Pharmaron Beijing : ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED DECEMBER 31, 2020

March 28, 2021 at 06:18 am EDT

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

Pharmaron Beijing Co., Ltd.*

ੰᎲʷϓ€̏ԯอᖹҦஔٰ΅Ϟࠢʮ̡

(A joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 3759)

ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED DECEMBER 31, 2020

FINANCIAL SUMMARY AND HIGHLIGHTS

Year ended December 31, 2020 2019

RMB' 000 RMB' 000

Change %

Revenue	5,133,597	3,757,160	36.6
Gross profit	1,916,113	1,331,701	43.9
Profit attributable to owners of the parent	1,172,383	547,190	114.3
Non-IFRSs adjusted net profit attributable
to owners of the parent	1,064,029	549,133	93.8
Net cash flows generated from
operating activities	1,648,610	938,585	75.6

- During the Reporting Period, the Group recorded aggregate revenue of approximately RMB5,133.6 million, representing an increase of approximately RMB1,376.4 million, or 36.6%, as compared to the year ended December 31, 2019.
- During the Reporting Period, the profit attributable to owners of the parent was approximately RMB1,172.4 million, representing an increase of approximately 114.3% as compared to the year ended December 31, 2019.
- During the Reporting Period, the net cash flows generated from operating activities was approximately RMB1,648.6 million, representing an increase of approximately 75.6% as compared to the year ended December 31, 2019.
- The Board proposed to declare a final dividend of RMB3.00 (inclusive of tax) per 10 shares or an aggregate of approximately RMB238.3 million for the year ended December 31, 2020.

The board of directors of Pharmaron Beijing Co., Ltd. is pleased to announce the consolidated results of the Group for the year ended December 31, 2020, together with the comparative figures for the corresponding period in 2019.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED DECEMBER 31, 2020

2020	2019
Notes	RMB' 000	RMB' 000
REVENUE	5	5,133,597	3,757,160
Cost of sales	(3,217,484)	(2,425,459)
Gross profit	1,916,113	1,331,701
Other income and gains	6	493,006	70,153
Other expenses	6	(143,814)	(11,761)
Selling and distribution expenses	(92,643)	(72,989)
Administrative expenses	(684,705)	(526,408)
Research and development costs	(105,345)	(62,872)
Impairment losses on financial and contract assets,
net of reversal	(14,823)	(5,495)
Finance costs	7	(23,854)	(82,476)
Share of losses of associates	(24,565)	(7,303)
Profit before tax	8	1,319,370	632,550
Income tax expense	9	(172,378)	(101,878)
Profit for the year	1,146,992	530,672
Attributable to:
Owners of the parent	1,172,383	547,190
Non-controlling interests	(25,391)	(16,518)
1,146,992	530,672
EARNINGS PER SHARE ATTRIBUTABLE TO
ORDINARY EQUITY HOLDERS OF THE PARENT
Basic
For profit for the year	11	RMB1.4825	RMB0.8284
Diluted
For profit for the year	11	RMB1.4781	RMB0.8282

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2020

2020	2019
RMB' 000	RMB' 000
Profit for the year	1,146,992	530,672
OTHER COMPREHENSIVE INCOME
Other comprehensive (loss)/income that may be reclassified to
profit or loss in subsequent periods:
Exchange differences on translation of foreign operations	(40,578)	11,847
Net other comprehensive (loss)/income that may be reclassified
to profit or loss in subsequent periods	(40,578)	11,847
Other comprehensive (loss)/income for the year, net of tax	(40,578)	11,847
Total comprehensive income for the year	1,106,414	542,519
Attributable to:
Owners of the parent	1,131,835	558,937
Non-controlling interests	(25,421)	(16,418)
1,106,414	542,519

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31, 2020

2020	2019
Notes	RMB' 000	RMB' 000
NON-CURRENT ASSETS
Property, plant and equipment	3,841,445	2,973,354
Right-of-use assets	567,630	498,989
Investment properties	43,889	46,013
Goodwill	1,166,172	203,286
Other intangible assets	189,976	35,352
Investments in associates	280,474	131,246
Equity investments at fair value through profit or loss	121,230	59,054
Deferred tax assets	8,436	6,372
Other non-current assets	149,162	36,921
Total non-current assets	6,368,414	3,990,587
CURRENT ASSETS
Inventories	128,757	97,050
Contract costs	152,860	60,347
Trade receivables	12	1,076,614	857,069
Contract assets	133,764	89,105
Prepayments, other receivables and other assets	196,020	197,576
Financial assets at fair value through profit or loss	825,312	169,762
Derivative financial instruments	84,698	13,689
Pledged deposits	7,263	17,634
Cash and cash equivalents	2,935,090	4,442,218
Total current assets	5,540,378	5,944,450
CURRENT LIABILITIES
Interest-bearing bank and other borrowings	386,146	300,654
Trade payables	13	191,497	117,978
Other payables and accruals	819,313	486,702
Contract liabilities	473,289	271,547
Lease liabilities	83,925	64,150
Tax payable	27,620	28,649
Total current liabilities	1,981,790	1,269,680
NET CURRENT ASSETS	3,558,588	4,674,770
TOTAL ASSETS LESS CURRENT LIABILITIES	9,927,002	8,665,357
4

NON-CURRENT LIABILITIES

Interest-bearing bank and other borrowings

Deferred tax liabilities

Financial liabilities at fair value through profit or loss

Deferred income

Lease liabilities

Total non-current liabilities

NET ASSETS

EQUITY

Share capital

Treasury shares

Reserves

Equity attributable to owners of the parent

Non-controlling interests

Total equity

2020	2019
Notes	RMB' 000	RMB' 000
394,811	543,791
106,906	40,782
146,810	-
158,128	111,606
186,608	131,160
993,263	827,339
8,933,739	7,838,018
794,387	794,387
(45,475)	(72,781)
8,121,407	7,045,457
8,870,319	7,767,063
63,420	70,955
8,933,739	7,838,018

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020

1. GENERAL INFORMATION
Pharmaron Beijing Co., Ltd. was incorporated and registered in the People's Republic of China ("PRC") on July 1, 2004. With the approval of the China Securities Regulatory Commission, the Company completed its initial public offering and was listed on the Shenzhen Stock Exchange (stock code: 300759.SZ) on January 28, 2019. On November 28, 2019, the Company was listed on the Main Board of the Stock Exchange of Hong Kong Limited (the "HKSE") (stock code: 3759.HK). The address of the registered office is 8th Floor, Block 1, 6 Taihe Road, Beijing Economic Technological Development Area, Beijing, China.
The Company is a leading fully-integrated pharmaceutical R&D services platform with global operations to accelerate drug innovation for our customers. The principal activity of the Company and its subsidiaries (together, the "Group") is to provide contract research, development and manufacturing services for innovative pharmaceutical products throughout the research and development cycle and the services are organised in three major categories: laboratory services, chemistry, manufacturing and controls ("CMC") (small molecule CDMO) services and clinical development services.
2. BASIS OF PREPARATION
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS), which comprise all standards and interpretations approved by the International Accounting Standards Board (the "IASB"), and International Accounting Standards and Standing Interpretations Committee interpretations approved by the International Accounting Standards Committee and the disclosure requirements of the Hong Kong Companies Ordinance.
The consolidated financial statements have been prepared under the historical cost convention, except for equity investments at fair value through profit or loss, derivative financial instruments, financial assets and financial liabilities at fair value through profit or loss which have been measured at fair value. The consolidated financial statements are presented in Renminbi ("RMB") and all values are rounded to the nearest thousand except when otherwise indicated.
3. ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS
The Group has not adopted the following standards that have been issued but are not yet effective in the consolidated financial statements:

Amendments to IFRS 3	Reference to the Conceptual Framework2
Amendments to IFRS 9, IAS 39, IFRS 7,	Interest Rate Benchmark Reform - Phase 21
IFRS 4 and IFRS 16
Amendments to IFRS 10 and IAS 28	Sale or Contribution of Assets between an Investor and
its Associate or Joint Venture4
IFRS 17	Insurance Contracts3
Amendments to IFRS 17	Insurance Contracts3,5
Amendments to IAS 1	Classification of Liabilities as Current or Non-current3
Amendments to IAS 1	Disclosure of Accounting Policies3
Amendments to IAS 16	Property, Plant and Equipment: Proceeds
before Intended Use2
Amendments to IAS 37	Onerous Contracts - Cost of Fulfilling a Contract2
Amendments to IAS 8	Definition of Accounting Estimates3
Annual Improvements to IFRS 2018-2020	Amendments to IFRS 1, IFRS 9, Illustrative Examples
accompanying IFRS 16, and IAS 412

1 Effective for annual periods beginning on or after January 1, 2021
2 Effective for annual periods beginning on or after January 1, 2022
3 Effective for annual periods beginning on or after January 1, 2023
4 No mandatory effective date yet determined but available for adoption
5 As a consequence of the amendments to IFRS 17 issued in June 2020, IFRS 4 was amended to extend the temporary exemption that permits insurers to apply IAS 39 rather than IFRS 9 for annual periods beginning before 1 January 2023

The Group is in the process of making an assessment of the impact of these new and revised IFRS upon initial application. So far, the Group considers that, these new and revised IFRSs are unlikely to have significant impact on the Group's results of operations and financial position.

4. OPERATING SEGMENT INFORMATION

For management purposes, the Group is organised into business units based on their services and has four reportable operating segments as follows:

- The laboratory services segment includes laboratory chemistry and bioscience (including DMPK/ADME, in vitro biology and in vivo pharmacology, safety assessment, discovery biologics and U.S. laboratory services) services
- The CMC (small molecule CDMO) services segment includes process development and manufacturing, materials science/pre-formulation, formulation development and manufacturing, and analytical development services
- The clinical development services segment includes clinical research services, site management services, regulatory bioanalysis and radiolabelled science services
- The "Others" segment

Segment revenue and results

The following is an analysis of the Group's revenue and results by reportable segments.

CMC

(small

molecule ClinicalLaboratory services RMB' 000

CDMO) development services services RMB' 000 RMB' 000

Others RMB' 000

Total RMB' 000

Year ended December 31, 2020

Segment revenue

3,262,714 1,221,985

Segment results

1,389,079

397,979

629,350 118,209

19,548 5,133,597
10,846 1,916,113
Unallocated amounts: Other income and gains
493,006
Other expenses (143,814)
Selling and distribution expenses (92,643)
Administrative expenses (684,705)
Research and development costs (105,345) Impairment losses on financial and
contract assets, net of reversal (14,823)
Finance costs (23,854)
Share of losses of associates (24,565)
Group's profit before tax 1,319,370
Year ended December 31, 2019
Segment revenue
2,379,509
Segment results
956,085
901,576 249,690
456,265 113,919
19,810 3,757,160
12,007 1,331,701

Unallocated amounts: Other income and gains

70,153

Other expenses (11,761)

Selling and distribution expenses (72,989)

Administrative expenses (526,408)

Research and development costs (62,872) Impairment losses on financial and

contract assets, net of reversal (5,495)

Finance costs (82,476)

Share of losses of associates (7,303)

Group's profit before tax

632,550

Management monitors the results of the Group's operating segments separately for the purpose of making decisions about resource allocation and performance assessment. No analysis of segment assets and liabilities is presented as management does not regularly review such information for the purposes of resource allocation and performance assessment. Therefore, only segment revenue and segment results are presented.

Geographical information

(a) Revenue
2020 RMB' 000
2019 RMB' 000
North America Europe
Asia (except Mainland China) Mainland China
3,271,385
2,208,691
979,762 869,541
142,924 149,937
700,218 478,402
Others
39,308 50,589
5,133,597
The revenue information above is based on the locations of the customers.
(b) Non-current assets

3,757,160

2020 RMB' 000

2019 RMB' 000

China

North America Europe

4,529,104

3,200,346

1,278,656 319,903

430,988 404,912

6,238,748

3,925,161

The non-current asset information above is based on the locations of the assets and excludes equity investments at fair value through profit or loss and deferred tax assets.

Information about major customers

No revenue from sales to a single customer amounted to 10% or more of the Group's revenue during each reporting period.

REVENUE

An analysis of revenue is as follows:

2020	2019
RMB' 000	RMB' 000
Revenue from contracts with customers	5,114,049	3,737,350
Revenue from other sources
Revenue from investment property operating lease	19,548	19,810
5,133,597	3,757,160
9

Revenue from contracts with customers

(a)
Segments	2020	2019
RMB' 000	RMB' 000
Types of services
Laboratory services	3,262,714	2,379,509
CMC (small molecule CDMO) services	1,221,985	901,576
Clinical development services	629,350	456,265
Total revenue from contracts with customers	5,114,049	3,737,350
Timing of revenue recognition
Services transferred at a point of time	2,731,623	2,028,539
Services transferred over time	2,382,426	1,708,811
Total revenue from contracts with customers	5,114,049	3,737,350
(b)	Performance obligations

Disaggregated revenue information

The Group has different contractual arrangements with different customers under two different charge methods: Full-Time-Equivalent ("FTE") or Fee-For-Service ("FFS") model.

All services under the FTE model, revenue is recognised over time at the amount to which the Group has the right to invoice for services performed. Therefore, under practical expedients allowed by IFRS 15, the Group does not disclose the value of unsatisfied performance obligations under the FTE model.

Similarly, for certain services under the FFS model, revenue is recognised over time and contracts are generally within an original expected length of one year or less. Therefore, the practical expedients are also applied.

