AuDITORSMessrs.PricewaterhouseCoopersCharteredAccountantsLevel10,1Sentral,JalanTravers KualaLumpurSentralP.O.Box1019250706KualaLumpur

SHARE REGISTRARTricorInvestorServicesSdnBhdLevel17,TheGardensNorthTowerMid Valley CityLingkaranSyedPutra59200KualaLumpurTel:+603-22643883Fax:+603-22821886



8

FINANCIAL CALENDAR

FINANCIAL YEAR

1Januaryto31December2014

RESuLTS

First quarterAnnounced 14 May 2014

Second quarterAnnounced21August2014

Third quarterAnnounced21November2014

Fourth quarterAnnounced23February2015

ANNuAL REPORT

Issued9March2015

ANNuAL GENERAL MEETING

Tobeheld31March2015

DIVIDENDS

First interimAnnounced 14 May 2014

Entitlement date 2June2014

Payment date 16June2014

Second interimAnnounced 21August2014

Entitlement date9September2014

Payment date24September2014

Third interimAnnounced 21November2014

Entitlement date 9December2014

Payment date30December2014

Fourth interimAnnounced 23February2015

Entitlement date 11 March 2015

Payment date 26 March 2015

2014 Annual Report



9

BOARD OF DIRECTORS

Tan Sri Dato’ Seri Lodin Wok KamaruddinChairman

Dato’ Farshila EmranManagingDirector



10

Daniel Ebinesan Izzat OthmanMohdSuffianHajiHaron Lieutenant General Dato’ Seri Panglima Dr Sulaiman Abdullah (Retired)

2014 Annual Report



11

TAN SRI DATO’ SERI LODIN WOK KAMARuDDINChairmanNon-IndependentNon-ExecutiveDirector

Tan Sri Dato’ Seri Lodin Wok Kamaruddin,Malaysian, sixtyfiveyearsofage,wasappointedasDirectorandChairmanoftheBoardon29April2011.HeisalsoamemberoftheNominationCommitteeandRemunerationCommittee.

TanSriDato’SeriLodingraduated fromTheUniversityofToledo, Ohio, United States of America with a Bachelorof Business Administration and Master of BusinessAdministration. He has extensive experience in not onlymanagingaprovidentfundbutalsointheestablishment,restructuring and management of various businessinterestsrangingfromplantation,trading,financialservices,propertydevelopmenttooilandgas,pharmaceuticalsandshipbuilding.

Presently,TanSriDato’SeriLodinistheChiefExecutiveofLembagaTabungAngkatanTenteraandDeputyChairman/Group Managing Director of Boustead Holdings Berhad(BHB).HeisalsotheChairmanofBousteadHeavyIndustriesCorporation Berhad (BHIC) and 1Malaysia DevelopmentBerhad. In addition, he is theDeputy Chairman ofAffin HoldingsBerhadandViceChairmanofBousteadPlantationsBerhad(BPB).

He also holds directorships inUACBerhad,MHSAviationBerhad,FIDEForum,MinorityShareholderWatchdogGroup,AffinBankBerhad,AffinIslamicBankBerhad,AffinHwangInvestment Bank Berhad and AXA Affin Life InsuranceBerhad. BHB, BHIC, BPB and Affin Holdings Berhad arepubliclistedcompaniesinMalaysia.

Among the many awards that Tan Sri Dato’ Seri Lodinhas received todate include the Chevalier De La LégionD’Honneur from the French Government, the MalaysianOutstandingEntrepreneurshipAward;theDegreeofDoctorofLawsHonorisCausafromtheUniversityofNottingham,United Kingdom; the UiTM Alumnus of The Year 2010AwardandTheBrandLaureateMostEminentBrandICONLeadershipAward2012.

