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一致B:2017年半年度报告(英文版) 下载公告
公告日期:2017-08-24
China National Accord Medicines Corporation Ltd.
                                                        Semi-Annual Report 2017
China National Accord Medicines Corporation Ltd.
             Semi-Annual Report 2017
                   August 2017
                                                 China National Accord Medicines Corporation Ltd.
                                                                        Semi-Annual Report 2017
         Section I. Important Notice, Contents and Paraphrase
Board of Directors, Supervisory Committee, all directors, supervisors and senior
executives of China National Accord Medicines Corporation Ltd. (hereinafter
referred to as the Company) hereby confirm that there are no any fictitious
statements, misleading statements, or important omissions carried in this report,
and shall take all responsibilities, individual and/or joint, for the reality,
accuracy and completion of the whole contents.
Lin Zhaoxiong, Principal of the Company, Wei Pingxiao, person in charger of
accounting works and Wang Ying, person in charge of accounting organ
(accounting principal) hereby confirm that the Financial Report of Semi
-Annual Report 2017 is authentic, accurate and complete.
All directors are attended the Board Meeting for report deliberation.
It is likely to existing risks in aspect of industrial competition, operation&
management, market and national policy, and majority investors are advised to
exercise caution of investment risks.
The Company plans not to pay cash dividends, bonus and carry out capitalizing
of common reserves.
                                                                                       China National Accord Medicines Corporation Ltd.
                                                                                                              Semi-Annual Report 2017
                                                           Contents
Semi-Annual Report 2017 ................................................................................................................. 1
Section I Important Notice and Paraphrase .................................................................................... 2
Section II Company Profile and Main Financial Indexes .............................................................. 5
Section III Summary of Company Business                            ................................................................................ 9
Section IV Discussion and Analysis of Business ............................................................................ 12
Section V Important Events ............................................................................................................ 22
Section VI Changes in Shares and Shareholders .......................................................................... 48
Section VII Preferred Stock ............................................................................................................ 54
Section VIII Particulars about Directors, Supervisors and Senior Executives .......................... 55
Section IX Corporate Bonds ........................................................................................................... 56
Section X Financial Report ............................................................................................................. 57
Section XI Documents Available for Reference ........................................................................... 254
                                                                            China National Accord Medicines Corporation Ltd.
                                                                                                   Semi-Annual Report 2017
                                                   Paraphrase
                  Items                Refers to                                      Contents
Listed Company, Company, the
                                       Refers to   China National Accord Medicines Corporation Ltd.
Company, Sinopharm Accord, the Group
Sinopharm Group                        Refers to   Sinopharm Group Co., Ltd., controlling shareholder of the Company
“Twelfth Five-Year”                  Refers to   Year of 2011 to 2015
Company Law                            Refers to   Company Law of the People’s Republic of China
Securities Law                         Refers to   Securities Law of the People’s Republic of China
Yuan, 10 thousand Yuan, 100 million
                                       Refers to   RMB, RMB 10 thousand, RMB 100 million
Yuan
Terminology:                           Refers to
Direct selling                         Refers to   A sales method of selling drug to the hospital directly
GMP certificate                        Refers to   Good Manufacture Practice of Drugs certificate
GSP certificate                        Refers to   Good Supply Practice certificate
                                                   That is CMS, and information system processing workflow &
Supply Chain Management                Refers to
                                                   procurement, inventory & sales documents
Abbreviation                           Refers to
SINOPHARM                              Refers to   China National Pharmaceutical Group Corporation
SINOPHARM (CNCM LTD)                   Refers to   China National Medicines Corporation Ltd.
Sinopharm Holding Guangzhou            Refers to   Sinopharm Holding Guangzhou Co., Ltd.
Guoda Drug Store                       Refers to   Sinopharm Holding Guoda Drug Store Co., Ltd.
Sinopharm Holding Guangxi              Refers to   Sinopharm Holding Guangxi Co., Ltd.
Shyndec Pharmaceutical                 Refers to   Shanghai Shyndec Pharmaceutical Co., Ltd.
Zhijun Pharmaceutical                  Refers to   China National Zhijun (Shenzhen) Pharmaceutical Co., Ltd.
Zhijun Pharmacy Trade                  Refers to   Shenzhen Zhijun Pharmacy Trade Co., Ltd.
Pingshan Pharmaceutical                Refers to   China National Zhijun (Shenzhen) Pingshan Pharmaceutical Co., Ltd.
Main Luck Pharmaceuticals              Refers to   Shenzhen Main Luck Pharmaceuticals Inc.
China National Zhijun (Suzhou)         Refers to   China National Zhijun (Suzhou) Pharmaceutical Co., Ltd.
                                                                                China National Accord Medicines Corporation Ltd.
                                                                                                       Semi-Annual Report 2017
               Section II Company Profile and Main Finnaical Indexes
I. Company profile
Short form of the stock           Sinopharm Accord ; Accord B           Stock code                  000028, 200028
Stock exchange for listing        Shenzhen Stock Exchange
Name of the Company (in
                                  国药集团一致药业股份有限公司
Chinese)
Short form of the Company
                                  国药一致
(in Chinese)
Foreign name of the Company
                                  China National Accord Medicines Corporation Ltd.
(if applicable)
Short form of foreign name of
                                  Sinopharm Accord
the Company (if applicable)
Legal representative              Lin Zhaoxiong
II. Person/Way to contact
                                                                                       Secretary of the Board
Name                                                              Chen Changbing
                                                                  Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District,
Contact add.
                                                                  Shenzhen, Guangdong Province
Tel.                                                              +(86)755 25875195;+(86)755 25875222
Fax.                                                              +(86)755 25195435
E-mail                                                            gyyz0028@sinopharm.com
III. Others
1. Way of contact
Whether registrations address, offices address and codes as well as website and email of the Company changed in reporting period or
not
□ Applicable √ Not applicable
Registrations address, offices address and codes as well as website and email of the Company has no change in reporting period,
found more details in Annual Report 2016.
                                                                                    China National Accord Medicines Corporation Ltd.
                                                                                                           Semi-Annual Report 2017
2. Information disclosure and preparation place
Whether information disclosure and preparation place changed in reporting period or not
□ Applicable √ Not applicable
The newspaper appointed for information disclosure, website for semi-annual report publish appointed by CSRC and preparation
place for semi-annual report have no change in reporting period, found more details in Annual Report 2016.
IV. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data
√ Yes □ No
Reasons of retroactive adjustment or re-statement
Enterprise combined under the same control
                                                                                                                Increase/decrease in
                                                                            Same period of last year
                                                Current period                                                   this report y-o-y
                                                                     Before adjustment      After adjustment     After adjustment
Operating revenue (RMB)                        20,524,807,669.57      14,089,052,871.88     20,562,402,047.82                -0.18%
Net profit attributable to shareholders of
                                                    556,125,318.19       542,122,083.86        659,078,223.36               -15.62%
the listed company(RMB)
Net profit attributable to shareholders of
the listed company after deducting                  546,253,390.00       404,509,408.41        401,762,449.20                35.96%
non-recurring gains and losses(RMB)
Net cash flow arising from operating
                                                    228,337,431.40       492,634,062.23        829,582,933.34               -72.48%
activities(RMB)
Basic earnings per share (RMB/Share)                        1.299                   1.495               1.558               -16.62%
Diluted earnings per share (RMB/Share)                      1.299                   1.495               1.558               -16.62%
Weighted average ROE                                        6.41%                9.53%                  8.59%                -2.18%
                                                                                                                Increase/decrease in
                                                                                                                this report-end over
                                                                               End of last period
                                             End of current period                                                  that of last
                                                                                                                    period-end
                                                                     Before adjustment      After adjustment     After adjustment
Total assets (RMB)                             22,199,774,990.31      21,312,754,511.97     21,316,548,247.95                 4.14%
Net assets attributable to shareholder of
                                                8,864,455,086.90       8,450,150,621.93      8,452,426,863.52                 4.87%
listed company(RMB)
Note: In October 2016, the Company sell the 51% equity of subordinate three pharmaceutical industry subsidiaries respectively
(including China National Zhijun (Shenzhen) Pharmaceutical Co., Ltd. (former Zhijun Pharmaceutical Co., Ltd., hereinafter referred
to as “Zhijun Pharmaceutical”), Shenzhen Zhijun Pharmacy Trade Co., Ltd.( hereinafter referred to as “Zhijun Pharmacy Trade”) and
China National Zhijun (Shenzhen) Pingshan Pharmaceutical Co., Ltd. (former Sinopharm Holding Shenzhen TCM Co., Ltd.,
                                                                                 China National Accord Medicines Corporation Ltd.
                                                                                                        Semi-Annual Report 2017
hereinafter referred to as “Zhijun Pingshan”)) and the whole operational assets of Pingshan Pharmaceutical R&D base, through
subscribing 15.56% new shares offering under the name of related party Shanghai Shyndec Pharmaceutical Co., Ltd. (hereinafter
referred to as “Shyndec Pharmaceutical”). Correspondingly, the comparative statement of the consolidate profit statement for
semi-annual of 2017 including the profit data for first half year of 2016 under the name of above mentioned three companies.
V. Difference of the accounting data under accounting rules in and out of China
1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International
Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable   √ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under both IAS (International Accounting
Standards) and Chinese GAAP (Generally Accepted Accounting Principles)
2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting
rules and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable   √ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under both foreign accounting rules and
Chinese GAAP (Generally Accepted Accounting Principles)
VI. Items and amounts of extraordinary profit (gains)/loss
√ Applicable   □ Not applicable
                                                                                                                               In RMB
                               Item                                          Amount                             Note
Gains/losses from the disposal of non-current asset (including the                                The gains from fixed assets
                                                                                     202,306.43
write-off that accrued for impairment of assets)                                                  disposal
Governmental subsidy calculated into current gains and
                                                                                                  Vary special subsidies and
losses(while closely related with the normal business of the
                                                                                    9,487,261.15 finance discount received in the
Company, excluding the fixed-amount or fixed-proportion
                                                                                                  Period
governmental subsidy according to the unified national standard)
                                                                                                  The current net gains/losses
                                                                                                  (from period-beginning to
Current net gains/losses (from period-beginning to combination                                    combination date) of the
date) of the subsidiary from enterprise combined under the same                        -1,096.00 Sinopharm Lerentang
control                                                                                           Shijiazhuang Medicine Co., Ltd.
                                                                                                  which purchased by enterprise
                                                                                                  combined under the same control
                                                                                                  Net gains/losses arising from
Reversal of impairment reserve for account receivable with
                                                                                    1,267,915.47 reversal of impairment reserve
separate impairment testing
                                                                                                  for account receivable
                                                                                    China National Accord Medicines Corporation Ltd.
                                                                                                           Semi-Annual Report 2017
                                                                                                     The gains obtained from offering
Gains/losses on entrusted loans                                                         937,951.77 entrust loans to China National
                                                                                                     Zhijun (Suzhou)
Other non-operating income and expenditure except for the
                                                                                      1,429,866.49
aforementioned items
Less: impact on income tax                                                            2,781,507.52
Influenced amount of minority shareholders’ equity (after tax)                         670,769.60
Total                                                                                 9,871,928.19                   --
Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies
Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to
the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their
Securities to the Public --- Extraordinary Profit/loss, explain reasons
□ Applicable √ Not applicable
In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of
extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to
the Public --- Extraordinary Profit/loss.
                                                                                    China National Accord Medicines Corporation Ltd.
                                                                                                           Semi-Annual Report 2017
                          Section III Summary of Company Business
I. Main businesses of the company in the reporting period
Whether the company needs to comply with the disclosure requirements of the particular industry
No
During the reporting period, Sinopharm Accord's main businesses include pharmaceutical distribution and pharmaceutical retail,
details are as follows:
(i) In the field of pharmaceutical distribution, the company aimed to become a pharmaceutical & health products and service provider
with the strongest influence, the highest share, the most complete varieties, the best services, and the fastest delivery in China's
southern region by continuously integrating the distribution and logistics business, deeply permeating into the terminal markets,
improving the ladder distribution network, and creating the intelligent supply chain.
1. The company's pharmaceutical distribution business is mainly established in Guangdong and Guangxi, the company has completed
the network construction in Guangdong and Guangxi in 2013, with the business extending to the county area, accelerated the
integration of three-level companies in 2015, realized the whole network operation in 2015, and further expanded the network in
2016, and established a business operation mode of “wholesale & retail integration” in 2017
2. The company's pharmaceutical distribution business leading in the scale in Guangdong and Guangxi, and led the market segments
in Guangdong and Guangxi, the apparatus and e-commerce business is relatively in the lead in the industry.
(ii) In the field of pharmaceutical retail, the company’s subsidiary Guoda Drug Store is a pharmaceutical retail enterprise ranking first
in the sales volume throughout the country, and is one of the few domestic enterprises with national drug retail networks. Guano Drug
Store retail chain networks spread over 18 provinces, autonomous regions and municipalities, covering nearly 70 large and
medium-sized cities, and manages nearly 3,700 retail drugstores.
1. Rich commodity category system and the nationwide procurement network
Guoda Drug Store is one of the pharmaceutical retail chain enterprises with the most abundant commodities throughout the country
that operates nearly 120,000 varieties of commodities. Relying on its strong purchasing network and years of experience in
commodity operation, Guoda Drug Store has established a set of commodity system with wide coverage, high professionalization
and abundant varieties according to the consumer demands and medication habits
2. Complete logistics and distribution system
Guoda Drug Store has a nationwide modern logistics and distribution system, and has established the logistics and distribution
network covering all the stores throughout the country, including Shanghai National Logistics Center and 23 provincial and
municipal distribution centers.
II. Major changes in main assets
1. Major changes in main assets
                Major assets                                                  Note of major changes
Equity assets                               Increased 87,710,400 Yuan over that of period-begin with 6.21% up, mainly due to the
                                                                                 China National Accord Medicines Corporation Ltd.
                                                                                                        Semi-Annual Report 2017
                                         investment income from associated enterprise
                                         Increased 37,460,200 Yuan over that of period-begin with 7.69% up, mainly because
Fixed assets
                                         logistic system and finance lease construction in process are transfer to fixed assets
                                         Increased 13,563,500 Yuan over that of period-begin with 4.23% up, mainly due to the
Intangible assets
                                         ERP system upgrade from Guoda and new real estate purchased
                                         Decreased 175,210,000 Yuan over that of period-begin with 37.23% down, mainly
Construction in progress                 because some of the ERP project completed and part of the reconstruction of logistic
                                         warehouse are transfer-out
                                         Increased 41,593,400 Yuan over that of period-begin with 43.94% up, mainly due to the
Other non-current assets
                                         investment for Sinopharm CICC Medical Industry Fund
2. Main overseas assets
□ Applicable √ Not applicable
III. Core competitiveness analysis
Whether the company needs to comply with the disclosure requirements of the particular industry
No
As an enterprise with both wholesale and retail business, Sinopharm Accord has the following competitive
advantages:
1. Strong network coverage and layout
- Take the lead in scale and cover the countrywide retail network: Guoda Drug Store is a pharmaceutical retail
enterprise with sales volume ranking first for five consecutive years throughout the country, with retail network
spreading over 18 provinces and municipalities and autonomous regions and covering nearly 70 cities, and
manages nearly 3,700 stores.
- Leading layout and complete distribution network in Guangdong and Guangxi: the company has complete
pharmaceutical distribution networks in Guangdong and Guangxi, which comprehensively cover the medical
institutions above second grade and the large-scale chain drugstores in Guangdong and Guangxi, and provide drug
distribution services for numerous drugstores, community health care service networks, clinics and the third
terminals represented by new rural cooperative medical system. The company is a leading provider of drug
distribution and supply chain services in Southern China.
2. Abundant variety resources
- Guoda Drug Store operates nearly 120,000 merchandises. With its relatively comprehensive purchasing network
and years of experience in commodity management, Guoda Drug Store has established a merchandise system with
wide coverage, high professionalization, and rich varieties.
- In the pharmaceutical distribution, the company has established extensive cooperative relations with thousands of
domestic manufacturers and commercial enterprises and established stable business relationships with hundreds of
import and joint venture manufacturers, and has rich variety resources.
                                                                      China National Accord Medicines Corporation Ltd.
                                                                                             Semi-Annual Report 2017
3. Complete logistics and distribution system
--Guoda Drug Store has a nationwide modern logistics and distribution system, and has established the logistics
and distribution network covering all the stores throughout the country, including Shanghai National Logistics
Center and 23 provincial and municipal distribution centers.
- Accord distribution adopts supply chain management and warehouse management solutions system, it has built
large-scale first-grade logistics centers in Guangzhou, Nanning, Shenzhen and other places and established
distribution centers in Guangdong and Guangxi which has formed ladder logistics and distribution networks, it is
the first enterprise in Guangdong and Guangxi that has achieved the third-party logistics qualification and has the
professional pharmaceutical logistics capabilities with the largest scale, the most extensive network, and the most
complete modes in southern China.
4. Sinopharm brand with unique influence
The company's brand and the retail and distribution sub-brands have the same strain with the brands of controlling
shareholders and the actual controllers, relying on the strong influence of the central enterprises, the company's
popularity and influence in the industry has become increasingly prominent.
                                                                            China National Accord Medicines Corporation Ltd.
                                                                                                   Semi-Annual Report 2017
                      Section IV Discussion and Analysis of Business
1. Introduction
In the first half of 2017, influenced by the fierce competition in external market, GPO bidding procurement, and
the changes in pharmaceutical policies, the overall pharmaceutical industry entered into the “new normal” of
slowdown in growth. Under the leadership of the board of directors of the company, Sinopharm Accord focused
on the annual management theme of “strategic transformation new journey and innovative development new leap”,
promoted the strategic landing, clarified the management ideas, consolidated the management foundation,
enhanced the business unit profitability, and orderly advanced the key works with open, comprehensive, sunshiny,
and positive attitude.
(i) The overall situation of Sinopharm Accord in the first half of 2017
Sinopharm Accord achieved operating income of RMB 20.525 billion, a decrease of 0.18% on a year-on-year
basis; achieved net profits attributable to the parent company of RMB 556 million, a decrease of 15.62% on a
year-on-year basis. The above mentioned item drops mainly because the comparative statement including the
profit statement data (first half year of 2016) of the three industrial enterprises that replace-out in material assets
reorganization occurred in October 2016. The operating income and net profit attributable to parent company has
a y-o-y growth of 3.79% and 6.73% respectively if ignore the above mentioned causes.
Pharmaceutical distribution achieved operating income of RMB15.754 billion, an increase of 1.56% on a
year-on-year basis; achieved net profits attributable to the parent company of RMB 306 million, an increase of
5.50% on a year-on-year basis.
Pharmaceutical retail achieved operating income of RMB 4.888 billion, an increase of 12% on a year-on-year
basis; achieved net profits attributable to the parent company of RMB 99 million, an increase of 30.08% on a
year-on-year basis.
(ii) The overall situation of pharmaceutical industry
In 2017, driven by reform and innovation, the medical reform continued to advance, various policies landed
soundly, and the market changes advanced irresistibly, therefore, we need to not only enhance the self-confidence
in development and maintain the strategic strength, but also seek for new thoughts and ideas and try to promote
the transformation.
1. Policy level: present the features of “grass-roots sinking”, “wide range”, “focusing
on detailed rules”, and “fast speed”, the profit direction of pharmaceutical industry have changes, while the
policies show diversity and complexity because of the national region.
2. Market level: the whole pharmaceutical industry slows down the growth, the market enters into the “callback”:
in the first half of 2017, the national pharmaceutical terminal sales reached RMB 803.7 billion, an increase of
7.8% on a year-on-year basis; the sales volume growth of three terminals, public hospitals, retail pharmacies, and
public primary medical care, is slowing down year by year.
                                                                         China National Accord Medicines Corporation Ltd.
                                                                                                Semi-Annual Report 2017
3. Competition level: the industry mergers and acquisitions of competitors accelerate, directly drive the rapid
growth of sales by scale expansion of stores.
(iii) Main work the company completed in the first half of 2017
1. Strategic transformation - explore the operation mode of wholesale and retail integration
The company established the organizational structure of wholesale and retail integration for strategic
transformation: the headquarters level set up the purchasing management department to promote and establish a
purchasing management system for wholesale and retail integration, at the same time, built variety sharing and
information platform for the whole line joint.
2. Management transformation - double headquarters control mode is clear
Set up strategic investment headquarters, retail operations headquarters, and distribution operations headquarters,
clarify the positioning, adjust the structure, sort out the responsibilities, optimize the functions, and give full play
to the headquarters. Of which:
Retail operations headquarters: sort out the organizational structure and department responsibilities, strengthen the
regional linkage, and enhance the resources integration and professional management capabilities of headquarters.
Distribution operations headquarters: undertake the strategic transformation requirements, match up with the new
structure design, and adjust the structure and personnel.
3. Distribute two-wheel drive - multi-format collaborative progress
(1) Give play to the smart supply chain performance, and deepen the integration of operations
In the new drug trading model, the company strengthened the variety analysis and risk assessment, completed the
variety catalog sorting of strategic integration, further enhanced the decision-making speed and adaptability of
purchase and marketing linkage; the company completed the responsibility system of purchasing manager
connecting subsidiaries, collaborated key customer to visit the subsidiaries, and effectively grafted resources to
enhance the competitiveness of subsidiaries; continued to strengthen the management of subsidiaries, included the
new subsidiaries into the integrated management, and bonded and unified the finance, human resources, and
system processes.
The company continued to optimize the variety structure, the proportion of domestic products continued to
increase, the format structure continued to optimize, the retail formats developed rapidly, and the growth of retail
direct sales and clinics business was rather good.
(2) Strategically promote business transformation, and build new competitive advantages
The company promoted the transformation of distribution industry and accelerated the development of retail
clinics, as of the end of the reporting period, newly opened 12 pharmacies, there are a total of 30 retail clinics at
present.
The company promoted the transformation of distribution model, created a new model of retail terminals, exerted
efforts to promote the national retail terminal business by sorting out the channel customers and integrating
resources, and achieved steady growth in the transformation period, and relied on B2B platform to build a
commercial sales center and form the on-line and off-line Omni-channel marketing linkage and create the core
competition advantages; give play to the advantages of integration, relied on the on the national commercial
                                                                        China National Accord Medicines Corporation Ltd.
                                                                                               Semi-Annual Report 2017
network coverage to promote the sinking of terminal network.
The company promoted the transformation of distribution services, and enriched the medical services products: in
the 24 innovative medical treatment projects, covering equipment supplies SPD, equipment maintenance business,
reagent business, and disinfection business.
4. Intensively cultivate retail and consolidate management - promote business development by management
improvement
(1) Focus on management, and improve operational efficiency and development quality
In the first half of the year, Guoda Drug Store achieved operation revenue of RMB 4.88 billion, with a
year-on-year growth of 12.00%; the integrated gross profit margin increased by 0.15% on a year-on-year basis;
the total expense ratio decreased by 0.38% on a year-on-year basis; the net profit attributable to parent company
was RMB 99 million, an increase of 30.08% on a year-on-year basis.
As of the end of the reporting period, Guoda Drug Store totally has 3693 stores.
(2) Optimize control, and give full play to all functions of the headquarters
Guoda Drug Store completed the adjustment of the headquarters’ structure, clarified the positioning, settled the
responsibilities, while established a special working group for the operations of subsidiaries, and deepened the
analysis and diagnosis of special subjects, in the first half of the year, Guoda Drug Store corrected the error at the
project site of stores with losses for 4 companies, and focused on promoting the business improvement of
subsidiaries; Guoda Drug Store promoted the overall business functions of commercial and purchase and the
business transformation, and established the national standard closed-loop management model of commercial and
purchase linkage, integrated and distributed the superior resources. Guoda Drug Store effectively submerged the
resources to help the regional intensive cultivation of commercial and purchase business, in the first half of the
year, the centralized purchasing and sales volume of Guoda Drug Store reached RMB 1.94 billion; Guoda Drug
Store strengthened the member management, as of the end of the reporting period, the total members reached 20
million.
(3) Accelerate the expansion of stores, and promote the Omni-channel marketing model
The expansion speed and quality of new stores of Guoda Drug Store are equally important: in the first half of the
year, it had a net increase of 191 stores, of which 160 new stores were for direct sales; the average daily sales
amount and the average daily gross profit margin of a single newly opened store of Guoda Drug Store were on the
rise;
Guoda Drug Store continued to promote e-commerce and other innovative businesses: in the first half of the year,
the innovation business reached 0.49 billion, an increase of 283% on a year-on-year basis, continued to optimize
the O2O platform construction, newly increased pharmacy network mall, Baidu take-out, 111.com.cn and other
new channels, which overall achieved sales of 120 million; Guoda Drug Store steadily expanded the commercial
insurance business, and nine regions increased card business, expanded Wanda “Yuanfuyun”, Jianyi card, Pukang
card, Qikang card and other card channels and achieved sales of 58.14 million.
5. Legal operations - adhere to the bottom line to ensure the sustainable development of the company
The company adheres to the quality bottom line, manages and operates in strict accordance with the GSP, and
                                                                                  China National Accord Medicines Corporation Ltd.
                                                                                                         Semi-Annual Report 2017
insists on the legal operation:
Implement responsibility: the company signs the liability statement about legal operation and construction of a
clean government with various departments, Sinopharm Holding Guangzhou Co., Ltd. and Guoda Drug Store, and
subsidiaries at all levels;
Process control: the company strengthens the control of risk events, optimizes the reporting process of risk events;
and organizes the annual version updating of company system according to the latest structure;
Risk prevention: the company implements the management requirements to risks in the business. Law works
extend to the front end, update contract management, audit and authorization and other managements, strengthen
the litigation tracking, and reduce risks.
II Main business analysis
Found more in I. Introduction in Discussion and Analysis of Business
Y-o-y changes of main financial data
                                                                                                                             In RMB
                               Current period           Same period of last year Y-o-y increase/decrease     Reasons for changes
Operating revenue                20,524,807,669.57           20,562,402,047.82                    -0.18% No major changes
Operating costs                  18,364,034,450.83           18,246,890,063.69                    0.64% No major changes
Sales expenses                    1,110,446,938.17             1,066,501,100.15                   4.12% No major changes
Administration expenses                340,636,051.11           431,344,673.41                  -21.03% No major changes
Finance expenses                        44,498,778.76             50,721,403.21                 -12.27% No major changes
Income tax expenses                    160,041,107.63           161,784,127.76                    -1.08% No major changes
                                                                                                           Declined 100% on a
                                                                                                           y-o-y basis, mainly
                                                                                                           because the industry
                                                                                                           company which has
                                                                                                           R&D input at same
R&D input                                                         25,988,200.63                -100.00%
                                                                                                           period of last year, has
                                                                                                           replace-out for material
                                                                                                           reorganization, and there
                                                                                                           are no R&D input
                                                                                                           occurred in the period
                                                                                                           Declined 72.48% on a
                                                                                                           y-o-y basis, mainly
Net cash flow arising                                                                                      because cash paid for
                                       228,337,431.40           829,582,933.34                  -72.48%
from operating activities                                                                                  commodity purchase and
                                                                                                           accepting labor force
                                                                                                           increased
                                                                                     China National Accord Medicines Corporation Ltd.
                                                                                                            Semi-Annual Report 2017
                                                                                                              Declined 122.33% on a
                                                                                                              y-o-y basis, mainly
                                                                                                              because the amount from
                                                                                                              equity disposal (67%
Net cash flow arising
                                                                                                              equity of China National
from investment                       -92,279,892.06               413,214,884.85                  -122.33%
                                                                                                              Zhijun (Suzhou) ) are
activities
                                                                                                              received at same period
                                                                                                              last year, while there are
                                                                                                              no such amount occurred
                                                                                                              in the period
Net cash flow arising
                                     -262,782,332.86              -357,891,458.21                   26.57% No major changes
from financing activities
                                                                                                              Declined 114.32% on a
                                                                                                              y-o-y basis, mainly
Net increase of cash and
                                     -126,724,793.52               884,777,295.64                  -114.32% because the net cash flow
cash equivalent
                                                                                                              from operating activities
                                                                                                              decreased
Major changes on profit composition or profit resources in reporting period
□ Applicable √ Not applicable
No major changes on profit composition or profit resources occurred in reporting period.
Constitution of main business
                                                                                                                                In RMB
                                                                                    Increase or      Increase or      Increase or
                                                                                    decrease of     decrease of    decrease of gross
                         Operating
                                         Operating cost       Gross profit ratio operating revenue operating cost   profit ratio over
                          revenue
                                                                                 over same period over same period same period of
                                                                                    of last year    of last year       last year
According to industries
                    15,537,269,873.0 14,713,158,964.5
Wholesale drugs                                                         5.30%             -0.22%              -0.03%             -0.18%
                                     0
Drug retail         4,816,778,486.05 3,629,787,703.67                  24.64%            18.04%             18.16%               -0.08%
Logistics and
warehousing              13,578,009.37      7,635,424.91               43.77%            35.51%               3.77%              17.20%
services
Lease and
training service        157,181,301.15    13,452,357.73                91.44%            10.36%            -19.53%                  3.18%
income
According to products
                    19,611,239,692.3 17,645,606,622.1
Drugs                                                                  10.02%             -0.95%              -0.07%             -0.79%
                                     7
Apparatus               547,196,320.22   508,201,853.85                 7.13%            11.28%             12.06%               -0.64%
Other                   366,371,656.98   210,225,974.86                42.62%            35.45%             56.26%               -7.64%
                                                                                               China National Accord Medicines Corporation Ltd.