6.
2020	2019
RMB' 000	RMB' 000
Other income
Interest income	74,064	9,614
Government grants and subsidies related to
- Assets	11,232	9,427
- Income	34,303	25,576
119,599	44,617
Other gains
Foreign exchange gains, net	-	1,882
Gains on fair value change of equity investment at fair value
through profit or loss	75,460	10,179
Gains on disposal of equity investment at fair value through
profit or loss	78,039	-
Gains on disposal of an associate	-	124
Gains on termination of lease contracts	46	-
Gains on financial assets at fair value through profit or loss	55,496	2,033
Gains on derivative financial instruments	140,797	-
Gains on fair value re-measurement of existing equity in business
combination not under common control	23,123	10,363
Others	446	955
373,407	25,536
493,006	70,153
Other expenses
Foreign exchange loss, net	(131,226)	-
Losses on disposal of property, plant and equipment	(7,326)	(667)
Losses on derivative financial instruments	-	(8,663)
Others	(5,262)	(2,431)
(143,814)	(11,761)
7.	FINANCE COSTS
2020	2019
RMB' 000	RMB' 000
Interest expenses on bank and other borrowings	17,024	75,856
Interest expenses on lease liabilities	11,486	9,318
Total interest expense on financial liabilities not at fair value
through profit or loss	28,510	85,174
Less: Interest capitalised	(4,656)	(2,698)
23,854	82,476

OTHER INCOME AND GAINS AND OTHER EXPENSES

8. PROFIT BEFORE TAX


2020	2019
RMB' 000	RMB' 000
Depreciation of property, plant and equipment	348,662	307,199
Depreciation of right-of-use assets	77,566	61,910
Depreciation of investment property	817	812
Amortisation of other intangible assets	10,971	4,661
Staff costs (including directors' and chief executive's remuneration):
Salaries and other benefits	1,796,881	1,192,315
Pension scheme contributions, social welfare and other welfare	391,658	368,206
Share-based compensation expenses	62,458	11,524
Gains on fair value re-measurement of existing equity in business
combination not under common control	(23,123)	(10,363)
Gains on fair value change of equity investment at fair
value through profit or loss	(75,460)	(10,179)
Gains on disposal of equity investment at fair value through profit or loss	(78,039)	-
Impairment losses on inventories, net of reversal	4,622	1,021
Impairment losses on financial and contract assets, net of reversal	14,823	5,495
Foreign exchange loss/(gains), net	131,226	(1,882)
(Gains)/losses on derivative financial instruments	(140,797)	8,663
Auditor's remuneration	4,300	3,480

The Group's profit before tax is arrived at after charging/(crediting):

*The staff costs for the year are included in "Cost of sales", "Administrative expenses", "Selling and distribution expenses" and "Research and development costs" in the consolidated statement of profit or loss.

INCOME TAX EXPENSE
2020	2019
RMB' 000	RMB' 000
Current tax	143,934	85,479
Deferred tax	28,444	16,399
172,378	101,878

Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation Regulation of the EIT Law, the EIT rate of the PRC subsidiaries is 25% unless subject to tax exemption set out below.

The Company was accredited as a "High and New Technology Enterprise" in 2017 which was subsequently renewed in 2020 and as an "Advanced Technology Enterprise" in 2015 which was subsequently renewed in 2020, and therefore the Company was entitled to a preferential EIT rate of 15% for each reporting period. These qualifications are subject to review by the relevant tax authority in the PRC for every three years.

Pharmaron Xi'an Co., Ltd. was accredited as an "Advanced Technology Enterprise" in 2018 and the qualification was subsequently renewed in 2020, and therefore Pharmaron Xi'an Co., Ltd. was entitled to a preferential EIT rate of 15% for each reporting period. This qualification is subject to review by the relevant tax authority in the PRC for every two years.

Pharmaron (Beijing) TSP Service Co., Ltd. was accredited as an "Advanced Technology Enterprise" in 2015 and the qualification was renewed in 2020 and as an "High and New Technology Enterprise" in 2020, and therefore Pharmaron (Beijing) TSP Service Co., Ltd. was entitled to a preferential EIT rate of 15% for each reporting period. These qualifications are subject to review by the relevant tax authority in the PRC for every three years.

Pharmaron (Ningbo) Technology Development Co., Ltd. was accredited as an "Advanced Technology Enterprise" in 2019 and the qualification was renewed in 2020, and therefore Pharmaron (Ningbo) Technology Development Co., Ltd. was entitled to a preferential EIT rate of 15% for each reporting period. This qualification is subject to review by the relevant tax authority in the PRC annually.

Pharmaron Shanghai Co., Ltd. was accredited as an "Advanced Technology Enterprise" in 2019, and therefore Pharmaron Shanghai Co., Ltd. was entitled to a preferential EIT rate of 15% for each reporting period. This qualification is subject to review by the relevant tax authority in the PRC for every three years.

Pharmaron (Tianjin) Process Development and Manufacturing Co., Ltd. was accredited as an "High and New Technology Enterprise" in 2020, and therefore Pharmaron (Tianjin) Process Development and Manufacturing Co., Ltd. was entitled to a preferential EIT rate of 15% for the year ended December 31, 2020. This qualification is subject to review by the relevant tax authority in the PRC for every three years.

Beijing Link Start Biotechnology Co., Ltd. was accredited as an "High and New Technology Enterprise" in 2020, and therefore Beijing Link Start Biotechnology Co., Ltd. was entitled to a preferential EIT rate of 15% for the year ended December 31, 2020. This qualification is subject to review by the relevant tax authority in the PRC for every three years.

RAMED (Beijing) Medical Technology Co., Ltd. was accredited as an "High and New Technology Enterprise" in 2020, and therefore RAMED (Beijing) Medical Technology Co., Ltd. was entitled to a preferential EIT rate of 15% for the year ended December 31, 2020. This qualification is subject to review by the relevant tax authority in the PRC for every three years.

The group entities incorporated in the U.S. were subject to the federal corporate tax at a rate of 21% and the state income tax at a rate ranging from 5% to 10 % as at December 31, 2019 and 2020.

The group entities incorporated in the United Kingdom were subject to tax at a rate of 19% for the years ended December 31, 2019 and 2020.

The group entities incorporated in Hong Kong were subject to Hong Kong profits tax at a rate of 16.5% on the estimated assessable profits for the years ended December 31, 2019 and 2020.

The Group's tax provision in respect of other jurisdictions has been calculated at the applicable tax rates in accordance with the prevailing practices of the jurisdictions in which the Group operates.

10. DIVIDENDS

2020	2019
RMB' 000	RMB' 000
Proposed final - RMB0.30 (2019: RMB0.15) per ordinary share	238,316	119,158

On May 28, 2020, the Company's shareholders approved the 2019 Profit Distribution Plan at annual general meeting, pursuant to which a final dividend of RMB0.15 (inclusive of tax) per share in respect of the year ended December 31, 2019 was declared to both holders of A shares and H shares and aggregate dividend amounted to RMB119,158,000 (inclusive of tax). Except for the dividend declared to the holders of restricted A shares that would be paid no earlier than the unlocking date, the rest of the dividend was paid in July 2020.

The proposed final dividend for the year ended December 31, 2020 is subject to the approval of the Company's shareholders at the forthcoming annual general meeting.

11. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

The calculation of basic earnings per share is based on the profit for the year attributable to ordinary equity holders of the parent, and the weighted average number of ordinary shares of 790,435,853 (2019: 660,535,750) in issue during the year, as adjusted to reflect the rights issue during the year.

The weighted average number of ordinary shares used in the calculation is based on the number of ordinary shares used in the basic earnings per share calculation adjusted for the dilutive effect of share options and restricted A shares issued by the Company. For the year ended December 31, 2020, the calculation of the diluted earnings per share is based on the profit for the year attributable to ordinary equity holders of the parent, adjusted to reflect the dilutive impact of the share options issued by the Group's subsidiaries, where applicable.

The calculations of basic and diluted earnings per share are based on:

2020 RMB' 000

2019 RMB' 000

Earnings:

Profit attributable to ordinary equity holders of the parent

1,172,383

547,190

Less: Cash dividends attributable to the shareholders of restricted shares expected to be unlocked in the future

(591)

Earnings for the purpose of calculating basic earnings per share

1,171,792

- 547,190

Effective of diluted potential ordinary shares:

Add: Cash dividends attributable to the shareholders of restricted shares expected to be unlocked in the future

Earnings for the purpose of calculating diluted earnings per share

591 1,172,383

- 547,190

2020

2019

Number of shares:

Weighted average number of ordinary shares in issue during the year, used in the basic earnings per share calculation

790,435,853 660,535,750
Effect of diluted potential ordinary shares:
Effective of restricted shares units and share awards issued by the Company
2,752,261
139,694
Weighted average number of ordinary shares in issue during the year, used in the diluted earnings per share calculation
793,188,114 660,675,444

12. TRADE RECEIVABLES

2020	2019
RMB' 000	RMB' 000
Trade receivables - third parties	1,110,720	876,344
Allowance for impairment	(34,106)	(19,275)
1,076,614	857,069

The Group's trading terms with its customers are mainly on credit. The credit period is generally one month, extending up to three months for major customers. Each customer has a maximum credit limit. The Group seeks to maintain strict control over its outstanding receivables to minimise credit risk. Overdue balances are reviewed regularly by senior management. In view of the aforementioned and the fact that the Group's trade receivables related to various diversified customers, there is no significant concentration of credit risk. The Group does not hold any collateral or other credit enhancements over its trade receivable balances. The balances of trade receivables are non-interest-bearing.

Included in the trade receivables was an amount due from related parties of RMB7,339,000 as at December 31, 2020 (2019: Nil), which was repayable on credit terms similar to those offered to the major customers of the Group.

An ageing analysis of gross carrying amount of the trade receivables as at the end of each reporting period, based on the invoice date, is as follows:

2020 RMB' 000

2019 RMB' 000

Within 1 year 1 year to 2 years More than 2 years

1,072,221 855,276

22,216 14,547

16,283 6,521

1,110,720 876,344

The movements in the loss allowance for impairment of trade receivables are as follows:

2020 RMB' 000

2019 RMB' 000

At beginning of year Impairment losses, net Exchange realignment

19,275 13,758

15,056 5,447

(225) 70

34,106

19,275

The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the use of the lifetime expected credit loss provision for all trade receivables.

An impairment analysis is performed at the end of each reporting period using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the end of each reporting period about past events, current conditions and forecasts of future economic conditions. Generally, trade receivables are written off if past due for more than two years and are not subject to enforcement activity.

Set out below is the information about the credit risk exposure on the Group's trade receivables using a provision matrix:

2020

13.

Expected credit	Gross carrying	Expected
loss rate	amount	credit losses
RMB' 000	RMB' 000
Within 1 year	0.65%	1,072,221	7,018
1 to 2 years	48.64%	22,216	10,805
Over 2 years	100.00%	16,283	16,283
1,110,720	34,106
2019
Expected credit	Gross carrying	Expected
loss rate	amount	credit losses
RMB' 000	RMB' 000
Within 1 year	0.65%	855,276	5,585
1 to 2 years	49.28%	14,547	7,169
Over 2 years	100.00%	6,521	6,521
876,344	19,275
TRADE PAYABLES

Trade payables are non-interest-bearing and normally settled on terms of one to three months.

An ageing analysis of the trade payables as at the end of each reporting period, based on the invoice date, is as follows:

2020	2019
RMB' 000	RMB' 000
Within 1 year	187,369	114,897
Over 1 year	4,128	3,081
191,497	117,978

Included in the trade payables was an amount due to a related party of RMB804,000 as at December 31, 2020 (2019: RMB4,000), which was repayable within 30 days, which represents credit terms similar to those offered by the related party to their major customers.

MANAGEMENT DISCUSSION AND ANALYSIS

Business Review

Principal Business

The Company is a leading fully-integrated pharmaceutical R&D services platform with global operations to accelerate drug innovation for our customers. The Company's research, development and manufacturing services platform of small molecule drugs evolved from laboratory chemistry where we are able to design a broad range of small molecule compounds for various major therapeutic areas and synthesize such compounds in scale. Leveraging on our core laboratory chemistry business, the Company has established a comprehensive discovery bioscience platform covering biology, DMPK and pharmacology to provide customers with integrated drug discovery services. The Company's fully-integrated pharmaceutical R&D services platform is in the industry leading position and has accumulated a broad customer base. In addition to further strengthening the existing services, the Company will continue to expand its capabilities downstream, including clinical development and commercial stage manufacturing services. Also, the Company will accelerate the establishment of R&D service capabilities for biologics and CGT products as Pharmaron is committed to becoming a global leader in pharmaceutical R&D services across multiple therapeutic modalities.

The Company has a well-established R&D services platform for the discovery stage of small molecule innovative drugs, based on which the Company has expanded its expertise to various stages of drug development and manufacturing. In order to meet customers' need for pharmaceutical R&D services, the Company expands its service scope to clinical development and CMC (small molecule CDMO) services. The Company's drug development services platform mainly provides drug safety assessment services with GLP compliance accredited by NMPA, FDA and OECD, chemical and formulations development services, GMP manufacturing services for chemical APIs and finished dosages, comprehensive radiolabelled science services that combine radioisotope based compound synthesis, clinical trial and analysis, as well as clinical development services including drug & device registration and application, medical affairs, clinical operation, data management and biostatistics and bioanalysis in both China and U.S..