Board of Directors



12

DATO’ FARSHILA EMRANManaging Director

Dato’ Farshila Emran, Malaysian, forty nine years of age,was appointed to the Board of Pharmaniaga Berhad on 25 March 2011, and was appointed as the ManagingDirectoron13April2011.ShesitsontheboardsofseveralsubsidiariesofPharmaniagaBerhad,notablyPharmaniagaLogistics Sdn Bhd, Pharmaniaga Manufacturing Berhad,PharmaniagaLifeScienceSdnBhdandPTErritaPharma. Dato’ Farshila was an Assistant Representative of SEVESSediver France from 1990 to 1995, a public listed highvoltage transmission line equipment company in France.ShewasthenmadeaRepresentativeofthatcompanyforMalaysiauntil2001. Dato’Farshila later founded IdamanPharmaManufacturingSdnBhd. Dato’FarshilaholdsaDiplomainOfficeManagementfromMARA University of Technology and Masters in BusinessAdministration(C)fromUniversitiUtaraMalaysia. On personal level, Dato’ Farshila has won many awardsincluding the 2013 MBA Industry Excellence Award –Health Services byTheASEAN BusinessAdvisory CouncilMalaysia and the Anugerah Kesatria Puteri Korporat, whichshe received in2012 forheractive role inWomenDirectors’ Programme, an initiative of the Ministry ofWomen, Family and Community Development, Malaysia. Further demonstrating her commitment in the WomenDirectors’ Programme,Dato’ Farshila also contributes as amemberoftheadvisorycommitteeforwomeninbusinessunder theFederationofMalaysianManufacturers aswellas the National Association of Women Entrepreneurs ofMalaysia. At Pharmaniaga, Dato’ Farshila continues to championtheemployees’welfareas shebelieves remunerationandbenefits help promote a productive working team. TheHRAsiaBestCompaniestoWorkforinAsiaAwardandtheM100 Best Employer Award which Pharmaniaga won in2014demonstrateshercommitment,relentlesspassionandexcellentleadership.

2014 Annual Report



13

DANIEL EBINESANNon-IndependentNon-ExecutiveDirector

Daniel Ebinesan, Malaysian, sixty nine years of age, wasappointed to the Board of Pharmaniaga Berhad on 25March2011.HeisalsoamemberoftheAuditCommittee.

He is aFellowof theChartered InstituteofManagementAccountants(CIMA)andamemberoftheMalaysianInstituteof Certified Public Accountants (MICPA) and MalaysianInstituteofAccountants(MIA).

HejoinedBousteadHoldingsBerhadinApril1974astheGroupAccountant. In January 1982, hewas promoted toGroupChiefAccountantandsubsequentlyinJanuary1993,he was promoted as the General Manager, Finance &Administration. In July 1996,Daniel assumed the role ofChiefFinancialOfficerandcurrentlyholdsthepositionofGroupFinanceDirector.Heisresponsibleforallfinancialmatters including acquisition of strategic businesses,treasury,riskmanagementstrategiesandformulationoftheBousteadGroup’sfinancialpoliciesandtaxplanning.

HehasbeenamemberoftheBoardofTrusteesofKumpulan Wang Simpanan Kakitangan Estet Malaysia since1996andhasservedasChairmanoftheBoardofMalaysianCarefromNovember1988 toMarch2011. Presently,he sitson theboardsofseveralsubsidiarieswithintheBousteadGroup.

Board of Directors



14

MOHD SuFFIAN HAjI HARONSenior-Independent

Non-ExecutiveDirector

MohdSuffianHajiHaron,Malaysian,sixtynineyearsofage,wasappointedtotheBoardofPharmaniagaBerhadon29April 2011. He is the Chairman of theAudit Committee,NominationCommitteeandRemunerationCommittee.

He started his career as a Diplomatic andAdministrativeOfficer, attached to the Implementation andCoordinationUnit of the Prime Minister’s Department and left theGovernment after 13 years of service and served for aGovernment-Linked Company for six years. He has vastexperience inthe insurance,financial,securitiesandassetmanagementsectorsaswellastrading,energy,oilandgasindustries.