                                                                                                                      Semi-Annual Report 2017
    According to region
                          20,524,807,669.5 18,364,034,450.8
    Domestic income                                                         10.53%                 -0.01%               0.80%                -0.72%
                                           7
   III. Analysis of non-main business
   □ Applicable √ Not applicable
   IV. Assets and liability
   1. Major changes of assets composition
                                                                                                                                             In RMB
                            End of current period                 End of last period
                                           Ratio in total                       Ratio in        Ratio changes        Notes of major changes
                           Amount                             Amount
                                               assets                          total assets
Monetary fund           3,361,328,847.44         15.14% 3,519,961,564.93           16.51%             -1.37% No major changes
Account
                        9,122,573,508.17         41.09% 7,654,225,510.89           35.91%              5.18% No major changes
receivable
Inventory               3,936,541,833.92         17.73% 4,049,482,529.71           19.00%             -1.27% No major changes
Investment
                         162,773,623.12           0.73%     166,715,848.80             0.78%          -0.05% No major changes
property
Long-term equity
                        1,500,744,612.15          6.76% 1,413,034,165.56               6.63%           0.13% No major changes
investment
Fix assets               524,469,811.81           2.36%     487,009,600.10             2.28%           0.08% No major changes
                                                                                                                Mainly because some of the ERP
Construction       in                                                                                           project completed and part of the
                          29,542,882.91           0.13%      47,063,868.49             0.22%          -0.09%
process                                                                                                         reconstruction of logistic
                                                                                                                warehouse are transfer-out
Short-term loans        1,600,656,482.46          7.21% 1,512,713,629.95               7.10%           0.11% No major changes
                                                                                                                Mainly due to the borrowing
Long-term loans           31,600,000.00           0.14%                                0.00%           0.14% from Group Finance Company in
                                                                                                                the period
   2. Assets and liability measured by fair value
   □ Applicable √ Not applicable
   3. Assets right restriction till end of reporting period
   Nil
                                                                                   China National Accord Medicines Corporation Ltd.
                                                                                                          Semi-Annual Report 2017
  V. Investment
  1. Overall situation
  □ Applicable √ Not applicable
  2. The major equity investment obtained in the reporting period
  □ Applicable √ Not applicable
  3. The major non-equity investment doing in the reporting period
  □ Applicable √ Not applicable
  4. Financial assets investment
  (1) Securities investment
  □ Applicable √ Not applicable
  The company had no securities investment in the reporting period.
  (2) Derivative investment
  □ Applicable √ Not applicable
  The Company has no derivatives investment in the Period
  VI. Sales of major assets and equity
  1. Sales of major assets
  □ Applicable √ Not applicable
  There are no major assets sell in the period
  2. Sales of major equity
  □ Applicable √ Not applicable
  VII. Analysis of main holding company and stock-jointly companies
  √Applicable   □ Not applicable
  Particular about main subsidiaries and stock-jointly companies net profit over 10%
                                                                                                                              In RMB
Company                                     Industr   Register                             Operating Operating                  Net profit
            Type        Main business                            Total assets Net Assets                         Net profit     attributab
 name                                            y    capital                               revenue   profit
                                                                                                                                   le to
                                                                                      China National Accord Medicines Corporation Ltd.
                                                                                                             Semi-Annual Report 2017
                                                                                                                                   parent
                                                                                                                                  company
                      Retail and distribution
                      in respect of
Sinopharm
                      pharmaceutical
Holding
             Subsidia products and medical Drug          1,010,000,0 5,026,099,7 1,840,652,5 4,887,781,7 175,519,8 131,326,227. 99,224,89
Guoda
             ry       apparatus and              retail 00.00             32.47       82.10       45.32     69.21            19          6.36
Drug Store
                      instruments,
Co., Ltd.
                      wholesale and retails
                      of health products
                      Chinese traditional
                      patent medicine,
                      chemical preparations,
                      antibiotics,
                      bio-chemical
                      medicine, biological
                      medicine, diagnosis
                      medicine, biological      Wester
Sinopharm             medicine with features n
Holding      Subsidia of treatment and          medici 1,530,000,0 5,947,042,7 1,762,486,6 7,844,436,1 129,932,7 96,951,959.4 96,858,33
Guangzhou ry          diagnosis, shaped         ne       00.00            57.93       90.11       24.99     19.43             6          3.78
Co., Ltd.             packing food,             wholes
                      chemical products,        ale
                      and various
                      commodity and
                      technique hold by
                      self-support and
                      agency as well as
                      import & export of
                      technology
                      Sales of drugs,
                      medical apparatus and
                      instruments,
                      freightage, storage,
                      loading and               Wester
Sinopharm             unloading, glass          n
Holding      Subsidia wares, cosmetics and medici 500,000,00 2,209,769,7 665,411,18 2,063,685,4 71,418,08 61,010,953.9 61,007,87
Guangxi      ry       daily merchandise;        ne       0.00             96.72        1.57       77.42       9.19            2          4.28
Co., Ltd.             other business            wholes
                      services, other           ale
                      professional
                      consultation, various
                      goods agency and for
                      self-operation, import
                                                                                   China National Accord Medicines Corporation Ltd.
                                                                                                          Semi-Annual Report 2017
                   & export of
                   technology, houses
                   leasing
Particular about subsidiaries obtained or disposed in report period
√Applicable    □ Not applicable
                                                The method of obtaining and handling     The influence to the whole production and
                Company Name
                                                 subsidiaries during the report period                   performance
                                                                                         Further consolidated the pharmaceutical
                                                                                         distribution   business   in   Guangxi    &
Sinopharm Holding Zhuhai Co., Ltd.           Acquisition
                                                                                         Guangdong and without major influence
                                                                                         on performance of the Company
                                                                                         Expand local medicine retail business
China National Lerentang Shijiazhuang
                                             Acquisition                                 layout, and without major influence on
Medicine Co., Ltd.
                                                                                         performance of the Company
                                                                                         Expand local medicine retail business
Guoda Drug Store Manchuria Co., Ltd.         Establishment                               layout, and without major influence on
                                                                                         performance of the Company
                                                                                         Providing      value-added     services   of
Sinopharm Holding Guangzhou Medicine                                                     pharmaceutical distribution, and without
                                             Establishment
Technology Co., Ltd.                                                                     major influence on performance of the
                                                                                         Company
                                                                                         Further consolidated the pharmaceutical
                                                                                         distribution   business   in   Guangxi    &
Maoming Yongsheng Medicines Co., Ltd. Acquisition
                                                                                         Guangdong and without major influence
                                                                                         on performance of the Company
VIII. Structured vehicle controlled by the Company
□ Applicable √ Not applicable
IX. Prediction of business performance from January – September 2017
Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the
warning of its material change compared with the corresponding period of the last year and explanation on reason
□ Applicable     √ Not applicable
X. Risks and countermeasures
1. The management risks in sustainable expansion of marketing network of Guoda Drug Store
The marketing network of Guoda Drug Store has maintained stable growth trend in recent years through newly
opened stores and extended mergers. The expansion of sales area and increase of stores have brought pressure on
the site selection, distribution, cash management, marketing and human resource management of the stores of
                                                                       China National Accord Medicines Corporation Ltd.
                                                                                              Semi-Annual Report 2017
Guoda Drug Store. The company will strengthen the management and construction in merchandise procurement,
logistics and distribution, marketing and other links and establish corresponding management methods for each
link so as to ensure the unified standards and management quality for store expansion.
2. Risks of intensifying market competition
At present, the market concentration ratio of domestic pharmaceutical retail market industry is relatively low, and
the national and regional pharmaceutical retail enterprises have fierce market competition. As the country continues
to introduce corresponding policies to encourage the integration of pharmaceutical retail industry, the major
pharmaceutical retail enterprises in the industry have accelerated the pace of mergers and acquisitions, and
continued to expand the marketing networks, improve the logistics center constructions, and innovate the business
and profit models so that the sales scale and comprehensive strength continuously strengthen. At the same time,
with the upgrading of consumption and the gradual opening of market, the foreign pharmaceutical distribution
enterprises with powerful strength are entering the domestic pharmaceutical distribution markets through a variety
of ways, so the industry competition is further intensifying. Sinopharm Accord will integrate the existing resources,
create a two-wheel drive development model with integration of both wholesale and retail, deeply give full play to
synergistic effect, directly face the end patients and consumers by varieties complementation, capital cooperation,
supply chain collaboration, internationalization promotion and other measures, and achieve brand globalization
through capital operation.
3. Risks of changes in industry policy
The development of pharmaceutical retail industry is regulated and influenced by the relevant national policies. The
state has promulgated a series of documents such as Good Supply Practice and Control System for Prescription
Drug and Over-The-Counter Drug (Pilot), which put forward specific requirements to the industry operation.
Along with the gradual increase of management standards for management standard, the regulations are
constantly being revised and improved and put forward higher requirements to the business operations. In addition,
since the promotion and implementation of the new medical reform in 2009, the state has implemented the essential
medicine system, public hospital reform, and drug centralized procurement bidding system throughout the country,
and repeatedly introduced policies to reduce the drug retail price ceiling in order to reduce the burden of drug use.
If the policies introduced in the process of implementing new medical reform impose restrictions on the industrial
development and the product price of retail drug stores, the operation and profitability of Guoda Drug Store may
have to face some challenges.
4. Risks of facing the horizontal competition
In the pharmaceutical retail field, Sinopharm Group’s affiliated distribution subsidiaries have also opened some
social retail pharmacies, which constitute a certain degree of horizontal competition with the subordinate Guoda
Drug Store. Sinopharm Group and Sinopharm have pledged to take effective measures to resolve the possible
horizontal competition.
                                                                                 China National Accord Medicines Corporation Ltd.
                                                                                                        Semi-Annual Report 2017
                                            Section V. Important Events
I. In the report period, the Company held annual shareholders’ general meeting and
extraordinary shareholders’ general meeting
1. Shareholders’ General Meeting in the report period
                                               Ratio of investor
 Session of meeting               Type                                   Date            Date of disclosure     Index of disclosure
                                                 participation
                                                                                                              Juchao
                                                                                                              Website—(http://www.c
First extraordinary                                                                                           ninfo.com.cn)
                    Extraordinary
general meeting of                                        60.77% 2017-01-18            2017-01-19             “Resolution Notice of
                    general meeting
2017                                                                                                          First      extraordinary
                                                                                                              general meeting of
                                                                                                              2017 No.: 2017-05
                                                                                                              Juchao
                                                                                                              Website—(http://www.c
Second
                                                                                                              ninfo.com.cn)
extraordinary      Extraordinary
                                                          61.05% 2017-03-14            2017-03-15             “Resolution Notice of
general meeting of general meeting
                                                                                                              Second extraordinary
2017
                                                                                                              general meeting of
                                                                                                              2017 No.: 2017-13
                                                                                                              Juchao
                                                                                                              Website—(http://www.c
Annual         General                                                                                        ninfo.com.cn)
                         AGM                              61.37% 2017-05-10            2017-05-11
Meeting of 2016                                                                                               “Resolution Notice of
                                                                                                              AGM of 2016 No.:
                                                                                                              2017-36
2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore
□ Applicable √ Not applicable
II. Profit distribution plan and capitalizing of common reserves plan for the Period
□ Applicable √ Not applicable
The Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either for
the semi-annual year.
III. Commitments completed in Period and those without completed till end of the Period from actual
controller, shareholders, related parties, purchaser and companies
√Applicable   □ Not applicable
                                  Type of                                                        Commitm Commitm Impleme
 Commitments       Promise                                Content of commitments
                               commitments                                                        ent date    ent term    ntation
Commitments
                                                                                  China National Accord Medicines Corporation Ltd.
                                                                                                         Semi-Annual Report 2017
for
share merger
reform
                                          As a large pharmaceutical commercial enterprise
                                          whose business involves pharmaceutical wholesale
                                          and retail, Sinopharm Holding may overlap with the
                                          Company in geographical segmentation during its
                                          future business development. To avoid the potential
                                          peer competition brought by such geographical
                                          overlap, Sinopharm Holding undertakes that, upon the
                                          transfer of shares of Sinopharm Holding Guangzhou
                                          it held to Accord Pharma, “1. it will not
Commitments in                            newly-establish or broaden within Guangdong any                                    Normally
                 Sinophar Commitment
report of                                 business operation that actually compete with that of 2005-06-2 Long-term implemen
                 m          of
acquisition or                            Accord Pharma, or set up any new subsidiaries or 1                     effective   ting
                 Holding shareholders
equity change                             subordinate enterprises who engage in such business.
                                          2. It will enter into business delineation with Accord
                                          Pharma and Sinopharm Holding Guangzhou, thereby
                                          giving the three parties clear geographical areas to
                                          carry out pharmaceutical wholesale and retail
                                          businesses, so as to avoid potential peer competition.
                                          Apart from above, Sinopharm Holding will no longer
                                          newly-establish any enterprise that may compete with
                                          Accord Pharma in the production and R&D of
                                          pharmaceutical products.”
                                          “Sinopharm Group and Sinopharm Foreign Trade
                                          made commitments in the Report about China
                                          National    Accord     Medicines     Corporation    Ltd.
                                          Purchasing Assets and Raising Supporting Funds and
                 Sinophar
                                          Related Transactions by Asset Sale, Stock Issuance
                 m Group
                                          and Cash Payment that the non-public offering of
                 Co.,
                                          shares of Sinopharm Accord obtained from this
                 Ltd.;
                                          transaction shall not be transferred within 36 months
                 China
Commitments in              Commitment    since the finish date of issuance and shall be unlocked                            Normally
                 National                                                                            2016-05-3
assets                      on   restricted after 36 months since the date of listing. Within 6                  36 months implemen
                 Pharmac
reorganization              shares        months after the completion of this transaction, if the                            ting
                 eutical
                                          closing price of the stock of Sinopharm Accord is less
                 Foreign
                                          than the issue price in continuous 20 trading days, or
                 Trade
                                          the closing price at the end of 6 months after the
                 Corporat
                                          completion of this transaction is less than the issue
                 ion
                                          price, the lockup period of the stock of Sinopharm
                                          Group and Sinopharm Foreign Trade obtained from
                                          Sinopharm     Accord     by   this    transaction   will
                                          automatically prolong at least 6 months. The shares
                                                                     China National Accord Medicines Corporation Ltd.
                                                                                            Semi-Annual Report 2017
                              derived from stock dividends allocation and capital
                              reserve increase transferring of Sinopharm Accord
                              based on the non-public offering of shares of
                              Sinopharm Accord obtained by this transaction should
                              also   abide      by   the   above   stock    restricted
                              arrangements.”
                              \"China Ping An Asset Management Co., Ltd. made
                              commitments in the Report about China National
                              Accord Medicines Corporation Ltd. Purchasing
                              Assets and Raising Supporting Funds and Related
                              Transactions by Asset Sale, Stock Issuance and Cash
Ping’an
                              Payment that the non-public offering of shares of
Assets      Commitment                                                                                         Normally
                              Sinopharm Accord obtained from this transaction 2016-05-3
Manage on        restricted                                                                        36 months implemen
                              shall not be transferred within 36 months since the 1
ment        shares                                                                                             ting
                              finish date of issuance and shall be unlocked after 36
Co., Ltd.
                              months since the date of listing. After placement
                              completed, the shares of the listed company increased
                              due to bonus shares and turning to increase capital
                              should pursuit to the restriction arrangement the
                              above mentioned.
                              “Sinopharm Group made commitments in the Report
                              about China National Accord Medicines Corporation
                              Ltd. Purchasing Assets and Raising Supporting Funds
                              and Related Transactions by Asset Sale, Stock
                              Issuance and Cash Payment that the 2016 annual net
                              profits of Foshan Nanhai, Guangdong Uptodate &
                              Special Medicines and Guoda Drug Store should
                              respectively be no less than RMB 47,385,600.00,
                              RMB 19,167,000.00, and RMB 98,466,100.00, while
            Performance       the 2017 annual net profits should respectively be no
Sinophar commitment           less than RMB 49,394,500.00, RMB 20,209,700.00,                                  Normally
                                                                                         2016-05-3 2018-12-3
m Group and                   and RMB 110,998,90.00, and the 2018 annual net                                   implemen
                                                                                         1         1
Co., Ltd. compensation profits should respectively be no less than RMB                                         ting
            arrangement       51,148,200.00, RMB 21,330,100.00, and RMB
                              131,275,500.00. Net profit refers to the lower one
                              between the after-tax net profit attributable to the
                              owners of parent company planning to invest in the
                              target company and the net profit attributable to the
                              owners of parent company after deducting the
                              non-recurring gains and losses. If the actual net profit
                              of the target company doesn’t reach the committed
                              net profit, Sinopharm Group will need to compensate
                              according to the stipulations of the \"Profit Forecast
                                                                    China National Accord Medicines Corporation Ltd.
                                                                                           Semi-Annual Report 2017
                            Compensation Agreement for the Stock Issuance and
                            Assets Purchase.”
                            Sinopharm Foreign Trade made commitments in the
                            Report about China National Accord Medicines
                            Corporation Ltd. Purchasing Assets and Raising
                            Supporting Funds and Related Transactions by Asset
                            Sale, Stock Issuance and Cash Payment that the 2016
                            annual net profits of Southern Medical Trade should
China                       be no less than RMB 39880700, while the 2017
National                    annual net profits should be no less than RMB
             Performance
Pharmac                     47323200, and should not less than RMB 55364600
             commitment                                                                                      Normally
eutical                     in 2018. Net profit refers to the lower one between 2016-05-3 2018-12-3
             and                                                                                             implemen
Foreign                     the after-tax net profit attributable to the owners of 1
             compensation                                                                                    ting
Trade                       parent company planning to invest in the target
             arrangement
Corporat                    company and the net profit attributable to the owners
ion                         of parent company after deducting the non-recurring
                            gains and losses. If the actual net profit of the
                            Southern Medical Trade doesn’t reach the committed
                            net profit, Sinopharm Foreign Trade will need to
                            compensate according to the stipulations of the
                            \"Profit Forecast Compensation Agreement for the
                            Stock Issuance and Assets Purchase.”
Fu                           “Fu Yueling and other 10 natural person made
Jianchen                    commitments in the Report about China National
g;      Fu                  Accord Medicines Corporation Ltd. Purchasing
Yuequn                      Assets and Raising Supporting Funds and Related
Gu                          Transactions by Asset Sale, Stock Issuance and Cash
Chaoqun                     Payment that the 2016 annual net profits of Southern
;     Guo                   Medical Trade should be no less than RMB
Shu’er;                    39,880,700, while the 2017 annual net profits should
Huang        Performance    be no less than RMB 47,323,200, and should not less
Qiufang; commitment         than RMB 55,364,600 in 2018. Net profit refers to the                            Normally
                                                                                       2016-05-3 2018-12-3
Li           and            lower one between the after-tax net profit attributable                          implemen
                                                                                       1         1
Hongbin compensation to the owners of parent company planning to invest in                                   ting
g;    Liao arrangement      the target company and the net profit attributable to
Zhi; Lin                    the owners of parent company after deducting the
Wanqun;                     non-recurring gains and losses. If the actual net profit
SunWei;                     of the Southern Medical Trade doesn’t reach the
Zhang                       committed net profit, Fu Yuequn and other 10 natural
Zhaohua                     person will need to compensate according to the
; Zhang                     stipulations of the \"Profit Forecast Compensation
Zhaotan                     Agreement for the Stock Issuance and Assets
g                           Purchase.”
China        Performance    “Sinopharm Accord made commitments in the Report 2016-05-3 2018-12-3 Normally
                                                                      China National Accord Medicines Corporation Ltd.
                                                                                             Semi-Annual Report 2017
National commitment       about China National Accord Medicines Corporation 1                      1            implemen
Accord and                Ltd. Purchasing Assets and Raising Supporting Funds                                   ting
Medicin compensation and Related Transactions by Asset Sale, Stock
es          arrangement   Issuance and Cash Payment that the net profits
Corporat                  attributable to the owners of parent company after
ion Ltd.                  deducting    the     non-recurring     gains   and     losses
                          committed by Zhijun Pharmaceutical in 2016, 2017
                          and 2018 should be respectively no less than RMB
                          222,671,700.00, RMB 232,561,600.00, and RMB
                          241,878,700.00; the net profits attributable to the
                          owners of parent company after deducting the
                          non-recurring gains and losses committed by Zhijun
                          Pharmacy Trade in 2016, 2017 and 2018 should be
                          respectively no less than RMB 2,379,600.00, RMB
                          2,335,100.00, and RMB 2,345,600.00; the net profits
                          attributable to the owners of parent company after
                          deducting    the     non-recurring     gains   and     losses
                          committed by Pingshan Pharmaceutical in 2016, 2017
                          and 2018 should be respectively no less than RMB
                          39,716,300.00, RMB 43,033,500.00, and RMB
                          50,325,500.00. If the actual net profits attributable to
                          the owners of parent company after deducting the
                          non-recurring      gains     and     losses    of     Zhijun
                          Pharmaceutical / Zhijun Pharmacy Trade / Pingshan
                          Pharmaceutical don’t reach the committed net profits
                          attributable to the owners of parent company after
                          deducting the non-recurring gains and losses,
                          Sinopharm Accord should compensate in accordance
                          with   the    stipulations      of   the   Profit    Forecast
                          Compensation Agreement for the Stock Issuance and
                          Assets Purchase.”
China                     “The listed company, controlling shareholders, the
National                  actual controllers made commitments in the Report
Accord                    about China National Accord Medicines Corporation
Medicin                   Ltd. Purchasing Assets and Raising Supporting Funds
es                        and Related Transactions by Asset Sale, Stock
Corporat                  Issuance and Cash Payment that the Company shall                                      Normally
            Other                                                                         2016-05-3 Long-term
ion                       not violate the relevant regulations of Article 16 in                                 implemen
            commitments                                                                   1        effective
Ltd.;Sin                  Securities Issuance and Underwriting Management                                       ting
opharm                    Approach, and directly or indirectly providing
Group                     financial    assistance    or    compensation       for   the
Co.,                      subscription objects and its shareholders / partners /
Ltd. ;Chi                 clients (if any) of this non-public offering does not
na                        exist and will not occur in the future.”
                                                                  China National Accord Medicines Corporation Ltd.
                                                                                         Semi-Annual Report 2017
National
Pharmac
eutical
Group
Corporat
ion
                         “Ping An Asset Management Co., Ltd. has made
                         commitments that the unit intends to utilize Ping An
                         Asset Xinxiang No.3 asset management product and
                         Ping An Asset Xinxiang No.7 asset management
                         product to fund and subscribe some non-public
                         offering of shares of Sinopharm Accord in this major
                         asset restructuring process, and has the ability to
Ping’an
                         subscribe the shares, the relevant capital sources are
Assets                                                                                                  Normally
            Other        legitimate, there is no hierarchical income and other 2016-03-2 Long-term
Manage                                                                                                  implemen
            commitments structured arrangements, and there is no use of 4                   effective
ment                                                                                                    ting
                         leveraged funds. The unit does not receive financial
Co., Ltd.
                         assistance or compensation from Sinopharm Accord
                         and its controlling shareholders, or the actual
                         controllers.     The      investors’    structure     of
                         above-mentioned products does not change from the
                         issue date of the commitment letter to the end date of
                         the lockup period of the stock that the unit subscribes
                         from Sinopharm Accord.”
                         “Sinopharm made commitments in the Report about
                         China National Accord Medicines Corporation Ltd.
                         Purchasing Assets and Raising Supporting Funds and
                         Related Transactions by Asset Sale, Stock Issuance
                         and Cash Payment that 1. if the stock intraday price
                         of Sinopharm Accord on any trading day of the 30
                         trading days after the listing of newly increased
China
                         shares in this transaction is less than the issue price of
National
                         newly increased shares in this transaction, Sinopharm
Pharmac Increase                                                                                        Normally
                         will accumulatively invest no more than RMB 150 2017-01-0 2017-02-2
eutical     holding                                                                                     implemen
                         million in these 30 trading days to increase the 6
Group       commitment                                                                                  ting
                         holding by the stock trading system of the Shenzhen
Corporat
                         Stock Exchange (this increase of holding) until the
ion
                         earlier one of below two situations occurs: (1) the
                         above-mentioned funds are use up; (2) the intraday
                         price of Sinopharm Accord is no less than the issue
                         price of newly increased shares in this transaction. 2.
                         Sinopharm shall not sell the shares obtained from this
                         increase of holding within 3 years after the end of this
                         increase of holding.”
                                                                    China National Accord Medicines Corporation Ltd.
                                                                                           Semi-Annual Report 2017
                             “Sinopharm Group made commitments in the Report
                             about China National Accord Medicines Corporation
                             Ltd. Purchasing Assets and Raising Supporting Funds
                             and Related Transactions by Asset Sale, Stock
                             Issuance and Cash Payment that the Company shall
                             be the controlling shareholder of China National
                             Accord Medicines Corporation Ltd. (hereinafter
                             referred to as Sinopharm Accord) up to the issue date
                             of this commitment letter, after the completion of this
                             major assets reorganization (hereinafter referred to as
                             “this reorganization”), Sinopharm Accord shall no
                             longer hold shares or operate relevant businesses of
                             pharmaceutical industry, the main business will
                             become the national pharmaceutical retail and
                             pharmaceutical distribution business in Guangdong
                             and Guangxi. In order to support the business
                             development of Sinopharm Accord and avoid
                             horizontal competition with Sinopharm Accord and
                             its controlling enterprises, the Company made
         Commitments
                             following irrevocable commitments and promises:1,
         on horizontal
                             after the completion of this reorganization, as for the
Sinophar competition,                                                                                     Normally
                             social retail drugstore assets except for Sinopharm 2016-12-2 Long-term
m Group relation                                                                                          implemen
                             Holding Guoda Drug Store Co., Ltd. and its 8                     effective
Co., Ltd. transaction                                                                                     ting
                             subsidiaries and branches owned or controlled by the
         and       capital
                             Company, the Company promised to take appropriate
         occupation
                             measures to solve the horizontal competition problem
                             in the pharmaceutical retail business between the
                             Company and Sinopharm Accord within 5 years since
                             the completion date of this reorganization. 2. The
                             Company's way of resolving horizontal competition
                             problems includes and is not limited to purchasing the
                             social retail drugstore assets subordinated to the
                             Company by Sinopharm Accord, taking the entrusted
                             operation, leasing or contracting operation by
                             Sinopharm Accord and its controlling enterprises in
                             accordance with the methods permitted bu national
                             laws to hold or control the social retail drugstore
                             assets, or transferring the controlling stake of the
                             social retail drugstore assets by the Company. 3. If the
                             shareholders of the social retail drugstore assets
                             (hereinafter referred to as \"the third party\") of the
                             Company or the enterprises controlled by the
                             Company have or are going to perform the
                             preemptive rights under the same conditions in
                                                                   China National Accord Medicines Corporation Ltd.
                                                                                          Semi-Annual Report 2017
                        accordance with relevant laws and corresponding
                        Articles of Association, then the above commitment
                        will not be applicable, but in this case, the Company
                        should try its utmost to urge the third party to waive
                        its preemptive rights. If the Company is unable to
                        urge the third party to give up the preemptive rights,
                        the Company will urge the enterprises controlled by
                        the Company to transfer the social retail drugstore
                        assets to the third party to solve the horizontal
                        competition     problem.     4.    The     pharmaceutical
                        distribution assets currently owned or controlled by
                        the Company are distributed outside Guangdong and
                        Guangxi regions, there is no horizontal competition
                        with Sinopharm Accord, the Company will not
                        engage in the same or similar operation businesses to
                        Sinopharm Accord in Guangdong and Guangxi in the
                        future, if the Company and its holding enterprises
                        obtain the new business opportunities constituting
                        substantial    horizontal    competition      (hereinafter
                        referred to as competitive new business) within the
                        pharmaceutical      distribution   business       scope    of
                        Sinopharm Accord in Guangdong and Guangxi, the
                        Company will send written notice to Sinopharm
                        Accord and try its utmost to firstly provide the new
                        business opportunities to Sinopharm Accord or its
                        holding enterprises according to the reasonable and
                        fair terms and conditions so as to avoid the horizontal
                        competition with Sinopharm Accord and its holding
                        enterprises.   5.   Since   the    issue   date     of    this
                        commitment letter, the Company promises to
                        indemnify Sinopharm Accord for all actual losses,
                        damages and expenses caused by the Company in
                        violation of any commitments under this commitment
                        letter. 6. This commitment letter terminates when
                        following circumstances occur (subject to the earlier
                        one): (1) the Company is no longer the controlling
                        shareholder of Sinopharm Accord; or (2) the shares of
                        Sinopharm Accord terminate the listing at the stock
                        exchange.”
China     Commitments “Sinopharm made commitments in the Report about
National on horizontal China National Accord Medicines Corporation Ltd.                                        Normally
                                                                                         2016-12-2 Long-term
Pharmac competition,    Purchasing Assets and Raising Supporting Funds and                                     implemen
                                                                                         8        effective
eutical   relation      Related Transactions by Asset Sale, Stock Issuance                                     ting
Group     transaction   and Cash Payment that the Company shall be the
                                                             China National Accord Medicines Corporation Ltd.