In terms of biologics and CGT products, the Company has accelerated the establishment of the team and facilities in China. Also, through the acquisition of Absorption Systems LLC and its wholly-owned subsidiaries, Absorption Systems California LLC and Absorption Systems Boston LLC (together, "Absorption Systems") in November 2020 for the team's world-class drug evaluation capabilities in the emerging field of CGT, the Company has begun to develop a service platform for CGT products. To further enhance our CGT services platform and enable the Company to better meet the needs of our customers, the Company has entered into a definitive agreement with AbbVie in February 2021 to acquired Allergan Biologics Limited which operates a manufacturing facility in Liverpool, U.K..

The Company has built a fully-integrated pharmaceutical R&D services platform with 16 facilities in China, U.S. and U.K. and over 1,500 customers worldwide. The Company has more than 11,000 employees, of which, over 9,800 R&D, production technology and clinical services staff. This world-class talent pool and their high-quality R&D services have been widely recognized by the industry.

Operating Models

The Company provides fully-integrated drug research, development and manufacturing services throughout the research and development cycle. Our principal businesses can be categorized into three service segments: laboratory services, CMC (small molecule CDMO) services and clinical development services.

1. Laboratory services

Laboratory services of the Company include laboratory chemistry and bioscience (including DMPK/ADME, in vitro biology and in vivo pharmacology, safety assessment, discovery biologics and U.S. laboratory services) services. Laboratory chemistry is the core and cornerstone of small molecule drug discovery, and it's also the starting point for the Company's business.

The Company has accumulated extensive experiences and established a core talent pool in the field of compound design and synthesis, providing target selection, compound design and synthesis, and compound screening services according to the needs of the customers. As the important components of our laboratory services, in vitro and in vivo DMPK/ADME, in vitro biology and in vivo pharmacology provide customers with drug discovery services including target validation, structure activity relationship studies, candidate compound identification, drugability studies (from aspects of biology, DMPK/ADME, pharmacology and safety assessment).

With the advantage of global GLP compliance (FDA, NMPA, OECD), the Company's drug safety assessment services provide a comprehensive IND support to our global customers by performing all the related safety assessment studies to support their IND filing in different jurisdictions. With our global R&D team and validated quality standards and systems, our drug discovery and development services assists our customers in accelerating their R&D projects from preclinical R&D to clinical phases in a number of countries.

To further strengthen the fully-integrated services platform and continue expand the global footprint, the Company acquired Absorption Systems in November 2020 and launched U.S. laboratory services through such acquisition. U.S. laboratory services mainly includes DMPK/ ADME and bioanalysis for both small and large molecules, particularly in transporters, human PK prediction and translational pharmaceutics. With the global network of laboratory services capabilities, the Company will further strengthen and consolidate its leading position in discovery and development DMPK platform. In addition, the U.S. laboratory services also include drug evaluation services for CGT products and laboratory services in the areas of ophthalmology and medical devices.

2. CMC (small molecule CDMO) services

Our experienced CMC (small molecule CDMO) services team delivers customized and cost-efficient solutions to customers in drug development and manufacturing, including process development and manufacturing, materials science/pre-formulation, formulation development and manufacturing, and analytical development services to support pre-clinical and clinical development. The CMC (small molecule CDMO) services of the Company mainly provide pharmaceutical companies with chemical and formulation process development and clinical scale manufacturing services during the drug development stage with capabilities and capacities to cover the process development and manufacturing needs throughout clinical Phase I to III. The cGMP API and drug product manufacturing facilities of the Company are qualified to manufacture products to support clinical trials in global markets, including the U.S., China and EU. Our quality assurance system follows guidelines of the International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH Guidelines) and supports the development and manufacture regulation of APIs and pharmaceuticals in compliance with FDA, NMPA and EMA, and can also support the preparation of complete regulatory data packages and documentation for regulatory filings and cGMP audits in the U.S., EU, and Asia.

For the capability's improvement, the Company keeps investing on cutting-edge technologies of small molecule to provide value-added process optimization and manufacture services to domestic and foreign customers to meet their needs at different drug development stages. In providing CMC (small molecule CDMO) services, the Company practiced the concept of green chemistry and vigorously applies new technologies such as flow chemistry and biocatalysis to develop safer and more efficient chemical processes for the customers. In addition, the chemistry team further strengthened the competitive advantage of CMC (small molecule CDMO) full service jointly with the teams of material science, crystallization R&D and formulation. In terms of R&D and manufacturing capacity, the Company has facilities in Tianjin, Shaoxing, Ningbo and the U.K., and will continue to increase capacity to provide customers with services that consistently meeting their global quality standards and production requirement. In terms of customer services, leveraging on the integrated services platform and the technical experience accumulated over the years, the Company's development and manufacturing services get involved at the early stage of the drug development projects, the solid foundation of the early stage projects has paved the way for the development of our commercial manufacturing business.

3. Clinical development services

Our clinical development services include overseas and domestic clinical development services.

The overseas clinical development services includes clinical trial services, site management services, regulatory bioanalysis and radiolabelled science services. Our independent early clinical R&D center with 96 beds in Maryland, the U.S., has an experienced medical and support team in clinical pharmacology, specializing in comprehensive FIH studies, vaccine development/infection challenge studies, comprehensive 14C human ADME studies, TQT/ cardiac safety, cross-ethnic bridging studies and patient recruitment.

Meanwhile, the Company has the global bioanalytical capabilities in China, the U.S. and the U.K., which is available for use by clinical trials around the world. Our regulatory bioanalysis includes small molecule bioassays, biologics bioassays, and 14C-API and 14C metabolism bioassays. The Company's experienced scientists in synthetic chemistry, analytical and DMPK/ADME of radiolabelled compounds help our customers synthesize 14C and 3H radiolabelled compounds and use for the DMPK/ADME studies of various compounds during clinical, preclinical and discovery stages, so as to accelerate their clinical development process.

Domestic clinical development services are mainly provided through our subsidiaries, CR Medicon and Beijing LinkStart, which include clinical research services, site management services, biostatistics and bioanalysis, covering different service needs of clinical research. CR Medicon focuses on providing clinical research services in China, mainly including: regulatory and registration services, medical affairs, clinical operations, data management and statistics, bioanalysis and pharmacovigilance, etc.; Beijing LinkStart focuses on providing one-stop shop services for clinical site management, including CRC services, hospital selection, SSU (Study Start Up) rapid start-up, recruitment and management, quality assurance and training and post-marketing studies, etc.

With the establishment of domestic and overseas clinical development services platforms, it enables our customers to submit IND application for their drug candidates in China, the U.S. or EU in parallel, building an integrated platform for clinical development services. With the synergetic effect of the integrated services approach and the continuous improvement of our capabilities, the Company's clinical development service business expands rapidly.

Financial Review

Despite the COVID-19 pandemic in 2020, the Company, adhering to the pragmatic and prudent work culture and efficient collaboration of our global integrated services platform, not only achieved the development and business targets set out in early 2020 and further strengthened the integrated services platform through both internal development and external acquisition.

Risks always come with opportunities. While the Company put in great effort to fight against COVID-19 pandemic, the Company also seized the opportunities of rapid growth of the pharmaceutical industry and deepen the collaboration with both the overseas and China pharmaceutical communities. Furthermore, Pharmaron is committed to becoming a global leader in pharmaceutical R&D services across multiple therapeutic and is accelerating the establishment of R&D service capabilities for biologics and CGT products.

During the Reporting Period, all business segments of the Company maintained strong growth momentum. The Company recorded total revenue of RMB5,133.6 million, representing an increase of 36.6% over the same period of last year. With the benefit from economies of scale and the growth in revenue, the Company achieved gross profit of RMB1,916.1 million and gross profit margin of 37.3%, net profits attributable to owners of the parent of RMB1,172.4 million, representing an increase of 114.3% over the same period of last year, and the Non-IFRSs adjusted net profit attributable to owners of the parent of RMB1,064.0 million, representing an increase of 93.8% over the same period of last year. The Company continue to implement its established growth strategies to further strengthen the laboratory and CMC (small molecule CDMO) services and at the same time strategically expand the clinical and biologics services. During the Reporting Period, each services segment achieved high quality development in terms of services capabilities and business growth which in turn further strengthened our fully integrated pharmaceutical R&D services platform.

With the growth in business demand, the Company continuously expanding its talent pool. As of December 31, 2020, The Company had over 11,000 employees, of which, over 9,800 R&D, production technology and clinical services staff, accounting for 89% of the total headcount. As of December 31, 2020, the headcount of R&D, production technology and clinical services staff increased by 3,426 as compared with 31 December, 2019 (including the increase in headcount due to the acquisition of Absorption Systems and Beijing LinkStart).

Overall Operation Results

1. Customer services

Our R&D services platform offered services to over 1,500 customers with a total of 721 new customers introduced in 2020. While we had significant growth in number of customers in 2020, over 90% of the revenue was contributed by the Company's large, diverse and loyal repeat customer base which including the world's top 20 pharmaceutical companies. Our end-to-end R&D services platform with seamless integration approach further enhance the synergies of our different service segments and gained more and more customer recognition. During the Reporting Period, over 80% of the revenue of our discovery stage bioscience services contributed by our existing laboratory chemistry customers, and 77% of CMC (small molecule CDMO) revenue contributed by our existing customers from drug discovery services (laboratory chemicals and bioscience services).

During the Reporting Period, with our strengths in providing high-quality services through our global service network, our discovery stage laboratory services gained more and more customer recognition with significant increase in customer numbers as well as deepen collaboration with customers. In addition, the Company conducted extensive scientific collaboration with customers and jointly published research findings. In 2020, a total of 15 papers were published on J. Med. Chem., Bioorg. Med. Chem. Lett. and Synlett and other international academic journals, together with 19 patented inventorship at home and abroad (with intellectual properties owned by customers). During the Reporting Period, the Company contributed to the development of global innovative drug R&D by applying our long-accumulated expertise in pharmaceutical R&D to support our customers' R&D projects, the Company contributed to the global pharmaceutical R&D community and conducted studies for 58 investigational new drugs (IND) or new drug applications filing for our Chinese customers, of which, 46 projects applied simultaneously in multiple jurisdictions (including China, the U.S. and EU) with the support of our integrated IND enabling service.

With the strengthening of both capability and capacity of the pharmaceutical process development and manufacturing services, the Company worked on 739 APIs or intermediates in 2020, including 487 preclinical stage, 202 Phase I-II clinical stage, 47 Phase III clinical stage and 3 in commercial stage.

We continuously strengthen our service capabilities of our clinical development service by integrating and coordinating resources at home and abroad. Following the acquisition of Beijing LinkStart in June 2020, the Company was in a position to offer comprehensive clinical development services in China including both CRO and SMO services.

With international operation as one of our core competitiveness and long-term strategy, it strengthen the capabilities of our fully integrated services platform and provided customized service solutions with the cutting-edge technology to our customer by utilizing the R&D resources of our global service network. In 2020, we further strengthen our international operation despite the impact from COVID-19 pandemic. In particular, our process chemistry and drug discovery team in U.K. and China worked closely together to provide customized solutions with hybrid model which continued to gain recognition from customers. Furthermore, leveraging on our expertise in international R&D services and our understanding of the Chinese customers' needs, we continuously tailored our service offerings for the Chinese customers and bridged them with our overseas operations (such as, our early clinical center in Maryland).

2. Capacity expansion
The Company continued expanding capacity to meet the growing business demand. During the Reporting Period, the Company increased 22,500 m2 of laboratory spaces in Beijing to further enhance the capacity of the laboratory services. In addition, during the Reporting Period, the Company was about to complete the construction of phase III of Tianjin plant (40,000 m2) and schedule to be operational in the first quarter of 2021 which will increase the process development capacity of our CMC (small molecule CDMO) services.
During the Reporting Period, the Company continued the construction of Phase II of Ningbo Hangzhou Bay R&D service center. The first 120,000 m2 of laboratory space of phase II of Ningbo Hangzhou Bay R&D service center was about to complete and expected to be operational in the first quarter of 2021. The remaining 42,000 m2 of phase II of Ningbo Hangzhou Bay R&D service center was under construction and expected to complete the main structure and start internal installation in 2021. Once completed, phase II of Ningbo Hangzhou Bay R&D service center can provide additional laboratory space for up to 2,500 scientists and technician for our laboratory and CMC (small molecule CDMO) services. Furthermore, with our strategy to expand our CMC (small molecule CDMO) service downstream to late-stage clinical and commercial manufacturing, we accelerated the construction of Shaoxing Phase I facility with an area of 81,000 m2 and reactor volume of 600 m3, of which, reactor volume of 200 m3 was expected to be operational in the second half of 2021 and the remaining 400 m3 will be completed in 2022.
In 2020, the Company continued to develop the discovery biologics service capability and accelerated the build up of the biologics CDMO service platform. In early 2020, we started the construction of 70,000 m2 of our biologics product development and manufacturing facility at our Ningbo Hangzhou Bay service center II phase I and was expected to start internal installation in June 2021 and become operational for GMP production in the second
half of 2022.
3. Technological investment
Continuous advancement of our technology and scientific platform is a key to maintain the leading position in the industry and the Company putting great emphasis on technological investment during the Reporting Period. In the chemical synthesis and manufacturing technology area, we focused on the application of the high throughput chemical reaction screening platform, flow chemical technology and biocatalysis technology. Using infinitesimal reaction materials to attempt a reaction condition, the high throughput chemical reaction screening platform can assess dozens or even hundreds of catalytic reaction conditions in a short time, to assist in finding the best synthetic solutions. In 2020, it assisted the chemistry departments in resolving nearly 2,000 challenging chemical reactions. The flow chemistry team completed more than 50 different types of flow reaction projects with the largest scale up to 140kg. Furthermore, the Company established a dedicated biocatalysis department in 2020, which had developed nearly 1,000 biocatalytic enzymes for a wide range of organic synthesis reactions, including oxidation, reduction, transamination, esterification and ester hydrolysis.

