Zhilin Li
谢谢Diana，大家早上好。我要感谢各位今天参加我们的电话会议，并感谢你们对中国医药的持续支持。2014年我们经历了严峻挑战，也取得了显著成就。经过近两年的建设，我们完成了20,000平方米新工厂的建设，安装了四条灭菌生产线、两条液体注射剂生产线和两条干粉注射剂生产线。2014年11月，我们获得了国家食品药品监督管理总局（CFDA）颁发的新GMP证书，并开始在我们的干粉注射剂和液体注射剂生产线上进行生产。在2014年1月1日至2014年11月3日期间，我们遭受了四十年一遇的16级超强台风带来的损失；我们暂停了这两条生产线，因为它们当时未能满足GMP升级的最后期限。在这段停产期间，我们通过限制赊销来控制市场，并执行了谨慎的营销策略，特别是根据现有和潜在经销商及医院客户的付款速度进行筛选，以逐步改善我们的贸易周转，特别是在应收账款回收方面。这一策略通过限制赊销暂时影响了我们本期的销售额。我现在将用英语宣读其余的准备好的杂项评论。中国医药行业一直是中国经济增长的关键贡献者。根据中国社会科学院（CASS）于2012年12月28日发布的《中国医药市场报告2012》（医疗蓝皮书），2012年中国医药市场规模达到9,261亿元人民币。2005年至2010年，中国医药市场的复合增长率超过20%，蓝皮书预测2013年至2020年将继续以平均12%的速度快速增长。蓝皮书指出，中国医药市场呈现出快速扩张、竞争激烈、集中度较低的特点，并受到政府政策的极大影响。蓝皮书进一步提到，医药市场的扩张得益于人口老龄化带来的药品需求增加、社会福利改善以及居民随着经济发展而增强的购买力。现在，我想回顾一下我们2014财年的财务业绩和资产负债表信息。截至2014年12月31日止年度，收入为2,490万美元，较截至2013年12月31日止年度的3,280万美元下降24%。这一下降主要是由于我们所有产品类别的销售额均有所下降，特别是我们的中枢神经及心脑血管产品销售额下降了约280万美元，抗病毒/感染及呼吸系统产品销售额下降了约180万美元。对于某些产品，我们在原材料采购时与销售业绩实现时的销售预估之间存在下降。我们还评估了原材料的公允价值，结果确定某些库存周转缓慢或已过时。根据截至2014年12月31日和2013年12月31日制定的预估，我们分别确认了截至2014年12月31日和2013年12月31日止年度的额外库存过时费用230万美元和990万美元。截至2014年12月31日止年度，毛利润为550万美元，而2013年毛亏损为50万美元。2014年我们的毛利率为21.90%，而2013年毛亏损率为1.5%。若不考虑库存过时的影响，管理层估计我们的毛利率在2014年约为30.9%，2013年约为28.7%。2014年的销售、一般及行政费用为510万美元，占销售额的20.3%，而2013年为570万美元，占销售额的17.3%。截至2014年12月31日止年度，公司的研发费用为280万美元，而2013年为170万美元。研发费用的变化主要是由于新生产线测试相关的成本。此外，我们自2013年开始进行领先配方筛选、新技术探索和技术标准改进活动。因此，与这些活动相关的费用在2014年有所增加。截至2014年12月31日止年度，公司的坏账费用为2,060万美元，而2013年的坏账费用为1,050万美元。2014年坏账费用的增加主要是由于我们长期账龄应收账款的增加。在截至2014年12月31日止的12个月内，我们因热带台风遭受了2,276,519美元的损失。上年同期没有可比费用。2014年净亏损为2,600万美元，每股基本和稀释亏损0.6美元，而2013年净亏损为2,000万美元，每股基本和稀释亏损0.46美元。净收入的下降主要是由于收入减少、坏账费用增加以及自然灾害损失。接下来看资产负债表。截至2014年12月31日，公司拥有现金及现金等价物530万美元，而截至2013年12月31日为600万美元。我们的应收账款余额从截至2013年12月31日的4,510万美元下降至截至2014年12月31日的2,490万美元。应收账款减少是由于我们加强了收款力度、增加了坏账准备，以及2014年第三季度实施的贸易应收账款回收折扣计划，以鼓励回收账龄超过一年的应收账款，以及销售额的下降。截至2014年12月31日止年度，经营活动产生的现金流量为460万美元，而2013年为860万美元。然而，我们将继续专注于我们的建筑开发和新GMP项目建设，并相信这将支持未来对我们股东权益的公平评估。至此，我们现在将开放电话会议进行提问。接线员？
Zhilin Li
Thank you, Diana, and good morning everyone. I would like to thank each of you for joining us today and for your continued support of China Pharma. We have experienced tough challenges and made remarkable achievements in 2014. We completed the construction of a 20,000 square meters new factory, installed with four sterilization production lines, two liquid injectables and two dry powder injectables production lines after nearly two years of construction. In November 2014, we obtained new GMP certificate issued by CFDA, as defined below and commenced the manufacturing at our dry powder injectables and liquid injectables production lines. While sustained the loss brought by once-in-forty-year 16 grade super typhoon during the period from January 1, 2014 to November 3, 2014; we suspended such two production lines as they did not then meet the GMP upgrading deadline. In this production-suspended period, we controlled our market by limiting our credit sales and executed a prudent marketing strategy and specifically by screening our existing and potential distributors and hospital customers based on their payment speed in order to gradually improve our trade turnover, especially in terms of the collection of our accounts receivables. This strategy has temporarily impacted our sales in the current period by limiting our credit sales. I will now read the rest of the miscellaneous prepared remarks in English. The Chinese pharmaceutical industry has been a key contributor to the PRC’s economic growth. The Chinese pharmaceutical market reached RMB 926.1 billion in 2012 according to Medical Blue Book, China Pharmaceutical Market Report 2012, the Blue Book published by the Chinese Academy of Social Sciences, CASS, on December 28, 2012. The compound growth rate of the China’s pharmaceutical market was over 20% from 2005 to 2010 and the Blue Book forecasts that it will continue its rapid expansion at an average rate of 12% from 2013 to 2020. The Blue Book pointed out that the Chinese pharmaceutical market is showing features of rapid expansion, fierce competition, lower