                                                                                    Semi-Annual Report 2017
Corporat and   capital actual controller of China National Accord Medicines
ion     occupation    Corporation    Ltd.   (hereinafter   referred   to   as
                      Sinopharm Accord) up to the issue date of this
                      commitment letter, after the completion of this major
                      assets reorganization (hereinafter referred to as “this
                      reorganization”), Sinopharm Accord shall no longer
                      hold shares or operate relevant businesses of
                      pharmaceutical industry, the main business will
                      become the national pharmaceutical retail and
                      pharmaceutical distribution business in Guangdong
                      and Guangxi. In order to support the business
                      development of Sinopharm Accord and avoid
                      horizontal competition with Sinopharm Accord and
                      its controlling enterprises, the Company made
                      following irrevocable commitments and promises:1,
                      after the completion of this reorganization, as for the
                      social retail drugstore assets except for Sinopharm
                      Group Guoda Pharmacy Co., Ltd. and its subsidiaries
                      and branches owned or controlled by the Company,
                      the Company promised to take appropriate measures
                      to solve the horizontal competition problem in the
                      pharmaceutical retail business between the Company
                      and Sinopharm Accord within 5 years since the
                      completion date of this reorganization. 2. The
                      Company's way of resolving horizontal competition
                      problems includes and is not limited to purchasing the
                      social retail drugstore assets subordinated to the
                      Company by Sinopharm Accord, taking the entrusted
                      operation, leasing or contracting operation by
                      Sinopharm Accord and its controlling enterprises in
                      accordance with the methods permitted bu national
                      laws to hold or control the social retail drugstore
                      assets, or transferring the controlling stake of the
                      social retail drugstore assets by the Company. 3. If the
                      shareholders of the social retail drugstore assets
                      (hereinafter referred to as \"the third party\") of the
                      Company or the enterprises controlled by the
                      Company have or are going to perform the
                      preemptive rights under the same conditions in
                      accordance with relevant laws and corresponding
                      Articles of Association, then the above commitment
                      will not be applicable, but in this case, the Company
                      should try its utmost to urge the third party to waive
                      its preemptive rights. If the Company is unable to
                                                                                       China National Accord Medicines Corporation Ltd.
                                                                                                              Semi-Annual Report 2017
                                           urge the third party to give up the preemptive rights,
                                           the Company will urge the enterprises controlled by
                                           the Company to transfer the social retail drugstore
                                           assets to the third party to solve the horizontal
                                           competition      problem.      4.     The   pharmaceutical
                                           distribution assets currently owned or controlled by
                                           the Company are distributed outside Guangdong and
                                           Guangxi regions, there is no horizontal competition
                                           with Sinopharm Accord, the Company will not
                                           engage in the same or similar operation businesses to
                                           Sinopharm Accord in Guangdong and Guangxi in the
                                           future, if the Company and its holding enterprises
                                           obtain the new business opportunities constituting
                                           substantial     horizontal      competition       (hereinafter
                                           referred to as competitive new business) within the
                                           pharmaceutical       distribution     business     scope     of
                                           Sinopharm Accord in Guangdong and Guangxi, the
                                           Company will send written notice to Sinopharm
                                           Accord and try its utmost to firstly provide the new
                                           business opportunities to Sinopharm Accord or its
                                           holding enterprises according to the reasonable and
                                           fair terms and conditions so as to avoid the horizontal
                                           competition with Sinopharm Accord and its holding
                                           enterprises. 5. This commitment letter terminates
                                           when following circumstances occur (subject to the
                                           earlier one): (1) the Company is no longer the actual
                                           controller of Sinopharm Accord; or (2) the shares of
                                           Sinopharm Accord terminate the listing at the stock
                                           exchange.”
                                           Sinopharm      Group        made    commitments       in    the                         Controlli
                                           Commitment Letter About Sinopharm Group Co.,                                            ng
                                           Ltd. to Avoid Horizontal Competition: “First, the                                      sharehold
                                           Company        and    the     Company’s      wholly-owned,                             er         is
                                           controlling or other enterprises with actual control (in                                implemen
                                           addition to Sinopharm Accord and its controlling                                        t in real
Commitments
                    Sinophar Commitment    enterprises,    hereinafter     the   same)      don’t    have                         earnest,
make in initial                                                                                              2013-09-0 Long-term
                    m       of             businesses and operations constituting the substantial                                  Sinophar
public   offering                                                                                            5        effective
                    Holding shareholders   horizontal competition to Sinopharm Accord and its                                      m Accord
or re-financing
                                           controlling enterprises. Second, the Company and the                                    will
                                           Company’s wholly-owned, controlling or other                                           actively
                                           enterprises with actual control shall not engage,                                       urged the
                                           participate in or do businesses and activities in                                       controllin
                                           Guangdong and Guangxi which constitute substantial                                      g
                                           competition to Sinopharm Accord and pharmaceutical                                      sharehold
                                                              China National Accord Medicines Corporation Ltd.
                                                                                     Semi-Annual Report 2017
                       business services. Third, the Company and the                                er       and
                       Company’s wholly-owned, controlling or other                                actual
                       enterprises with actual control shall not engage,                            controller
                       participate in or do businesses and activities which                         to fulfill
                       constitute substantial competition to Sinopharm                              commitm
                       Accord and pharmaceutical industry businesses.                               ents
                       Fourth, the Company shall not take advantage of the
                       control to Sinopharm Accord to damage the
                       legitimate rights and interests of Sinopharm Accord
                       and other shareholders (especially medium and small
                       shareholders). This commitment letter takes effect
                       from the issue date, and remains in effect for the
                       entire period when the Company acts as the
                       controlling shareholder or its related party of
                       Sinopharm Accord. Within the effective period of the
                       commitment,     if    the   Company      violates    this
                       commitment and causes a loss to Sinopharm Accord,
                       the Company will timely make full compensation for
                       Sinopharm Accord.”
                       Sinopharm     Group    made    commitments      in   the
                       Commitment Letter About Sinopharm Group Co.,
                                                                                                    Controlli
                       Ltd. to Regulate the Related Transactions with China
                                                                                                    ng
                       National Accord Medicines Corporation Ltd.: “First,
                                                                                                    sharehold
                       when the Company is controlling Sinopharm Accord,
                                                                                                    er         is
                       the Company and the companies and enterprises
                                                                                                    implemen
                       directly and indirectly controlled by the Company
                                                                                                    t in real
                       (“related party” for short) will strictly regulate the
                                                                                                    earnest,
                       related transactions with Sinopharm Accord and its
                                                                                                    Sinophar
                       controlling enterprises. Second, for the related
                                                                                                    m Accord
                       transactions that     cannot   be   avoided or have
Sinophar Commitment                                                                                 will
                       reasonable reasons to occur, the Company and related 2013-09-0 Long-term
m       of                                                                                          actively
                       party   shall sign    normative related transaction 5            effective
Holding shareholders                                                                                urged the
                       agreement in accordance with relevant laws with
                                                                                                    controllin
                       Sinopharm Accord. Sinopharm Accord implements
                                                                                                    g
                       the approval procedures and fulfills the information
                                                                                                    sharehold
                       disclosure obligations of the related transactions
                                                                                                    er       and
                       according to relevant laws, regulations, rules, other
                                                                                                    actual
                       normative documents and the constitutions of
                                                                                                    controller
                       Sinopharm Accord. Third, for the related transactions
                                                                                                    to fulfill
                       that cannot be avoided or have reasonable reasons to
                                                                                                    commitm
                       occur, the Company and related party shall abide by
                                                                                                    ents
                       the open, fair and just market principles and confirm
                       the price of related transactions in accordance with
                                                                            China National Accord Medicines Corporation Ltd.
                                                                                                   Semi-Annual Report 2017
                             the price that the independent third party without
                             association sets for the same and similar transactions,
                             and ensure the fairness of the price of the related
                             transactions. Fourth, when the board of directors and
                             the general meeting of stockholders of Sinopharm
                             Accord vote on the related transactions involving the
                             Company and other enterprises controlled by the
                             Company, the Company shall fulfill the necessary
                             obligations        that   the     associated   directors   and
                             associated shareholders abstain from voting in
                             accordance with the relevant provisions, and abide by
                             the       legal    procedures      for    approving    related
                             transactions        and     the     information     disclosure
                             obligations. Fifth, the Company guarantees to
                             participate in the shareholders' general meeting,
                             equally exercise the corresponding rights and take the
                             corresponding obligations in accordance with the
                             constitutions of Sinopharm Accord, not to take
                             advantage of controlling shareholder status to seek
                             improper benefits or utilize related transactions to
                             illegally transfer the funds and profits of Sinopharm
                             Accord, and not to damage the legitimate rights and
                             interests of other shareholders (especially the medium
                             and small shareholders) of Sinopharm Accord. Sixth,
                             this commitment letter comes into force from the
                             issue date and remains in effect for the entire period
                             when the Company acts as the controlling shareholder
                             or its related party of Sinopharm Accord. Within the
                             effective period of the commitment, if the Company
                             violates this commitment and causes a loss to
                             Sinopharm Accord, the Company will timely make
                             full compensation for Sinopharm Accord.”
                             Sinopharm made commitments in the Commitment                                         Controlli
                             Letter About China National Pharmaceutical Group                                     ng
                             Corporation to Avoid Horizontal Competition with                                     sharehold
                             China National Accord Medicines Corporation Ltd.:                                    er         is
                             “First, in the next five years, Sinopharm plans to take                             implemen
           Commitment
Sinophar                     appropriate measures (including assets replacement or 2013-10-1 Long-term t in real
           of       actual
m Group                      acquisition, equity reorganization, etc.) to resolve the 6               effective   earnest,
           controller
                             horizontal competition between Sinopharm Weiqida                                     Sinophar
                             and Sinopharm Accord. Second, in addition to the                                     m Accord
                             past matters and matters disclosed in this commitment                                will
                             letter,      the     Company        and    the     Company’s                        actively
                             wholly-owned, controlling or other enterprises with                                  urged the
                                                                        China National Accord Medicines Corporation Ltd.
                                                                                               Semi-Annual Report 2017
                             actual control rights (except for Sinopharm Accord                               controllin
                             and its controlling enterprises, the same as below)                              g
                             shall not directly engaged in, participate in or do the                          sharehold
                             businesses    an     activities     constituting     actual                      er       and
                             competition to the production and operation of                                   actual
                             Sinopharm     Accord     in       China.   The     relevant                      controller
                             commitments about avoiding horizontal competition                                to fulfill
                             that the Company made in the past still remain in                                commitm
                             effect. Third, the Company shall not take advantage                              ents
                             of the control relationship to Sinopharm Accord to
                             damage the legitimate rights and interests of
                             Sinopharm Accord and its shareholders (especially
                             the medium and small shareholders). Fourth, this
                             commitment letter comes into force from the issue
                             date and remains in effect for the entire period when
                             the Company acts as the controlling shareholder or its
                             related party of Sinopharm Accord.”
                             Sinopharm    Group     made       commitments      in   the
                             Commitment Letter About Sinopharm Group Co.,
                             Ltd. to Regulate the Related Transactions with China
                                                                                                              Controlli
                             National Accord Medicines Corporation Ltd.: “First,
                                                                                                              ng
                             when the Company is controlling Sinopharm Accord,
                                                                                                              sharehold
                             the Company and the companies and enterprises
                                                                                                              er         is
                             directly and indirectly controlled by the Company
                                                                                                              implemen
                             (“related party” for short) will strictly regulate the
                                                                                                              t in real
                             related transactions with Sinopharm Accord and its
                                                                                                              earnest,
                             controlling enterprises. Second, for the related
                                                                                                              Sinophar
                             transactions that can not be avoided or have
                                                                                                              m Accord
                             reasonable reasons to occur, the Company and related
           Commitment                                                                                         will
Sinophar                     party   shall sign     normative related transaction 2013-09-2 Long-term
           of       actual                                                                                    actively
m Group                      agreement in accordance with relevant laws with 2                    effective
           controller                                                                                         urged the
                             Sinopharm Accord. Sinopharm Accord implements
                                                                                                              controllin
                             the approval procedures and fulfills the information
                                                                                                              g
                             disclosure obligations of the related transactions
                                                                                                              sharehold
                             according to relevant laws, regulations, rules, other
                                                                                                              er       and
                             normative documents and the constitutions of
                                                                                                              actual
                             Sinopharm Accord. Third, for the related transactions
                                                                                                              controller
                             that cannot be avoided or have reasonable reasons to
                                                                                                              to fulfill
                             occur, the Company and related party shall abide by
                                                                                                              commitm
                             the open, fair and just market principles and confirm
                                                                                                              ents
                             the price of related transactions in accordance with
                             the price that the independent third party without
                             association sets for the same and similar transactions,
                                                                                    China National Accord Medicines Corporation Ltd.
                                                                                                           Semi-Annual Report 2017
                                         and ensure the fairness of the price of the related
                                         transactions. Fourth, when the board of directors and
                                         the general meeting of stockholders of Sinopharm
                                         Accord vote on the related transactions involving the
                                         Company and other enterprises controlled by the
                                         Company, the Company shall fulfill the necessary
                                         obligations    that   the     associated   directors   and
                                         associated shareholders abstain from voting in
                                         accordance with the relevant provisions, and abide by
                                         the   legal    procedures      for   approving     related
                                         transactions    and     the     information     disclosure
                                         obligations. Fifth, the Company guarantees not to
                                         take advantage of actual controller status to seek
                                         improper benefits or utilize related transactions to
                                         illegally transfer the funds and profits of Sinopharm
                                         Accord, and not to damage the legitimate rights and
                                         interests of other shareholders (especially the medium
                                         and small shareholders) of Sinopharm Accord. Sixth,
                                         this commitment letter comes into force from the
                                         issue date and remains in effect for the entire period
                                         when the Company acts as the actual controller or its
                                         related party of Sinopharm Accord.
Equity incentive
commitment
Other
commitments
for medium and
small
shareholders
Completed      on
                    Y
time (Y/N)
IV. Appointment and non-reappointment (dismissal) of CPA
Financial report has been audit or not
□ Yes √ No
Not been audited.
V. Explanation from Board of Directors, Supervisory Committee for “Qualified Opinion”
that issued by CPA
□ Applicable √ Not applicable
                                                                                   China National Accord Medicines Corporation Ltd.
                                                                                                          Semi-Annual Report 2017
VI. Explanation from the Board for “Qualified Opinion” of last year’s
□ Applicable √ Not applicable
VII. Bankruptcy reorganization
□ Applicable √ Not applicable
No bankruptcy reorganization for the Company in Period.
VIII. Lawsuits
Material lawsuits and arbitration
□ Applicable √ Not applicable
No significant lawsuits and arbitrations occurred in the reporting period.
Other lawsuits
As of the date of disclosing this report, the company has 4 cases of contract disputes in the daily operation, with total amount of
RMB 430,600.00 involved; one case of infringement dispute, involving a total amount of RMB 53,200.00; and one case of equity
transfer dispute, involving a total amount of RMB 355,100.00.
The total amount involved in the above 6 cases was RMB 838,900.00, which neither formed the expected liabilities, nor had an effect
on normal operation and management of the company.
IX. Penalty and rectification
□ Applicable √ Not applicable
No penalty and rectification for the Company in Period.
X. Integrity of the Company and its controlling shareholders and actual controllers
√Applicable     □ Not applicable
In the reporting period, integrity of the company and its controlling shareholders and actual controllers is good and they do not have a
relatively large amount of due existing debt with court's effective judgments.
XI. Implementation of the Company’s stock incentive plan, employee stock ownership plan or
other employee incentives
□ Applicable √ Not applicable
The Company has no equity incentive plan, employee stock ownership plans or other employee incentives in Period.
                                                                                  China National Accord Medicines Corporation Ltd.
                                                                                                         Semi-Annual Report 2017
XII. Major related transaction
1. Related transaction with routine operation concerned
(1) The related transaction with routine operations concerned found more in the “X. Related parties and related transaction” in
“Section X. Financial Report”;
(2) The related transactions are settled by cash and notes, disclosed on 22 April 2017, and disclosure on Juchao Website with Notice
No.: 2017-032;
(3) In accordance with the “Supplementary Notice on Routine Associated Transactions for year of 2017 Estimated” that deliberated
and approved by the Board dated 22 April 2017,      in reporting period, sales of the related parties account for 36.48% in total
amount that estimated, and related party purchase account for 38.42% in total amount that estimated.
2. Related transactions by assets acquisition and sold
□ Applicable √ Not applicable
No related transactions by assets acquisition and sold for the Company in reporting period.
3. Related transactions of mutual investment outside
□ Applicable √ Not applicable
No main related transactions of mutual investment outside for the Company in reporting period.
4. Contact of related credit and debt
√Applicable   □ Not applicable
Note: See Note X (X)
Whether the Company had non-operating contact of related credit and debt
□Yes √ No
The Company had no non-operating contact of related credit and debt in the reporting period.
5. Other related transactions
√Applicable   □ Not applicable
1. The company held the 21st meeting of the 7th Board of Directors on January 6, 2017, which examined and
approved the Proposal on Investing in Sinopharm Zhongjin Medical Industry Fund, and the company intended to
invest RMB 200 million to subscribe for Sinopharm Zhongjin Medical Industry Fund (hereinafter referred to as
“Industry Fund”), and serve as a limited partner of Sinopharm Zhongjin Medical Industry Fund.
2. The company held the 22nd meeting of the 7th Board of Directors and the 2016 annual general meeting of
stockholders respectively on April 17, 2017 and May 10, 2017, which examined and approved the Proposal on
Carrying out the Receivables Factoring Business and Related Transactions with Sinopharm Group (China)
Finance Lease Co., Ltd., in 2017, the company intends to carry out the receivables factoring business with
Sinopharm Group (China) Finance Lease Co., Ltd., and the credit lines are no more than RMB 1 billion.
                                                                                  China National Accord Medicines Corporation Ltd.
                                                                                                         Semi-Annual Report 2017
Disclosure information for major related transaction temporary disclosed
                 Temporary notice                             Dated disclosed                       Website for disclosure
Notice     of    Investment     Subscription     of
Sinopharm Zhongjin Medical Industry Fund
                                                      2017-01-07                    Juchao Website: http://www.cninfo.com.cn
and    Related     Transactions      (Notice   No.:
2017-03)
Supplementation Notice on Carrying out the
Receivables Factoring Business and Related
Transactions between China National Accord
                                                      2017-04-22                    Juchao Website: http://www.cninfo.com.cn
Medicines Corporation Ltd. and Sinopharm
Group (China) Finance Lease Co., Ltd.
(Notice No.: 2017-33)
XIII. Non-operational fund occupation from controlling shareholders and its related party
□ Applicable √ Not applicable
No non-operational fund occupation from controlling shareholders and its related party in period.
XIV. Significant contract and implementations
1. Trusteeship, contract and leasing
(1) Trusteeship
□ Applicable √ Not applicable
No trusteeship for the Company in reporting period.
(2) Contract
□ Applicable √ Not applicable
No contract for the Company in reporting period.
(3) Leasing
□ Applicable √ Not applicable
No leasing for the Company in reporting period.
2. Major guarantees
√Applicable     □ Not applicable
                                                                                    China National Accord Medicines Corporation Ltd.
                                                                                                           Semi-Annual Report 2017
(1) Guarantees
                                                                                                                    In 10 thousand Yuan
                    Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries)
                                                                                                                            Guarante
                        Related
                                               Actual date of                                                                   e for
   Name of the         Announce                                                                                 Implemen
                                    Guarantee happening (Date     Actual             Guarantee     Guarantee
    Company               ment                                                                                               related
                                      limit      of signing   guarantee limit          type          term       ted (Y/N)
   guaranteed          disclosure
                                                agreement)                                                                      party
                          date
                                                                                                                                (Y/N)
                                         Guarantee between the Company and the subsidiaries
                                                                                                                            Guarante
                        Related
                                               Actual date of                                                                   e for
   Name of the         Announce                                                                                 Implemen
                                    Guarantee happening (Date     Actual             Guarantee     Guarantee
    Company               ment                                                                                               related
                                      limit      of signing   guarantee limit          type          term       ted (Y/N)
   guaranteed          disclosure
                                                agreement)                                                                      party
                          date
                                                                                                                                (Y/N)
Sinopharm
                                                                                    General      2016.9.26-20
Holding Shenzhen 2016-03-26              1,000 2016-09-26                  326.21                               N           N
                                                                                    assurance    17.9.25
Medicine Co., Ltd.
China National
                                                                                    General      2016.5.25-20
Accord Medicines 2016-03-26             25,000 2016-05-25               12,607.63                               N           N
                                                                                    assurance    17.5.25
Corporation Ltd.
China National
                                                                                    General      2016.11.23-2
Accord Medicines 2016-03-26             20,000 2016-11-23               15,001.35                               N           N
                                                                                    assurance    017.11.22
Corporation Ltd.
Sinopharm
                                                                                    General      2016.07.04-2
Holding Shenzhen 2016-03-26              2,000 2016-07-04                   1,158                               N           N
                                                                                    assurance    017.07.04
Yanfeng Co., Ltd.
Sinopharm
                                                                                    General      2016.09.26-2
Holding Shenzhen 2016-03-26              7,000 2016-09-26                   1,200                               N           N
                                                                                    assurance    017.09.25
Yanfeng Co., Ltd.
Sinopharm
                                                                                    General      2016.11.23-2
Holding Shenzhen 2016-03-26              2,000 2016-11-23                   2,000                               N           N
                                                                                    assurance    017.11.22
Yanfeng Co., Ltd.
Sinopharm
                                                                                    General      2016.06.28-2
Holding Shenzhen 2016-03-26              3,000 2016-06-28                   1,350                               N           N
                                                                                    assurance    017.04.28
Yanfeng Co., Ltd.
Sinopharm
Holding                                                                             General      2017.5.20-20
                      2017-04-19        35,000 2017-05-20                8,942.41                               N           N
Guangzhou Co.,                                                                      assurance    18.5.20
Ltd.
                                                              China National Accord Medicines Corporation Ltd.
                                                                                     Semi-Annual Report 2017
Sinopharm
Holding                                                       General      2016.10.19-2
                 2016-03-26   10,000 2016-10-19    2,767.67                               N        N
Guangzhou Co.,                                                assurance    017.10.18
Ltd.
Sinopharm
Holding                                                       General      2016.9.22-20
                 2016-03-26   21,000 2016-09-22    7,039.63                               N        N
Guangzhou Co.,                                                assurance    17.9.21
Ltd.
Sinopharm
Holding                                                       General      2016.6.29-20
                 2016-03-26   40,000 2016-06-29   35,670.04                               N        N
Guangzhou Co.,                                                assurance    17.6.28
Ltd.
Sinopharm
Holding                                                       General      2017.3.1-201
                 2016-03-26   15,000 2017-03-01          0                                N        N
Guangzhou Co.,                                                assurance    7.9.19
Ltd.
Sinopharm
Holding                                                       General      2016.9.26-20
                 2016-03-26   35,000 2016-09-26          0                                N        N
Guangzhou Co.,                                                assurance    17.9.25
Ltd.
Sinopharm
Holding                                                       General      2016.7.6-201
                 2016-03-26   30,000 2016-07-06   26,242.13                               N        N
Guangzhou Co.,                                                assurance    7.4.30
Ltd.
Sinopharm
Holding                                                       General      2017.5.15-20
                 2017-04-19   40,000 2017-05-15   20,823.45                               N        N
Guangzhou Co.,                                                assurance    18.5.14
Ltd.
Sinopharm
Holding                                                       General      2016.6.30-20
                 2016-03-26   50,000 2016-06-30   34,122.66                               N        N
Guangzhou Co.,                                                assurance    17.6.30
Ltd.
Sinopharm
Holding                                                       General      2016.5.10-20
                 2016-03-26   20,000 2016-05-10     1,001.9                               N        N
Guangzhou Co.,                                                assurance    17.5.9
Ltd.
Sinopharm
Holding                                                       General      2016.6.28-20
                 2016-03-26   30,000 2016-06-28    6,895.32                               N        N
Guangzhou Co.,                                                assurance    17.4.28
Ltd.
Sinopharm        2017-04-19   85,000 2017-04-19   21,389.52 General        2017.4.19-20 N          N
                                                                  China National Accord Medicines Corporation Ltd.
                                                                                         Semi-Annual Report 2017
Holding                                                           assurance    18.3.31
Guangzhou Co.,
Ltd.
Sinopharm
Holding                                                           General      2016.9.26-20
                     2016-03-26    5,000 2016-09-26    4,371.19                               N        N
Guangdong                                                         assurance    17.9.25
Yuexing Co., Ltd.
Sinopharm
Holding                                                           General      2016.9.18-20
                     2016-03-26    3,000 2016-09-18    1,288.41                               N        N
Guangdong                                                         assurance    17.9.17
Yuexing Co., Ltd.
Sinopharm
Holding                                                           General      2017.1.18-20
                     2016-12-30    2,000 2017-01-18     337.69                                N        N
Guangdong                                                         assurance    18.1.17
Yuexing Co., Ltd.
Sinopharm
                                                                  General      2016.9.26-20
Holding Guangxi      2016-03-26   25,000 2016-09-26    6,997.09                               N        N
                                                                  assurance    17.9.25
Co., Ltd.
Sinopharm
                                                                  General      2016.9.14-20
Holding Guangxi      2016-03-26    5,000 2016-09-14          0                                N        N
                                                                  assurance    17.9.13
Co., Ltd.
Sinopharm
                                                                  General      2016.9.30-20
Holding Guangxi      2016-03-26   20,000 2016-09-30    6,836.37                               N        N
                                                                  assurance    17.9.30
Co., Ltd.
Sinopharm
                                                                  General      2016.11.2-20
Holding Guangxi      2016-03-26   20,000 2016-11-02   15,982.61                               N        N
                                                                  assurance    17.11.2
Co., Ltd.
Sinopharm
                                                                  General      2016.9.26-20
Holding Foshan       2016-03-26    1,000 2016-09-26     597.77                                N        N
                                                                  assurance    17.9.25
Co., Ltd.
Sinopharm
Holding                                                           General      2017.3.31-20
                     2016-12-30    3,000 2017-03-31    2,503.73                               N        N
Guangdong                                                         assurance    17.10.29
Hengxing Co., Ltd.
Sinopharm
                                                                  General      2016.12.23-2
Holding Jiangmen 2016-03-26        2,000 2016-12-23    1,999.78                               N        N
                                                                  assurance    017.9.25
Renren Co., Ltd.
Sinopharm
                                                                  General      2016.9.26-20
Holding Liuzhou      2016-03-26    9,000 2016-09-26          0                                N        N
                                                                  assurance    17.9.25
Co., Ltd.
Sinopharm            2017-04-19    5,000 2017-06-21    3,181.12 General        2017.6.21-20 N          N
                                                                               China National Accord Medicines Corporation Ltd.
                                                                                                      Semi-Annual Report 2017
Holding Liuzhou                                                                assurance    18.6.20
Co., Ltd.
Sinopharm
                                                                               General      2017.2.15-20
Holding Liuzhou       2016-12-30     6,000 2017-02-15                651.94                                N        N
                                                                               assurance    18.1.2
Co., Ltd.
Guangdong
Nanfang
                                                                               General      2017.6.14-20
Pharmaceutical        2017-04-19    15,000 2017-06-14              9,967.14                                N        N
                                                                               assurance    18.6.13
Foreign Trade Co.,
Ltd.
Guangdong
Nanfang
                                                                               General      2017.6.5-201
Pharmaceutical        2017-04-19     2,500 2017-06-05                108.54                                N        N
                                                                               assurance    7.12.31
Foreign Trade Co.,
Ltd.
Foshan Nanhai
Uptodate &                                                                     General      2017.1.19-20
                      2016-12-31     5,000 2017-01-19                2,961.8                               N        N
Special Medicines                                                              assurance    17.12.30
Co. Ltd.
Foshan Nanhai
Uptodate &                                                                     General      2017.5.15-20
                      2017-04-19     5,000 2017-05-15              1,170.33                                N        N
Special Medicines                                                              assurance    18.5.14
Co. Ltd.
Foshan       Nanhai
                                                                               General      2017.1.19-20
Pharmaceutical        2016-12-30     1,000 2017-01-19                      0                               N        N
                                                                               assurance    17.12.30
Group Co., Ltd.
Foshan       Nanhai
                                                                               General      2017.1.19-20
Pharmaceutical        2016-12-30     5,000 2017-01-19                221.88                                N        N
                                                                               assurance    17.12.30
Group Co., Ltd.
Sinopharm
                                                                               General      2016.12.20-2
Holding Zhaoqing 2016-03-26          2,000 2016-09-26                  2,000                               N        N
                                                                               assurance    017.9.25
Co., Ltd.
Sinopharm
                                                                               General      2016.09.26-2
Holding Zhanjiang 2016-03-26         1,500 2016-09-26                  1,500                               N        N
                                                                               assurance    017.09.25
Co., Ltd.
                                                            Total amount of actual
Total amount of approving
                                                            occurred guarantee for
guarantee for subsidiaries in                     187,500                                                          492,259.17
                                                            subsidiaries in report period
report period (B1)
                                                            (B2)
Total amount of approved                                    Total balance of actual
                                                  614,000                                                          261,215.34
guarantee for subsidiaries at the                           guarantee for subsidiaries at
                                                                                    China National Accord Medicines Corporation Ltd.
                                                                                                           Semi-Annual Report 2017
end of reporting period (B3)                                     the end of reporting period
                                                                 (B4)
                                        Guarantee between the subsidiaries and the subsidiaries
                                                                                                                             Guarante
                         Related
                                                Actual date of                                                                   e for
   Name of the          Announce                                                                                 Implemen
                                     Guarantee happening (Date     Actual            Guarantee     Guarantee
    Company                ment                                                                                               related
                                       limit      of signing   guarantee limit         type          term        ted (Y/N)
   guaranteed           disclosure
                                                 agreement)                                                                      party
                           date
                                                                                                                                 (Y/N)
Fujian      Guoda
                                                                                    General       2017.2.1-201
Pharmacy     Chain 2016-12-30             1,950 2017-02-01               1,695.96                                N           N
                                                                                    assurance     8.2.1
Co.,Ltd
Sinopharm
Holding Guoda
Fumei                                                                               General       2016.12.1-20
                        2016-12-30        9,000 2016-12-01                  5,343                                N           N
Pharmaceutical                                                                      assurance     17.12.1
(Shanghai) Co.,
Ltd.