Mohd Suffian obtained his Bachelor of Economics fromUniversity Malaya in 1970 and Master of BusinessAdministration in 1976 from the University of Oregon,UnitedStatesofAmerica.

HecurrentlysitsasanIndependentNon-ExecutiveDirectorof Affin Bank Berhad, Affin Islamic Bank Berhad and asChairmanofLK&AssociatesSdnBhd.

2014 Annual Report



15

IzzAT OTHMANIndependentNon-ExecutiveDirector

Izzat Othman, Malaysian, fifty four years of age, wasappointedasanIndependentNon-ExecutiveDirectortotheBoardofPharmaniagaBerhadon25March2011.Heis also amember of theAudit Committee, NominationCommitteeandRemunerationCommittee.

HeisalawyerbyprofessionandisapartnerofthelawfirmofMessrs.Azzat&Izzat.

He graduated with an LLB (Hons) in April 1985 fromUniversitiMalaya.Subsequently,hewasadmittedasanAdvocateandSolicitoron25January1986.

HewasformerlyaDirectorofAFFINSecuritiesSdnBhdandBHInsuranceBerhadandhasvastexperiencerelatingtolitigation,conveyancingandcorporatematters.

He sits on the boards of several subsidiaries ofPharmaniagaBerhadnotablyPharmaniagaLogisticsSdnBhd, Pharmaniaga International Corporation Sdn Bhd, PT Millennium Pharmacon International Tbk and PTErritaPharma,thelatterofwhichIzzatistheChairman.

Board of Directors



16

LIEuTENANT GENERAL DATO’ SERI PANGLIMA DR SuLAIMAN ABDuLLAH (Retired)

IndependentNon-ExecutiveDirector

Lieutenant General Dato’ Seri Panglima Dr Sulaiman Abdullah (Retired), Malaysian, fifty nine years of age,was appointed to the Board of Pharmaniaga Berhad on29 December 2011. He is also a member of the AuditCommittee.

HestartedhiscareerasMedicalOfficerwith theMinistryof Defence and has served the Malaysian Armed Forcesfor more than 29 years. His last appointment with theMalaysian Armed Forces was as the Director General ofMalaysianArmedForcesHealthServices.

Lieutenant General Dato’ Seri Panglima Dr Sulaimanholds a Master of Health Planning from theUniversity of New South Wales, Sydney, Australia, Diploma in Tropical Medicine and Hygiene from theMahidol University, Thailand, Masters of Public Health from the University of Philippines System, Manila,Philippines,DiplomainPrincipleofMilitaryMedicinefromtheAcademyofHealthSciences,FortSamHouston,Texas,UnitedStatesofAmericaandDoctorofMedicine(M.D)fromtheUniversitiKebangsaanMalaysia.

Hehasvastexperienceinthemanagementandsupervisionof Malaysian Armed Forces Health Services all overMalaysia.HewasalsoinvolvedinthesupervisionforthedevelopmentofHospitalAngkatanTenteraTuankuMizan.

2014 Annual Report



17

SENIOR MANAGEMENT TEAM

Marksmanship is something that ignites mypassion while being an excellentrelief from the daily grind. As Itakemyaim,everythingelsefadesawaywhile I focusonmyself, thefirearm andmymark. There is apowerful feeling in being able tohandle a firearm well and it is aresponsibility that I do not takelightly,muchlikemyaccountabilityas a leader. Marksmanship, likeleadership, truly is all aboutpractice, patience and experimentwithminimalmarginforerror”

Dato’ Farshila EmranManaging Director

“

Senior Management Team



18

Swimming isweirdly amazing. Thewatercansootheyouoritcangoagainstyouanddrownyou.But if you relax and stop panicking, you’d soon findyourselfonewiththewater.Swimmingtaughtmehowtohandlepressure.I’velearnedthatifIsurroundmyselfwith the rightkindof influences, I’m less likely to sinkintothewaysoftheworld.Positiveinfluencesfromtherightenvironmentkeepmeafloat.”