concentration, and is greatly influenced by government’s policies. The Blue Book further mentioned that the pharmaceutical market expansion was supported by increased demand for medicine associated with population aging, improved social welfare and residents’ enhanced purchasing power along with economic development. Now, I would like to review our fiscal year 2014 financial results and balance sheet information. Revenue for the year ended December 31, 2014 was $24.9 million, a decrease of 24% from revenue of $32.8 million for the year ended December 31, 2013. This decrease primarily resulted from decreases in sales throughout all our production categories, especially our CNS Cerebral &Cardio Vascular products decreased by roughly $2.8 million and our Anti-Viro/Infectious & Respiratory products decreased by roughly $1.8 million. We have had decreases in sales estimates between the time when raw materials were purchased and the time when the sales performance is realized for certain products. We have also assessed the fair value of our raw material, as a result we determined that certain inventory was slow moving or obsolete. Based on the developed estimates as of December 31, 2014 and 2013, we recognized additional inventory obsolescence expense of $2.3 million and $9.9 million for the years ended December 31, 2014 and 2013, respectively. Gross profit for the year ended December 31, 2014 was $5.5 million, compared to gross loss of $0.5 million in 2013. Our gross profit margin in 2014 was 21.90% compared to gross loss margin of 1.5% in 2013. Without the effect of inventory obsolescence, management estimates that our gross profit would have been approximately 30.9% in 2014 and 28.7% in 2013. Selling, general and administrative expenses in 2014 were $5.1 million, or 20.3% of sales, compared to $5.7 million, or 17.3% of sales in 2013. For the year ended December 31, 2014, the company’s research and development expense was $2.8 million, compared to $1.7 million in 2013. The change in research and development expenses was mainly due to the costs related to testing of the new production lines. In addition, we commenced leading formulation screening, new technology exploration and technical criteria improvement activities since 2013. As a result, the expenses related to such activities increased in 2014. For the year ended December 31, 2014, the company’s bad debt expenses were $20.6 million, compared to the bad debt expense of $10.5 million in 2013. The increase in bad debt expenses in 2014 was mainly due to the increase in our long-aging accounts receivable. We suffered losses of $2,276,519 relating to the tropical typhoon during the 12 months ended December 31, 2014. There was no comparable expense in the prior year period. Net loss for the year 2014 was $26 million, or $0.6 per basic and diluted share, compared to net loss of $20 million, or $0.46 per basic and diluted share in 2013. The decrease in net income was mainly due to the decrease in revenue, increase in bad debt expense, and losses from natural disaster. Turning to the balance sheet. As of December 31, 2014, the company had cash and cash equivalents of $5.3 million compared to $6 million as of December 31, 2013. Our accounts receivable balance decreased to $24.9 million as of December 31, 2014 from $45.1 million as of December 31, 2013. Our receivables decreased due to our enhanced collection efforts, increased allowance, and the trade receivables collection discount program implemented in the third quarter of 2014 to encourage the collection of accounts receivable aged over one year and decrease in sales. For the year ended December 31, 2014, cash flow from operating activities was $4.6 million, as compared to $8.6 million in 2013. However, we will continue focusing on our building development and new GMP projects construction and believe that this will support the fair evaluation of our shareholders’ interest in the future. With this, we will now open the call up to the question. Operator?