Sinopharm
Holding     Guoda
                                                                                    General       2017.6.1-201
Pharmacy                2017-04-19        3,000 2017-06-01                884.79                                 N           N
                                                                                    assurance     8.6.1
Guangdong
Co.,Ltd
Sinopharm
Holding     Guoda
                                                                                    General       2017.6.1-201
Pharmacy                2017-04-19        3,000 2017-06-01               1,009.41                                N           N
                                                                                    assurance     8.6.1
Guangdong
Co.,Ltd
Sinopharm
Holding     Guoda                                                                   General       2017.1.29-20
                        2016-12-30        2,100 2017-01-29                719.19                                 N           N
Pharmacy Guangxi                                                                    assurance     17.12.31
Chain Co.,Ltd
Sinopharm
Holding     Guoda                                                                   General       2017.4.24-20
                        2017-04-19        3,000 2017-04-24               2,229.11                                N           N
Pharmacy        Inner                                                               assurance     18.4.23
Mongolia Co.,Ltd
Sinopharm
Holding     Guoda                                                                   General       2017.4.23-20
                        2017-04-19        5,000 2017-04-23               2,520.22                                N           N
Pharmacy        Inner                                                               assurance     18.4.22
Mongolia Co.,Ltd
Sinopharm                                                                           General       2017.5.1-201
                        2017-04-19        6,000 2017-05-01                      0                                N           N
Holding Guoda                                                                       assurance     8.5.1
                                                             China National Accord Medicines Corporation Ltd.
                                                                                    Semi-Annual Report 2017
Pharmacy Shanxi
Yiyuan Chain
Co.,Ltd.
Sinopharm
Holding Guoda
                                                             General      2016.7.1-201
Pharmacy Shanxi   2016-12-30   4,000 2016-07-01   3,843.46                               N        N
                                                             assurance    7.7.1
Yiyuan Chain
Co.,Ltd.
Sinopharm
Holding Guoda
                                                             General      2016.10.1-20
Pharmacy Shanxi   2016-12-30   2,800 2016-10-01   2,796.15                               N        N
                                                             assurance    17.10.1
Yiyuan Chain
Co.,Ltd.
Sinopharm
Holding Guoda
                                                             General      2016.9.1-201
Pharmacy Shanxi   2016-12-30   1,500 2016-09-01   1,499.26                               N        N
                                                             assurance    7.12.1
Yiyuan Chain
Co.,Ltd.
Sinopharm
Holding Guoda
                                                             General      2016.10.1-20
Pharmacy Shanxi   2016-12-30   1,960 2016-10-01   1,909.54                               N        N
                                                             assurance    17.10.1
Yiyuan Chain
Co.,Ltd.
Sinopharm
Holding Guoda
                                                             General      2016.3.1-201
Pharmacy          2016-12-30   5,600 2016-03-01   1,848.87                               N        N
                                                             assurance    7.3.1
Shenyang Chain
Co.,Ltd
Sinopharm
Holding Guoda
                                                             General      2017.3.1-201
Pharmacy          2016-12-30   4,500 2017-03-01    4,498.4                               N        N
                                                             assurance    8.3.1
Shenyang Chain
Co.,Ltd
Sinopharm
Holding Guoda
                                                             General      2016.6.1-201
Pharmacy          2016-12-30   5,000 2016-06-01   4,998.08                               N        N
                                                             assurance    7.6.1
Shenyang Chain
Co.,Ltd
Sinopharm
Holding Guoda                                                General      2016.11.1-20
                  2016-12-30   6,000 2016-11-01    3,459.8                               N        N
Pharmacy                                                     assurance    17.11.1
Shenyang Chain
                                                                                      China National Accord Medicines Corporation Ltd.
                                                                                                             Semi-Annual Report 2017
Co.,Ltd
Sinopharm
Holding       Guoda
Pharmacy                                                                              General            2016.9.1-201
                        2016-12-30     1,000 2016-09-01                      525.18                                     N   N
Yangzhou                                                                              assurance          7.9.1
Dadesheng     Chain
Co.,Ltd
Shanxi        Guoda
                                                                                      General            2017.5.1-201
Wanmin Drugstore 2017-04-19            3,000 2017-05-01                          0                                      N   N
                                                                                      assurance          8.5.1
Chain Co.,Ltd
Shanxi        Guoda
                                                                                      General            2017.4.1-201
Wanmin Drugstore 2016-12-30            5,000 2017-04-01                       1,400                                     N   N
                                                                                      assurance          8.4.1
Chain Co.,Ltd
Shanxi Tongfeng
                                                                                      General            2016.11.1-20
Pharmaceutical          2016-12-30     2,100 2016-11-01                       1,800                                     N   N
                                                                                      assurance          17.11.1
Logistics Co., Ltd.
Tianjin       Guoda
                                                                                      General            2016.4.1-201
Pharmacy      Chain 2016-12-30         1,000 2016-04-01                       60.61                                     N   N
                                                                                      assurance          7.3.1
Co.,Ltd
                                                                  Total   amount        of      actual
Total     amount   of      approving
                                                                  occurred      guarantee          for
guarantee for subsidiaries in                           23,000                                                               54,430.86
                                                                  subsidiaries in report period
report period (C1)
                                                                  (C2)
                                                                  Total   balance       of      actual
Total     amount     of    approved
                                                                  guarantee for subsidiaries at
guarantee for subsidiaries at the                       76,510                                                               43,041.02
                                                                  the end of reporting period
end of reporting period (C3)
                                                                  (C4)
Total amount of guarantee of the Company( total of three abovementioned guarantee)
Total     amount   of      approving                              Total   amount        of      actual
guarantee     in   report     period                  210,500 occurred guarantee in report                                  546,690.03
(A1+B1+C1)                                                        period (A2+B2+C2)
Total     amount      of    approved                              Total   balance       of      actual
guarantee at the end of report                        690,510 guarantee at the end of report                                304,256.36
period (A3+B3+C3)                                                 period (A4+B4+C4)
The proportion of the total amount of actually guarantee in the
                                                                                                                                34.32%
net assets of the Company (that is A4+ B4+C4)
Including:
Note:
Before deliverydate of the material asset reorganization, Guoda Pharmacy and its subordinate subsidiary entered into relevant
guarantee agreement (Sinopharm Holding provide a guaranty) before the reorganizataion. After delivery date, as the “Adjustment on
General Credit Limit Application to the Bank for year of 2016 and Guarantee Arrangement” was deliberated and approved by the 20th
session of 7th BOD of Sinopharm Accord held on 29 December 2016 and First Extraordinary Shareholders General Meeting of
                                                                                  China National Accord Medicines Corporation Ltd.
                                                                                                         Semi-Annual Report 2017
Sinopharm Accord for year of 2017 dated 18 January 2017, Sinopharm Accord act as the guarantor for Guoda Pharmacy and its
subsidiary to re-signing relevant guarantee agreement. Found more in the “Sinopharm Accord: Notice of Adjustment on General
Credit Limit Application to the Bank for year of 2016 and Guarantee Arrangement” (Notice No.:2016-96) released on 30 December
2016 and “Sinopharm Accord: Resolution Notice of First Extraordinary Shareholders General Meeting for year of 2017” (Notice
No.:2017-05) dated 18 January 2017 published on Juchao website
(2) Guarantee outside against the regulation
□ Applicable √ Not applicable
No guarantee outside against the regulation in Period.
3. Other material contracts
□ Applicable √ Not applicable
No other material contracts for the Company in reporting period.
XV. Social responsibility
1. Execution of social responsibility of targeted poverty alleviation
(1) Summary of the targeted poverty alleviation for the half year
The Company temporarily not to carry out a targeted poverty alleviation in the peirod, and there are no follow-up plans either.
(2)Targeted poverty alleviation for the first half of 2017
Nil
(3) Follow-up target poverty alleviation
Nil
2. Major environment protection
The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department
No
XVI. Explanation on other significant events
√Applicable   □ Not applicable
During the reporting period, the progress of the company's major asset reorganization was as follows: on January
4, 2021, the company made the Announcement about the Implementation of Purchasing Assets and Raising
Supporting Funds and Related Transactions by Asset Sale, Stock Issuance and Cash Payment and the Newly
Increased Share of Sinopharm Accord; and respectively issued the Announcement about the Implementation of
Major Asset Reorganization of Sinopharm Accord (Announcement No. 2017-11, 2017-12) respectively on
February 28, 2017 and March 9, 2017.
                                                                     China National Accord Medicines Corporation Ltd.
                                                                                            Semi-Annual Report 2017
As of the issue date of this report, the Company has completed the registration of real estate transfer of the
Pingshan base project of this asset sale located at the north side of Lanzhu East Road, Biomedical Base, Kengzi
Street, Pingshan New District, the relevant real estate has been registered under the name of Shyndec
Pharmaceutical; the counterparty of this asset sale, Shanghai Shyndec Pharmaceutical Co., Ltd., has completed its
registration for the non-public offering of shares to the Company. For details of the above announcement, please
refer to http://www.cninfo.com.cn.
XVII. Significant event of subsidiary of the Company
□ Applicable √ Not applicable
                                                                                      China National Accord Medicines Corporation Ltd.
                                                                                                             Semi-Annual Report 2017
   Section VI. Changes in Shares and Particulars about Shareholders
I.Changes in share capital
1.Changes in share capital
                                                                                                                                 In share
                              Before the Changes                   Increase/Decrease in the Change (+, -)                After the Changes
                                                                              Public
                                                          Newly-
                                                                      Bonus reserve-co
                              Amount         Proportion   issued                            Others      Subtotal        Amount       Proportion
                                                                      shares nverted
                                                          shares
                                                                              shares
I. Restricted shares          74,484,531       20.54% 65,495,040                          -74,482,543   -8,987,503      65,497,028     15.30%
2. State-owned legal
                              74,482,543       20.54% 60,380,743                          -74,482,543 -14,101,800       60,380,743     14.10%
person’s shares
3. Other domestic
                                     1,988       0.00%    5,114,297                                         5,114,297    5,116,285       1.20%
shareholding
Including:     Domestic
                                        0                 5,114,297                                         5,114,297    5,114,297       1.19%
legal person’s shares
         Domestic
                                     1,988       0.00%                                                                       1,988       0.01%
natural person’s shares
II. Unrestricted shares      288,147,412       79.46%                                     74,482,543 74,482,543 362,629,955            84.70%
1. RMB ordinary
                             233,261,812       64.32%                                     74,482,543 74,482,543 307,744,355            71.88%
shares
2. Domestically listed
                              54,885,600       15.14%                                                                   54,885,600     12.82%
foreign shares
III. Total shares            362,631,943      100.00% 65,495,040                                     0 65,495,040 428,126,983         100.00%
Reasons for share changed
√Applicable     □ Not applicable
1. The company has completed the asset purchase by stock issuance and the non-public offering of shares on
January 5, 2017, newly increased restricted shares of 65,495,040 shares. After the completion of the transaction,
the company’s shares increased to 428,126,983 shares. See details on the announcement about the implementation
of purchasing assets and raising supporting funds and related transactions by asset sale, stock issuance and cash
payment and the newly increased share disclosed at http://www.cninfo.com.cn on January 4, 2017
2. The non-public offering of shares in 2013 of 74,482,543 shares held by the company’s controlling shareholder
Sinopharm Group has been lifted on March 21, 2017.
Approval of share changed
√Applicable     □ Not applicable
                                                                                China National Accord Medicines Corporation Ltd.
                                                                                                       Semi-Annual Report 2017
The shares increased for listing and desterilization of non-tradable shares the above mentioned are being approved
by Shenzhen Stock Exchange
Ownership transfer of share changed
□ Applicable √ Not applicable
Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common
shareholders of Company in latest year and period
□ Applicable √ Not applicable
Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators
□ Applicable √ Not applicable
2. Changes of restricted shares
√Applicable    □ Not applicable
                                                                                                                                  In Share
                                                            Restricted
                                                             Shares
                     Opening shares Shares released in      Increased        Ending shares           Restricted
   Shareholders                                                                                                       Date for released
                         restricted        Period               In             restricted             reasons
                                                               the
                                                             Period
Sinopharm Group                                                                                  Private issuing of
                           74,482,543       74,482,543                   0                   0                        2017-3-21
Co., Ltd.                                                                                        Stock for 2013
                                                                                                 Purchasing the
                                                                                                 assets of private
Sinopharm Group
                                      0               0        55,057,700        55,057,700 issuing stock with 2020-1-6
Co., Ltd.
                                                                                                 shares issuing for
                                                                                                 year of 2017
                                                                                                 Purchasing the
China National
                                                                                                 assets of private
Pharmaceutical
                                      0               0         5,323,043          5,323,043 issuing stock with 2020-1-6
Foreign Trade
                                                                                                 shares issuing for
Corp.
                                                                                                 year of 2017
Ping An Assets-                                                                                  Purchasing the
ICBC-Xinxiang                                                                                    assets of private
No.3 Assets                           0               0         2,557,149          2,557,149 issuing stock with 2020-1-6
Management                                                                                       shares issuing for
Products                                                                                         year of 2017
Ping An Assets-
                                                                                                 Purchasing the
ICBC- Ping An
                                                                                                 assets of private
Assets Xinxiang                       0               0         2,557,148          2,557,148                          2020-1-6
                                                                                                 issuing stock with
No.7 Insurance
                                                                                                 shares issuing for
Assets
                                                                                         China National Accord Medicines Corporation Ltd.
                                                                                                                Semi-Annual Report 2017
Management                                                                                             year of 2017
Products
Total                     74,482,543             74,482,543         65,495,040            65,495,040            --                 --
II. Securities issuance and listing
√Applicable   □ Not applicable
                                                                                               Date
  Stock and                                                                      Approved
                                Issue price      Circulation                                    of                                Date of
  derivative    Issuing date                                    Listing date       trading                Index of disclosure
                               (interest rate)     figures                                    termin                             disclosure
  securities                                                                      volume
                                                                                              ation
Stock
                                                                                                       Sinopharm Accord:
                                                                                                       Announcement about
                                                                                                       the Implementation of
                                                                                                       Purchasing Assets and
                                                                                                       Raising Supporting
A-Share        2017-01-05      53.50              65,495,040 2017-01-05          65,495,040            Funds and Related        2017-01-04
                                                                                                       Transactions by Asset
                                                                                                       Sale, Stock Issuance
                                                                                                       and Cash Payment and
                                                                                                       the Newly Increased
                                                                                                       Share
Convertible bond, warrant bond and corporate bond
Other derivative securities
Security offering in reporting period
The company has completed the asset purchase by stock issuance and the non-public offering of shares on January
5, 2017, newly increased restricted shares of 65,495,040 shares. After the completion of the transaction, the
company’s shares increased to 428,126,983 shares. See details on the Announcement about the Implementation of
Purchasing Assets and Raising Supporting Funds and Related Transactions by Asset Sale, Stock Issuance and
Cash Payment and the Newly Increased Share, which released on Juchao website dated 4 January 2017
III. Number of shareholders and share-holding
                                                                                                                                        In Share
                                                                        Total preference shareholders
Total common shareholders at                                            with voting rights recovered at
                                                               11,793
period-end                                                              end of reporting period (if
                                                                        applicable) (see Note 8)
                 Particulars about shares held above 5% by common shareholders or top ten common shareholders
                                                                                        China National Accord Medicines Corporation Ltd.
                                                                                                               Semi-Annual Report 2017
                                                     Number                                               Number of share pledged/frozen
                                                                                Amount
                                                        of
                                                                                   of        Amount of
                                         Proportion common Changes in
                        Nature of                                               restricted un-restricte
 Shareholders                            of shares    shares        reporting
                       shareholder                                              common d common State of share              Amount
                                           held       held at        period
                                                                                 shares shares held
                                                     period-en
                                                                                  held
                                                        d
Sinopharm           State-owned                      239,999,9 +55,057,70 55,057,70 184,942,29
                                            56.06%
Group Co., Ltd. corporate                                    91 0                        0
HTHK/CMG
FSGUFP-CMG
FIRST STATE         Overseas corporate       2.04% 8,732,491
CHINA
GROWTH FD
China       Life
Insurance   Co.,
Ltd. – tradition
                    Domestic non
–general
                    state-owned              1.51% 6,454,402
insurance
                    corporate
products
-005L-CT001
Shen
China National
Pharmaceutical State-owned
                                             1.24% 5,323,043 +5,323,043 5,323,043
Foreign Trade       corporate
Corp.
TARGET
                    Overseas corporate       1.27% 5,449,232
VALUE FUND
GUOTAI
JUNAN
SECURITIES( Overseas corporate               1.05% 4,489,371
HONGKONG)
LIMITED
China
Merchants Bank
Co., Ltd.-China
Universal           Domestic non
Assets              state-owned              1.03% 4,430,009
Management          corporate
Medical
Services
Flexible Mixed
                                                                                      China National Accord Medicines Corporation Ltd.
                                                                                                             Semi-Annual Report 2017
Securities
Investment
Fund
New China Life
Insurance      Co.,
Ltd. – Bonus – Domestic non
Individual            state-owned                0.98% 4,199,772
bonuses           - corporate
-018L-FH002
Shen
Central      Huijin State-owned
                                                 0.89% 3,804,400
Investment Ltd. corporate
VALUE
PARTNERS
                      Overseas corporate         0.71% 3,038,918
CLASSIC
FUND
                                            Sinopharm Group Co., Ltd. and China National Pharmaceutical Foreign Trade Corporation
Explanation           on      associated have the same actual controller, which is China National Pharmaceutical Group Corporation.
relationship among the aforesaid It is unknown that there exists no associated relationship or belongs to the consistent actionist
shareholders                                among the other tradable shareholders regulated by the Management Measure of Information
                                            Disclosure on Change of Shareholding for Listed Companies.
                                  Particular about top ten common shareholders with un-restrict shares held
                                                 Amount of un-restrict common shares held at                   Type of shares
              Shareholders
                                                                 period-end                                 Type           Amount
                                                                                                   RMB ordinary
Sinopharm Group Co., Ltd.                                                            184,942,291                            184,942,291
                                                                                                   shares
HTHK/CMG FSGUFP-CMG                                                                                Domestically
FIRST STATE CHINA GROWTH                                                               8,732,491 listed foreign                 8,732,491
FD                                                                                                 shares
China Life Insurance Co., Ltd. –
                                                                                                   RMB ordinary
tradition       –general       insurance                                              6,454,402                                6,454,402
                                                                                                   shares
products -005L-CT001 Shen
                                                                                                   Domestically
TARGET VALUE FUND                                                                      5,449,232 listed foreign                 5,449,232
                                                                                                   shares
GUOTAI JUNAN                                                                                       Domestically
SECURITIES(HONGKONG)                                                                   4,489,371 listed foreign                 4,489,371
LIMITED                                                                                            shares
China Merchants Bank Co.,                                                                          RMB ordinary
                                                                                       4,430,009                                4,430,009
Ltd.-China Universal Assets                                                                        shares
                                                                                   China National Accord Medicines Corporation Ltd.
                                                                                                          Semi-Annual Report 2017
Management Medical Services
Flexible Mixed Securities
Investment Fund
New China Life Insurance Co., Ltd.
                                                                                                  RMB ordinary
– Bonus – Individual bonuses -                                                      4,199,772                            4,199,772
                                                                                                  shares
-018L-FH002 Shen
                                                                                                  RMB ordinary
Central Huijin Investment Ltd.                                                        3,804,400                            3,804,400
                                                                                                  shares
                                                                                                  Domestically
VALUE PARTNERS CLASSIC
                                                                                      3,038,918 listed foreign             3,038,918
FUND
                                                                                                  shares
Bank of China- Harvest Stable
                                                                                                  RMB ordinary
Open-end Securities Investment                                                        2,684,976                            2,684,976
                                                                                                  shares
Fund
Expiation on associated relationship
or consistent actors within the top
                                       It is unknown that there exists associated relationship or belongs to the consistent actionist
10 un-restrict common shareholders
                                       among the above-mentioned shareholders regulated by the Management Measure of
and between top 10 un-restrict
                                       Information Disclosure on Change of Shareholding for Listed Companies.
common shareholders and top 10
common shareholders
Agree to buy-back dealings occurred in Period by top 10 common shareholders and top 10 common shareholders with shares
restricted for sale
□Yes    √No
No agree to buy-back dealings occurred in Period by top 10 common shareholders and top 10 common shareholders with shares
restricted for sale
IV. Changes of controlling shareholders or actual controller
Changes of controlling shareholders in reporting period
□ Applicable √ Not applicable
Changes of controlling shareholders had no change in reporting period.
Changes of actual controller in reporting period
□ Applicable √ Not applicable
Changes of actual controller in reporting period had no change in reporting period.
                                                            China National Accord Medicines Corporation Ltd.
                                                                                   Semi-Annual Report 2017
                                      Section VII. Preferred Stock
□ Applicable √ Not applicable
The Company has no preferred stock in reporting period.
                                                                                  China National Accord Medicines Corporation Ltd.
                                                                                                         Semi-Annual Report 2017
            Section VIII. Directors, Supervisors and Senior Executives
I. Changes of shares held by directors, supervisors and senior executives
□ Applicable √ Not applicable
Shares held by directors, supervisors and senior executives have no changes in reporting period, found more details in Annual Report
2016.
II. Resignation and dismissal of directors, supervisors and senior executives
√ Applicable □ Not applicable
    Name             Title             Type               Date                                Reasons
                                                                           Liu Yong elected as the director of 7th BOD of the
                                    Appointment and
Liu Yong           Director                             2017-01-18         Company by first extraordinary shareholders meeting of
                                    removal
                                    Expiration of the                      Resigned independent director of the Company for
He Zhiyi           N/A                                  2017-02-14
                                    term of office                         office term ends
                                                                           Chen Honghui elected as independent director of 7th
                   Independent      Appointment and
Chen Honghui                                            2017-03-14         BOD of the Company by second extraordinary
                   director         removal
                                                                           shareholders meeting of 2017
                                                                           Resigned deputy GM of the Company for personal
Pan Rangren        N/A              Dismissed           2017-02-22
                                                                           reasons
                                                                           Not in serves as director of the Company for legal
Wei Yulin          Director         Leave the post      2017-03-25
                                                                           retirement age
                                                                           Recruit Zhao Xiaochuan as deputy GM of the Company
Zhao Xiaochuan Deputy GM            Appointed           2017-04-17
                                                                           by 22nd session meeting of 7th BOD
                                                                           Recruit Chen Changbing as deputy GM of the
Chen Changbing Deputy GM            Appointed           2017-04-17
                                                                           Company by 22nd session meeting of 7th BOD
                                                                              China National Accord Medicines Corporation Ltd.
                                                                                                     Semi-Annual Report 2017
                                         Section IX. Corporate Bond
Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when
semi-annual report approved for released or fail to cash in full on due
No
                                                                           China National Accord Medicines Corporation Ltd.
                                                                                                  Semi-Annual Report 2017
                                     Section X. Financial Report
I.Report of the Auditors
Consolidated financial statements for the six months ended 30 June 2017 haven’t been audited.