Mohamed Iqbal Abdul RahmanChief Operating Officer

“

Strategy is nothingwithout patience. We alwayswant fast results, but criticalthinking is important toensure all risks are calculated.Strategisingwilltaketimeandrequirepatience,butteamwork,bornoutofawell-thought-outstrategy will ensure we getwhatweaimfor.Chesstaughtmewell.”

Norai’ni Mohamed AliChief Financial Officer

“

2014 Annual Report



19

I knowwhatmyaimis.Iknowmytoolstoo.Theclubismadeofexoticmaterial like titanium.It has the right shaft lengthand heel angle. My aim maybefar. ButIamwillingtotakethechance,becauseaslongasIknowIhavetherighttool,Iamdetermined.”

Abdul Malik MohamedLogistics & Distribution Director

“

What we sow todayechoesinthefuture.Wehavetomakethefirstmove.Weshouldnever stop and wait for theharvest. When we continuallysow,ourharvestcomesbacktous inmanyways. It is a cycleofblessinginmotion.Itisveryimportant to understand whatwewanttoreapinthefuture.Ifyouneedlove,thenloveothers.The kind of harvest you needdetermines the kind of seedyousow.”

Datin Shamsinar Hj ShaariTechnical Director

“




20

Every timeIseeanuphill,Iseeastruggle.Mylungswouldscreamforoxygen.Mylegswouldbeg for mercy. But I know thatafter an uphill pedalling, therecan only be a downhill cruising.That’s where the reward is –rolling fast while relaxing mymuscles,easingmybreathingandenjoyingthewindinmyface.Thesame principle is shared in life.Every struggle is followed by asatisfyingreward.”

Zulhazri RazaliCommercial Director

“

WhenIamonaracetrack, Iamnotracingagainstothers. Iamracingagainstmyself. I lovetopushmyselftothelimits.Ilovetheadrenalinerushthatcomeswithit.Drivingonaracetrackhastaughtmealotofthingsaboutspeed,brakingandhittingtheapex–thesameprinciplesIapplyattheoffice–howtosurgeforwardwith ideas,whentoholdthembackandwheretohitthem.”

Sharifah Fauziyah Syed MohtharRegulatory Affairs Director

“

2014 Annual Report



21

I learnedfromarcherytoclearlyseenotonlythetargetIwantthearrowto hit, but also the external factorsthat could affect hitting the targetsuchaswind,distanceandmyownpulling force. In life and business,notonlymust Ifirst clearly identifythegoal,butImustalsoconsiderallthe external factors thatwill affectmy efforts and adjust accordinglybeforeImakemyshot.”

Elias EffendyBusiness Development Director

“

Motif is the main expressiveelement in batik design. Themotifnotonlymakesthetextileattractive,but also determines the features and functions of a certain fabric.Every individual design triggers mycreative inspiration and I approachmy working team much the same way. Every team member isexpressively unique, thus I ensurethey contribute and complementeach other to produce an excellentfabricofsuccess.”

Norshilla NazruddinCorporate Services Director

“




22

Winnerofthe“Industry Class in Pharmaceutical”–SelangorExcellenceBusinessAwards2014

AWARDSWinnerofthe“Best Companies to Work for in Asia Awards 2014”–HRtradejournal,HRAsia

Winnerofthe“Malaysia’s Top 100 Leading Graduate Employers”–MalaysianGraduateBarometer

2014 Annual Report



23 2014 Annual Report



23

THE SuCCESSORS

These are the prime movers who continue to raise our performance,

leading to improvements in pharmaceutical services and positioning

Pharmaniaga as a relevant participant of the industry.

SHAPING A HEALTHIER SOCIETY

The way our health services are

delivered is constantly enhanced to

ensure that we can provide the highest

quality care today and tomorrow.

Dear Shareholder,

The year 2014 was an excellent one forPharmaniagaBerhad(Pharmaniaga)aswescaledupourbusinessoperationsandstrengthenedourpositionasaleaderinthepharmaceuticalsector,bothinMalaysiaandregionally.Wedeliveredastrong performancewith a profit before tax ofRM126millioncomparedwithRM93millionlastyear,asignificant35%increase.