In the discovery and bioscience area, the Company had established and improved Pharmaron DNA-encoded Library (DEL) screening platform, chemopoteomics platform, in vivo imaging technology platform and 3D spheroid and organoid screening platform. In 2020, the Company conducted hit screening campaigns using Pharmaron DEL against the new biological target of interest and successfully identified several novel hit compound series for the customers, which not only helped our customers to speed up their drug discovery programs, but also laid concrete foundation for attracting more customers for Pharmaron DEL services. The chemopoteomics platform using activity and reactivity-based probes together with proteomics profiling allows quick identification of interacting proteins and targets within the cells or tissues. The in vivo imaging technology platform can provide valuable data to support drugability evaluation with respect to the efficacy and safety of drug candidates. Our image technology platform can quantify drug candidates' tissue distribution dynamically in rodent tumor model using radioistope labelled compounds. In addition, we had developed a simplified method that could conduct isotopic tracing and assess the qualitative and quantitative distribution of compounds in animal at different time points in a faster, more efficient and low-cost manner which can further promote the application of such technology in early drug discovery programs. Also, we are in the process of building up 3D spheroids and organoid screening platform which are closer to the complex in vivo conditions as compared to traditional 2D culture. Using 3D spheroids and organoids as in vitro assay platform to investigate the efficacy and safety of drug candidates has more clinical significance.

4. External expansion

During the Reporting Period, the Company continued to expand its global footprint. In addition to strengthen our service capabilities and capacities with our existing U.S. and U.K. operations, the Company completed the acquisition of Absorption Systems in November 2020. The principal business of Absorption Systems are to provide non-clinical in vitro and in vivo analytical services, bioassays testing and animal testing services for biologics, small molecule drugs, CGT and medical device products to support the discovery, development and regulatory approval of the products. Combining with Absorption Systems' core expertise in DMPK/ADME and bioanalysis for both small and large molecules and its strategic presence in life science hubs in the U.S., it further strengthened the Company's global service networks and strengthen Pharmaron's leading position in discovery and development DMPK services. In addition, the Company is able to create additional value to its customers with Absorption Systems' established services in the areas of ophthalmology and medical devices. Also, leveraging on Absorption Systems' expertise in evaluating CGT products, the Company further strengthens its CGT services platform to better serve our customers and entered into definitive agreement to acquire Allergan Biologics Limited in Liverpool, U.K. from AbbVie for establishing CDMO services of CGT products.

In order to expand and strengthen our clinical service offering in China, the Company completed the acquisition of Beijing LinkStart during the Reporting Period and made bolt-on acquisitions of Beijing S&Q Healthcare Co., Ltd and RAMED (Beijing) Medical Technology Co., Ltd. to further strengthen the service offering in site management, recruitment and medical device regulatory and clinical services.

Operation results of each business sector

1. Laboratory services

The Company's laboratory services consists of laboratory chemistry and bioscience (including DMPK/ADME, in vitro biology and in vivo pharmacology, safety assessment, discovery biologics and U.S. laboratory services) services. As global pharmaceutical R&D investment continues to grow and the penetration rate for pharmaceutical R&D outsourcing continues to increase, the business volume from high quality customers and projects is on the rising trend. During the Reporting Period, the Company, through it's global resources allocation and long-accumulated laboratory service capabilities, supported our customers to continue their pharmaceutical R&D programs during the pandemic and have undertaken more research works from customers, which contributed to the rapid growth of laboratory service revenue. The Company recorded revenue of RMB3,262.7 million in laboratory services, which representing an increase of 37.1% as compared to 2019, with the gross profit margin of 42.6%, representing an increase of 2.4% compared with last year.

Laboratory chemistry represents the core and cornerstone of small molecule drug discovery, as well as the starting point of the Company's business. The Company had nearly 4,000 scientists and technicians in laboratory chemistry area which is one of the world leading chemistry groups in terms of size and expertise.

During the Reporting Period, whilst our laboratory chemistry services achieved steady growth, bioscience services entered the fast lane of development with the bioscience revenue contribution to the laboratory service increased to 41.3% in 2020 (including the revenue contribution of U.S. laboratory services following the acquisition of Absorption Systems in November 2020), as a result of the seamless integration with laboratory chemistry services. With over 1,600 scientists and technicians in the bioscience areas, we gradually established our expertise in the bioscience area in terms of service capabilities and coverages with in vitro and in vivo DMPK/ADME services covered the entire process of drug discovery. Our in vivo DMPK/ADME service cover DMPK screening for animals in different sizes, including rodents, canines and monkeys. Our in vitro DMPK/ADME service developed nearly 20 non-regular in vitro drug metabolism assays in 2020 and is now establishing a 3D cell model and physiology-based pharmacokinetic model. During the Reporting Period, the Company continued the team building and technology innovation of our in vitro biology and in vivo pharmacology services platform which has rapid business growth and increased customer recognition. Our in vitro biology department had established leading expertise in vitro drug efficacy and preliminary toxicity assessment and further expands its capabilities in target validation, high throughput screening, cell-based target specific assays and resistance model, the development of specific and diversified enzyme-based and cell-based screening platform. The team has also been working on the application of emerging RNA editing technique in our lab with high throughput screening capability. All of these have enriched our in vitro biology services platform. Through continued strengthening of its technology and building up new disease models, our in vivo pharmacology team further expands its service offering to provide customers with efficient and quality pharmacology and efficacy services and is on track to become one of the world leading pharmacology service teams.

During the Reporting Period, the Company acquired U.S. Absorption Systems and launched U.S. laboratory services through such acquisition. U.S. laboratory services mainly includes DMPK/ADME and bioanalysis for both small and large molecules, particularly in transporters, human PK prediction and translational pharmaceutics. With the global network of laboratory services capabilities, the Company further strengthen its leading position in discovery and development DMPK platform. In addition, the U.S. laboratory services also include drug evaluation services for CGT products and laboratory services in the areas of ophthalmology and medical devices.

In order to meet the increasing business demand, the Company continued to expand its services capacity. At the same time, in order to meet the business needs, the Company continues to expand its R&D team and improve the caliber of its personnel. As of December 31, 2020, the staff for the laboratory service business were 5,685, representing an increase of 1,384 as compared to December 31, 2019.

2. CMC (small molecule CDMO) services

Our experienced CMC (small molecule CDMO) team delivers customized and cost-efficient solutions to customers in drug development and manufacturing, including process development and manufacturing, materials science/pre-formulation, formulation development and manufacturing, and analytical development services to support pre-clinical and clinical development, which can help our customers significantly reduce R&D costs and expedite the R&D process. During the Reporting Period, the Company recorded revenue of RMB1,222.0 million in CMC (small molecule CDMO) services, representing an increase of 35.5% as compared to 2019, with the gross profit margin of 32.6%, representing an increase of 4.9% as compared to last year.

The increase in revenue from CMC (small molecule CDMO) services was mainly due to more drug discovery projects accumulated over the years progressing to the development stage, the expanded CMC (small molecule CDMO) services offering, the improvement of technical capabilities, and the continuous expansion of manufacturing capacity and the increased demand from the domestic innovative drug development market. During the Reporting Period, the Company continuously strengthens the CMC (small molecule CDMO) service platform with the U.K. and Chinese teams worked more closely together which in turn contributing to the continuous improvement in the business quality in the CMC (small molecule CDMO) services.

During the Reporting Period, the Company worked on 739 APIs or intermediates, including 487 in preclinical stage, 202 in Phase I-II clinical stage, 47 in Phase III clinical stage and 3 in commercial stage.

In terms of technology, the Company practiced the concept of green chemistry and vigorously applies new technologies such as flow chemistry and biocatalysis to develop safer and more efficient chemical processes for the customers. In addition, the chemistry team further strengthened the competitive advantage of full CMC (small molecule CDMO) services jointly with the teams of material science, crystallization R&D and formulation.

Our material science and crystallization R&D services continued improving market competitiveness and contributed to high-quality growth of CMC (small molecule CDMO) services. We continued to develop capabilities for our formulation development and manufacturing services which completed 26 GMP projects in 2020.

In 2020, the Company continued to strengthen its quality management by adhering to the highest-level international quality control standards to pave the way for the further development of CMC (small molecule CDMO) service. In view of the COVID-19 pandemic and the restriction from our customers for the onsite audit, our QA team promptly launched remote audit function and worked flexibility with our customers to carry out the audit by the combination of online and offline measures. During the Reporting Period, we successfully completed and passed a total of 55 audits including audits from the global top 20 pharmaceutical companies. The implementation of electronic quality management system further improved the accessibility and data integrity of our quality system. In addition, the Company was committed to continuously improve our EHS management by setting higher standard for employee's health protection and safety operation which is essential for the growth of the business.

With the implementation of China's Drug Marketing Authorization Holder System and the rise of a large number of biotech start-ups, the focus of pharmaceutical R&D in China is shifting from generic drug R&D to innovative drug R&D, and it is expected that the Chinese CMC (small molecule CDMO) market will continue to grow. In order to meet the growing demand for CMC (small molecule CDMO) services, the Company is actively expanding its CMC (small molecule CDMO) service team. As of December 31, 2020, the Company had 1,934 employees engaged in CMC (small molecule CDMO) services, representing an increase of 390 employees as compared to December 31, 2019.

3. Clinical development services

Our clinical development services include overseas and domestic clinical development services. During the Reporting Period, with the help of our unique integrated services platform of radioisotope compound "synthesis-clinical-analysis", our overseas operations achieved steady growth despite the fact that the operation of our early phase clinical center in the U.S. was significant affected by the COVID-19 pandemic. For the China-based operations, with the effective control of the COVID-19 pandemic in China, our clinical development service in China gradually recovered since second quarter. During the Reporting Period, the Company recorded revenue of RMB629.4 million in clinical development services, representing an increase of 37.9% over the same period of last year, and a gross profit margin of 18.8%.

With the acquisition of Beijing LinkStart in June 2020 and CR Medicon in 2019, respectively, the Company established an integrated clinical development services platform in China with comprehensive service offering for both CRO and SMO services. The Company continuously develop the clinical development services and increased the talent pool in clinical development services. As of December 31, 2020, the Company had 2,208 employees engaged in clinical development services, representing an increase of 1,652 as compared to December 31, 2019.

Gross Profit and Gross Profit Margin

During the Reporting Period, our gross profit was approximately RMB1,916.1 million, as compared to RMB1,331.7 million for the year ended December 31, 2019. Gross profit margin increased from 35.4% to 37.3% as compared to the year ended December 31, 2019.

Gross profit of our laboratory services increased from RMB956.1 million for the year ended December 31, 2019 to RMB1,389.1 million for the Reporting Period. Gross profit margin of our laboratory services increased from 40.2% for the year ended December 31, 2019 to 42.6% for the Reporting Period, primarily due to the higher operating efficiency due to economy of scale as a results of increase in laboratory services revenue.

Gross profit of our CMC (small molecule CDMO) services increased from RMB249.7 million for the year ended December 31, 2019 to RMB398.0 million for the Reporting Period primarily due to the increased demand for our CMC (small molecule CDMO) services. Gross profit margin of our CMC (small molecule CDMO) services increased from 27.7% for the year ended December 31, 2019 to 32.6% for the Reporting Period, primarily due to the successful production ramp-up since second quarter.

Gross profit of our clinical development services increased from RMB113.9 million for the year ended December 31, 2019 to RMB118.2 million for the Reporting Period. Gross profit margin of our clinical development services decreased from 25.0% for the year ended December 31, 2019 to 18.8% for the Reporting Period, representing a decrease of 6.2% over the same period last year.

Other Income and Gains

During the Reporting Period, other income and gains was approximately RMB493.0 million, representing an increase of approximately 602.8% or RMB422.9 million as compared to the year ended December 31, 2019. The increase was mainly due to: (1) the listing of our equity investment, Zentalis Pharmaceuticals, Inc. ("Zentalis"), on the Nasdaq Global Market on April 3, 2020 (U.S. local time) (stock code: ZNTL). In December 2020, the Company sold 285,062 shares of Zentalis and recognized gains on disposal from Zentalis of RMB78.0 million. As of December 31, 2020, the Company still holds 285,062 shares of Zentalis, the Group recognized gains on fair value change from Zentalis of RMB75.5 million; (2) increase in interest income of RMB64.5 million; (3) increase in government grants of RMB10.5 million; (4) increase in gains on financial assets at fair value through profit or loss of RMB53.5 million, which was mainly from the investments in some medium-risk and low-risk wealth management products purchased from a number of reputable international banks for cash management purpose; (5) increase in gains on derivative financial instruments at fair value through profit or loss of RMB140.8 million, which was mainly from foreign exchange forward contracts and collar contracts with banks in order to manage the Group's foreign currency exposure in relation to USD against RMB; (6) one-off fair value gain of RMB23.1 million resulted from re-measurement of our equity interest in LinkStart when it became our subsidiary in June 2020.

Other Expenses

During the Reporting Period, other expense was approximately RMB143.8 million, representing an increase of approximately 1,122.8% or RMB132.1 million as compared to the year ended December 31, 2019. The increase was mainly due to the foreign exchange loss of RMB131.2 million in 2020.

Selling and Distribution Expenses

The selling expenses in the Reporting Period were approximately RMB92.6 million, increased by approximately 26.9% or approximately RMB19.7 million as compared to the year ended December 31, 2019. The increase was primarily due to increase in headcount of our business development staff to support our expansion of operation.