                       CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                        CONSOLIDATED BALANCE SHEET
                                                 As at 30 June 2017
                                         (Expressed in Renminbi Yuan)
ASSETS                                    Note V                      30 June 2017    31 December 2016
Current assets
   Cash and bank balances                   1                    3,361,328,847.44      3,519,961,564.93
   Notes receivable                         2                    1,044,457,065.20      1,504,000,909.21
   Accounts receivable                      3                    9,122,573,508.17      7,654,225,510.89
   Advances to suppliers                    4                     356,732,828.43         424,867,581.80
   Interest receivable                      5                            55,855.56          450,722.67
   Other receivables                        6                     471,096,771.67         478,573,423.62
   Inventories                              7                    3,936,541,833.92      4,049,482,529.71
   Other current assets                     8                         90,246,738.10       57,209,263.04
Total current assets                                            18,383,033,448.49     17,688,771,505.87
Non-current assets
  Financial assets available-for-sale       9                         13,685,760.00       13,685,760.00
   Long-term equity investments            10                    1,500,744,612.15      1,413,034,165.56
   Investment properties                    11                    162,773,623.12         166,715,848.80
   Fixed assets                            12                     524,469,811.81         487,009,600.10
   Construction in progress                13                         29,542,882.91       47,063,868.49
   Intangible assets                       14                     333,998,871.41         320,435,400.89
   Goodwill                                15                     827,963,369.44         823,890,174.21
   Long-term prepaid expenses              16                     212,763,843.93         188,377,725.64
   Deferred tax assets                     17                         74,555,861.41       72,914,722.30
   Other non-current assets                18                     136,242,905.64          94,649,476.09
Total non-current assets                                         3,816,741,541.82      3,627,776,742.08
Total assets                                                    22,199,774,990.31     21,316,548,247.95
The accompanying notes form an integral part of these financial statements
                       CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                CONSOLIDATED BALANCE SHEET (Continued)
                                                As at 30 June 2017
                                           (Expressed in Renminbi Yuan)
LIABILITIES                                     Note V           30 June 2017     31 December 2016
Current liabilities
    Short-term borrowings                         19          1,600,656,482.46     1,512,713,629.95
    Notes payable                                 20          2,188,044,512.96     2,406,642,582.86
    Accounts payable                              21          7,374,938,495.12     6,701,558,514.10
    Advances from customers                       22           167,151,483.39        163,450,365.92
    Employee benefits payable                     23           135,450,663.42        195,138,079.85
    Tax payable                                   24           171,890,118.32        187,043,717.52
    Interest payable                              25              5,880,795.47         6,956,463.02
    Dividends payable                            26               9,036,964.22         8,483,370.21
    Other payables                                27           903,536,646.94        917,193,911.34
  Non-current liabilities due within one year    28               5,038,700.43        36,411,339.96
    Other current liabilities                    29                   76,143.06         123,294.77
Total current liabilities                                    12,561,701,005.79    12,135,715,269.50
Non-current liabilities
    Long-term borrowings                          30            31,600,000.00                     -
    Long-term payables                            31            12,104,897.06         14,616,598.34
    Payable for specific projects                32                  800,000.00         800,000.00
    Deferred income                               33           121,946,453.35        123,953,462.81
  Long-term employee benefits payable             34              2,078,999.89         1,722,599.89
    Deferred tax liabilities                     17             73,869,023.27         76,535,704.01
    Other non-current liabilities                 35            45,427,343.31         45,427,343.31
Total non-current liabilities                                  287,826,716.88        263,055,708.36
Total liabilities                                            12,849,527,722.67    12,398,770,977.86
The accompanying notes form an integral part of these financial statements
                   CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                              CONSOLIDATED BALANCE SHEET (Continued)
                                            As at 30 June 2017
                                       (Expressed in Renminbi Yuan)
SHAREHOLDERS’ EQUITY                   Note V                       30 June 2017       31 December 2016
Shareholders’ equity
   Share capital                          36                      428,126,983.00          362,631,943.00
   Capital surplus                        37                     3,151,532,012.50       3,152,718,024.92
   Other equity instruments               38                                    -          65,495,040.00
   Surplus reserve                        39                      181,315,971.50          181,315,971.50
   Retained earnings                      40                     5,103,480,119.90       4,690,265,884.10
Shareholders’ equity attributable
  to shareholders of the parent                                  8,864,455,086.90       8,452,426,863.52
Non-controlling interests                                         485,792,180.74          465,350,406.57
Total shareholders’ equity                                      9,350,247,267.64       8,917,777,270.09
Total liabilities and shareholders’                         22,199,774,990.31         21,316,548,247.95
    equity
The accompanying notes form an integral part of these financial statements
The financial statements have been signed by:
Legal representative:                    Financial controller:                      Head of Accounting
  Department:
                       CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                         CONSOLIDATED INCOME STATEMENT
                                       For the six months ended 30 June 2017
                                              (Expressed in Renminbi Yuan)
                                                          Note V   For the six months ended    For the six months ended
                                                                                30 June 2017                30 June 2016
Operating revenue                                          41             20,524,807,669.57           20,562,402,047.82
       Less: Operating costs                               41             18,364,034,450.83           18,246,890,063.69
               Tax and surcharge                           42                 63,185,620.86               57,846,885.62
               Selling expenses                            43               1,110,446,938.17           1,066,501,100.15
               Administrative expenses                     44                340,636,051.11              431,344,673.41
               Finance costs                               45                 44,498,778.76               50,721,403.21
               Impairment loss                             46                     96,757.16                1,150,573.63
       Add: Investment income                              47                146,726,039.90              149,361,622.38
                Incl: Investment     income        from
                                                                             146,676,039.90               27,607,440.12
                associates
                Miscellaneous incomes                      48                   7,958,493.67                           -
Operating profits                                                            756,593,606.25              857,308,970.49
       Add: Non-operating income                           49                  6,634,437.62               17,757,829.29
    Incl: Gain from disposal of non-current                                  579,658.49                 4,017,585.64
          assets
       Less: Non-operating expenses                        50                   3,653,197.22                1,640,538.33
         Incl: Loss from disposal of non-current                                 377,352.06                  591,341.17
           assets
Total profit                                                                 759,574,846.65              873,426,261.45
       Less: Income taxes                                  51                160,041,107.63              161,784,127.76
Net profit                                                                   599,533,739.02              711,642,133.69
       Incl: Net profit of acquiree before business
         combinations involving enterprises under
                                                                                   -1,096.00                 -102,530.12
         common control
Net profit attributable to shareholders of the parent                        556,125,318.19              659,078,223.36
Profit or loss of non-controlling interests                                   43,408,420.83               52,563,910.33
Total comprehensive income                                                   599,533,739.02               711,642,133.69
Incl: Total comprehensive income for the year
                                                                             556,125,318.19               659,078,223.36
       attributable to owners of the parent
Total comprehensive income for the year
                                                                              43,408,420.83                52,563,910.33
       attributable to non-controlling interests
Earnings per share
         Basic earnings per share                                                     1.299                        1.558
         Diluted earnings per share                                                   1.299                        1.558
The accompanying notes form an integral part of these financial statements
                                                          CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                                 CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
                                                                            For the six months ended 30 June 2017
                                                                                 (Expressed in Renminbi Yuan)
                   2017                                     Shareholders’ equity attributable to shareholders of the parent                                Non-controlling        Total equity
                                                             Other equity                                                                                         interests
                                          Share capital       instrument         Capital surplus   Surplus reserve   Retained earnings           Subtotal
 Closing balance of the preceding year   362,631,943.00    65,495,040.00       3,151,518,024.92    181,315,971.50     4,689,189,642.51   8,450,150,621.93   463,832,912.18    8,913,983,534.11
    Business combination involving
     enterprises under common control                 -                 -          1,200,000.00                  -        1,076,241.59      2,276,241.59      1,517,494.39       3,793,735.98
 Opening balance of the current year     362,631,943.00    65,495,040.00       3,152,718,024.92    181,315,971.50     4,690,265,884.10   8,452,426,863.52   465,350,406.57    8,917,777,270.09
 Movements in the current year            65,495,040.00   (65,495,040.00)        (1,186,012.42)                  -     413,214,235.80     412,028,223.38     20,441,774.17     432,469,997.55
 (1) Total comprehensive income                       -                 -                      -                 -     556,125,318.19     556,125,318.19     43,408,420.83     599,533,739.02
 (2) Capital paid and reduced by
                                          65,495,040.00   (65,495,040.00)        (1,186,012.42)                  -      (1,075,583.99)     (2,261,596.41)     7,557,944.01       5,296,347.60
      owners
    1.Capital injection by owners         65,495,040.00   (65,495,040.00)                      -                 -                   -                  -     9,075,000.00       9,075,000.00
   2.Business combination involving
   enterprises under common control                   -                 -        (1,200,000.00)                  -      (1,075,583.99)     (2,275,583.99)    (1,517,055.99)     (3,792,639.98)
   3.Others                                           -                 -             13,987.58                  -                   -         13,987.58                  -         13,987.58
 (3) Profit distribution                              -                 -                      -                 -    (141,835,498.40)   (141,835,498.40)   (30,524,590.67)   (172,360,089.07)
   1.Distribution to equity owners                    -                 -                      -                 -    (141,281,904.39)   (141,281,904.39)   (30,524,590.67)   (171,806,495.06)
   2.Others                                           -                 -                      -                 -        (553,594.01)       (553,594.01)                 -       (553,594.01)
 Closing balance of the current year     428,126,983.00                 -      3,151,532,012.50    181,315,971.50     5,103,480,119.90   8,864,455,086.90   485,792,180.74    9,350,247,267.64
The accompanying notes form an integral part of these financial statements
                                                                       CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                                            CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
                                                                                         For the year ended 31 December 2016
                                                                                             (Expressed in Renminbi Yuan)
                      2016                                                     Shareholders’ equity attributable to shareholders of the parent                                           Non-controlling         Total equity
                                                                                                                                                                                                interests
                                                Share capital       Other equity instrument       Capital surplus       Surplus reserve       Retained earnings        Subtotal
Closing balance of the preceding year            362,631,943.00                               -      1,863,894,533.34     181,315,971.50          3,045,551,246.71    5,453,393,694.55    113,081,262.72    5,566,474,957.27
Business combination involving enterprises
      under common control                                      -                             -      1,334,904,770.31                     -         592,834,676.01    1,927,739,446.32    424,511,166.59    2,352,250,612.91
Opening balance of the current year              362,631,943.00                                      3,198,799,303.65     181,315,971.50          3,638,385,922.72    7,381,133,140.87    537,592,429.31    7,918,725,570.18
Movements in the current year                                   -             65,495,040.00           (46,081,278.73)                     -       1,051,879,961.38    1,071,293,722.65    (72,242,022.74)    999,051,699.91
(1) Total comprehensive income                                  -                             -                     -                     -       1,186,539,201.93    1,186,539,201.93     95,236,608.98    1,281,775,810.91
(2) Capital paid and reduced by owners                          -             65,495,040.00           (46,081,278.73)                     -                       -     19,413,761.27    (117,965,822.18)    (98,552,060.91)
  1.Capital injection by owners                                 -              5,114,297.00           263,030,592.50                      -                       -    268,144,889.50                   -    268,144,889.50
  2.Significant reorganization                                  -             60,380,743.00          (156,366,978.12)                     -                       -    (95,986,235.12)                  -    (95,986,235.12)
  3. Acquisition of non-controlling interests                   -                             -      (152,385,126.76)                     -                       -   (152,385,126.76)   (124,729,773.24)   (277,114,900.00)
  4.Others                                                      -                             -          (359,766.35)                     -                       -       (359,766.35)      6,763,951.06         6,404,184.71
(3) Profit distribution                                         -                             -                     -                     -       (134,659,240.55)    (134,659,240.55)    (49,512,809.54)   (184,172,050.09)
  1.Distribution to owners                                      -                             -                     -                     -       (108,789,582.90)    (108,789,582.90)    (32,266,371.11)   (141,055,954.01)
  2.Others                                                      -                             -                     -                     -        (25,869,657.65)     (25,869,657.65)    (17,246,438.43)    (43,116,096.08)
Closing balance of the current year              362,631,943.00               65,495,040.00          3,152,718,024.92     181,315,971.50          4,690,265,884.10    8,452,426,863.52    465,350,406.57    8,917,777,270.09
              The accompanying notes form an integral part of these financial statements
                  CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                CONSOLIDATED CASH FLOW STATEMENT
                                   For the six months ended 30 June 2017
                                        (Expressed in Renminbi Yuan)
                                                               Note V   For the six months ended For the six months ended
                                                                                     30 June 2017             30 June 2016
 1.CASH FLOWS FROM OPERATING ACTIVITIES
    Cash received from sales of good or rendering of                           21,970,884,180.09         21,470,945,636.40
    services
    Tax refunds                                                                     5,740,675.89             13,046,803.80
    Cash receipts related to other operating activities         52                 98,022,828.67            138,828,103.59
    Sub-total of cash inflows from operating activities                        22,074,647,684.65         21,622,820,543.79
    Cash paid for goods and services                                           19,734,413,196.28         18,624,902,770.08
    Cash paid to and on behalf of employees                                       864,562,267.50            917,184,961.14
    Cash paid for all types of taxes                                              601,078,629.47            605,595,102.51
    Cash payments related to other operating activities         52                646,256,160.00            645,554,776.72
    Sub-total of cash outflows from operating activities                       21,846,310,253.25         20,793,237,610.45
    Net cash flows from operating activities                    53                228,337,431.40            829,582,933.34
 2.CASH FLOWS FROM INVESTING ACTIVITIES
    Cash received from recovery of investments                                                 -                         -
    Cash received from returns on investments                                      58,647,191.65             36,639,004.96
          Net cash received from disposal of fixed
    assets, intangible assets and other long-term                                 171,059.95             21,570,184.64
            t
          Net cash received from disposal                 of
    subsidiaries and other business units                                                  -            128,845,881.13
     Cash receipts related to other investing activities        52                 87,027,340.19          1,563,344,224.08
    Sub-total of cash inflows from investing activities                           145,845,591.79          1,750,399,294.81
The accompanying notes form an integral part of these financial statements
                  CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                      CONSOLIDATED CASH FLOW STATEMENT (Continued)
                                   For the six months ended 30 June 2017
                                        (Expressed in Renminbi Yuan)
                                                                         For the six months        For the six
                                                                Note V       ended 30 June    months ended 30
                                                                                       2017         June 2016
 2.CASH FLOWS FROM INVESTING ACTIVITIES(Continued)
     Cash paid for acquisition of fixed assets,
                                                                              82,123,615.39     120,577,396.73
    intangible assets and other long-term assets
    Cash paid for acquisition of investments                                  71,120,000.00                   -
           Net cash paid for acquisition of subsidiaries and
                                                                 53           14,706,789.56      11,639,196.11
         other business units
    Net cash paid from disposal of subsidiaries and other
                                                                 53                       -                   -
       business units
          Cash payments related to other investing activities    52           70,175,078.90   1,204,967,817.12
    Sub-total of cash outflows from investing activities                     238,125,483.85   1,337,184,409.96
    Net cash flows from investing activities                                (92,279,892.06)     413,214,884.85
3.CASH FLOWS FROM FINANCING ACTIVITIES
    Cash proceeds from investments by others                                   9,075,000.00       1,470,000.00
      Incl: Cash received from capital contributions from
                                                                               9,075,000.00       1,470,000.00
               non-controlling shareholders of subsidiaries
    Cash received from borrowings                                           233,533,871.46      310,379,970.40
          Cash receipts related to other financing activities    52           90,932,396.75     307,483,727.11
    Sub-total of cash inflows from financing activities                      333,541,268.21     619,333,697.51
    Cash repayments for debts                                                201,503,745.30     534,184,361.10
    Cash payments for distribution of dividends or profit and
                                                                             215,828,281.10     187,230,050.83
      interest expenses
      Incl: Profit and dividends paid to non-controlling
                                                                              30,408,202.08      23,782,595.33
               shareholders of subsidiaries
          Cash payments related to other financing activities    52          178,991,574.67     255,810,743.79
    Sub-total of cash outflows from financing activities                     596,323,601.07     977,225,155.72
    Net cash flows from financing activities                               (262,782,332.86)    (357,891,458.21)
The accompanying notes form an integral part of these financial statements
                  CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                     CONSOLIDATED               CASH FLOW STATEMENT (Continued)
                                  For the six months ended 30 June 2017
                                         (Expressed in Renminbi Yuan)
                                                            Note V    For the six months    For the six months
                                                                     ended 30 June 2017    ended 30 June 2016
 4.EFFECT OF FOREIGN EXCHANGE RATE CHANGES                                             -          (129,064.34)
   ON CASH AND CASH EQUIVALENTS
 5.NET INCREASE IN CASH AND CASH EQUIVALENTS                 53         (126,724,793.52)        884,777,295.64
  Add: Cash and cash equivalents at beginning of the year               3,150,915,425.49      2,164,444,441.33
 6.CASH AND CASH EQUIVALENTS AT END OF YEAR                  53         3,024,190,631.97      3,049,221,736.97
The accompanying notes form an integral part of these financial statements
                 CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                  COMPANY BALANCE SHEET
                                        As at 30 June 2017
                                  (Expressed in Renminbi Yuan)
ASSETS                                 Note XIV            30 June 2017      31 December 2016
Current assets
  Cash and bank balances                                1,088,457,038.55      1,342,041,409.86
  Notes receivable                                         82,583,407.82         79,868,867.49
  Accounts receivable                      1             555,764,168.38         397,351,577.24
  Advances to suppliers                                      375,688.15           2,135,439.82
  Interest receivable                                       1,191,624.39          2,029,125.06
  Dividends receivable                                      1,291,719.37                     -
  Other receivables                        2            1,063,684,257.88      1,801,567,851.50
  Inventories                                            199,983,065.42         184,708,273.76
  Other current assets                                     22,800,815.46          6,937,946.90
Total current assets                                    3,016,131,785.42      3,816,640,491.63
Non-current assets
  Long-term equity investments             3            6,989,135,018.18      5,914,542,602.10
  Investment properties                                     3,167,820.65          3,571,809.38
  Fixed assets                                             15,269,320.98         16,555,996.92
  Construction in progress                                             -                     -
  Intangible assets                                         1,706,425.77          1,534,730.15
  Long-term deferred expenses                               6,126,344.77          6,645,211.13
  Deferred tax assets                                       2,817,431.42          2,869,931.88
  Other non-current assets                                 69,859,840.00          9,859,840.00
Total non-current assets                                7,088,082,201.77      5,955,580,121.56
Total assets                                           10,104,213,987.19      9,772,220,613.19
The accompanying notes form an integral part of these financial statements
                      CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                COMPANY BALANCE SHEET (Continued)
                                                As at 30 June 2017
                                       (Expressed in Renminbi Yuan)
LIABILITIES                                                     30 June 2017    31 December 2016
Current liabilities
  Short-term borrowings                                       153,000,000.00        50,000,000.00
  Notes payable                                               344,585,820.47       334,383,191.54
  Accounts payable                                            471,108,632.14       391,726,381.93
  Advances from customers                                      16,404,170.49         2,997,964.16
  Employee benefits payable                                    18,505,598.69        30,618,183.84
  Tax payables                                                 12,385,501.35         3,308,582.29
  Interest payable                                                136,752.17            37,801.50
  Other payables                                              838,299,508.82     1,100,143,593.55
  Non-current liabilities due within one year                               -       31,600,000.00
  Other current liabilities                                      3,687,520.27         123,294.77
Total current liabilities                                    1,858,113,504.40    1,944,938,993.58
Non-current liabilities
  Long-term borrowings                                         31,600,000.00                    -
  Payables for specific projects                                  800,000.00          800,000.00
  Deferred income                                                1,570,000.00        1,570,000.00
  Long-term employee benefits payable                                3,000.00           26,000.00
  Deferred tax liabilities                                       3,773,319.00        3,773,319.00
Total non-current liabilities                                  37,746,319.00         6,169,319.00
Total liabilities                                            1,895,859,823.40    1,951,108,312.58
The accompanying notes form an integral part of these financial statements
                    CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                 COMPANY BALANCE SHEET (Continued)
                                              As at 30 June 2017
                                          (Expressed in Renminbi Yuan)
SHAREHOLDERS’ EQUITY                                         30 June 2017    31 December 2016
Shareholders’ equity
  Share capital                                             428,126,983.00       362,631,943.00
  Capital surplus                                          4,381,845,619.03    4,381,845,619.03
  Surplus reserves                                          181,315,971.50       181,315,971.50
  Other equity instruments                                                -       65,495,040.00
  Retained earnings                                        3,217,065,590.26    2,829,823,727.08
Total shareholders’ equity                                8,208,354,163.79    7,821,112,300.61
Total liabilities and shareholders’ equity               10,104,213,987.19    9,772,220,613.19
The accompanying notes form an integral part of these financial statements
                       CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                            COMPANY INCOME STATEMENT
                                       For the six months ended 30 June 2017
                                            (Expressed in Renminbi Yuan)
                                                       Note XIV    For the six months    For the six months
                                                                  ended 30 June 2017    ended 30 June 2016
Operating revenue                                         4          1,658,600,818.96      1,552,341,588.24
       Less: Operating costs                              4          1,600,647,589.46      1,493,968,402.10
               Tax and surcharge                                         5,062,317.16          2,731,916.50
               Selling expenses                                         22,844,614.29         21,954,941.85
               Administrative expenses                                  24,917,988.21         27,037,698.40
               Finance costs                                          (37,042,967.55)       (30,420,731.23)
               Impairment loss                                            (32,604.71)           162,410.56
       Add: Investment income                             5           508,360,741.85         619,060,351.75
                        Incl: Investment income from                   155,838,740.45         24,377,006.76
                  associates
                        Miscellaneous incomees                            641,300.00                      -
Operating profits                                                      551,205,923.95        655,967,301.81
       Add: Non-operating income                                          185,619.34           2,235,966.07
                    Incl: Gain from disposal of
                    non-current assets                                       1,087.38                     -
       Less: Non-operating expenses                                      1,011,760.15           253,886.24
                  Incl: Loss from disposal of
                   non-current assets                                               -           253,886.24
Total profit                                                           550,379,783.14        657,949,381.64
       Less: Income taxes                                               21,856,015.57          6,795,489.16
Net profit                                                             528,523,767.57        651,153,892.48
Total comprehensive income                                             528,523,767.57        651,153,892.48
The accompanying notes form an integral part of these financial statements
                                                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                              COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
                                                                 For the six months ended 30 June 2017
                                                                      (Expressed in Renminbi Yuan)
                                                                     Other equity
           2017                                  Share capital                        Capital surplus   Surplus reserve   Retained earnings        Total equity
                                                                     instruments
           Closing balance of the preceding
                 year                          362,631,943.00      65,495,040.00    4,381,845,619.03    181,315,971.50    2,829,823,727.08    7,821,112,300.61
           Others                                            -                  -                   -                 -                   -                   -
           Opening balance of the current
           year                                362,631,943.00      65,495,040.00    4,381,845,619.03    181,315,971.50    2,829,823,727.08    7,821,112,300.61
           Movements in the current year        65,495,040.00     (65,495,040.00)                   -                 -     387,241,863.18     387,241,863.18
          (1) Total comprehensive income                     -                  -                   -                 -     528,523,767.57     528,523,767.57
          (2) Capital paid and reduced by
                owners                          65,495,040.00     (65,495,040.00)                   -                 -                   -                   -
             1. Capital injection by owners     65,495,040.00     (65,495,040.00)                   -                 -                   -                   -
             2. Significant reorganization                   -                  -                   -                 -                   -                   -
             3. Others                                       -                  -                   -                 -                   -                   -
          (3) Profit distribution                            -                  -                   -                 -    (141,281,904.39)   (141,281,904.39)
             1. Distribution to owners                       -                  -                   -                 -    (141,281,904.39)   (141,281,904.39)
           Closing balance of the current
           year                                428,126,983.00                   -   4,381,845,619.03    181,315,971.50    3,217,065,590.26    8,208,354,163.79
The accompanying notes form an integral part of these financial statements
                                                  CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                         COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)
                                                                For the Year ended 31 December 2016
                                                                    (Expressed in Renminbi Yuan)
                                                                 Other equity
2016                                            Share capital                     Capital surplus   Surplus reserve   Retained earnings         Total equity
                                                                 instruments
Closing balance of the preceding year         362,631,943.00                -   1,869,692,921.70    181,315,971.50    2,160,557,903.68    4,574,198,739.88
 Others                                                     -               -                   -                 -     138,820,739.37      138,820,739.37
Opening balance of the current year           362,631,943.00                -   1,869,692,921.70    181,315,971.50    2,299,378,643.05    4,713,019,479.25
Movements in the current year                               -   65,495,040.00   2,512,152,697.33                  -     530,445,084.03    3,108,092,821.36
(1) Total comprehensive income                              -               -                   -                 -     639,234,666.93      639,234,666.93
(2) Capital paid and reduced by owners                      -   65,495,040.00   2,512,152,697.33                  -                   -   2,577,647,737.33
   1. Capital injection by owners                           -    5,114,297.00    263,030,592.50                   -                   -     268,144,889.50
   2. Significant reorganization                            -   60,380,743.00   2,249,481,871.18                  -                   -   2,309,862,614.18-
   3. Others                                                -               -       (359,766.35)                  -                   -        (359,766.35)
(3) Profit distribution                                     -               -                   -                 -    (108,789,582.90)    (108,789,582.90)
   1. Distribution to owners                                -               -                   -                 -    (108,789,582.90)    (108,789,582.90)
Closing balance of the current year           362,631,943.00    65,495,040.00   4,381,845,619.03    181,315,971.50    2,829,823,727.08    7,821,112,300.61
The accompanying notes form an integral part of these financial statements
                   CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                       COMPANY CASH FLOW STATEMENT
                                      For the six months ended 30 June 2017
                                           (Expressed in Renminbi Yuan)
                                                                  For the six months    For the six months
                                                                 ended 30 June 2017    ended 30 June 2016
1.CASH FLOWS FROM OPERATING ACTIVITIES
   Cash received from sales of good or rendering of
     services                                                       1,691,499,935.88      1,576,646,019.42
   Cash receipts related to other operating activities                 16,864,750.56         22,616,621.43
   Sub-total of cash inflows from operating activities              1,708,364,686.44      1,599,262,640.85
   Cash paid for goods and services                                 1,590,317,986.60      1,475,945,895.68
   Cash paid to and on behalf of employees                             40,727,189.33         35,409,274.67
   Cash paid for all types of taxes                                    28,888,466.38         27,421,192.97
   Cash payments       related   to    other   operating
     activities                                                        17,091,927.42         11,418,997.25
   Sub-total of cash outflows          from operating
     activities                                                     1,677,025,569.73      1,550,195,360.57
   Net cash flows from operating activities                            31,339,116.71         49,067,280.28
2. CASH FLOWS FROM INVESTING ACTIVITIES
   Cash received from returns of investments                          202,011,829.53        163,130,121.71
   Net cash received from disposal of fixed assets,
     intangible assets and other long-term assets                                  -                     -
   Net cash received from disposal of subsidiaries
     and other business                                                            -        156,111,000.00
   Cash receipts related to other investing activities              1,979,269,200.00      1,172,470,415.00
   Sub-total of cash inflows from investing activities              2,181,281,029.53      1,491,711,536.71
          Cash paid for acquisition of fixed assets,
       intangible assets and other long-term assets                     3,921,020.07         26,667,196.89
    Cash paid for investment                                        1,019,000,000.00                     -
   Net cash paid for purchasing subsidiaries and
     other business                                                    16,840,000.00          1,267,000.00
   Cash payments related to other investing activities              1,424,861,720.90      1,188,252,457.00
   Sub-total of cash outflows from investing activities             2,464,622,740.97      1,216,186,653.89
   Net cash flows from investing activities                         (283,341,711.44)        275,524,882.82
The accompanying notes form an integral part of these financial statements
                      CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                               COMPANY CASH FLOW STATEMENT (Continued)
                                       For the six months ended 30 June 2017
                                            (Expressed in Renminbi Yuan)
                                                                   For the six months    For the six months
                                                                  ended 30 June 2017    ended 30 June 2016
3. CASH FLOWS FROM FINANCING ACTIVITIES
      Cash proceeds from investments by others                                                            -
      Cash received from borrowings                                     41,600,000.00         80,100,000.00
      Cash receipts related to other financing activities            7,272,687,714.06      3,791,553,620.54
      Sub-total of cash inflows from financing activities            7,314,287,714.06      3,871,653,620.54
      Cash repayments for debts                                         41,600,000.00        190,995,172.30
      Cash payments for distribution of dividends or
                                                                       143,087,008.08        113,348,821.62
    profit and interest expenses
      Cash payments related to other financing activities            7,131,182,482.56      3,483,341,340.39
      Sub-total cash outflows from financing activities              7,315,869,490.64      3,787,685,334.31
      Net cash flows from financing activities                         (1,581,776.58)         83,968,286.23
4.    NET INCREASE           IN   CASH      AND     CASH
                                                                     (253,584,371.31)        408,560,449.33
       EQUIVALENTS
     Add: Cash and cash equivalents at beginning of the              1,342,041,409.86        429,437,078.35
       year
5. CASH AND CASH EQUIVALENTS
                                                                     1,088,457,038.55        837,997,527.68
         AT END OF YEAR
The accompanying notes form an integral part of these financial statements
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                   Notes to financial statements
                                  For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
I           Profile of the Company
(1)      Historical development and basic information
As approved by the People’s Government of Shenzhen (SFBF (1993) No.356), China National Accord
Medicines Corporation Ltd. (hereinafter referred to as the “the Company”), formerly known as Shenzhen
Health Mineral Water Corp., Ltd., was registered as a joint stock liability limited company on 1 February
1993 through stock transformation. In March 1993, with the approval from the Shenzhen Branch of the
People’s Bank of China, the Company issued 30 million A shares (including 16.5 million public shares, 3.5
million employee shares and 10 million corporation shares) and 20 million B shares. After this issuance,
the Company’s share capital was RMB105 million. Through convert capital surplus into share capital,
bonus issues and issuance of shares for years, the share capital of the Company increased to
RMB428,126,983 as at 30 June 2017.
In November 2000, the Company entered into an Assets Exchange Agreement with Shenzhen
Investment Management Company, the original major shareholder of the Company, to exchange all the
assets and liabilities of the Company as of 31 August 2000 for Shenzhen Investment Management
Company’s 100% equity interests in 11 pharmaceutical companies and certain properties as well as 51%
equity interests in Shenzhen Tefa Modern Computer Co., Ltd. The above assets exchange proposal was
approved by shareholders in the Second Extraordinary General Meeting on December 29, 2000. The
transaction was completed on 8 January 2001.
On 18 February 2004, the Company’s original major shareholder, Shenzhen Investment Management
Company, entered into a Stock Transfer Agreement with Sinopharm Group Co., Ltd. (hereinafter referred
to as “Sinopharm Group”) to transfer its 43.33% shares in the Company to Sinopharm Group. The legal
procedures of the above equity transfer were completed on 9 December 2004. At the same time, as
approved by the State-owned Assets Supervision and Administration Commission of the State Council
(GZCQ (2004) No.525) and the China Securities Regulatory Commission (ZJGSZ (2004) No.94), the
nature of these shares was changed from state-owned stock to state-owned legal entity stock and
Sinopharm Group became the largest shareholder of the Company.
On 14 April 2006, the Company’s proposal on reformation of segregated stocks was approved. To gain
liquidity for the restricted stocks of the Company, the holders of the restricted stocks of the Company
agreed to pay the following consideration: based on the stock registration as of 27 April 2006, the
Company issued bonus shares on 28 April 2006 at the ratio of 3 shares to every 10 A shares to liquidated
A-shareholders which went public on the same day. After this bonus issue, the total number of shares of
the Company remained unchanged with corresponding changes in the composition of shareholdings.
On March 14 2014, the company issued 74,482,543 ordinary shares (A shares) through the non-public
offering. Par value per share is RMB1 yuan. The shares shall not be transferred within 36 months since
the issued day. The total number of shares of the Company was 362,631,943 since the date of issue.
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                           Notes to financial statements (Continued)
                                 For the Year ended 30 June 2017
                  (All amounts in Renminbi “RMB” unless otherwise stated)
I         Profile of the Company (Continued)
(1)     Historical development and basic information (Continued)
As of 31 October 2016, the company issued RMB65,495,040.00 ordinary shares (A shares) through the
non-public offering. Par value per share is RMB1 yuan. Through the non-public offering, the Company
acquired the companies under common control, including Sinopharm Holding Guoda Pharmacy Co., Ltd.
(“Guoda Pharmacy”), Foshan Nanhai Medicine Group Co., Ltd.(“Foshan Nanhai”),Guangdong South
Pharmaceutical Foreign Trade Co., Ltd. (“South Pharma & Trade), Guangdong Dong Fang Uptodate &
Special Medicines Co., Ltd. (“ Guangdong Uptodate & Special Medicines”) by issuing shares and raised
supporting funds by issuing shares to Ping An Asset Management Co., Ltd.(“Ping An Asset Management”)
to acquire non-controlling interest of South Pharma & Trade. The relevant shares were successfully
issued and listed on 5 January 2017.
As of 30 June 2017, the total share capital was RMB428,126,983.
The Company is registered with Shenzhen Administration for Industry & Commerce. Its Uniform Social
Credit Code is 91440300192186267U. The operation period of the Company is from 2 August 1986 to the
long term. The registered capital of the Company is RMB428,126,983. The legal representative of the
Company is Lin Zhaoxiong.
The approved scope of business of the Company and its subsidiaries (together “the Group”) includes: the
wholesale of traditional Chinese medicine preparations, bulk pharmaceutical drugs, chemical
preparations, bulk antibiotic drugs, antibiotic preparations, biochemical drugs, biological products
(including vaccines and in vitro diagnostic reagents psychotropic drugs and preparations, narcotic drugs,
toxic drugs for medical use, protein assimilation preparation and peptide hormones; trade of dietary
supplement; research, development and consultation services of pharmaceutical packaging materials
and pharmaceutical industry products; industrial investment holding; domestic trade; material supply and
marketing industry (other than special licensing); sale of ambulances; trade of second-class and third-
class medical equipment; project investment; property management and lease of self-owned properties;
pharmacovigilance and medical information consulting; parking operation; logistics and related services;
package agency business; logistic design; import and export services (excluding projects that are
prohibited by the country; limited projects has to be approved before operating).
                 CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                             Notes to financial statements (Continued)
                                  For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
I     Profile of the Company (Continued)
(2)      The Group’s parent and ultimate parent company is Sinopharm Group and China National
         Pharmaceutical Group Corporation respectively.
(3)      These financial statements were authorized for issue by the board of directors of the Company on
         24 August 2017.
II    Basis of preparation
The financial statements were prepared in accordance with the Basic Standard and specific standards of
the Accounting Standards for Business Enterprises issued by the Ministry of Finance on 15 February
2006 and the specific accounting standards and the relevant regulations issued thereafter (hereafter
collectively referred to as the “Accounting Standards for Business Enterprises” or “CAS”), and the
disclosure requirements in the Preparation Convention of Information Disclosure by Companies Offering
Securities to the Public No.15 – General Rules on Financial Reporting issued by the China Securities
Regulatory Commission.
These financial statements are prepared on a going concern basis.
Except for certain financial instruments, the financial statements have been prepared using historical cost
as the principle of measurement. Where assets are impaired, provisions for asset impairment are made in
accordance with the relevant requirements.
The Group has made accounting policies and accounting estimates according to its own operation and
production characteristics, which are mainly reflected in the bad debt provision for account receivables
(Note Ⅲ (10)), inventory costing methods (Note Ⅲ (11)), depreciation methods for fixed assets and
amortization method for intangible assets (NoteⅢ(15),Note III(18)), judgement basis for capitalization of
development costs (NoteⅢ(18)) , impairment of long-term assets (NoteⅢ(21)), revenue recognition (Note
Ⅲ(25)).
                 CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                              Notes to financial statements (Continued)
                                    For the Year ended 30 June 2017
                    (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates
(1) Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the period ended 30 June 2017 are in compliance with the
Accounting Standards for Business Enterprises, and truly and completely present the financial position of
the Group and the Company as of 30 June 2017 and the operating results, cash flows and other
information of the Group and the Company for the year then ended.
(2) Accounting year
The Company’s accounting year starts on 1 January and ends on 31 December.
(3) Functional currency
The functional currency is Renminbi (RMB).
(4) Business combinations
(a) Business combinations involving entities under common control
Assets and liabilities (including goodwill arising from ultimate controlling shareholder’s acquisition of the
party being absorbed) that are obtained by the absorbing party in a business combination shall be
measured at their carrying amounts at the combination date as recorded by the party being absorbed.