Asaresultofoureffortstoboostourearningsgrowthaswellasoptimisecostsandimproveoperationalefficiency,wesuccessfullymaintainedourgrowthmomentum.Onthisnote,Iampleasedtopresenttoyouourannualreportfortheyearended31December2014.

28

n TAN SRI DATO’ SERI LODIN WOK KAMARuDDIN

Chairman

CHAIRMAN’SSTATEMENT

2014 Annual Report



29

ECONOMIC LANDSCAPEDuetoagingpopulationandtheriseofchronicdiseases,theglobalpharmaceutical industry experienced favourable growth in 2014.Thiswasfurthersupportedbyhealthcarereformsandtechnologicaladvancements,particularlyinemergingmarkets.

InMalaysia,thepharmaceuticalsectorcontinuestoexperiencesteadymarket growth on the back of increasing urbanisation and growingaffluence in the expanding middle class. The prevalence of non-communicable diseases has also spurred demand for healthcareservicesthroughoutthenation.

In order to capitalise on the inherent prospects of the industry, theGovernment has identified the healthcare sector as one of the keydriversoftheeconomy,withafocusonpublichealthcareinfrastructure,researchanddevelopment,genericdrugsandmedicaltourism.Furthertothis,asignificantamountwasallocatedinBudget2015toprovidequality health services and facilities for the nation. This certainlybodeswellfortheGroupaswestrivetoexpandourcapabilitiesandtapintonewopportunities.

FINANCIAL PERFORMANCEIn linewith our drive to strengthen our core businesses, theGroupdelivered a higher revenue of RM2.1 billion for our financial yearended31December 2014. This reflects a 9% increase fromRM1.9billioninthepreviousyear, largelyduetohighercontributionsfromthepublicandprivatesectors.

In tandemwith this,we recordedaprofitafter taxofRM94million, a66%jumpfromRM57millioninthelastfinancialyear.Thisgrowthstemsfromincreaseddemandfromboththeconcessionandprivatebusinessesaswellaslowerprovisionfordoubtfuldebts.

Meanwhile, earnings per share rose to 36 sen in the year underreview (2013: 21 sen), while net assets per share was at RM2.03(2013:RM1.88). Shareholders’ fundsstoodatRM527millionfortheyearended31December2014comparedwithRM488millioninthepreviousfinancialyear.

“Wehaveplansinthepipelinetoexpandourproductportfolioviaourdedicatedresearchanddevelopmentefforts.”

Chairman’s Statement



30

Revenue

RMBILLION2.1

RMMILLION94

ProfitAfter Tax

DIVIDENDAsaresultoftheGroup’sremarkableperformanceduringtheyear,theBoardofDirectorsdeclareda fourth interimdividendof12senpersharewhichwillbepaidon26March2015,bringingtotalnetdividendpersharefortheyearto28sen.Thistranslatestoadividendpayoutratioof77%andadividendyieldof6.1%basedontheclosingpriceforthefinancialyear.

HuMAN CAPITALThe mark of a good company is its ability to identify and build aleadershippipelinetoensurebusinesscontinuity.Weareevermindfulthatthedevelopmentofourhumancapitalisparamounttodrivingnotonlyourpresentgrowthbutalsoourfutureprogress.Onthisnote,weplacegreatimportanceonoursuccessionplanningprogrammeaswetakeafarsightedapproachtonurturingourhandpickedteamofhighlymotivated and performance driven individuals who will ultimatelyhelmtheGroup.

2014 Annual Report



31

Onourjourneyupthevaluechain,wecontinuetoshapeandenhanceourexistingworkforcethrougharangeoftalentdevelopmentandtrainingprogrammes.Testamenttoourstrongemployeeengagementandongoingeffortsto implement good workplace practices, Pharmaniagareceived HR Asia Best Companies to Work for in Asia2014AwardandM100BestEmployerAward.