Administrative Expenses

The administrative expenses of the Group in the Reporting Period were approximately RMB684.7 million, as compared to approximately RMB526.4 million for the year ended December 31, 2019. The increase was mainly due to our continued business expansion. Our administrative expenses as a percentage to revenue decreased from 14.0% in the year ended December 31, 2019 to 13.3% in the Reporting Period, which was mainly due to the economies of scale and our expense control effort.

Research and Development Costs

The research and development expenses of the Group in the Reporting Period were approximately RMB105.3 million, representing an increase of approximately 67.6% or RMB42.5 million as compared to the year ended December 31, 2019. The increase was primarily due to our increased internal R&D activities for exploring and expanding into new service offerings.

Finance Costs

During the Reporting Period, finance costs was approximately RMB23.9 million, representing a decrease of approximately 71.1% or RMB58.6 million as compared to the year ended December 31, 2019. The decrease was primarily due to the repayments of interest-bearing bank and other borrowings in the Reporting Period.

Income Tax Expense

The income tax expense in the Reporting Period was approximately RMB172.4 million, representing an increase of 69.2% or approximately RMB70.5 million as compared to the year ended December 31, 2019. It was due to the increase in profit before tax as a result of the growth of the Group's business operations.

Profit in the Reporting Period

As a result of the foregoing, the profit attributable to owners of the parent in the Reporting Period was RMB1,172.4 million, increased by 114.3% as compared to RMB547.2 million for the year ended December 31, 2019.

Non-IFRSs Adjusted Net Profit for the Year Attributable to Owners of the Parent

To supplement the financial statements prepared by us, we use non-IFRSs adjusted net profit attributable to owners of the parent as an additional financial measure. We define non-IFRSs adjusted net profit attributable to owners of the parent as net profit before certain expenses/(gains) as set out in the table below.

The Company believes that the consideration of the non-IFRSs adjusted net profit attributable to owners of the parent by eliminating the impact of certain incidental, non-cash or non-operating items is useful for better understanding and assessing underlying business performance and operating trends for the Company's management, shareholders and potential investors.

The non-IFRSs adjusted net profit attributable to owners of the parent is not an alternative to (i) profit before tax or net profit (as determined in accordance with IFRSs) as a measure of our operating performance, (ii) cash flows from operating, investing and financing activities as a measure of our ability to satisfy our cash needs, or (iii) any other measures of performance or liquidity. In addition, the presentation of the non-IFRSs adjusted net profit attributable to owners of the parent is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with the IFRSs. Shareholders and potential investors should not view the non-IFRSs adjusted net profit attributable to owners of the parent on a stand-alone basis or as a substitute for results under the IFRSs, or as being comparable to results reported or forecasted by other companies.

Year ended	Year ended
December 31,	December 31,
2020	2019
RMB' 000	RMB' 000
Profit attributable to owners of the parent	1,172,383	547,190
Add:
Share-based compensation expenses	51,949	9,496
Foreign exchange related losses/(gains)	111,431	(1,579)
(Gains)/losses on derivative financial instruments related to
foreign exchange	(119,678)	7,364
Non-IFRS net profit attributable to
owners of the parent	1,216,085	562,471
Add:
Realized and unrealized (gains)/losses from equity investments	(152,056)	(13,338)
Non-IFRS adjusted net profit attributable to
owners of the parent	1,064,029	549,133

Cash Flows

During the Reporting Period, net cash flows generated from operating activities of the Group amounted to RMB1,648.6 million, representing an increase of RMB710.0 million or 75.6% over the year ended December 31, 2019. The increase was mainly due to the increase in our revenue and profit during the Reporting Period.

During the Reporting Period, net cash flows used in investing activities of the Group amounted to RMB3,371.1 million, representing an increase of RMB2,325.8 million or 222.5% over the year ended December 31, 2019. The net cash flows used in investing activities during this Reporting Period was mainly from (1) net cash outflows used in purchase of time deposits over three months and some medium-risk and low-risk wealth management products purchased from a number of reputable international banks of RMB1,124.8 million; (2) construction of our Phase II of Ningbo Hangzhou Bay R&D service center, Phase I of Shaoxing Shangyu manufacturing facility, Phase III of Tianjin CMC (small molecule CDMO) facility and purchases of other property, plant and equipment of RMB1,308.4 million; (3) cash outflows used in acquisition of subsidiaries and capital injection in associates of RMB1,082.9 million; (4) net of cash inflows from disposal of equity investments at fair value through profit or loss of RMB96.8 million.

During the Reporting Period, net cash flows used in financing activities of the Group amounted to RMB280.2 million, which was due to (1) payment of dividends of RMB118.6 million; (2) payment of lease liabilities of RMB90.7 million; (3) net repayment of bank loans and other borrowings of RMB46.8 million.

Liquidity and Financial Resources

The Group has maintained a sound financial position during the Reporting Period. As at December 31, 2020, the Group's cash and bank balance amounted to approximately RMB2,935.1 million. For the Reporting Period, net cash flows generated from operating activities of the Group amounted to approximately RMB1,648.6 million.

The Group recorded total current assets of approximately RMB5,540.4 million as at December 31, 2020 (December 31, 2019: approximately RMB5,944.5 million) and total current liabilities of approximately RMB1,981.8 million as at December 31, 2020 (December 31, 2019: approximately RMB1,269.7 million). The current ratio (calculated by dividing the current assets by the current liabilities) of the Group was approximately 2.8 as at December 31, 2020 (December 31, 2019: approximately 4.7).

Borrowings and Gearing Ratio

As at December 31, 2020, the Group aggregated interest-bearing bank and other borrowings of RMB781.0 million. Among the total borrowings, RMB386.1 million will be due within one year and RMB394.8 million will be due after one year.

As at December 31, 2020, the gearing ratio, calculated as total liabilities over total assets, was 25.0%, as compared with 21.1% as at December 31, 2019.

Pledge of Assets

As at December 31, 2020, the Group mortgaged property, plant and equipment with a net carrying amount of approximately RMB405.6 million (December 31, 2019: approximately RMB1,333.2 million); and the mortgaged right-of-use assets had a net carrying amount of approximately RMB180.5 million (December 31, 2019: approximately RMB81.7 million).

Those pledged assets above have been used to secure the Group's interest-bearing bank borrowings.

Besides, as at December 31, 2020, the Group pledged deposits of approximately RMB7.3 million (December 31, 2019: approximately RMB17.6 million) to issue letters of credit and for environmental protection.

Contingent Liabilities

As at December 31, 2020, the Group did not have any material contingent liabilities.

Miscellaneous

Evaluation on the impact of the 2020 Novel Coronavirus

In 2020, under the backdrop of the COVID-19 pandemic, the importance and social value of healthcare industry has been further heightened. The Company was at a critical moment of development with both opportunities and challenges existed. In the face of the pandemic, the Company took various prevention and control measures to vigorously protect the health of its employees, and ensure the Company continued its rapid growth strategy as set at the beginning of the year.

Since the outbreak of the COVID-19 pandemic, the Company postponed the resumption of China operations for one week in the first quarter, which slightly delays in meeting the delivery schedules for some of the orders in the first quarter of 2020. Starting from the second quarter, with the pandemic in China under effective control, our China-based laboratories and manufacturing facilities resumed to normal rapidly. With the strong demand from laboratories and CMC (small molecule CDMO) services, the revenue of the Company continuously to grow. Although the COVID-19 pandemic in EU and the U.S. has certain impact on the company's overseas clinical development services, the domestic clinical development services have gradually recovered in the second half of the year; At the same time, with the unique radioisotope compound "synthesis-clinical-analysis" integrated services platform, the overall clinical development services also achieved steady growth in 2020. The COVID-19 pandemic had no significant adverse impact on the Company's business, operation and cashflow, and the Company had successfully achieved its business goals in 2020.

CORE COMPETITIVENESS ANALYSIS

The Company provides customers with fully-integrated services covering drug research, development and manufacturing services for innovative pharmaceutical products throughout the research and development cycle, which lead to significant competitive advantages in the business model, R&D service capabilities, customer collaboration and supporting domestic and foreign pharmaceutical/biotech companies in innovative drug R&D.

1. Leading fully-integrated pharmaceutical R&D services platform with strong capabilities and comprehensive service offerings across the globe

The Company has a well-established pharmaceutical R&D services platform for the discovery stage of small molecule innovative drugs, based on which the Company has expanded its expertise to various stages of drug development and manufacturing. The Company is in a leading position in drug discovery, preclinical and early clinical-stage research, and is committed to expanding its capabilities downstream to late clinical-stage development and commercial manufacturing. In the process of expanding R&D services, the Company has successfully evolved from a pure laboratory chemistry service provider to an end-to-end pharmaceutical R&D services platform with operations in China, the U.S. and the U.K. The Company has established comprehensive expertise in different R&D stages, so as to assist customers in accelerating their R&D programs and cater to a full spectrum of customers' needs. The Company has established a good reputation in the global pharmaceutical R&D service industry and a strong partnership with top pharmaceutical and biotech companies. Through the comprehensive early-stage drug R&D services, we have accumulated a profound understanding of the unique scientific challenges facing their new pharmaceutical R&D projects, which better positions the Company to press ahead with such projects in the late development stage. The Company's profound industry knowledge, strong execution capability and end-to-end solutions will shorten the drug discovery and development cycle and reduce the associated risks, thereby creating value for customers. As a fully-integrated pharmaceutical R&D service provider, the Company's comprehensive pharmaceutical R&D services platform has the following three core competences:

(1) Comprehensive chemistry platform throughout the entire drug R&D and commercial stages

As a fully-integrated service provider for the research, development and manufacturing of small molecule pharmaceutical products, the Company's expertise and advantage in chemistry technology is crucial throughout the whole drug R&D process.

With the comprehensive chemical technology platform covering compound design (including CADD), design and synthesis of a compound library, medicinal chemistry, synthetic chemistry, analytical chemistry, early process chemistry, and process chemistry and GMP API manufacturing, the Company can satisfy customers' demand for pharmaceutical R&D and manufacturing in each stage of the pharmaceutical R&D process, including laboratory synthesis process at the drug discovery stage, small-scale process and GLP/GMP manufacturing at the preclinical drug development stage, mid-scale process and GMP manufacturing at the clinical stage as well as process development for GMP commercial manufacturing, which fully cater to the diversified needs of different types of customers. In addition to providing R&D services for the compound synthesis process, combined with its formulation development services, the Company is able to provide customers with fully-integrated pharmaceutical R&D and manufacturing solutions from initial compounds to finished dosages.

(2) DMPK/ADME service platform throughout the entire drug R&D process
The Company provides DMPK/ADME services covering the whole R&D process from drug discovery to development. The early DMPK/ADME studies are of great importance as they can provide a key basis for our customers to determine their late-stage drug development strategy. Radioisotopic analysis technology is critical as an important drug metabolism analysis technology during the clinical stage. Following the approval of the radioisotopic use license at the Company's clinical center in the U.S. in early 2018, the Company is the only pharmaceutical R&D service provider that offers integrated pharmaceutical R&D solutions, which cover radioisotope compound synthesis and human ADME studies using regular isotope analysis technology or high-sensitivity AMS technology. In addition, with acquisition of Absorption Systems, the Company broadened its global service network and further strengthen its leading position in discovery and development DMPK platform.
(3) Comprehensive integrated platform from drug discovery to POC ("proof of concept")
From inception, the Company has committed to the establishment of integrated services platform from drug discovery to proof of concept stage, which covers compound design, compound library synthesis, synthetic and medicinal chemistry, biology, DMPK, pharmacology, toxicology, drug safety assessment, radiolabelled chemistry and DMPK, clinical pharmacology, clinical bioanalysis, clinical data statistics, chemical process development and API manufacturing and formulation and drug product manufacturing.
With this comprehensive integrated services platform, the Company has undertaken many integrated research projects, and achieved a considerable number of milestones. In addition, the Company can also provide a customized service package at a particular stage of drug R&D process, such as an integrated service package for IND enabling which includes preclinical safety assessment, early process development and manufacturing, pharmacology, DMPK and clinical proposal. With this comprehensive IND enabling solutions and the ability to support IND filing for different jurisdictions, it provides flexibility to the customers, accelerates their drug development process and reduces their overall R&D costs.

2. Global operations, profound experience in pharmaceutical R&D and state-of-the-art technologies to provide customized solutions
The Company operates globally through our 16 laboratories, clinical and manufacturing facilities in China, the U.S. and the U.K., of which 8 operating facilities from overseas. The Company's profound experience in global pharmaceutical R&D, together with its global operations and world-class technical capabilities, allow us to offer our customers a unique proposition that combines our technical expertise in different geographic location and efficient services with seamless integration. The Company has a proven track record of offering customized solutions to customers to address their specific needs by integrating the expertise from our global operations.
It is the Company's core strategy for each international acquisition to effectively integrate with our global services platform and brought in the world class talent and facilities into our integrated services platform to further strengthen our overall services capabilities and increase the efficiency of our services. These strategies complement each other to effectively improve the Company's international operation capability and bring high value-added services to customers. For example, our process chemistry and drug discovery team in U.K. and China worked closely together to provide customized solutions with hybrid model which continued to gain recognition from customers.
Through our global operation, the Company has established a services network and strategic presence in global life science hubs which enhance the customer communication and understanding of customer needs. Also, by carrying out our R&D services under different jurisdictions, it provides flexibility to customize our services solutions that best suit our customers' geographic and strategic needs. The clinical pharmacology team in the U.S. has worked seamlessly with our Chinese team to help customers in China for the preparation and filing of IND application and conducted the first-in-human (FIH) studies in the U.S.. In addition, the Company's experience in regulatory filings in various jurisdictions and its service model of providing customers with total solution enable our customers to file IND applications for their drug candidates in China, the U.S., or EU in parallel, which makes the IND applications of our customers more flexible and efficient.
3. Committed to utilizing innovative technologies to meet evolving R&D needs and increase efficiency
Since inception, the Company has put great emphasis on technology and innovation to fuel the constant grow of the business and satisfy the evolving R&D needs. It develops new technologies through multiple measures such as internal research and development, collaboration with academic and professional institutions, customer collaboration and acquisitions. In recent years, the Company has been strategically developing new technologies and capabilities in chemistry and bioscience areas, and committed to further strengthening of the integrated services platform.