The difference between the carrying amount of the net assets obtained and the carrying amount of the
consideration paid for the combination (or the aggregate face value of shares issued as consideration)
shall be adjusted to share premium under capital surplus. If the capital surplus is not sufficient to absorb
the difference, any excess shall be adjusted against retained earnings. The transaction costs of issuing
equity securities or debt securities for business combination are recognized at the initial recognition
amount of equity securities or debt securities.
(b) Business combinations involving enterprises not under common control
The cost of combination and identifiable net assets obtained by the acquirer in a business combination
are measured at fair value at the acquisition date. Where the cost of the combination exceeds the
acquirer’s interest in the fair value of the acquirer’s identifiable net assets, the difference is recognized as
goodwill; where the cost of combination is lower than the acquirer’s interest in the fair value of the
acquirer’s identifiable net assets, the difference is recognized in profit or loss for the current period. Costs
directly attributable to the combination are included in profit or loss in the period in which they are incurred.
Transaction costs associated with the issue of equity or debt securities for the business combination are
included in the initially recognized amounts of the equity or debt securities.
                 CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                              Notes to financial statements (Continued)
                                    For the Year ended 30 June 2017
                    (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(4) Business combinations (Continued)
Where the business combination not involving enterprises under common control which is achieved in
stages, the acquirer’s previously held equity interests in the acquiree are remeasured at the fair value on
the acquisition date, with the difference between fair value and carrying amount recognized as investment
income for the current period. If the acquirer’s previously held equity interests of the acquiree involve
other comprehensive income (“OCI”) under the equity method, the accounting treatment is conducted on
the same basis as would have been required if the investee had directly disposed of the related assets or
liabilities, and the changes in shareholders’ equity other than net profit or loss, OCI and profit distributions
are charged to profit or loss for the current period on the acquisition date.
(5) Preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all of its
subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated
from the date that such control ceases. For a subsidiary that is acquired in a business combination
involving enterprises under common control, it is included in the consolidated financial statements from
the date when it, together with the Company, comes under common control of the ultimate controlling
party. The portion of the net profits realized before the combination date is presented separately in the
consolidated income statement.
In preparing the consolidated financial statements, where the accounting policies and the accounting
periods of the Company and subsidiaries are inconsistent, the financial statements of the subsidiaries are
adjusted in accordance with the accounting policies and the accounting period of the Company. For
subsidiaries acquired from business combinations involving enterprises not under common control, the
individual financial statements of the subsidiaries are adjusted based on the fair value of the identifiable
net assets at the acquisition date.
All significant intra-group balances, transactions and unrealized profits are eliminated in the consolidated
financial statements. The portion of a subsidiary’s equity and the portion of a subsidiary’s net profits,
losses and comprehensive income for the period not attributable to the Company are recognized as
non-controlling interests and presented separately in the consolidated financial statements within equity,
net profits and total comprehensive income respectively. Unrealized gain or loss from selling assets to
subsidiaries fully offsets the net income attributable to equity holders of the company. Unrealized gain or
loss from purchasing assets from subsidiaries offsets the net income attributable to equity holders of the
company and attributable to the non-controlling interest by the distribution proportion regarding the
Company and the subsidiary. Unrealized gain or loss from transaction between subsidiaries offsets the
net income attributable to equity holders of the company and attributable to the non-controlling interest by
the distribution proportion regarding the Company and the selling side of the subsidiaries. If different
recognition perspectives for the same transaction arise within different accounting identities setup, there
is an adjustment for the transaction from the Group’s perspective.
                  CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                              Notes to financial statements (Continued)
                                    For the Year ended 30 June 2017
                     (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(6) Acquisition of non-controlling interests in controlled subsidiaries
The Company acquires equity from the minority shareholders after taking control of the subsidiary, in the
consolidated financial statements, the subsidiary’s assets, liabilities should be measured from the
combination or acquisition date. The difference between the carrying amount of acquisition of
non-controlling interest and the net assets proportion calculated by the original share percentage since
the acquisition date should be recognized in capital surplus. If the capital surplus is insufficient to dilute,
the retained earnings shall be adjusted.
(7)    Cash and cash equivalents
Cash and cash equivalent comprise cash on hand, deposits that can be readily drawn on demand, and
short-term and highly liquid investments that are readily convertible to known amounts of cash and are
subject to an insignificant risk of changes in value.
(8) Foreign currency translation
Foreign currency transact translated into RMB using the exchange rates prevailing at the dates of the
transactions.
At the balance sheet date, monetary items denominated in foreign currencies are translated into RMB
using the spot exchange rates on the balance sheet date. Exchange differences arising from these
translations are recognized in profit or loss for the current period, except for those attributable to foreign
currency borrowings that have been taken out specifically for the acquisition or construction of qualifying
assets, which are capitalized as part of the cost of those assets. Non-monetary items denominated in
foreign currencies that are measured at historical costs are translated at the balance sheet date using the
spot exchange rates at the date of the transactions. The effect of exchange rate changes on cash is
presented separately in the cash flow statement.
(9) Financial instruments
(a) Financial assets
(i)   Classification of financial assets
Financial assets are classified into the following categories at initial recognition: financial assets at fair
value through profit or loss, receivables, available-for-sale financial assets and held-to-maturity
investments. The classification of financial assets depends on the Group’s intention and ability to hold the
financial assets. The Group currently holds the financial assets including receivables and
available-for-sale financial assets. Receivables, including notes receivables, accounts receivable and
other receivables, are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. Available-for-sale financial assets are those non-derivative financial assets
that are designated as available for sale at initial recognition or are not classified as financial assets at fair
value through profit or loss, held-to-maturity investments or borrowings and receivables.
                 CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                             Notes to financial statements (Continued)
                                    For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
 III Summary of significant accounting policies and accounting estimates (Continued)
 (9) Financial instruments (Continued)
 (a) Financial assets (Continued)
 (ii) Recognition and measurement
Financial assets are recognized at fair value on the balance sheet when the Group becomes a party to
the contractual provisions of the financial instrument. The transaction expenses are included in
receivables’ original book value, which is measured at amortized cost using the effective interest method.
After initial recognition, financial assets available-for-sale are measured at fair value.
The premium/discount is amortized using the effective interest method and recognized as interest income
or expense. A gain or loss arising from a change in the fair value of an available-for-sale financial asset is
recognized as other comprehensive income, except for impairment losses and foreign exchange gains
and losses resulted from monetary financial assets which are recognized in profit or loss, until the
financial asset is derecognized or determined to be impaired, at which time the accumulated gain or loss
previously recognized is transferred to profit or loss of the current period. Interests and dividends relating
to an available-for-sale financial asset are recognized in profit or loss of the current period. Investments in
equity instruments, which do not have quoted prices in an active market and whose fair values cannot be
reliably measured, are measured at cost.
(iii) Impairment of financial assets
The Group assesses the carrying amounts of receivables other than those at fair value through profit or
loss at each balance sheet date. If there is objective evidence that a financial asset is impaired, an
impairment loss is provided for.
Objective evidence refers to matters that occur after the financial assets have been recognized, affect the
estimated future cash flow and could be measured accurately by the Group.
When an impairment loss on a financial asset carried at amortized cost has occurred, the amount of loss
is provided for at the difference between the asset’s carrying amount and the present value of its
estimated future cash flows (excluding future credit losses that have not been incurred). If there is
objective evidence that the value of the financial asset recovered and the recovery is related objectively to
an event occurring after the impairment was recognized, the previously recognized impairment loss is
reversed and the amount of reversal is recognized in profit or loss.
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                            Notes to financial statements (Continued)
                                   For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(9) Financial instruments (Continued)
(a) Financial assets (Continued)
(iii) Impairment of financial assets (Continued)
Where there is objective evidence of impairment of available for sale financial assets, the cumulative loss
which results from a decline in fair value and is previously recognized in other comprehensive income is
removed from other comprehensive income and recognized in profit or loss. The cumulative loss
removed is measured as the difference between the acquisition cost and the current fair value, less any
retrieved costs, amortization and impairment loss previously recognized in profit or loss. In the case of
equity investments classified as available for sale, objective evidence of impairment would include a
significant or prolonged decline in the fair value of an investment below its cost. “Significant” is
evaluated against the original cost of the investment and “prolonged” against the period in which the fair
value has been below its original cost. Where there is evidence of impairment, the cumulative loss
removed is measured as the difference between the acquisition cost and the current fair value, less any
impairment loss on that investment previously recognized in profit or loss. Impairment losses on equity
instruments classified as available for sale are not reversed through profit or loss. Increases in their fair
value after impairment are recognized directly in other comprehensive income.
The determination of what is “significant” or “prolonged” requires judgement. In making this judgement,
the Group evaluates, among other factors, the duration or extent to which the fair value of an investment
is less than its cost.
(iv) Derecognition of financial assets
A financial asset is derecognized when any of the following criteria is met: (i) the contractual rights to
receive the cash flows from the financial asset expire; (ii) the financial asset has been transferred and the
Group transfers substantially all the risks and rewards of ownership of the financial asset to the
transferee; or (iii) the financial asset has been transferred and the Group has not retained control of the
financial asset, although the Group neither transfers nor retains substantially all the risks and rewards of
ownership of the financial asset.
On derecognition of a financial asset, the difference between the carrying amount and the sum of the
consideration received and the cumulative changes in fair value that had been recognized directly in
equity is recognized in profit or loss.
                  CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                               Notes to financial statements (Continued)
                                      For the Year ended 30 June 2017
                     (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(9) Financial instruments (Continued)
(b) Financial liabilities
Financial liabilities are classified into the following categories at initial recognition: financial liabilities at fair
value through profit or loss and other financial liabilities. The financial liabilities of the Group mainly
comprise other financial liabilities, including payables and borrowings
Payables, including notes payable, accounts payable and other payables, are recognized initially at fair
value and subsequently measured at amortized cost using the effective interest method.
Borrowings are recognized initially at fair value, net of transaction costs incurred, and subsequently
carried at amortized costs using the effective interest method.
Other financial liabilities with maturities no more than one year are classified as current liabilities. Other
financial liabilities with maturities over one year but are due within one year at the balance sheet date are
classified as the current portion of non-current liabilities. Others are classified as non-current liabilities.
A financial liability is derecognized or partly derecognized when the current obligation is discharged or
partly discharged. The difference between the carrying amount of the financial liability or the
derecognized part of the financial liability and the consideration paid is recognized in profit or loss.
(c) Offset of financial instruments
A financial asset and a financial liability shall be offset and the net amount presented in the balance sheet
when both of the following conditions are satisfied: 1) the enterprise has a legal right to set off the
recognized amounts and the legal right is currently enforceable; 2) the enterprise intends either to settle
on a net basis or to realize the financial asset and settle the financial liability simultaneously.
(d) Transfer of financial assets
A financial asset is derecognized when the Group has transferred substantially all the risks and rewards
of the asset to the referee. A financial asset is not derecognized when the Group retains substantially all
the risks and rewards of the asset.
When the Group has neither transferred nor retained substantially all the risks and rewards of the asset, it
either i) derecognizes the transferred asset when it has transferred control of the asset; or ii) continues to
recognize the transferred asset to the extent of the Group's continuing involvement, in which case, the
Group also recognizes an associated liability.
Continuing involvement that takes the form of a guarantee over the transferred financial asset is
measured at the lower of the original carrying amount of the asset and the guarantee amount. The
guarantee amount is the maximum amount of consideration that the Group could be required to repay.
                 CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                              Notes to financial statements (Continued)
                                   For the Year ended 30 June 2017
                    (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(10) Receivables
Receivables comprise notes receivable, accounts receivable and other receivables. Accounts receivable
arising from the sale of goods or rendering of services are initially recognized at fair value of the
contractual payments from the buyers or service recipients.
(a)      Receivables with amounts that are individually significant and subject to separate assessment for
         provision for bad debts
       Receivables with amounts that are individually significant are subject to assessment for impairment
       on the individual basis. If there exists objective evidence that the Group will not be able to collect
       the amount under the original terms, a provision for impairment of that receivable is made.
       The criterion for determining individually significant amounts is that any individual amount is more
       than RMB5 million.
       The method of providing for bad debts for those individually significant amounts is as follows: the
       amount of the present value of the future cash flows expected to be derived from the receivable
       below its carrying amount.
(b) Receivables that are subject to provision for bad debts on the grouping basis
       Receivables with amounts that are not individually significant and those receivables that have been
       individually assessed for impairment and have not been found impaired are classified into certain
       groupings based on their credit risk characteristics. The provision for bad debts is determined
       based on the historical loss experience for the groupings of receivables with similar credit risk
       characteristics, taking into consideration of the current circumstances.
       A provision for impairment of the receivables is made based on the ageing of receivables at the
       following percentage:
                                   Provision ratios used for accounts         Provision ratios used for
                                                           receivable                other receivables
          Within 1 year                                          0-5%                             0-5%
          1 to 2 years                                         5-10%                            5-10%
          2 to 3 years                                        10-30%                           10-30%
          3 to 4 years                                        20-50%                           20-50%
          4 to 5 years                                        20-80%                           20-80%
          More than 5 years                                  20-100%                          20-100%
(c)      Receivables with amounts that are not individually significant but subject to separate assessment
         for provision for bad debts
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                            Notes to financial statements (Continued)
                                  For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
     The reason for making separate assessment for provision for bad debts is that there exists objective
evidence that the Group will not be able to collect the amount under the original terms of the receivable.
     The provision for bad debts is determined based on the amount of the present value of the future
cash flows expected to be derived from the receivable below its carrying amount.
                 CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                             Notes to financial statements (Continued)
                                  For the Year ended 30 June 2017
                     (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(10) Receivables (Continued)
(d)     When the Group transfers the accounts receivable to the financial institutions without recourse,
    the difference between the proceeds received from the transaction and their carrying amounts
    and the related taxes is recognized in profit or loss for the current period.
(11) Inventories
(a) Classification
         Inventories include raw materials, work in progress, finished goods, delegate processing supplies
         and turnover materials, and are measured at the lower of cost and net realizable value.
(b) Costing of inventories
    Cost is determined on the weighted average method. The cost of finished goods and work in
    progress comprises raw materials, direct labor and an allocation of systematically allocated
    overhead expenditures incurred based on the normal operating capacity.
(c) Basis for determining net realizable values of inventories and method for making provisions for
      decline in the value of inventories
    Provisions for declines in the value of inventories are determined at the excess amount of the
    carrying value of the inventories over their net realizable value. Net realizable value is
    determined based on the estimated selling price in the ordinary course of business, less the
    estimated costs to completion and estimated costs necessary to make the sale and related taxes.
(d) The Group adopts the perpetual inventory system.
(e) Amortization methods of low value consumables and packaging materials
         Turnover materials include low value consumables and packaging materials, which are expensed
         when issued.
(12) Assets classified as held for sale
Non-current assets or disposal group satisfying the following conditions will be classified as assets held
for sale: (i) the non-current assets or disposal group are instantly ready for sale under the custom terms;
(ii)the resolution regarding the disposal of the non-current assets or disposal group has been
appropriately approved. (iii)Company has signed an irrevocable agreement. (iv)The disposal will be
accomplished within 1 year.
                 CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                              Notes to financial statements (Continued)
                                    For the Year ended 30 June 2017
                    (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(12) Assets classified as held for sale (Continued)
Non-current assets which meet the conditions of assets classified as held for sale, excluding financial
assets, investment properties measured by the fair value method, and deferred income tax assets could
be appraised as the lower number of the book value and fair value minus disposal cost. The difference
between the fair value minus disposal cost and the book value should be recognized as an Impairment
loss.
Assets and liabilities among the non-current assets or disposal group that are classified as assets
classified as held for sale should be classified as current assets and current liabilities respectively, and
should be individually presented on the balance sheet.
(13) Long-term equity investments
Long-term equity investments comprise the Company’s long-term equity investments in its subsidiaries
and the Group’s long-term equity investments in its associates.
Subsidiaries are the investees over which the Company is able to exercise control. Associates are the
investees that the Group has significant influence on their financial and operating policies.
Investments in subsidiaries are measured using the cost method in the Company’s financial statements,
and adjusted by using the equity method when preparing the consolidated financial statements. Interests
in associates are accounted for using the equity method.
(a) Determination of investment cost
For long-term equity investments acquired through a business combination: for long-term equity
investments acquired through a business combination involving enterprises under common control, the
investment cost shall be the absorbing party’s share of the carrying amount of shareholders’ equity of the
party being absorbed at the combination date; for long-term equity investments acquired through a
business combination involving enterprises not under common control, the investment cost shall be the
combination cost.
(b) Subsequent measurement and recognition of related profit or loss
For long-term equity investments accounted for using the cost method, they are measured at the initial
investment costs, and cash dividends or profit distribution declared by the investees are recognized as
investment income in profit or loss.
For long-term equity investments accounted for using the equity method, where the initial investment cost
of a long-term equity investment exceeds the Group’s share of the fair value of the investee’s identifiable
net assets at the acquisition date, the long-term equity investment is measured at the initial investment
cost; where the initial investment cost is less than the Group’s share of the fair value of the investee’s
identifiable net assets at the acquisition date, the difference is included in profit or loss and the cost of the
long-term equity investment is adjusted upwards accordingly.
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                             Notes to financial statements (Continued)
                                   For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(13) Long-term equity investments (Continued)
For long-term equity investments accounted for using the equity method, the Group recognizes the
investment income according to its share of net profit or loss of the investee. The Group discontinues
recognizing its share of net losses of an investee after the carrying amount of the long-term equity
investment together with any long-term interests that, in substance, form part of the investor’s net
investment in the investee are reduced to zero. However, if the Group has obligations for additional
losses and the criteria with respect to recognition of provisions under the accounting standards on
contingencies are satisfied, the Group continues recognizing the investment losses and the provisions.
For changes in shareholders’ equity of the investee other than those arising from its net profit or loss,
other comprehensive income, and profit distribution, the Group adjusts the book value of the investment
and records capital surplus accordingly. The carrying amount of the investment is reduced by the Group’s
share of the profit distribution or cash dividends declared by an investee.
The unrealized profits or losses arising from the intra-group transactions amongst the Group and its
investees are eliminated in proportion to the Group’s equity interest in the investees, and then based on
which the investment gains or losses are recognized. For the loss on the intra-group transaction amongst
the Group and its investees attributable to asset impairment, any unrealized loss is not eliminated.
 (c) Basis for determining existence of control, joint control or significant influence over investees
Control is the power to govern the financial and operating policies of the investee so as to obtain benefits
from its operating activities. In determining whether the Company is able to exercise control over the
investee, the effect of potential voting rights over the investee is considered, such as convertible debts
and warrants currently exercisable.
Significant influence is the power to participate in the financial and operating policy decisions of the
investee, but is not control or joint control over those policies.
(d) Impairment of long-term equity investments
The carrying amount of long-term equity investments in subsidiaries and associates is reduced to the
recoverable amount when the recoverable amount is less than the carrying amount (Note III (21)).
(14) Investment properties
Investment properties, including land use rights that have already been leased out, buildings that are held
for the purpose of leasing, and buildings that are being constructed or developed for the purpose of
leasing in future, are measured initially at cost. Subsequent expenditures incurred in relation to an
Investment properties are included in the cost of the Investment properties when it is probable that the
associated economic benefits will flow to the Group and their costs can be reliably measured; otherwise,
the expenditures are recognized in profit or loss in the period in which they are incurred.
                  CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                            Notes to financial statements (Continued)
                                  For the Year ended 30 June 2017
                    (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(14) Investment properties (Continued)
The Group adopts the cost model for subsequent measurement of investment properties. Buildings and
land use rights are depreciated or amortized to their estimated net residual values over their estimated
useful lives. The estimated useful lives, the estimated net residual values that are expressed as a
percentage of cost and the annual depreciation (amortization) rates of investment properties are as
follows:
                    Estimated useful life       Estimated residual value            Annual depreciation
(amortization) rates
Buildings             12-35 years                 0-5%                                2.71-7.92%
Land use rights       30-50 years                  -                                  2.00-3.33%
When an Investment properties is transferred to owner-occupied properties, it is reclassified as a fixed
asset or intangible asset at the date of the transfer. When an owner-occupied property is transferred out
for earning rentals or for capital appreciation, the fixed asset or intangible asset is reclassified as an
investment property at its carrying amount at the date of the transfer.
The Investment properties’ estimated useful life, net residual value and depreciation (amortization)
method applied are reviewed and adjusted as appropriate at each end of year.
An Investment properties is derecognized on disposal or when the Investment properties is permanently
withdrawn from use and no future economic benefits are expected from its disposal. The net amount of
proceeds from sale, transfer, retirement or damage of an Investment properties after its carrying amount
and related taxes and expenses is recognized in profit or loss for the current period.
The carrying amount of an Investment properties is reduced to the recoverable amount if the recoverable
amount is below the carrying amount (Note III (21)).
(15) Fixed assets
(a) Recognition and initial measurement of fixed assets
Fixed assets comprise buildings, machinery and equipment, motor vehicles, other equipment and
leasehold improvements.
Fixed assets are recognized when it is probable that the related economic benefits will flow to the Group
and the costs can be reliably measured. Fixed assets purchased or constructed by the Group are initially
measured at cost at the acquisition date. The fixed assets contributed by the State shareholders at the
reorganization of the Company into a corporation entity are recognized based on the revaluated amounts
approved by the State-owned Assets Administration Department.
Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is
probable that the associated economic benefits will flow to the Group and the related cost can be reliably
              CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                        Notes to financial statements (Continued)
                             For the Year ended 30 June 2017
                (All amounts in Renminbi “RMB” unless otherwise stated)
measured. The carrying amount of the replaced part is derecognized. All the other subsequent
expenditures are recognized in profit or loss in the period in which they are incurred.
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                            Notes to financial statements (Continued)
                                  For the Year ended 30 June 2017
                     (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(15) Fixed assets (Continued)
(b) Depreciation methods of fixed assets
Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their
estimated residual values over their estimated useful lives. For the fixed assets that have been provided
for impairment loss, the related depreciation charge is prospectively determined based upon the adjusted
carrying amounts over their remaining useful lives.
The estimated useful lives, the estimated residual values expressed as a percentage of cost and the
annual depreciation rates are as follows:
                                    Estimated useful lives        Estimated residual value        Annual
depreciation rates
Buildings                            20-35 years                    0-5%                    2.71-5.00%
Machinery and equipment              5-14 years                     3-6%                   6.79-19.40%
Motor vehicles                      3-10 years                      0-5%                   9.50-33.33%
Other equipment                     3-10 years                      0-5%                   9.50-33.33%
Leasehold improvements              within 5 years                  0%                   20% and above
The estimated useful life, the estimated net residual value of a fixed asset and the depreciation method
applied to the asset are reviewed, and adjusted as appropriate at least at each end of year.
(c) The carrying amount of fixed assets is reduced to the recoverable amount when the recoverable
amount is less than the carrying amount (Note III (21)).
(d) Recognition basis and measurement method for financing leased fixed assets.
Finance leases are leases with the whole risks and rewards related to the asset substantially transferred.
Fixed assets leased under finance lease are recognized with at smaller value of the fair value and
minimum lease payments. The difference between the book value and the minimum lease payments
should be recognized as unrecognized financing charges (Note III (28) (b)).
Fixed assets leased under finance lease are depreciated using the same policy as that those fixed assets
owned by the company. For those leased assets that the ownership of the assets can be ascertained by
the expiration date, the assets should be depreciated within estimated useful lives. Otherwise, the assets
should be depreciated within the shorter period of the leasing period and estimated useful lives.
(e) Disposal of fixed assets
A fixed asset is derecognized on disposal or when no future economic benefits are expected from its use
or disposal. The amount of proceeds from disposal on sale, transfer, retirement or damage of a fixed
asset net of its carrying amount and related taxes and expenses is recognized in profit or loss for the
current period.
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                            Notes to financial statements (Continued)
                                  For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(16) Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises construction costs, installation
costs, borrowing costs that are eligible for capitalization and other costs necessary to bring the fixed
assets ready for their intended use. Construction in progress is transferred to fixed assets when the
assets are ready for their intended use, and depreciation begins from the following month. The carrying
amount of construction in progress is reduced to the recoverable amount when the recoverable amount is
less than the carrying amount (Note III (21)).
(17) Borrowing costs
The borrowing costs that are directly attributable to the acquisition and construction of a fixed asset that
needs a substantially long period of time for its intended use commence to be capitalized and recorded as
part of the cost of the asset when expenditures for the asset and borrowing costs have been incurred, and
the activities relating to the acquisition and construction that are necessary to prepare the asset for its
intended use have commenced. The capitalization of borrowing costs ceases when the asset under
acquisition or construction becomes ready for its intended use and the borrowing costs incurred thereafter
are recognized in profit or loss for the current period. Capitalization of borrowing costs is suspended
during periods in which the acquisition or construction of a fixed asset is interrupted abnormally and the
interruption lasts for more than 3 months, until the acquisition or construction is resumed.
For the specific borrowings obtained for the acquisition or construction of a fixed asset qualifying for
capitalization, the amount of borrowing costs eligible for capitalization is determined by deducting any
interest income earned from depositing the unused specific borrowings in the banks or any investment
income arising on the temporary investment of those borrowings during the capitalization period.
For the general borrowings obtained for the acquisition or construction of a fixed asset qualifying for
capitalization, the amount of borrowing costs eligible for capitalization is determined by applying the
weighted average effective interest rate of general borrowings, to the weighted average of the excess
amount of cumulative expenditures on the asset over the amount of specific borrowings. The effective
interest rate is the rate at which the estimated future cash flows during the period of expected duration of
the borrowings or an applicable shorter period are discounted to the initial amount of the borrowings.
(18) Intangible assets
Intangible assets include land use rights, computer software, technology patents, trademarks and
distribution network, which are initially recognized at cost. Intangible assets contributed by state-owned
shareholders during the Company reorganization were recorded based on the valuation amount
approved by the State-owned Assets Supervision and Management Department.
                   CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                               Notes to financial statements (Continued)
                                   For the Year ended 30 June 2017
                     (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(18) Intangible assets (Continued)
    Categories                                                                             Useful lives
    Land use rights                         Between the approved useful period and the Company’s
                                                                                     operating period
    Software                                                                                 3-5 years
    Trademarks                                                                              5-10 years
    Technology patents                                                                         5 years
    Distribution network                                                                      20 years
    Franchising rights                                                                        10 years
    Favorable leases                                                                      17-20 years
A land use right granted by government with an infinite useful life would not be amortized. Other land use
rights are amortized on the straight-line basis over their approved useful period. If the acquisition costs of
land use rights and the buildings located thereon cannot be reliably allocated between the land use rights
and the buildings, all of the acquisition costs are recognized as fixed assets.
For an intangible asset with a finite useful life, review of its useful life and amortization method is
performed at each end of year, with adjustments made as appropriate. For an intangible asset without a
definite useful life, review of its useful life is performed at each end of year.
The expenditure on an internal research and development project is classified into expenditure on the
research phase and expenditure on the development phase based on its nature and whether there is
material uncertainty that the research and development activities can form an intangible asset at end of
the project.
Expenditure for investigation, evaluation and selection of production process and new drugs researches
is recognized in profit or loss in the period in which it is incurred. Expenditure on the designation,
measurement of the final utilization of the production process and new drugs before mass production, is
capitalized only if all of the following conditions are satisfied:
      development of the production process and new drugs has been fully demonstrated by the
      technical team;
      management has approved the budget of drug production development and new drugs;
      market research analysis suggests that the products produced by the new production technology
      are able to be promoted;
      adequate technical, financial and other resources to complete the development and the ability to
      use or sell the intangible asset;
      the expenditure attributable to the intangible asset during its development phase can be reliably
      measured.
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                            Notes to financial statements (Continued)
                                  For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(18) Intangible assets (Continued)
Other development costs that do not meet the conditions above are recognized in profit or loss in the
period in which they are incurred. Development costs previously recognized as expenses are not
recognized as an asset in a subsequent period. Capitalized expenditure on the development phase is
presented as development costs in the balance sheet and transferred to intangible assets at the date that
the asset is ready for its intended use.
The carrying amount of intangible assets is reduced to the recoverable amount when the recoverable
amount is less than the carrying amount (Note III (21)).
(19) Long-term prepaid expenses
Long-term prepaid expenses include the expenditure for improvements to fixed assets under operating
leases, and other expenditures that have been made but should be recognized as expenses over more
than one year in the current and subsequent periods. Long-term prepaid expenses are amortized on the
straight-line basis over the expected beneficial period and are presented at actual expenditure net of
accumulated amortization.
(20) Governmental medical reserve funds and specially approved reserving materials
Appointed by the PRC Government, CNPGC is responsible for purchasing, allocating and providing the
governmental medical reserves, which include the medical products, traditional Chinese medicine and
medical appliances for nation-wide emergency rescue and disaster relief. Appointed by the Government
of Guangxi Province, Sinopharm Medicine Holding Guangxi Co., Ltd. (“Sinopharm Guangxi”), a
subsidiary of the Company, is responsible for purchasing, allocating and providing the medical reserves,
which include the medical products needed for serious disasters, epidemics and other emergencies as
well as endemic diseases in Guangxi Province. In accordance with the regulation of CNPGC, as being
the enterprise who bears the obligation for specially approved medical reserving materials, the medical
reserve funds received from the PRC Government or local government are recognized as other
non-current liabilities. The Group reserves the specially approved medical reserving materials according
to the reserve program (by category and by quantity), applies dynamic management and recognizes as
other non-current assets.