A demonstration of Pharmaniaga’s appeal among job-seekers,wereceivedover1,000jobapplicationsduringtheBNYouthCareerFair2014,heldinPutrajaya.

COMMuNITY OuTREACHInviewofthedevastatingfloodsituationineastcoastofMalaysia,Pharmaniagahastakendrasticstepstoensurethat the supplies of medicines to affected areas are notinterrupted.Oureffortsincludeusinghelicopterstoenable themedicines tobedeliveredeven in timesofdisaster.

Pharmaniaga has also helped to contribute at theinternational level. To ease the burden of the peopleof Gaza who were under attack, we have contributedmedicalaidintheformofmedicinesandmedicaldevicesworthRM600,000.ThisaidistohelpthepeopleofGazawhoareseekingtreatmentasaresultofthewarthatisplaguingthem.

OuTLOOKAtatimewhenconsumerspendingismoderatedbyrisingcostsofliving,healthcareremainsahighpriority.Despitea volatile global economic climate, the pharmaceuticalsector is relatively resilient due to increasing publicawareness coupled with greater access to healthcare.Aswemoveforward,theGroupwillcontinuedeliveringvaluetoourshareholdersbyleveragingontheprospectsofthishighlylucrativeindustry.

Chairman’s Statement



32

Aswepassthehalfwaymarkofour10-yearConcessionAgreementwiththeMinistryofHealth(MOH),weremaincommitted todeliveringahigh levelof service.Withaviewtoprovidingqualityhealthcareproductsandhealthrelatedservicestoboththepublicandprivatesector,wehaveplansinthepipelinetoexpandourproductportfolioviaourdedicatedresearchanddevelopmentefforts.Intandemwiththis,weintendtostepupourmanufacturingcapabilitiesinordertocatertorisingdemand.

As we strengthen our presence domestically, we alsolooktoexpandbeyondMalaysianborders.InIndonesia,wesuccessfullycompletedtheacquisitionof75%equityinterestinPTErritaPharmaforRM74millionin2014.PTErritaPharmaisagenericpharmaceuticalmanufacturingcompanylocatedinBandung,Indonesia.ThiscorporateexercisewillenabletheGrouptotapintotheIndonesianmarketanddevelopaneffectivemanufacturingchannelfor our range of products, allowing us to capitalise onthe inherent prospects in the country. The acquisitionwill also complement the marketing and distributionbusiness of our distribution subsidiary in Indonesia, PTMillennium Pharmacon Tbk, allowing us to commandgreatermarketshare.

Clearly,therearevastopportunitiesintheindustrythatwillpropeltheGrouponourgrowthpath.Aswefocuson developing our core businesses, a key element ofour success is thatwearepartof theBousteadGroup,enabling Pharmaniaga to leverage on the strength ofitsparentcompany.Welookforwardtoabrightfutureahead as we continue tomove up the pharmaceuticalvaluechain.

ACKNOWLEDGEMENTAswe surge ahead in 2015 to solidify our position inthepharmaceutical industry, Iwouldliketoexpressmyappreciation and heartfelt gratitude to the Board ofDirectors for theirsteadfastcommitment indrivingthegrowthandsuccessofPharmaniaga.

Furthermore, our remarkable performance would nothavebeenpossibleifnotforthevaluablecontributionsof our employees, who have been constant in theirdedication to achieve the goals and aspirations of theGroup.

Equallyimportantisourkeyclient,MOHaswellasourothercustomers,suppliers,partnersandbankers,whosemuch needed support has been instrumental in ourgrowth. In addition, given that we operate in a highlyregulatedsector,wewouldalsoliketothanktherelevantGovernmentbodies andauthorities inMalaysia for thetrustandconfidencetheyhaveplacedinPharmaniaga.

TAN SRI DATO’ SERI LODIN WOK KAMARuDDINChairman

2014 Annual Report



33

7081 - 0341389667530

Documents

Transcript of 7081 - 0341389667530