In the chemical synthesis and manufacturing technology area, we focused on the application of the high throughput chemical reaction screening platform, flow chemical technology and biocatalysis technology. Using infinitesimal reaction materials to attempt a reaction condition, the high throughput chemical reaction screening platform can assess dozens or even hundreds of catalytic reaction conditions in a short time, to assist in finding the best synthetic solutions. In 2020, it assisted the chemistry departments in resolving nearly 2,000 challenging chemical reactions. The flow chemistry team completed more than 50 different types of flow reaction projects with the largest scale up to 140kg. Furthermore, the Company established a dedicated biocatalysis department in 2020, which had developed nearly 1,000 biocatalytic enzymes for a wide range of organic synthesis reactions, including oxidation, reduction, transamination, esterification and ester hydrolysis.

In the discovery and bioscience area, the Company had established DNA-encoded Library (DEL) screening platform, chemopoteomics platform, in vivo imaging technology platform and 3D spheroid and organoid screening platform. In 2020, the Company conducted hit screening campaigns using Pharmaron DEL against the new biological target of interest and successfully identified several novel hit compound series for the customers, which not only helped our customers to speed up their drug discovery programs, but also laid concrete foundation for attracting more customers for our DEL services. The chemopoteomics platform using activity and reactivity-based probes together with proteomics profiling allows quick identification of interacting proteins and targets within the cells or tissues. The in vivo imaging technology platform can provide valuable data to support drugability evaluation with respect to the efficacy and safety of potential drugs. Our image technology platform can quantify potential drugs' tissue distribution dynamically in rodent tumor model using radioistope labelled compounds. In addition, we had developed a simplified method that could conduct isotopic tracing and assess the qualitative and quantitative distribution of compounds in animal at different time points in a faster, more efficient and low-cost manner which can further promotion the application of such technology in early drug discovery programs. Also, we are in the process of building up 3D spheroids and organoid screening platform which are closer to the complex in vivo conditions as compared to traditional 2D culture. Using 3D spheroids and organoids as in vitro assay platform to investigate the potential efficacy and safety of drugs has more clinical significance.

4. Dedicated, stable and visionary management teams, experienced talent pools with progressive corporate culture

The Company's management team is led by Dr. LOU Boliang, our chairman and chief executive officer. With over 30 years of experience in the pharmaceutical industry, he is highly respected in the industry for his excellent leadership that contributes to the Company's rapid development. The Company's senior management team has been with us for more than 10 years. The Company has nearly 100 senior scientific and technical leaders, 3 of whom were named as National Talents and 15 named as Beijing Talents. Members of our highly skilled, experienced and international management team possess diverse expertise and extensive knowledge, and have significantly contributed to the growth of the Company's institutional knowledge base. The Company focuses on its home-grown scientific teamconsisting of selected, young and promising scientists, which enables us to form a cohesive and vibrant mid-level management team composed of nearly 2,000 technical managers and high-caliber scientific research talents across all scientific disciplines of the Company. In addition, the Company's visionary management team has established a highly experienced and skilled talent pool with strong execution efficiency. As of December 31, 2020, the Company had over 9,800 R&D, production technology and clinical services staff in China, the U.K. and the U.S.. The highly professional technical team ensures the Company's continuous provision of high-quality R&D services for customers. The open platform for talent development ensures that the Company will continuously attract talents from around the globe.

The Company is committed to its corporate philosophy of "Employee First and Customer Centric" which put strong emphasis on employee training and improves all mechanisms so as to integrate their career development into the Company's overall development strategy. In order to develop and train our talents, the Company provides training to our employees through our in-house training system including the "Pharmaron College", visiting scholar programs at renowned laboratories and institutions and holds various seminars, forums and academic symposiums regularly, through which our team members acquire updates on the most advanced technology and techniques of the industry. In addition, the Company has developed training programs with the world renowned universities and research institutes for high-caliber scientific research talent. The above measures have greatly improved the scientific research capabilities and cohesion of the Company and its employees. Furthermore, we respect and value every single customer so as to ensure R&D quality by tackling each technical challenges and complete every single tasks with integrity and scientific rigor.

Our dedicated, stable and visionary management team, experienced talent pool and outstanding corporate culture lay a solid foundation for the Company's long-term success.

5. Reputable, loyal and expanding customer base that contributes to our sustainable growth and business collaboration

The Company has a large, diverse and loyal customer base consisting of more than 1,500 customers, including the global top 20 pharmaceutical companies and numerous reputable biotech companies. In 2020, the Company introduced 721 new customers, with over 90% of revenue contributed by the Company's large, diverse and loyal repeat customers The Company's fully-integrated solution and deep understanding of customers' needs allow it to provide customized pharmaceutical R&D services for customers according to their needs. With further progress made in the existing customers' projects, the loyal and growing customer base will enable us to develop new services in drug development and at the early clinical stage.

The Company benefits from its strategic partnership with specific customers. Through know-how sharing and training provided during our deep collaboration with these customers, the Company is able to further improve technical capabilities and enhance service excellence, thereby creating a virtuous cycle. With our strong technical expertise, advanced technological infrastructure, profound industry knowledge, strong execution capability and quality customer services, the Company is able to become our customers' strategic partner and help them form their drug development or R&D outsourcing strategies, which in turn reinforces our close relationships with such customers. In addition to our strong scientific capabilities, the Company puts emphasis on areas like environmental protection, health, safety and intellectual property protection. The Company takes such measures as establishing the intellectual property protection system and building the information system to ensure that our customers' intellectual properties are well protected, and is widely recognized and trusted by customers in this respect. The Company's high-quality services enable us to accumulate a good reputation among our existing customers, and to further expand our customer base by acquiring new customers through word-of-mouth referrals.

6. Insight into industry trends and well positioned to capture growth opportunities arising from industry evolution

The Company, with profound industry accumulation, large customer base and close partnership, keeps abreast of the global pharmaceutical R&D trends. It's strong awareness and understanding of evolving R&D needs allow the Company to be adaptive and expand into new emerging fields and implement innovative technology to better serve our customers.

It is a trend for pharmaceutical R&D companies to enter into deeper collaborations with their pharmaceutical R&D service providers that provide end-to-end services with good track records to achieve higher R&D efficiency. In addition, the number of biotech start-ups and their R&D investments increase rapidly. Out of consideration of costs and time efficiency, these biotech start-ups more extensively use the fully-integrated R&D services platform to support their pharmaceutical R&D programs. Through long-term collaboration with customers, the Company will contribute to transforming the drug R&D industry in a more efficient way and continuously benefit from the growing demand for pharmaceutical R&D services.

Along with the trend of the Chinese pharmaceutical industry shifting from generic drugs to innovative drugs and the rapidly increasing number of biotech start-ups in China, making it the fastest-growing pharmaceutical R&D services market across the world. The Company is well-positioned to capitalize on the strong growth drivers in China's pharmaceutical R&D industry and further strengthen its leadership in such a market.

Outlook for 2021

Discussion and Analysis of Future Development

1. Industry competition and development

The Company is engaged in drug research, development and manufacturing services, and provides customers with fully-integrated services for innovative pharmaceutical products throughout the research and development cycle. Its business is closely related to the development of the pharmaceutical industry and pharmaceutical R&D outsourcing market.

(1) Market conditions of pharmaceutical R&D and outsourcing services

Under the pressure of increasing R&D costs and patent cliff, as well as limited by their own R&D capacity, pharmaceutical companies gradually turn to pharmaceutical R&D and manufacturing outsourcing services with an aim to reduce their R&D costs of drugs and improve their R&D efficiency. The increasing investment in pharmaceutical R&D also provides a solid foundation for the market development of outsourcing services for R&D and manufacturing. In the future, the size of global pharmaceutical research, development and manufacturing service market and the size of China's pharmaceutical service market are expected to maintain solid growth. According to Frost & Sullivan's forecast, the size of global pharmaceutical service market is expected to be US$99.9 billion in 2020. It is estimated that the size of global pharmaceutical service market will increase to US$149.8 billion by 2024, representing an excepted CAGR of 10.7% from 2020 to 2024. Compared to global pharmaceutical service market, China's pharmaceutical service market is smaller in size but is growing at a faster growth rate. According to Frost & Sullivan's forecast, the size of China's pharmaceutical service market is expected to reach US$12 billion in 2020, and it is expected to increase to US$32.7 billion by 2024, twice the growth rate of global pharmaceutical service market. According to Frost & Sullivan's forecast, the size of global pharmaceutical R&D outsourcing services market was US$67.2 billion in 2020, representing a market penetration rate (the proportion of the size of the total CRO services market in the total R&D investment) of 35.2%; meanwhile, the size of Chinese pharmaceutical R&D outsourcing services market is expected to be US$8 billion in 2020, representing a market penetration rate of 31.7%. In 2024, the size of global pharmaceutical R&D outsourcing services market is expected to be US$96 billion, and the market penetration rate will further climb to 42.3%; the Chinese market is expected to reach US$22.2 billion and the market penetration rate is expected to be 46.6%.

(2) Market conditions of drug discovery R&D services
Drug discovery is a multidisciplinary and systematic work and process. According to Frost & Sullivan's forecast, the size of global drug discovery service market is expected to be US$14.2 billion in 2020, representing a market penetration rate (the proportion of the revenue from services in the total R&D investment) of 35.5%. It is estimated that the size of global drug discovery service market will increase to US$20.4 billion by 2024, representing a CAGR of 9.5% from 2020 to 2024, far exceeding the growth rate of investment in drug discovery R&D in the same period, and the penetration rate of global drug discovery R&D service market will reach 43.3%; meanwhile, the size of China's drug discovery service market is estimated to be US$1.6 billion in 2020, accounting for 43.2% of the entire drug discovery R&D market. It is estimated that the size of China's drug discovery R&D service market will increase to US$4.3 billion by 2024, exceeding the growth rates of both the investment in drug discovery and the global drug discovery R&D services in the same period. The market penetration rate of China's drug discovery R&D services will also rise to 62.1%.
(3) Market conditions of pharmaceutical development and manufacturing services
Pharmaceutical development and manufacturing services cover the whole process of preclinical research, clinical research, drug registration and commercial manufacturing. According to Frost & Sullivan's forecast, the size of global pharmaceutical CMO service market is expected to be US$32.7 billion in 2020. It is estimated that the size of global pharmaceutical CMO service market will increase to US$53.8 billion by 2024, representing a CAGR of 13.3% from 2020 to 2024; meanwhile, the size of China's pharmaceutical CMO service market is expected to be US$4 billion in 2020, accounting for 12.2% of the entire pharmaceutical CMO service market. It is estimated that the size of China's pharmaceutical CMO service market will increase to US$10.5 billion by 2024, 14.0% higher than the growth rate of global pharmaceutical CMO service in the same period.

(4) Market conditions of clinical development services

Drug clinical development services cover phase I to III of clinical trials and post-commercialization research of drugs. With the steady growth in investments in drug research and development, patent cliff for a number of major pharmaceutical products drawing near and the rising number of small to medium size biotech companies globally, pharmaceutical companies leverage the services providing by CRO, particular in the clinical development area, in order to advances the drug development stages more efficiently. According to Frost and Sullivan's forecast, the global market for drug clinical development services reached US$43.2 billion in 2020, and market penetration (the proportion of revenue of clinical development CRO service in total clinical development investment) is 33.5%. The global market is expected to reach US$62.2 billion by 2024, representing an expected CAGR of 9.5%, and market penetration is expected to reach 40.3%; at the same time, the market for drug clinical development outsourcing services in China has reached US$4.4 billion, accounting for 10.1% of the global market for drug clinical development services, and market penetration was 26.0%. With the rapid growth of the Chinese pharmaceutical industry, it is expected that the market for drug clinical research service in China will reach US$13.7 billion and market penetration rate of 42.7% by 2024, representing an expected CAGR of 33.1%, far exceeding the global market growth rate of 9.5% during the same period.

2. Outlook and strategy of the Company's future development

The Company will continue to build and improve our fully-integrated international pharmaceutical R&D services platform, which has always been our core development strategy. In addition to continue develop our small molecule integrated R&D services platform, the Company will accelerate the establishment of R&D service capabilities for biologics and CGT products as Pharmaron is committed to becoming a global leader in drug R&D services across multiple therapeutic modalities. Through the fully-integrated services platform, the Company is able to provide customers with more flexible and efficient services, business teams equipped with various professional skills customize services for customers according to their needs in a timely manner, and promptly respond to the requirements of relevant R&D projects, so as to help customers successfully and efficiently complete pharmaceutical R&D works while promoting collaboration between different disciplines. On one hand, our international acquisition effectively integrate with our global services platform and brought in the world class talent and facilities into our integrated services platform to further strengthen our overall services capabilities and increase the efficiency of our services. On the other hand, our global operation has established a services network and strategic presence in global life science hubs which enhance the customer communication and understanding of customer needs as well as offers customized solutions to customers by integrating the expertise and presence from our global operations.