(21) Impairment of long-term assets
Fixed assets, construction in progress, intangible assets with finite useful lives, long-term prepaid
expenses and investment properties measured using the cost model and long-term equity investments in
subsidiaries and associates are tested for impairment if there is any indication that an asset may be
impaired at the balance sheet date. If the result of the impairment test indicates that the recoverable
amount of the asset is less than its carrying amount, a provision for impairment and an impairment loss
are recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs to sell and the present value of the
future cash flows expected to be derived from the asset. Provision for asset impairment is determined and
recognized on the individual asset basis. If it is not possible to estimate the recoverable amount of an
individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A
group of assets is the smallest group of assets that is able to generate independent cash inflows.
                 CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                             Notes to financial statements (Continued)
                                   For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(21) Impairment of long-term assets (Continued)
Goodwill that is separately presented in the financial statements,intangible assets with infinite useful lives
and capitalized development costs are tested at least annually for impairment, irrespective of whether
there is any indication that it may be impaired. In conducting the test, the carrying value of goodwill is
allocated to the related asset groups or groups of asset groups which are expected to benefit from the
synergies of the business combination. If the result of the test indicates that the recoverable amount of an
asset group or group of asset groups, including the goodwill allocated, is lower than its carrying amount,
the corresponding impairment loss is recognized. The impairment loss is first deducted from the carrying
amount of goodwill that is allocated to the asset group or group of asset groups, and then deducted from
the carrying amount of other assets within the asset groups or groups of asset groups in proportion to the
carrying amount of other assets.
Once the above Impairment loss is recognized, it will not be reversed for the value recovered in the
subsequent periods.
(22) Employee benefits
Employee benefits mainly include short-term employee benefits, post-employment benefits, termination
benefits and other long-term employee benefits incurred in exchange for service rendered by employees
or various forms of rewards or compensation due to severance of labor relation.
(a) Short-term employee benefits
Short-term employee benefits include wages or salaries, bonuses, allowances and subsidies, staff
welfare, medical insurance, work injury insurance, maternity insurance, housing funds, and labor union
funds and employee education funds. The employee benefits are recognized in the accounting period in
which the service has been rendered by the employees, and as costs of assets or expenses to whichever
the employee service is attributable.
(b) Post-employment benefits (defined contribution plans)
The Company classifies post-employment benefit plans into either defined contribution plans or defined
benefit plans. Defined contribution plans are post-employment benefit plans under which the Company
pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and
defined benefit plans are post-employment benefit plans other than defined contribution plans. During the
reporting period, the Company's post-employment benefits mainly include basic pensions, unemployment
insurance and enterprise annuity, both of which belong to the defined contribution plans.
Basic pensions
The Company’s employees participate in the defined basic pension insurance plan set up and
administered by local labor and social protection authorities. Basic pensions are provided monthly
according to stipulated bases and proportions to local labor and social security contribution. When
employees retire, local labor and social security institutions have a duty to pay the basic pension
insurance to them. The amounts payable are recognized as liabilities based on the above provisions in
the accounting period in which the service has been rendered by the employees, and as costs of assets
or expenses to whichever the employee service is attributable.
                  CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                            Notes to financial statements (Continued)
                                  For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(22) Employee benefits (Continued)
(c) Termination benefits
The Group recognizes the debt and the gain or loss, when offering compensation for terminating the labor
contract before the due date, or encouraging the staff to resign voluntarily, at the earlier of when the
Group cannot unilaterally withdraw the labor relation plan and when the Group recognizes the cost
relating to recombinant involving the payment of termination benefits.
(d) Retirement benefits
The Group provides retirement benefits to employees who accept the internal retirement arrangements.
Retirement benefits refer to the salary and social security contribution provided to those staff who
voluntarily quit the job with approval from the management team, before the retirement age.
The group offers retirement benefits from the date when the arrangement begins, to the date when the
staff reaches the retirement age. The liability including salary and security contribution funds is
recognized when conditions for recognition are meet, regarding to the period from the staff leaves the
position to the normal retirement date. Difference arising from the changes in actuarial assumptions for
retirement benefits and adjustments in welfare standard, will be accounted for in the current profits and
losses.
Retirement benefits that are expected to be paid within one year from the balance sheet date are
disclosed as current liabilities.
(23) Provisions
An obligation related to a contingency shall be recognized by the Group as a provision when all of the
following conditions are satisfied, except contingent considerations and contingent liabilities assumed in a
business combination not involving enterprises under common control:
(1) The obligation is a present obligation of the Group;
(2) It is probable that an outflow of economic benefits from the Group will be required to settle the
    obligation; and
(3) The amount of the obligation can be measured reliably.
The provisions are initially measured at the best estimate of the expenditure required to settle the related
present obligation, taking into account factors pertaining to a contingency such as the risks, uncertainties
and time value of money as a whole. The carrying amount of provisions is reviewed at the balance sheet
date. Where there is clear evidence that the carrying amount of a provision does not reflect the current
best estimate, the carrying amount is adjusted to the current best estimate.
Contingent liabilities of the acquiree obtained in a business combination shall be measured at fair value in
initial recognition. After initial recognition, subsequent measurement is conducted using the higher of the
amount recognized by provisions and the amount of initial recognition deducting the accumulated
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                           Notes to financial statements (Continued)
                                 For the Year ended 30 June 2017
                  (All amounts in Renminbi “RMB” unless otherwise stated)
amortization amount determined by the principles of revenue recognition.
                 CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                             Notes to financial statements (Continued)
                                   For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(24) Dividend distribution
Cash dividend distribution is recognized as a liability in the period in which it is approved by shareholder
at the annual shareholders’ meeting.
(25) Revenue recognition
The amount of revenue is determined in accordance with the fair value of the consideration received or
receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is
shown net of discounts and returns.
Revenue can be recognized on condition that the transaction-related economic interest is expected to be
satisfied, the amount is able to reliably measured, and the following recognition conditions are met:
(a) Sale of goods
Revenue from the sale of goods is recognized when significant risks and rewards of ownership of the
goods are transferred to the buyer, the Company retains neither continuing managerial involvement to the
degree usually associated with ownership nor effective control over the goods sold, and it is probable that
the economic benefit associated with the transaction will flow to the Company and the relevant revenue
and costs can be measured reliably.
(b) Rendering of services
The Group provides freight, storage and other services to external parties. The freights are recognized as
revenue right after the goods are transported to the place of delivery according to contracts or
agreements, received and confirmed by the purchasers. Other revenue is determined in accordance with
the amount provided in the service period stipulated in the contract.
(c) Customer loyalty programme
The Group, offers a customer loyalty programme where points earned through the purchase of goods can
only be redeemed for goods provided by Sinopharm Group Zhijun (Shenzhen) Pharmaceutical Co., Ltd.
or other free goods. The fair value of the consideration received or receivable in respect of the initial sale
is allocated between the award credits and the other components of the sale. Fair value of award points is
measured on the basis of the value of the awards (that is, goods or services) for which they could be
redeemed, the fair value of the award credits should take account of expected forfeitures as well as the
discounts or incentives that would otherwise be offered to customers who have not earned award credits
from an initial sale.
                 CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                              Notes to financial statements (Continued)
                                    For the Year ended 30 June 2017
                    (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(26) Government grants
Government grants are transfers of monetary or non-monetary assets from the government to the Group
at nil consideration, including refund of taxes and financial subsidies, etc.
A government grant is recognized when the conditions attached to it can be complied with and the
government grant can be received. For a government grant in the form of transfer of monetary assets, the
grant is measured at the amount received or receivable. For a government grant in the form of transfer of
non-monetary assets, it is measured at fair value; if the fair value is not reliably determinable, the grant is
measured at nominal amount.
A government grant related to an asset is a grant received aimed to create a long-term asset by
contracting or other methods. A government grant related to income is any grant other than government
grants related to assets.
A government grant related to an asset is recognized as deferred income, and evenly amortized to profit
or loss over the useful life of the related asset. Government grants measured at nominal amounts are
recognized immediately in profit or loss for the current period.
For government grants related to income, where the grant is a compensation for related expenses or
losses to be incurred by the Group in the subsequent periods, the grant is recognized as deferred income,
and included in profit or loss over the periods in which the related costs are recognized; where the grant is
a compensation for related expenses or losses already incurred by the Group, the grant is recognized
immediately in profit or loss for the current period.
A government grant related to daily operating activities is recognized as Miscellaneous incomes. If the
grant is not related to daily operating activities that is recognized as none-operating income. The Bureau
of Finance appropriates finance discount to the group directly, then the group write off the related cost of
loan。
(27) Income tax
Income tax comprises current and deferred tax. Income tax is recognized as income or an expense in
profit or loss of the current period, or recognized directly in shareholders’ equity if it arises from a business
combination or relates to a transaction or event which is recognized directly in shareholders’ equity.
The Group measures a current tax asset or liability arising from the current and prior period based on the
amount of income tax expected to be paid by the Group or returned by tax authority calculated according
to related tax laws.
Deferred tax assets and deferred tax liabilities are calculated and recognized based on the differences
arising between the tax bases of assets and liabilities and their carrying amounts (temporary differences).
Deferred tax asset is recognized for the deductible losses that can be carried forward to subsequent
years for deduction of the taxable profit in accordance with the tax laws. No deferred tax liability is
recognized for a temporary difference arising from the initial recognition of goodwill. No deferred tax asset
or deferred tax liability is recognized for the temporary differences resulting from the initial recognition of
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                            Notes to financial statements (Continued)
                                   For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
assets or liabilities due to a transaction other than a business combination, which affects neither
accounting profit nor taxable profit (or deductible loss). At the balance sheet date, deferred tax assets and
deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the
asset is realized or the liability is settled.
                   CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                               Notes to financial statements (Continued)
                                     For the Year ended 30 June 2017
                     (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(27) Income tax(Continued)
Deferred tax assets are only recognized for deductible temporary differences, deductible losses and tax
credits to the extent that it is probable that taxable profit will be available in the future against which the
deductible temporary differences, deductible losses and tax credits can be utilized.
Deferred tax assets and liabilities are offset when:
      the deferred taxes are related to the same tax payer within the Group and the same taxation
      authority; and,
      that tax payer has a legally enforceable right to offset current tax assets against current tax liabilities.
Deferred tax liabilities are recognized for temporary differences arising from investments in subsidiaries
and associates, except where the Group is able to control the timing of the reversal of the temporary
difference, and it is probable that the temporary difference will not reverse in the foreseeable future. When
it is probable that the temporary differences arising from investments in subsidiaries, and associates will
be reversed in the foreseeable future and that the taxable profit will be available in the future against
which the temporary differences can be utilized, the corresponding deferred tax assets are recognized.
(28) Leases
Finance leases are leases with the whole risks and rewards related to the asset substantially transferred.
The other kinds of leases are nominated operating leases.
(a) Operating leases
Lease payments under an operating lease are recognized on a straight-line basis over the period of the
lease, and are either capitalized as part of the cost of related assets or charged as an expense for the
current period.
Lease income under an operating lease is recognized on a straight-line basis over the period of the lease.
(b) Finance leases
Fixed assets leased under finance leases are recognized at the smaller value of the fair value and
present value of the minimum lease payments. The difference between the book value and the minimum
lease payments should be recognized as unrecognized financing charges, and amortized within the
leasing period. The minimum lease payments net off the unrecognized financing charges should be
classified as long-term payables.
                 CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                            Notes to financial statements (Continued)
                                  For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(29) Discontinued operations
A discontinued operation is a component of an enterprise that either has been disposed of or is classified
as held for sale, and is separately identifiable operationally and for financial reporting purpose, and
satisfies one of the following conditions:
(1) Represents a separate major line of business or geographical area of operations;
(2) Is part of a single coordinated plan to dispose of a separate major line of business or geographical
    area of operation;
(3) Is a subsidiary acquired exclusively with a view to resale.
(30) Segment information
The Group identifies operating segments based on the internal organization structure, management
requirements and internal reporting system, and discloses segment information of reportable segments
which is determined on the basis of operating segments.
An operating segment is a component of the Group that satisfies all of the following conditions: (1) the
component is able to earn revenues and incur expenses from its ordinary activities; (2) whose operating
results are regularly reviewed by the Group’s management to make decisions about resources to be
allocated to the segment and to assess its performance, and (3) for which the information on financial
position, operating results and cash flows is available to the Group. If two or more operating segments
have similar economic characteristics and satisfy certain conditions, they are aggregated into one single
operating segment.
(31) Critical accounting estimates
The Group continually evaluates the critical accounting estimates and key judgments applied based on
historical experience and other factors, including expectations of future events that are believed to be
reasonable.
(a) Critical accounting estimates and key assumptions
The critical accounting estimates and key assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next accounting year are outlined
below:
(i)   Accounting estimates on impairment of goodwill
The Group tests annually whether goodwill has suffered any impairment. The recoverable amount of
asset groups and groups of asset groups is the present value of the future cash flows expected to be
derived from them. These calculations require the use of estimates (Note V (16)).
If management revises the gross margin that is used in the calculation of the future cash flows of asset
groups and groups of asset groups, and the revised gross margin is lower than the one currently used,
the Group would need to recognize further impairment against goodwill and fixed assets.
                 CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                             Notes to financial statements (Continued)
                                   For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
III   Summary of significant accounting policies and accounting estimates (Continued)
(a) Critical accounting estimates and key assumptions (Continued)
(i)   Accounting estimates on impairment of goodwill (Continued)
If management revises the pre-tax discount rate applied to the discounted cash flows, and the revised
pre-tax discount rate is higher than the one currently applied, the Group would need to recognize further
impairment against goodwill and fixed assets.
If the actual gross margin/pre-tax discount rate is higher/lower than management’s estimates, the
impairment loss of goodwill previously provided for is not allowed to be reversed by the Group.
(ii) Accounting estimates on impairment of accounts receivable
In accordance with the Group’s accounting policy (Note III (10)), the Group’s management tests annually
whether receivables have suffered any impairment. Impairment of receivables has been assessed by
taking into account the customers’ credit history and financial position together with the current market
conditions. Even if the Group’s management has made bad debt provision for the expected loss at its best
estimate, there is a possibility that changes in customers’ financial position or market conditions will alter
the result.
(iii) Accounting estimates on impairment of inventories
In accordance with the Group’s accounting policy (Note III (11) (c)), the Group’s management estimates
the net realizable value of the inventory. Net realizable value is determined based on the estimated selling
price in the ordinary course of business, less the estimated costs to completion and estimated costs
necessary to make the sale and related taxes. Even if the Group’s management has made stock
provision for the expected impairment at its best estimate, there is a possibility that changes in market
conditions will alter the result.
V     Changes of significant accounting policies
Pursuant to regulations of accounting for Enterprises NO.16- Government grants(Accounting (2017)
NO.15,Since January 1st 2017, government grant related to daily operating activities is recognized as
Miscellaneous incomes. If the grant is not related to daily operating activities that is recognized as
none-operating income. The Bureau of Finance appropriates finance discount to the group directly, then
the group write off the related cost of loan. During the current reporting period,the group recognized RMB
7,958,493.67 miscellaneous income. The Bureau of Finance appropriates finance discount to the group
directly, then the group write off the related cost of loan.
                     CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                      Notes to financial statements (Continued)
                                               For the Year ended 30 June 2017
                        (All amounts in Renminbi “RMB” unless otherwise stated)
IV      Taxation
1.      Main categories and rates of taxes:
    Categories                             Tax base                                                                            Tax rate
    Corporate income tax (“CIT”)         Taxable income                                                               15%,20% or 25%
                                               Taxable value added amount (Tax payable is calculated
                                               using the taxable sales amount multiplied by the effective tax
    Value added tax (“VAT”)              rate less deductible VAT input of the current period)            0%,3%,5%,6%,11%,13% or 17%
    City      maintenance            and
           construction tax                    Amount of VAT and business tax paid                                                5% or 7%
    Educational surcharge                  Amount of VAT and business tax paid                                                     3%
    Local educational surcharge            Amount of VAT and business tax paid                                                     2%
2.   Tax preferences
(a) In 2014, the Group’s subsidiary Sinopharm Holding Guangxi Logistics Co., Ltd. (“Sinopharm
    Guangxi Logistics”) was approved by the Guangxi Local Tax Bureau to enjoy a tax discount
    applicable to corporations in the region of Western Development to pay income tax at a tax rate of
    15%. In 2016,due to the real estate relocation income, the operating revenue’s proportion is below
    70%, which does not meet the requirements of the preferential tax rate, so Sinopharm Guangxi
    Logistics was subject to a corporate income tax rate of 25% during the year.
     From May to December of 2015, eight subsidiaries in Guangxi Province of the Group, including
     Sinopharm Guangxi, Sinopharm Holding Liuzhou Co., Ltd. (“Sinopharm Liuzhou”) , Sinopharm
     Holding Beihai Co., Ltd (“Sinopharm Beihai”), Sinopharm Holding Guilin Co., Ltd. (“Sinopharm
     Guilin”), Sinopharm Holding Guigang Co., Ltd. (“Sinopharm Guigang”), Sinopharm Holding Yulin Co.,
     Ltd. (“Sinopharm Yulin”), Sinopharm Holding Baise Co., Ltd (“Sinopharm Baise”)and Sinopharm
     Holding Wuzhou Co., Ltd. (“Sinopharm Wuzhou”) were all approved by the Guangxi Local Tax
     Bureau to enjoy a tax concession of Western Development at a preferential CIT rate of 15%. The
     applicable period for Sinopharm Guangxi, Sinopharm Liuzhou and Sinopharm Beihai is 1 January
     2014 to 31 December 2020, and that for the other 5 subsidiaries is 1 January 2015 to 31 December
     2020.
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                            Notes to financial statements (Continued)
                                   For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
IV   Taxation (Continued)
2.    Tax preferences (Continued)
(b) The Urumqi Head Office, Changji Branch and Karamay Branch of Sinopharm Holding Xinjiang New
    & Special Medicines Chain Store Co., Ltd. (“Xinjiang New & Special Medicines”), a subsidiary of the
    Group, shall pay tax at a rate of 15% by jurisdictions According to the Circular of the Ministry of
    Finance, the State Administration of Taxation, the General Administration of Customs on Issues
    Concerning Tax Policies for the Further Development of the Western Regions (Cai shui [2011]
    No.58), enterprises from encouraged industries in the Western Regions, could enjoy a reduced CIT
    rate of 15% from 1 January 2011 to 31 December 2020. According to the reply to Registration Form
    for Items Enjoying Preferential Treatments in Corporate Income Tax by local tax authorities, in 2016
    and 2017, the Urumqi Head Office, Changji Branch and Karamay Branch of Xinjiang New & Special
    Medicines were subject to a reduced CIT rate of 15%.
     According to Ning cai (shui) fa [2012] No.957, Ningxia Guoda Pharmacy Chain Store Co., Ltd., a
     subsidiary of the Group, was qualified for the enterprise from encouraged industries of Western
     Development. Therefore, in 2016 and 2017, the company was exempt from the local retained portion
     of the corporate income tax (40%), and therefore subject to a CIT rate of 15%.
     According to Cai shui [2011] No.58 and Notices on Tax Reduction and Exemption (Hu shi hui guo
     shui deng zi [2014] No. 37), Sinopharm Holding Guoda Neimenggu Pharmacy Chain Store Co., Ltd.,
     a subsidiary of the Group, was entitled to the preferential tax rate for the further development of the
     Western Regions. Therefore the company is entitled to a preferential CIT rate of 15%.
     According to the tax reduction and exemption conditions under the Circular of Local Taxation Bureau
     of the Autonomous Region on Printing and Distributing the Administration and Implementation
     Measures for Preferential Corporate Income Tax (Gui di shui fa [2009] No. 150), Sinopharm Holding
     Guoda Guangxi Pharmacy Chain Store Co., Ltd., received the Written Decision on Approval and
     Confirmation of Preferential Tax from local taxation bureau of Liuzhou city on 21 May 2015, which
     approved that the company was subject to a CIT rate of 15% in 2016 and 2017.
(c) The Corporate Income Tax Law of the People's Republic of China stipulates in Article 28 that, small
    low-profit enterprises are subject to corporate income tax at a rate of 20%. The Implementation
    Rules for the Corporate Income Tax Law of the People's Republic of China stipulate in Article 92 that,
    small low-profit enterprises refer to enterprises operating in industries not restricted or prohibited by
    the State and satisfying following conditions: 1. For industrial enterprises, the annual taxable income
    does not exceed RMB300,000; the number of employees does not exceed 100 and the total assets
    does not exceed RMB30 million; 2. for other industries, the annual taxable income does not exceed
    RMB300,000; the number of employees does not exceed 80 and the total assets does not exceed
    RMB10 million.
     In addition, according to the Circular on Issues Concerning the Preferential Policies for Corporate
     Income Tax for Small Low-profit Enterprises (Cai shui [2015] No. 34), Announcement of the State
     Administration of Taxation on Issues concerning the Implementation of the Further Expansion of the
     Scope of Small Low-profit Enterprises (Cai shui [2015] No.99), small low-profit enterprises with
     annual taxable income of RMB300,000 or less enjoy a tax reduction of 50% of the income and pays
     income tax at a rate of 20%. That is, the applicable corporate income tax rate is 10%.
                  CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                               Notes to financial statements (Continued)
                                     For the Year ended 30 June 2017
                    (All amounts in Renminbi “RMB” unless otherwise stated)
V      Notes to the consolidated financial statements
1.    Cash and bank balances
                                                        30 June 2017             31 December 2016
       Cash on hand                                     2,352,467.38                   6,164,382.85
       Cash at banks                                 3,021,838,164.59              3,144,751,042.64
       Other cash balances                            337,138,215.47                369,046,139.44
       - deposits for letters of credit                   258,800.00                      58,800.00
       - deposits for bank acceptance
         notes                                        329,893,872.10                333,961,620.45
       - Cash deposit for pledged loan                              -                 31,255,582.91
       - Term deposits longer than 3
                                                        6,985,543.37                   3,770,136.08
         months
                                                     3,361,328,847.44              3,519,961,564.93
2.    Notes receivable
                                                        30 June 2017             31 December 2016
      Trade acceptance notes                           642,961,849.94               594,546,810.36
      Bank acceptance notes                            401,495,215.26               909,454,098.85
                                                     1,044,457,065.20              1,504,000,909.21
     At 30 June 2017 and 31 December 2016, there were no notes receivable that were pledged
                    CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                     Notes to financial statements (Continued)
                                         For the Year ended 30 June 2017
                       (All amounts in Renminbi “RMB” unless otherwise stated)
V      Notes to the consolidated financial statements (Continued)
2.   Notes receivable (Continued)
     Notes receivable endorsed or discounted by the Group to other parties which were not yet due at 30
     June 2017 are as follows:
                                                                          30 June 2017
                                                                 Derecognized            Not derecognized
     Trade acceptance notes                                                  -               5,242,378.62
     Bank acceptance notes                                    1,075,857,770.01                          -
                                                              1,075,857,770.01               5,242,378.62
     As at 30 June 2017 and 31 December 2016, notes that were converted into accounts receivable due to
     the drawer’s inability to settle the note on maturity date are as follows:
                                                                                            30 June 2017
       Trade acceptance notes                                                               3,434,399.98
3.   Accounts receivable
                                                                     30 June 2017          31 December 2016
      Accounts receivable                                         9,173,691,063.26           7,703,120,162.25
      Less: provision for bad debt                                 (51,117,555.09)            (48,894,651.36)
                                                                  9,122,573,508.17           7,654,225,510.89
                          CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                            Notes to financial statements (Continued)
                                                       For the Year ended 30 June 2017
                             (All amounts in Renminbi “RMB” unless otherwise stated)
V        Notes to the consolidated financial statements (Continued)
3.     Accounts receivable (Continued)
     The accounts receivable by category are analyzed below:
                                                      30 June 2017                                                      31 December 2016
                              Gross carrying amount                     Provision for bad debt        Gross carrying amount            Provision for bad debt
                                  Amount     Proportion                      Amount    Proportion           Amount Proportion              Amount     Proportion
     Individually
      significant
      items       for
      which
      provision for
      bad debt is
      recognized
      separately          484,964,949.60              5.29%          (11,559,178.29)        2.38%    445,672,816.82      5.79%    (11,559,178.29)           2.59%
     Items         for
      which
      provision    for
      bad debt      is
      recognized   by
      group              8,672,588,544.28         94.54%             (31,108,015.89)        0.36%   7,236,776,975.66    93.95%    (27,546,435.58)           0.38%
     Not
     individually
     significant
     Items        for
     which
     provision for
     bad debt is
     recognized
     separately            16,137,569.38              0.17%           (8,450,360.91)       52.36%     20,670,369.77      0.26%     (9,789,037.49)         47.36%
                         9,173,691,063.26        100.00%             (51,117,555.09)        0.56%   7,703,120,162.25   100.00%    (48,894,651.36)           0.63%
                   CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                  Notes to financial statements (Continued)
                                        For the Year ended 30 June 2017
                      (All amounts in Renminbi “RMB” unless otherwise stated)
V     Notes to the consolidated financial statements (Continued)
3.   Accounts receivable (Continued)
     At 30 June 2017, accounts receivable that are individually significant and individually assessed for
     provisions are as follows:
                                            Carrying       Bad debt
                                             amount        provision        Rate           Assessment for impairment
     Receivable     of      medical                                                   Receivable of medical insurance
       insurance                      354,567,313.29                   -        -         with no risk of recoverability
                                                                                      Receivable of Franchises within 1
     Receivable of Franchises          49,409,908.28                   -        -      year with no risk of recoverability
                                                                                      Receivable of E-Business with no
     Receivable of E-Business          30,388,582.67                   -        -                  risk of recoverability
     Sinopharm     Health    Online                                                 Receivable due from a related party
       Co., Ltd.                       16,695,069.39                   -        -          with no risk of recoverability
                                                                                     Receivable of Credit cards with no
     Receivable of credit card         15,059,755.54                   -        -                  risk of recoverability
                                                                                    Disputed receivable with higher risk
     Hubei            Xianning                                             100.00    of recoverability which is related to
       Pharmaceutical Co., Ltd.        11,559,178.29   11,559,178.29           %                                 a lawsuit
     Sinopharm           Holding                                                    Receivable due from a related party
       Hulunbuir Co., Ltd.              4,463,112.54                   -        -          with no risk of recoverability
                                                                                    Receivable due from a related party
     Sinopharm Group Co., Ltd.          2,822,029.60                   -        -          with no risk of recoverability
     Total                            484,964,949.60   11,559,178.29
                  CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                               Notes to financial statements (Continued)
                                    For the Year ended 30 June 2017
                        (All amounts in Renminbi “RMB” unless otherwise stated)
V     Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
     The accounts receivable for which the Group recognized provision for bad debt using the aging
     analysis method are presented as follows
                                                              30 June 2017
                                           Carrying amount                     Bad debt provision
                                                   Amount                            Amount         Proportion
    Within 1 year                      8,645,188,111.59                  (28,310,998.07)           0.33%
    1 to 2 years                         21,606,310.52                    (1,434,050.12)           6.64%
    2 to 3 years                          4,781,838.39                     (688,294.90)           14.39%
    Over 3 years                          1,012,283.78                     (674,672.80)           66.65%
                                           8,672,588,544.28                  (31,108,015.89)           0.36%
                    CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                    Notes to financial statements (Continued)
                                            For the Year ended 30 June 2017
                       (All amounts in Renminbi “RMB” unless otherwise stated)
V     Notes to the consolidated financial statements (Continued)
3.   Accounts receivable (Continued)
     The provision for bad debt was RMB3,379,381.84 in 30 June 2017, including
     RMB1,935,876.77recovered or reversed. Important recovered or reversed bad debt items are listed
     below:
                                                              Reason for
                                                          recoverability or   Original assessment for      Recovered or      Way of
                                                                 reversal        providing impairment   reversed amount    recovery
                                                                                                                            Amount
     Guangdong Guanghong Medicine Co., Ltd.               Amount received     Uncertainty in recovery        957,838.00   received
     Health Centre of Guangzhou City Conghua District                                                                       Amount
     Chengjiao Street                                     Amount received     Uncertainty in recovery        158,647.79   received
                                                                                                                            Amount
     Health Centre of Enping City Juntang Town            Amount received     Uncertainty in recovery        108,667.90   received
                                                                                                                            Amount
     Health Centre of Luoding City Jialuo Town            Amount received     Uncertainty in recovery         41,827.10   received
     Health Centre of Guangzhou City Zengcheng
     District Licheng Street (The Hospital of Guangzhou                                                                     Amount
     City Zengcheng District Licheng Street)              Amount received     Uncertainty in recovery           934.68    received
                                                                                                           1,267,915.47
                     CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                       Notes to financial statements (Continued)
                                               For the Year ended 30 June 2017
                         (All amounts in Renminbi “RMB” unless otherwise stated)
V     Notes to the consolidated financial statements (Continued)
3.   Accounts receivable (Continued)
     Accounts receivable written off in 30 June 2017 are analysed below:
                                            Nature of the                                                    Related party transaction
                                              receivable     Amount                                Reason                       or not
                                                                        Amount received after wrtten off
                                            Receivables                  for recoverability in significant
     Guangxi Lingshan Medicine Co., Ltd.   of goods sold    11,000.00            doubt due to long age.                            No
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                            Notes to financial statements (Continued)
                                   For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
V     Notes to the consolidated financial statements (Continued)
3.    Accounts receivable (Continued)
     (i) They were written off in the current year after being approved by the board of directors.
     As at 30 June 2017, the top five accounts receivable by customer are summarised below:
                                                                  Bad debt provision   % of the total accounts
                                                     Amount                 amount                  receivable
     Top 1 Account receivable                178,720,779.86           (1,461,522.62)                   1.95%
     Top 2 Account receivable                129,732,940.73            (453,009.27)                    1.41%
     Top 3 Account receivable                128,425,578.61                        -                   1.40%
     Top 4 Account receivable                104,563,931.39                        -                   1.14%
     Top 5 Account receivable                103,634,729.44            (874,496.05)                    1.13%
                                             645,077,960.03           (2,789,027.74)                   7.03%
     In 30 June 2017, accounts receivable of RMB1,121,332,496.26 have been factored to a financial institute
     (2016:RMB1,687,263,359.73).