We will adhere to the business development strategy that put emphasis on both domestic and overseas markets. Through our established effort in developing overseas market, we have a large customers base with solid customer relationship and we will constantly improves our R&D capabilities and professional skills to offer high quality services to our customers and expand our collaboration with them. Also, we will take advantage of our brand reputation and develop and introduce our services to more customers. For the domestic market, we will pay more attention in cultivating the domestic market and adopt a specific market strategy to address the domestic needs.

3. Main operational plan of the Company for 2021

In 2021, guided by its long term growth strategy, the Company will carry out works focusing on the following aspects:

(1) Maintain its leading position in the small molecule R&D service area and further enhance our technologies and global footprint expansion.
Advanced technologies are crucial for the Company to maintain its leading position in the small molecule area, the Company will build upon its established fully-integrated small molecule drugs R&D services platform and continuously invest in the latest small molecule technology to expand the services offerings. Also, regarding business development, we will pay more attention to brand building by providing top quality small molecule services to further strengthen customer loyalty and brand recognition.
(2) Accelerate the build up of biologics and CGT services platform
While developing discovery biologics service capabilities, we will accelerate the build-up of the CDMO service platform for biologics and CGT products. In 2021, we will further develop our biologics drug discovery service capabilities by expanding our team and introduce more professional talent and broaden our services offering. We will accelerate the construction of biologics manufacturing capacities for drug development stage in Ningbo and establishing a quality system that meet the highest international standard. Furthermore, we will leverage on the existing CGT service capabilities of Absorption Systems and the acquisition of Allergan Biologics Limited which we expect to complete in second quarter of 2021 to establish our global CGT service platform.
(3) Further enhance management capabilities
To strengthen our core competitiveness, we will further integrate our global resources to build a global services platform. As such, we will improve execution efficiency of the management team to better support our global expansion strategy. Our management capabilities also involves quality and safety management. In 2021, the Company will provide high quality services and products to our customers by adhering to the highest international quality standards. Safety production will continue to be the top priority of our daily operation which is crucial for the sustainability of the Company businesses. On top of that, information security will become an important component of our safety production efforts. For this purpose, we will continuously optimize and upgrade the information system of our global operation to constantly safeguard customers' information and intellectual properties.
(4) Continue to expand domestic and overseas market shares
For the overseas market growth, we will continue to maintain our solid relationships with our existing customer base, deeply analyze and explore customer needs, expand our service offerings, and introduce new customers with the help of our reputation and brand influence. For the domestic market, we will pay more attention in cultivating the domestic market and adopt a specific market strategy to address the domestic needs to improve our competitiveness in the domestic market. With the increase of our late stage CMC (small molecule CDMO) service capacity, we are seeking further expansion in the domestic market.

(5) Continue to strengthen our talent pool to support our long-term and sustainable growth

Human resources are the foundation of innovation and key to strengthen our core competitiveness. As future development of the Company rely on high caliber talents in different areas, we deeply understand the urgency and necessity of building an inclusive and open talent development platform to continually infuse new energy to fuel our company innovation and growth.

4. Potential risks

(1) Risk of declining demand in pharmaceutical R&D service market
The Company is a leading fully-integrated pharmaceutical R&D services platform with global operations to accelerate drug innovation for our customers. While the global pharmaceutical industry is expected to keep growing driven by such factors as an aging population, higher disposable income and increased spending on healthcare, there is no guarantee, that the pharmaceutical industry will grow at the rate we project. If the growth of the global pharmaceutical market slows down in the future, customers may suspend their pharmaceutical R&D projects or reduce their pharmaceutical R&D budget, which will have an adverse impact on the Company's business performance and prospects. The Company will continue to implement its strategies, improve its scientific research capabilities and service quality and enhance its market competitiveness.
(2) Risk of losing scientific and technological talents and senior management members
The Company has established a talent team with extensive experience and strong execution capability, which possesses the ability to provide customers with high-quality services in a timely manner and keep up with the cutting-edge technology and latest development of pharmaceutical R&D. However, there is a limited supply of qualified R&D personnel with requisite experience and expertise and such qualified personnel are also highly sought after by large pharmaceutical companies, biotech start-ups and scientific research institutes. If the Company fails to maintain competitiveness in attracting and retaining excellent scientific and technological personnel in the future, we may not be able to provide customers with high-quality services, which could have a material adverse impact on its business.
The Company will optimize and improve the human resource management system, further strengthen efforts in various aspects such as attraction, assessment, training and incentives, and constantly improve the long-term incentive mechanism (including equity incentives) for all kinds of talent, striving to establish a talent team with first-class caliber that can adapt to international competition.

(3) Risks regarding intellectual property protection
Protection of intellectual property rights associated with customers' R&D services is critical to all of our customers. The service agreements and confidentiality agreements signed between the Company and our customers typically require the Company to exercise all reasonable precautions to protect the integrity and confidentiality of our customers' information. Any unauthorized disclosure of our customers' intellectual property or confidential information could subject the Company to liability for breach of contract and result in significant damage to our reputation, which could have a material adverse impact on the Company's business and operating results.
The Company will continuously improve the existing confidentiality policy, software and hardware, and continue to carry out internal training for employees to enhance their awareness of confidentiality and intellectual property protection.
(4) Risks regarding policies and regulation
There are strict laws, regulations and industry standards in many countries or regions to which drugs are intended to be ultimately sold (such as China, the U.S., the U.K. and several EU countries) to regulate drug development and manufacturing. The pharmaceutical regulatory authorities of these countries (e.g., FDA or NMPA) also conduct planned or unplanned facility inspections over drug development and manufacturing agencies (e.g., our customers and us) to ensure that relevant facilities meet regulatory requirements. During the past periods, the Company has passed the inspection of relevant regulatory authorities on drug discovery, development and manufacturing processes and facilities in all major aspects. If the Company fails to continuously meet the requirements of regulatory policies or fails to pass the on-site inspection by regulatory authorities in the future, it may be disqualified or subject to other administrative penalties, resulting in the termination of cooperation by our customers.
In addition, the operation of the Company is subject to national and regional laws on environmental protection, health and safety, including but not limited to the use of hazardous chemicals that are flammable, explosive and toxic and the treatment of pollutants (waste gas, waste water, waste residue or other pollutants). If the relevant environmental protection policies become more stringent in the future, the Company's costs for environmental compliance will rise.
The Company will monitor the trend of applicable policies and regulations to ensure its continuous fulfillment of regulatory policy requirements.

(5) Risk of international policy changes
We are a pharmaceutical R&D services platform with well-established global operations and a substantial portion of our customers are pharmaceutical and biotechnology companies outside of China. The demand for our services by these customers may be impacted by trade policies promulgated by respective local governments against Chinese pharmaceutical R&D service providers as a result of the rise in trade protectionism and unilateralism in recent years. In the event the trade tension between China and other major countries continue to escalate, or any such countries impose restrictions or limitations on pharmaceutical R&D outsourcing, our business and results of operations may be adversely affected. We have been expanding our service capabilities in overseas markets since 2015 with an aim to mitigate any potential impact such policy changes may have on our business.
(6) Risk of failure to obtain the licenses required for carrying out businesses
The Company is subject to a number of laws and regulations on pharmaceutical R&D and manufacturing. These laws and regulations require that the Company obtain a number of approvals, licenses and permits from different competent authorities to operate our business, some of which are subject to regular renewal. The Company has and will continue to strictly monitor its licensing management. If the Company fails to obtain the approval, license and permit required for its operation, it will have to suspend its operation as ordered by the relevant regulatory authorities.
(7) Risks regarding exchange rates
The Company's exchange currency risk mainly relates to USD, GBP and EUR. During the Reporting Period, the Company's income from overseas customers took up a much higher portion than that from domestic customers, and a considerable portion of our income came from sales denominated in USD. However, most of the Company's personnel and operating facilities are located in China, and the relevant operating costs and expenses are denominated in RMB. In recent years, as affected by China's political and economic conditions, trade tensions between the U.S. and China, international economic and political developments, as well as the decision of the Chinese government to further promote the reform of the RMB exchange rate system and enhance the flexibility of RMB exchange rates, the exchange rates between RMB and USD and other currencies fluctuate.
In response to the risk of exchange rate fluctuations, the Company has reduced and will continue to reduce such risk through hedging transactions.

(8) Risks regarding market competition
The global pharmaceutical R&D service market for innovative drugs is highly competitive. The Company is committed to building a fully-integrated services platform with laboratory services, clinical development and CMC (small molecule CDMO) services capabilities. Therefore, the Company expects to compete with domestic and international competitors at specific stages of pharmaceutical R&D. At the same time, the Company also competes with the discovery, trial, development and commercial manufacturing departments within pharmaceutical companies. As more competitors enter the market, level of competition is expected to escalate. The Company is confronted with market competition in terms of service quality, breadth of integrated service, timeliness of delivery, R&D service strength, intellectual property protection, depth of customer relationship, price, etc.
(9) Risks regarding technological innovation
With the continuous market development and innovation of R&D technologies, advanced technologies are vital for the Company to maintain its leading position in the industry. The Company shall keep up with the development direction of new technologies and processes to maintain our leading position in the industry. The Company will continue to invest a large amount of human and capital resources to develop new technologies and upgrade our services platform. If target companies with new technologies appeal to us, the Company will consider acquisitions to inject new service capabilities into our platform.
(10) Risks regarding service quality
Service quality and customer satisfaction are one of the important factors for the Company to maintain performance growth. The Company's pharmaceutical research, development and production services mainly provide customers with experimental data and samples, which serve as an important basis for customers to carry out subsequent R&D and manufacturing. Meanwhile, our customers have the right to review the standard operating procedures and records of the Company's services, and check the facilities used to provide services to them. The Company has and will continue to steadily advance quality management to provide customers with high-quality products and services. If the Company fails to maintain high service quality, or the experimental data or samples we provide are defective, or our service facilities fail to pass customers' review, the Company may face liquidated damages and suffer loss of customers due to reputation damage, which will have an adverse impact on the Company's busines.

OTHER INFORMATION

Final Dividend

The Board proposed to declare a final dividend of RMB3.00 (inclusive of tax) per 10 shares or an aggregate of approximately RMB238.3 million for the year ended December 31, 2020.

The aforesaid proposal is subject to the consideration and approval at the AGM. If the distribution proposal is approved at the AGM, it is expected that the final dividend for the year ended December 31, 2020 will be paid in 60 days after AGM to the shareholders. Details regarding the closure of the register of members of the Company and declaration and payment of dividends will be announced separately.

Use of Proceeds from the Global Offering

Upon completion of the global offering of its H Shares (the "Global Offering"), the Company raised net proceeds of approximately RMB4,522.7 million. As at December 31, 2020, the balance of unutilized net proceeds amounted to approximately RMB2,293.0 million. The net proceeds from the Global Offering have been and will be utilized in accordance with the purposes set out in the prospectus of the Company dated November 14, 2019. The table below sets out the planned applications of the net proceeds and actual usage up to December 31, 2020.

Expected timeline for

Use of proceedsAllocation of net proceeds (RMB million)Utilized amount as at December 31, 2020 (RMB million)Unutilized net proceeds as at December 31, 2020 (RMB million)utilizing the net proceeds from the

Global Offering (1)

Expand capacities and capabilities in laboratory and manufacturing facilities in the PRC

Expected to be fully utilized by

30.0%

1,356.8

909.9

446.9

December 31, 2021

Expected to be fully utilized by

• upgrading and expanding our Ningbo facility

19.5%

881.9

482.8

399.1

December 31, 2021

Expected to be fully utilized by

• upgrading and expanding our Tianjin facility

4.5%

203.5

155.7

47.8

December 31, 2021

Have been fully utilized by

• upgrading and expanding other manufacturing facilities

6.0%

271.4

December 31, 2020

Use of proceedsAllocation of net proceeds (RMB million)Utilized amount as at December 31, 2020 (RMB million)Unutilized net proceeds as at December 31, 2020 (RMB million)Expected timeline for utilizing the net proceeds from the

Global Offering (1)

Expected to be fully utilized byFund further expansion of businesses in the U.S. and U.K.

10.0%

452.3

114.6

337.7

December 31, 2021

Establish pharmaceutical R&D services platform for discovery and development of biologics

Expected to be fully utilized by

20.0%

904.5

December 31, 2022

Expected to be fully utilized byExpand clinical development services

15.0%

678.4

74.5

603.9

December 31, 2022

Expand our capacity and capabilities through acquisitions of CRO and CMO companies and businesses

Have been fully utilized by

15.0%

678.4

December 31, 2020

Have been fully utilized byGeneral corporate and working capital

10.0%

452.3

December 31, 2020

Total

4,522.7

2,229.7

2,293.0

Note: The Company intends to use the remaining unused net proceeds in the coming years in accordance with the purpose set out in the Prospectus. The Company will continue to evaluate the Group's business objectives and will change or modify the plans against the changing market conditions to suit the business growth of the Group. We will issue an appropriate announcement if there is any material change to the above proposed use of proceeds.

Employee Remuneration and Relations

As at December 31, 2020, the Group had a total of 11,012 employees, as compared to 7,393 employees as at December 31, 2019. The Group provides employees with competitive remuneration and benefits, and the Group's remuneration policies are formulated according to the assessment of individual performance and are periodically reviewed. The Group provides employees with opportunities to work on cutting-edge drug development projects with world-class scientists, as well as offer opportunities to continue academic learning in the Group's Pharmaron College.

Purchase, Sale or Redemption of the Company's Listed Securities

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's listed securities during the Reporting Period.

Material Events after the Reporting Period

Acquisition of 100% equity interest in Allergan Biologics Limited ("ABL")

In February 2021, Pharmaron Biologics (UK) Holdings Limited and Pharmaron (Hong Kong) International Limited (both are wholly-owned subsidiaries of the Company) entered into a sale and purchase Agreement with AGN Sundry LLC to acquire 100% equity interest of ABL, at an estimated cash consideration of US$120,000,000 (equivalent to RMB776,556,000). ABL (an indirect subsidiary of AbbVie Inc., a company listed on the New York Stock Exchange) is an in-house R&D center of AbbVie Inc. for biologics and other advanced therapeutics. It operates a manufacturing facility in Liverpool, U.K., which is one of the most advanced research and development and clinical manufacturing facilities in the area. For further details, please refer to the announcement of the Company dated March 1, 2021.

The acquisition is expected to be completed later in the second quarter of 2021.

Compliance with the Model Code for Securities Transactions by Directors

The Company has adopted the Model Code as set out in Appendix 10 of the Listing Rules as its code of conduct for Directors' securities transactions. Having made specific enquiry with the Directors, all of the Directors confirmed that they have complied with the required standards as set out in the Model Code during the Reporting Period.

Compliance with the Corporate Governance Code

During the Reporting Period, the Company has complied with all the code provisions set forth in the Corporate Governance Code in Appendix 14 of the Listing Rules, with the exception that the roles of the chairman of the Board and the general manager of our Company have not been segregated as required by code provision A.2.1 of the Corporate Governance Code. In view of Dr. LOU Boliang's experience, personal profile and his roles in our Company and that Dr. LOU has assumed the role of chief executive officer of our Company since our commencement of business, the Board considers it beneficial to the business prospect and operational efficiency of our Company that Dr. LOU assumes the roles of the chairman of the Board as well as the chief executive officer of our Company. The Board shall review the structure from time to time to ensure that the structure facilitates the execution of the Group's business strategies and maximizes effectiveness of its operation.

Audit Committee

The Company established the Audit Committee with written terms of reference in compliance with Rule 3.21 of the Listing Rules and the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 to the Listing Rules. The Audit Committee comprises three members, namely, Mr. YU Jian, Mr. TSANG Kwan Hung Benson and Ms. CHEN Guoqin, who are all independent non-executive Directors of the Company. Mr. YU is the chairman of the Audit Committee, who possesses suitable professional qualifications.

The Audit Committee has reviewed the Company's audited consolidated annual results for the Reporting Period and confirms that the applicable accounting principles, standards and requirements have been complied with, and that adequate disclosures have been made. The Audit Committee has also discussed the auditing, internal control and financial reporting matters.

Scope of Work of Ernst & Young

The figures above in respect of this annual results announcement for the year ended December 31, 2020 have been agreed with the Company's auditor, Ernst & Young, certified public accountants ("Ernst & Young"), to be consistent with the amounts set out in the Group's consolidated financial statements for the year. The work performed by Ernst & Young in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by Ernst & Young on this announcement.

Annual General Meeting

During the 9th meeting of the 2nd session of the Board, the Board has (i) approved the convening of the AGM; and (ii) authorized the chairman of the Board to approve the documents to be issued for the AGM, and to determine other matters relating to the AGM, including but not limited to the time and place of the AGM. The notice and circular for the AGM will be dispatched in due course.

Publication of the Annual Results and Annual Report

The annual results announcement is published on the website of the Stock Exchange (www.hkexnews.hk) as well as the website of the Company (www.pharmaron.com). The Group's 2020 annual report which include all the financial and other related information of the Company required by the Listing Rules will be dispatched to shareholders and will be published on the aforementioned websites in due course.

APPRECIATION

Lastly, I would like to thank all the staff and the management team for their hard work during the Reporting Period. I would also like to express heartfelt gratitude to all of our users and business partners on behalf of the Group, and wish for their continuous support in the future. We will keep working closely with our shareholders and employees to steer the Group to a more modernized and sophisticated level of operation, through which we aspire to turn to a new chapter in the Group's development.

DEFINITIONS
"AGM"	the annual general meeting of the Company to be held for the
purpose of, among others, approving the audited financial statements
for the year ended December 31, 2020
"AMS"	accelerator mass spectrometry
"API"	Active Pharmaceutical Ingredient
"A Share(s)"	domestic shares of our Company, with a nominal value of RMB1.00
each, which are listed for trading on the Shenzhen Stock Exchange
and traded in RMB
"Audit Committee"	the audit committee of the Board
"Board"	the board of Directors of the Company
"14C"	Carbon-14 (14C), or radiocarbon, a radioactive isotope of carbon with
an atomic nucleus containing 6 protons and 8 neutrons
"CAGR"	compound annual growth rate
"CGT"	cell and gene therapy
"CMC"	chemistry, manufacturing and controls
"CMO"	Contract Manufacturing Organization
"Company"	Pharmaron Beijing Co., Ltd. (ੰᎲʷϓ€̏ԯอᖹҦஔٰ΅Ϟࠢ
ʮ̡), a joint stock limited company incorporated under the laws of
the PRC
"CRC"	Clinical Research Coordinator
"CR Medicon"	Nanjing Ximaidi Medical Technology Co., Ltd. (یԯҎ௥ࠔᔼᖹ߅
ҦϞࠢʮ̡) a company incorporated in PRC on January 20 2017,
which is held as of 100% by CR Medicon, our subsidiary
"CRO"	Contract Research Organization
"DMPK/ADME"	drug metabolism and pharmacokinetics/Absorption, Distribution,
Metabolism and Excretion
"Directors"	directors of the Company
"EU"	European Union
"EUR"	Euro, the lawful currency of European Union
51

"FDA"	the Food and Drug Administration of the U.S.
"FIH"	first-in-human
"GBP"	Great Britain Pound, the lawful currency of the United Kingdom
"GLP"	Good Laboratory Practice
"GMP"	Good Manufacturing Practice
"H Share(s)"	overseas-listed foreign shares in the share capital of our Company,
with a nominal value of RMB1.00 each, which are listed for trading
on the Hong Kong Stock Exchange and traded in HK dollars
"IND applications"	Investigational new drug applications
"Group", "we", "our"	the Company and its subsidiaries
or "us"
"LinkStart"	Beijing LinkStart Biotechnology Co., Ltd. (̏ԯᑌ౶༺ᔼᖹ߅Ҧ೯
࢝Ϟࠢʮ̡), a company incorporated in PRC on July 19, 2012, one
of our subsidiaries
"Listing Rules"	the Rules Governing the Listing of Securities of the Stock Exchange
"Model Code"	the Model Code for Securities Transactions by Directors of the
Listing Issuers
"NMPA"	National Medical Product Administration (਷࢕ᖹ္ۜຖ၍ଣ҅)
(formerly known as China Food and Drug Administration), the
authority responsible for approving drug and biologic products in
China
"OECD"	the Organization for Economic Cooperation and Development
"PRC"	the People's Republic of China
"Pharmaron Ningbo Tech"	Pharmaron (Ningbo) Technology Development Co., Ltd. (ੰᎲʷ
ϓ€ྐྵت߅Ҧ೯࢝Ϟࠢʮ̡), formerly known as Ningbo KTB
Technology Development Co., Ltd. (ྐྵتੰइ௹߅Ҧ೯࢝Ϟࠢʮ
̡), a company incorporated in the PRC on January 12, 2015, our
wholly-owned subsidiary
"Pharmaron Shaoxing"	Pharmaron Shaoxing Co., Ltd. (ੰᎲʷϓ€ୗጳᖹุϞࠢʮ̡), a
company incorporated in the PRC on January 3, 2017, our wholly-
owned subsidiary

"Pharmaron Tianjin"	Pharmaron (Tianjin) Process Development and Manufacturing
Co., Ltd. (ੰᎲʷϓ€˂ݵᖹيႡ௪ҦஔϞࠢʮ̡), a company
incorporated in the PRC on July 16, 2008, our wholly-owned
subsidiary
"R&D"	research and development
"Reporting Period"	the year ended December 31, 2020
"RMB"	Renminbi, the lawful currency of the PRC
"SMO"	Site Management Organization
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"U.K."	the United Kingdom
"U.S."	the United States
"USD"	United States Dollar, the lawful currency of the United States
"%"	per cent.
Beijing, the PRC
March 28, 2021

By order of the Board Pharmaron Beijing Co., Ltd.

Dr. LOU Boliang

Chairman

As at the date of this announcement, the Board of Directors of the Company comprises Dr. LOU Boliang, Mr. LOU Xiaoqiang and Ms. ZHENG Bei as executive Directors, Mr. CHEN Pingjin, Mr. HU Baifeng, Mr. LI Jiaqing and Mr. ZHOU Hongbin as non-executive Directors, and Mr. DAI Lixin, Ms. CHEN Guoqin, Mr. TSANG Kwan Hung Benson and Mr. YU Jian as independent non-executive Directors.

* For identification purposes only

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Pharmaron Beijing Co. Ltd. published this content on 28 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 March 2021 10:17:00 UTC.

End-of-day quote Shenzhen S.E. Other stock markets 06:00:00 2024-04-25 pm EDT			5-day change	1st Jan Change
19.16 ^CNY	+5.04%		+5.39%	-33.89%

Apr. 26	Pharmaron Beijing Posts 34% Profit Drop in Q1 as Revenue Slips 2%	MT
Apr. 26	Nomura Adjusts Pharmaron Beijing Co's Price Target to HK$15.41 From HK$17.99, Keeps at Buy	MT

Pharmaron Beijing Posts 34% Profit Drop in Q1 as Revenue Slips 2%	Apr. 26	MT
Nomura Adjusts Pharmaron Beijing Co's Price Target to HK$15.41 From HK$17.99, Keeps at Buy	Apr. 26	MT
Pharmaron Beijing To Repurchase Shares Worth Up To 300 Million Yuan; Shares Jump 8%	Apr. 26	MT
Pharmaron Beijing Co., Ltd. announces an Equity Buyback for CNY 300 million worth of its shares.	Apr. 25	CI
Pharmaron Beijing Co., Ltd. Announces Executive Changes	Apr. 25	CI
Pharmaron Beijing Co., Ltd. Reports Earnings Results for the First Quarter Ended March 31, 2024	Apr. 25	CI
Pharmaron Beijing Co., Ltd. authorizes a Buyback Plan.	Apr. 24	CI
Pharmaron Partners Seven Firms to Float 2 Billion Yuan Fund	Apr. 08	MT
Pharmaron's 2023 Profit, Revenue Rise; Misses Estimates	Mar. 28	MT
Pharmaron Beijing Co., Ltd. Proposes Final Dividend for the Financial Year Ended December 31, 2023	Mar. 27	CI
Pharmaron Beijing Co., Ltd. Reports Earnings Results for the Full Year Ended December 31, 2023	Mar. 27	CI
Nomura Adjusts Pharmaron Beijing’s Price Target to HK$17.99 From HK$30.92, Keeps at Buy	Mar. 06	MT
Pharmaron Beijing Sees Up to 14% Jump in 2023 Profit	Jan. 29	MT
Pharmaron Forecasts Up to 19% Rise in 2023 Attributable Profit	Jan. 29	MT
Pharmaron Beijing Co., Ltd. Provides Earnings Guidance for the Financial Year Ended December 31, 2023	Jan. 28	CI
Pharmaron Beijing Buys Back Additional Series 2 Bonds	Jan. 15	MT
Pharmaron Beijing Buys Back $68 Million of Convertible Bonds Due 2026	Jan. 12	MT
Pharmaron Beijing Buys Back 705 Million Yuan of Series 2 Bonds Due 2026	Jan. 12	MT
Pharmaron's Q3 Attributable Profit Rises 6%; Shenzhen Shares Surge 12%	23-10-30	MT
Pharmaron Beijing Co., Ltd. Reports Earnings Results for the Nine Months Ended September 30, 2023	23-10-29	CI
Nomura Adjusts Pharmaron’s Price Target to 61.24 Yuan From 66.94 Yuan, Keeps at Buy	23-10-25	MT
Pharmaron's Profit Climbs 34.3% in H1	23-08-28	MT
Pharmaron Beijing Co., Ltd. Reports Earnings Results for the Half Year Ended June 30, 2023	23-08-27	CI
Pharmaron Beijing's Profit to Jump Up to 36% in H1; Shares Jump 10%	23-07-31	MT
Pharmaron Slashes Conversion Price of Zero-Coupon Convertible Bonds Due 2026	23-07-26	MT

	1st Jan change	Capi.
PHARMARON BEIJING CO., LTD.	-33.89%	3.94B
IQVIA HOLDINGS INC.	+1.51%	42.59B
MODERNA, INC.	+8.57%	40.65B
LONZA GROUP AG	+49.22%	40.57B
CELLTRION, INC.	-12.36%	26.77B
ICON PUBLIC LIMITED COMPANY	+8.92%	24.81B
ALNYLAM PHARMACEUTICALS, INC.	-25.13%	18.17B
MEDPACE HOLDINGS, INC.	+29.17%	12.05B
CHARLES RIVER LABORATORIES INTERNATIONAL, INC.	-3.12%	11.7B
UNITED THERAPEUTICS CORPORATION	+6.35%	11.1B

Pharmaron Beijing Co., Ltd.

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300759

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Biotechnology & Medical Research

Pharmaron Beijing : ANNUAL RESULTS ANNOUNCEMENT FOR THE YEAR ENDED DECEMBER 31, 2020

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