                     CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                 Notes to financial statements (Continued)
                                       For the Year ended 30 June 2017
                       (All amounts in Renminbi “RMB” unless otherwise stated)
V      Notes to the consolidated financial statements (Continued)
4.    Advances to suppliers
(a)   The aging of     advances to suppliers is analyzed below:
                                        30 June 2017                                   31 December 2016
                                      Amount      % of total balance                    Amount      % of total balance
      Within 1 year           346,218,255.15                97.05%            411,644,193.52                  96.88%
      1 to 2 years              7,974,841.88                 2.24%             11,793,388.28                    2.78%
      2 to 3 years              2,539,731.40                 0.71%                 800,000.00                   0.19%
      Above 3 years                         -                      -               630,000.00                   0.15%
                              356,732,828.43               100.00%            424,867,581.80                 100.00%
      The prepayment aged for more than a year is mainly the advance made by South Pharma & Trade to
      suppliers for equipment to be resold to the hospitals amounting to RMB10,015,568.84 (31 December 2016:
      RMB12,927,024.58) as the hospital equipment procurement is a large project and takes a long time to
      complete.
(b) As at 30 June 2017, the top five advances to suppliers by customer are summarized below:
                                                                          Amount            Proportion of total balance
Total amount of top five advances to suppliers                    70,451,215.37                                19.75%
5.    Interest receivable
                                                                       30 June 2017                 31 December 2016
      Fixed deposits                                                               -                        450,722.67
      Entrusted Loans                                                    55 ,855.56                                      -
                                                                          55,855.56                         450,722.67
                   CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                   Notes to financial statements (Continued)
                                        For the Year ended 30 June 2017
                       (All amounts in Renminbi “RMB” unless otherwise stated)
V       Notes to the consolidated financial statements (Continued)
6.     Other receivables
                                                                          30 June 2017                 31 December 2016
       Deposits                                                        171,761,925.12                    192,975,588.52
       Receivable of equity transactions                                  8,980,000.00                      8,980,000.00
       Petty cash advance to employees                                   20,280,521.80                    14,926,087.80
       Receivable due from related parties                              116,485,640.83                   145,308,980.82
       Others                                                          172,609,240.84                    135,585,385.78
                                                                        490,117,328.59                   497,776,042.92
       Less: provision for bad debts                                   (19,020,556.92)                   (19,202,619.30)
                                                                       471,096,771.67                    478,573,423.62
(a)    The ageing of other receivables is analyzed below:
                                                                          30 June 2017                 31 December 2016
       Within 1 year                                                   447,313,915.96                    449,973,669.71
       1 to 2 years                                                      18,882,168.89                    15,346,020.98
       2 to 3 years                                                       4,133,155.96                      6,037,372.86
       Above 3 years                                                     19,788,087.78                    26,418,979.37
                                                                        490,117,328.59                   497,776,042.92
(b)    Changes of related provision for bad debts are analyzed below:
                  Balance at the
                                      Increases in    Reversal in                                        Balance at the end
                    beginning of                                    Written off in    Decreased in
                                          the year      the year                                                of the year
                        the year                                         the year    reorganization
      2017        19,202,619.30        747,448.78    (929,511.16)                -                 -         19,020,556.92
      2016        19,117,084.21        181,998.77     (57,164.51)     (3,692.31)         (35,606.86)         19,202,619.30
                    CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                     Notes to financial statements (Continued)
                                              For the Year ended 30 June 2017
                        (All amounts in Renminbi “RMB” unless otherwise stated)
V     Notes to the consolidated financial statements (Continued)
6.    Other receivables (Continued)
(c)    Other receivables and related provision for bad debts by category are analyzed below:
                                                30 June 2017                                               31 December 2016
                               Carrying amount                Bad debt provision             Carrying amount                 Bad debt provision
                                  Amount           %               Amount            %          Amount             %              Amount          %
       Individually
         significant and
         subject      to
         separate
         impairment
         assessment         151,446,451.48     30.90%         (9,510,078.71)   6.28%      184,418,573.80      37.05%        (9,315,472.11)    5.05%
       Receivable
         accounts with
         similar credit
         risk               313,933,848.12     64.05%         (2,455,351.03)   0.78%      286,923,888.75      57.64%        (2,655,875.78)    0.93%
       Individually not
          significant but
          individually
          evaluated for
          impairment         24,737,028.99      5.05%         (7,055,127.18)   28.52%      26,433,580.37       5.31%        (7,231,271.41) 27.36%
                                                                                                                            (19,202,619.30
                            490,117,328.59 100.00%        (19,020,556.92)      3.88%      497,776,042.92     100.00%                     )    3.86%
(d)    As at 30 June 2017, impairment provision for other receivables individually significant are
       analyzed as below:
                                                                         Bad debt
                                                    Amount               provision          Rate                       Assessment for impairment
                                                                                                           Cash deposit, no risk of recoverable, no
       Deposit
                                             134,608,277.20                      -             -                                          provision
       Shenzhen YinghaiTechnology
       Investment Co., Ltd.                    8,980,000.00         (8,980,000.00)       100.00%                       Uncertainty in recoverability
                                                                                                              Staff temporary borrowings, partially
       Staff temporary borrowings              7,858,174.28           (530,078.71)        6.75%                                    unrecoverable
                                             151,446,451.48         (9,510,078.71)        6.28%
                      CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                        Notes to financial statements (Continued)
                                             For the Year ended 30 June 2017
                           (All amounts in Renminbi “RMB” unless otherwise stated)
V     Notes to the consolidated financial statements (Continued)
6. Other receivables (Continued)
(e)         Provisions for impairment of the receivables which are within a similar risk group are analyzed
            below:
                                                                                      30 June 2017
                                                            Carrying amount                              Bad debt provision
                                                                     amount                              Amount                            Rate
            Within 1 year                                   309,570,541.75                      (1,861,710.38)                          0.60%
            1 to 2 years                                       3,414,989.23                          (292,845.10)                       8.58%
            2 to 3 years                                         415,164.36                           (41,516.44)                       10.00%
            Above 3 years                                        533,152.78                          (259,279.11)                       48.63%
                                                            313,933,848.12                      (2,455,351.03)                          0.78%
(h)   As at 30 June 2017,the top 5 parties that owed the largest amounts of other receivable balances are
      analyzed below:
                                                                     Nature           Amount           Age          % of total amount    Provision of bad debt
      Guangdong             Pharmaceutical   Pharmaceutical trading platform                     Within 1
           electronic trading platform            payments not yet cleared      92,328,384.43       year                    18.84%                           -
      Shanghai Shyndec Pharmaceutical        Pingshan engineering project                        Within 1
           Co., Ltd.                                               funds        64,949,258.90       year                    13.25%                           -
                                                                                                 Within 1
      Zhijun Suzhou                          Associated company borrowing       44,000,000.00       year                      8.98%                          -
      Shanxi    Medical      Insurance                                                           Within 1
           Management Center                      Medical insurance deposit     23,231,333.70       year                      4.74%                          -
      Shenzhen       Social       Security                                                       Within 1
           Administration                         Medical insurance deposit      9,427,293.57       year                      1.92%                          -
                                                                               233,936,270.60                               47.73%                           -
                       CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                   Notes to financial statements (Continued)
                                             For the Year ended 30 June 2017
                        (All amounts in Renminbi “RMB” unless otherwise stated)
V      Notes to the consolidated financial statements (Continued)
7.    Inventories
 (a) Inventories by category are analyzed below:
                                               30 June 2017                                         31 December 2016
                                Book value          Provision      Net book value          Book value      Provision      Net book value
      Raw materials              903,408.07               -             903,408.07         463,493.71               -         463,493.71
      Finished goods       3,944,981,985.48 (13,274,944.95)       3,931,707,040.53   4,061,265,347.64 (14,930,813.47)   4,046,334,534.17
      Work in progress           195,959.12               -             195,959.12         277,528.67               -         277,528.67
      Low cost consumables     3,735,426.20               -           3,735,426.20       2,406,973.16               -       2,406,973.16
                           3,949,816,778.87 (13,274,944.95)       3,936,541,833.92   4,064,413,343.18 (14,930,813.47)   4,049,482,529.71
(b) Provision for declines in value of inventories is analysed below:
                                                   Increases in                               Decreases
                              1 January 2017             merge                                                             30 June 2017
                                                                        Increases        Reversal         Written off
      Finished goods           14,930,813.47        825,145.97          36,589.81    2,517,604.30                  -       13,274,944.95
                               14,930,813.47        825,145.97          36,589.81    2,517,604.30                  -       13,274,944.95
(c)     Provision of inventories is determined according to the gap between the net realizable value and
    the inventory book value.
                   CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                 Notes to financial statements (Continued)
                                       For the Year ended 30 June 2017
                      (All amounts in Renminbi “RMB” unless otherwise stated)
V      Notes to the consolidated financial statements (Continued)
8.   Other current assets
                                                             30 June 2017         31 December 2016
      Input VAT to be credited                              61,612,448.41            54,643,824.07
      Corporate income tax to be deducted                    6,076,566.66              2,044,674.94
      Others                                                22,557,723.03               520,764.03
                                                            90,246,738.10            57,209,263.04
9.   Financial assets available-for-sale
                                                            30 June 2017      31 December 2016
     Available-for-sale equity instruments
       -
            easured at cost                              - 13,865,760.00            13,865,760.00
     Impairment provision                                   (180,000.00)              (180,000.00)
                                                           13,685,760.00            13,685,760.00
                                                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                                              Notes to financial statements (Continued)
                                                                    For the Year ended 30 June 2017
                                                 (All amounts in Renminbi “RMB” unless otherwise stated)
V       Notes to the consolidated financial statements (Continued)
9.     Available-for-sale financial assets (Continued)
2017:
                                                 Carrying amount                                             Impairment provision
          Investee                                                                                                                                      Shareholdin   received for the y
                                     Opening       Increase        Decrease         Closing       Opening        Increase     Decrease       Closing         g (%)                   ear
Sinopharm Health Online Co.,
  Ltd.                          12,000,000.00             -               -   12,000,000.00              -               -           -              -      10.00%                      -
Sinopharm Holding Hubei
  Guoda Pharmacy Co., Ltd.       1,000,000.00             -               -    1,000,000.00              -               -           -              -      10.00%                      -
Sinopharm Guoda Taishan
  Qunkang Pharmacy Chain
  Store Co., Ltd. (“Guoda
  Taishan”)                                -             -               -               -              -               -           -              -             -                    -
Hunan              Zhongbai
  pharmaceutical investment
  Co., Ltd.                        315,000.00             -               -     315,000.00               -               -           -              -        7.00%                     -
Shanghai Guoda Shuguang
                                   270,760.00                                   270,760.00
  Pharmacy Co., Ltd.                                      -               -                              -               -           -              -       25.00%                     -
Xinxiang Golden Elephant.          180,000.00             -               -     180,000.00    (180,000.00)               -           -   (180,000.00)      18.00%                      -
Shanghai Guoren Pharmacy
  Co., Ltd.                        100,000.00             -               -     100,000.00               -               -           -              -       10.00%                     -
                                13,865,760.00             -               -   13,865,760.00   (180,000.00)               -           -   (180,000.00)             -                    -
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                             Notes to financial statements (Continued)
                                   For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
V     Notes to the consolidated financial statements (Continued)
9. Available-for-sale financial assets (Continued)
Classification of available for sale financial assets   Available-for-sale equity instruments
Opening blance of provision for impairment                                               180,000.00
Closing blance of provision for impairment                                               180,000.00
                       CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                               Notes to financial statements (Continued)
                                                      For the Year ended 30 June 2017
                             (All amounts in Renminbi “RMB” unless otherwise stated)
V      Notes to the consolidated financial statements (Continued)
10.    Long-term equity investments
      Associates in 2017
                                                                                      Changes in the year
                                                                                                                                                    Provisio
                                                                                                                Cash
                                                  1 January                                                                                            n for
         Investee                                             Additional    Profit of loss       Other      dividend                30 June 2017
                                                       2017                                                                                         impairm
                                                              Investme      under equity      changes       declared       Other
                                                                                                                                                         ent
                                                                      nt         method       in equity           by
                                                                                                            investee
         Associates
         Shenzhen         Main          Luck    207,259,086            -   27,151,517.0               -     (35,190,0           -    199,220,603           -
         Pharmaceutical Inc (“Main Luck                 90                           6                        00 00)
         Sinopharm Holding Zhuhai Co.,             1,420,13                                                              (1,420,1
                                                                       -                 -            -             -                           -          -
         Ltd (“Sinopharm Zhuhai”)”.(b)              9.96                                                                39.96)
         Shanghai    Beiyi     Guoda               8,980,08                                                                          9,971,870.1
                                                                       -     991,783.70               -             -           -                          -
         Pharmaceutical Co. Ltd. (c)                   6.48
         Shanghai Liyi Pharmacy Co., Ltd.          642,479
                                                                       -      59,874.12               -             -           -     702,353.81           -
         (d)                                            .69
         Dongyuan              Accord
                                                   396,638                                                                                            396,6
         Pharmaceutical Chain Co., Ltd.                                -                 -            -             -           -     396,638.32
                                                        .32                                                                                           38.32
         (f)
         Sinopharm Jienuo Medical
           Treatment Service Guangdong              9,442,7                 (403,428.80                                              9,039,312.8
                                                                       -                              -             -           -                          -
           Co., Ltd. (“Guangdong Jie                 41.61                           )
           nuo”) (g)
                                                    69,642,                (9,711,552.17                                             59,931,433.
         Zhijun Suzhou (h)                                             -                              -             -           -                          -
                                                     985.98                            )
                                                   174,820                 57,389,488.1                                              232,209,900
         Zhijun Medicine. (i)                                          -                              -             -           -                          -
                                                    ,412.07                           5                                                       .22
                                                    6,198,8                                                                          7,047,943.5
         Zhijun Trade. (i)                                             -     849,123.12               -             -           -                          -
                                                      20.40
                                                    47,087,                 14,858,166.                                              61,946,124.
         Pingshan Medicine (i)                                         -                              -             -           -                          -
                                                     958.31                          26
         Shanghai                 Shyndec        887,539,45                55,590,445.8                     (22,468,8                920,675,069
                                                                       -                     13,987.58                          -                          -
         Pharmaceutical Co., Ltd.                      4.16                           5                        18.32)                         .27
                                               1,413,430,80            - 146,775,417.2       13,987.58      (57,658,8   (1,420,13 ,1,501,141,250      396,6
                                                       3.88                          9                         18.32)       9.96)             .47     38.32
                        CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                         Notes to financial statements (Continued)
                                          For the Year ended 30 June 2017
                              (All amounts in Renminbi “RMB” unless otherwise stated)
V        Notes to the consolidated financial statements (Continued)
11.      Investment properties
Subsequent measurement under the cost model:
      2017                                                       Buildings and
                                                                 constructions       Land use right                  Total
      Original cost
                            Opening balance                    245,258,727.03        23,833,990.27         269,092,717.30
                            Transfer from fixed assets          11,593,729.85                    -           11,593,729.85
                            Transfer from intangible assets                  -          302,035.37              302,035.37
                            Disposal of subsidiaries                         -                   -                       -
                            Transfer to intangible assets                    -                   -                       -
                            Transfer to fixed assets                         -                   -                       -
                            Disposal and retirement             (3,480,329.35)        (764,259.54)          (4,244,588.89)
                            Closing balance                    253,372,127.53        23,371,766.10         276,743,893.63
Accumulated
depreciation          and
amortization
                            Opening balance                    (93,028,655.88)       (8,048,212.62)      (101,076,868.50)
                            Provision                           (3,988,205.68)         (386,140.84)        (4,374,346.52)
                            Transfer from fixed assets          (9,576,586.76)                     -       (9,576,586.76)
                            Transfer from intangible assets                  -          (43,391.68 )           (43,391.68)
                            Disposal of subsidiaries                         -                     -                     -
                            Transfer to intangible assets                    -                     -                     -
                            Transfer to fixed assets                         -                     -                     -
                            Disposal or retirement                2,251,296.46           149,626.49          2,400,922.95
                            Closing balance                   (104,342,151.86)       (8,328,118.65)      (112,670,270.51)
    Provision for
       impairment
                            Opening balance                     (1,300,000.00)                     -        (1,300,000.00)
                            Closing balance                     (1,300,000.00)                     -        (1,300,000.00)
      Carrying amount
                            At end of year                     147,729,975.67        15,043,647.45         162,773,623.12
                            At beginning of the year           150,930,071.15        15,785,777.65         166,715,848.80
(a) Fixed assets without official property right certificates
                      Items                             Carrying amount          Reason for outstanding property right
                                                                                             certificates
               CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                          Notes to financial statements (Continued)
                             For the Year ended 30 June 2017
                 (All amounts in Renminbi “RMB” unless otherwise stated)
Guangxi old town reconstruction          67,232,205.84                       In the process
                                                 CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                                             Notes to financial statements (Continued)
                                                                   For the Year ended 30 June 2017
                                                    (All amounts in Renminbi “RMB” unless otherwise stated)
V      Notes to the consolidated financial statements (Continued)
12.   Fixed assets
                                                                                                                                          Fixed asset
                                 2017                               Buildings        Machinery           Vehicles   Other equipment                                  Total
                                                                                                                                        improvements
      Original cost
      Opening balance                                         416,870,234.54    136,667,853.08     90,713,467.96     240,527,711.61     22,373,714.89     907,152,982.08
      Purchase                                                 29,071,000.00     25,309,413.95      2,346,534.84      11,010,714.13      5,539,205.82      73,276,868.74
      Transfer from construction in progress                                -     1,056,016.47                  -        631,255.64                  -      1,687,272.11
      Transfer from Investment properties                       3,480,329.35                  -                 -                  -                 -      3,480,329.35
      Business combination not involving enterprises under
                                                                            -        85,536.45        345,119.91          11,299.12        108,297.67         550,253.15
    common control
      Transfer to Investment properties                       (11,558,969.35)                 -                 -                  -                 -    (11,558,969.35)
      Disposal of subsidiaries                                              -                 -                 -                  -                 -                  -
      Disposal or retirement                                                -     (572,893.19)     (3,961,648.11)    (5,886,493.20 )    (3,546,468.45)    (13,967,502.95)
      Closing balance                                         437,862,594.54    162,545,926.76     89,443,474.60     246,294,487.30     24,474,749.93     960,621,233.13
      Accumulated depreciation
      Opening balance                                        (139,954,250.07)   (57,610,772.80)   (59,136,773.31)   (142,597,466.20)   (20,844,119.60)   (420,143,381.98)
      Provision                                                (6,763,965.48)    (7,395,676.21)    (4,286,580.46)    (10,200,464.21)    (6,575,618.32)    (35,222,304.68)
      Transfer from Investment properties                      (2,251,296.46)                 -                 -                  -                 -     (2,251,296.46)
      Transfer to Investment properties                         9,576,586.76                  -                 -                  -                 -      9,576,586.76
                           CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                   Notes to financial statements (Continued)
                                          For the Year ended 30 June 2017
                            (All amounts in Renminbi “RMB” unless otherwise stated)
Disposal of subsidiaries                           -                 -                 -                  -                 -                  -
Disposal or retirement                             -       446,746.15      3,311,446.20       4,984,576.03      3,146,206.66      11,888,975.04
Closing balance                     (139,392,925.25)   (64,559,702.86)   (60,111,907.57)   (147,813,354.38)   (24,273,531.26)   (436,151,421.32)
                                           CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                                      Notes to financial statements (Continued)
                                                           For the Year ended 30 June 2017
                                              (All amounts in Renminbi “RMB” unless otherwise stated)
V       Notes to the consolidated financial statements (Continued)
12.    Fixed assets (Continued)
      2017(Continued)
                                                                                                                             Fixed asset
                                                            Buildings       Machinery         Vehicles   Other equipment                            Total
                                                                                                                           improvements
      Provision for impairment
      Opening balance                                                -               -               -                 -               -                -
      Disposal of subsidiaries                                       -               -               -                 -               -                -
      Closing balance                                                -               -               -                 -               -                -
      Carrying amount
      At end of year                                  298,469,669.29     97,986,223.90   29,331,567.03    98,481,132.92      201,218.67    524,469,811.81
      At beginning of the year                        276,915,984.47     79,057,080.28   31,576,694.65    97,930,245.41    1,529,595.29    487,009,600.10
                   CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                              Notes to financial statements (Continued)
                                  For the Year ended 30 June 2017
                      (All amounts in Renminbi “RMB” unless otherwise stated)
V      Notes to the consolidated financial statements (Continued)
12.    Fixed assets (Continued)
(a)    Fixed assets held under finance leases are presented as follows:
      2017
                                                                   Accumulated    Provision for
                                          Original cost                                            Carrying amount
                                                                   depreciation    impairment
      Machinery                         24,727,118.29              4,954,963.05               -       19,772,155.24
(b)Fixed assets without official property right certificates
                  Items                              Carrying amount               Reason for outstanding property
                                                                                          right certificates
Buildings                                                         29,071,000.00                       In the process
(c)   As at 30 June 2017, there were no fixed assets that were leased under operating leases.
(d) During the semi year of 2017, fixed assets are accumulated depreciation as blow:
                                                               For the six month ended       For the six month ended
                                                                       30 June 2017                     30 June 2016
Operating cost                                                           1,353,951.51                    3,379,289.25
Selling expenses                                                        21,860,957.80                  17,367,421.52
Administrative expenses                                                 14,130,107.15                  24,142,228.81
Manufacturing expenses                                                     128,584.68                      103,213.44
                                                                        37,473,601.14                  44,992,153.01
                       CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                    Notes to financial statements (Continued)
                                        For the Year ended 30 June 2017
                            (All amounts in Renminbi “RMB” unless otherwise stated)
V        Notes to the consolidated financial statements (Continued)
13.      Construction in progress
                                                      30 June 2017                                 31 December 2016
                                                       Provision for         Carrying       Carrying Provision for        Carrying
                                       Carrying balance impairment            amount        balance impairment             amount
      Warehouse improvement                                                             14,044,783.6
      project                               289,698.61               -    289,698.61               8             -   14,044,783.68
      New office building    project      8,237,719.60               -   8,237,719.60 7,979,356.35               -    7,979,356.35
      Supply chain extension
      project                             9,717,627.82               -   9,717,627.82 5,209,203.43               -    5,209,203.43
                                                                                     10,889,391.6
      Software project                      779,888.49               -    779,888.49            7                -   10,889,391.67
       Pingshan     pharmaceutical
       research & development
       manufacturing base                             -              -              -              -             -               -
       Zhijun production workshop
       technological transformation
       project                                        -              -              -              -             -               -
       Zhijun(Suzhou) production
       workshop        technological
       transformation project                         -              -              -              -             -               -
      Other projects                     10,517,948.39               - 10,517,948.39 8,941,133.36                -    8,941,133.36
                                                                                        47,063,868.4
                                         29,542,882.91               - 29,542,882.91               9             -   47,063,868.49
                                                                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                                                               Notes to financial statements (Continued)
                                                                                          For the Year ended 30 June 2017
                                                                     (All amounts in Renminbi “RMB” unless otherwise stated)
V       Notes to the consolidated financial statements (Continued)
13.   Construction in progress (Continued)
(a)   Changes of significant construction in progress
      Changes of significant construction in progress in 2017 are presented as follows:
                                                                                                                                      Decrease
                                                                                                                                                                                                                      Proportion of
                                                        At beginning of                                                               Transfer to long                                                 Source of
      Project name                            Budget                           Increase                                                                   Disposal of             At end of year                     investment to
                                                               the year                    Transferred to fixed      Transferred to      term prepaid                                                     funds
                                                                                                                                                                        Others                                          budget (%)
                                                                                                        assets    intangible assets          expense     subsidiaries
      Warehouse        improvement                                                                                                                                                                 Working capital
       project                          17,208,255.52   14,044,783.68       970,183.59                        -   (14,725,268.66)                   -              -               289,698.61                                99.22
      New office building Project       38,182,660.00    7,979,356.35       380,363.25           (122,000.00)                     -                 -              -              8,237,719.60     Working capital           21.69
      Supply chain extension project    18,761,555.11    5,209,203.43      6,116,687.64        (1,269,801.71)        (338,461.54)                   -              -              9,717,627.82     Working capital           75.72
      Software project                  15,592,801.89   10,889,391.67      4,703,410.22                           (14,812,913.40)                   -              -               779,888.49      Working capital           99.00
      Other construction projects      207,336,158.27    8,941,133.36      2,137,449.09          (295,470.40)        (265,163.66)                   -              -             10,517,948.39     Working capital            5.04
                                       297,081,430.79   47,063,868.49     14,308,093.79         (1,687,272.11)    (30,141,807.26 )                  -              -             29,542,882.91
                                            CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                                        Notes to financial statements (Continued)
                                                             For the Year ended 30 June 2017
                                               (All amounts in Renminbi “RMB” unless otherwise stated)
V     Notes to the consolidated financial statements (Continued)
13. Construction in progress (Continued)
(a)   Changes of significant construction in progress(Continued)
                                                                                                                                 Incl: interest
                                                                                                     Accumulated amount of                        Capitalization
Project name                                                         Budget    Progress(%)                                    capitalized in
                                                                                                         interest capitalized                          rate (%)
                                                                                                                                 current year
Warehouse improvement project                                  17,208,255.52      80.00
New office building project                                    38,182,660.00      90.00
Supply chain extension project                                 18,761,555.11      77.00
Software project                                               15,592,801.89      95.00
         Other construction projects                          207,336,158.27
                                                              297,081,430.79                -
(b) As of 30 June 2017,there are no finance leases in construction in progress (31 December 2016: RMB1,924,502.57 ).
                                                       CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                                                   Notes to financial statements (Continued)
                                                                       For the Year ended 31 December 2016
                                                           (All amounts in Renminbi “RMB” unless otherwise stated)
V       Notes to the consolidated financial statements (Continued)
14.   Intangible assets
      2017                                        Land use right         Software    Patent      Trademarks      Sales network      Franchise               Total
      Original cost
      Opening balance                             56,018,083.73    100,602,877.73         -   159,219,850.00    112,117,142.86     710,000.00     428,667,954.32
      Purchase                                     4,000,000.00      6,834,388.84         -                 -                 -              -     10,834,388.84
      Transfer   from     construction      in
    progress                                               -    15,395,443.32         -                 -                 -              -     15,395,443.32
      Transfer from investment properties            764,259.54                  -        -                 -                 -              -        764,259.54
      Disposal of subsidiaries                                 -                 -        -                 -                 -              -                  -
      Transfer to investment properties            (302,035.37)                  -        -                 -                 -              -       (302,035.37)
      Transfer to long term prepaid expense                    -     (944,000.00)         -                 -                 -              -       (944,000.00)
      Disposal or retirement                                   -                 -        -                 -                 -              -                  -
      Closing balance                             60,480,307.90    121,888,709.89         -   159,219,850.00    112,117,142.86     710,000.00     454,416,010.65
      Accumulated amortization
      Opening balance                            (23,161,818.46)   (44,791,854.17)        -   (10,088,261.76)   (29,480,619.04)   (710,000.00)   (108,232,553.43)
      Provision                                    (403,832.25)     (5,185,150.96)        -    (2,472,852.98)    (4,211,873.15)              -    (12,273,709.34)
      Transfer from investment properties          (149,626.49)                  -        -                 -                 -              -       (149,626.49)
      Disposal of subsidiaries                                 -                 -        -                 -                 -              -                  -
      Transfer to investment properties               43,391.68                  -        -                 -                 -              -         43,391.68
                                              CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                                          Notes to financial statements (Continued)
                                                             For the six months ended 30 June 2017
                                                  (All amounts in Renminbi “RMB” unless otherwise stated)
2017                                     Land use right         Software    Patent      Trademarks      Sales network      Franchise               Total
Transfer to long term prepaid expense                 -       195,358.34         -                -                  -              -         195,358.34
Disposal or retirement                                -                 -        -                -                  -              -                  -
Closing balance                         (23,671,885.52)   (49,781,646.79)        -   (12,561,114.74)   (33,692,492.19)   (710,000.00)   (120,417,139.24)
                                        CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                                     Notes to financial statements (Continued)
                                                       For the six months ended 30 June 2017
                                           (All amounts in Renminbi “RMB” unless otherwise stated)
V    Notes to the consolidated financial statements (Continued)
14. Intangible assets (Continued)
    2017 (Continued)           Land use right       Software       Patent    Trademarks    Sales network   Franchise            Total
    Provision for impairment
    Opening balance                         -               -           -              -               -           -                -
    Disposal of subsidiaries                -               -           -              -               -           -                -
    Closing balance                         -               -           -              -               -           -                -
    Carrying amount
    At end of the year         36,808,422.38    72,107,063.10           - 146,658,735.26   78,424,650.67           -   333,998,871.41
    At beginning of the year   32,856,265.27    55,811,023.56           - 149,131,588.24   82,636,523.82           -   320,435,400.89
                                          CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                                        Notes to financial statements (Continued)
                                                          For the six months ended 30 June 2017
                                             (All amounts in Renminbi “RMB” unless otherwise stated)
V        Notes to the consolidated financial statements (Continued)
14.     Intangible assets (Continued)
       As at 30 June 2017, there were no intangible assets arising from internal research and development (30 June 2016: none)
       As at30 June 2017, intangible assets without the right certificates as below,
          Items                         Carrying amount                           Reason for outstanding property right certificates
      Land use right                     4,000,000.00                                              In the process
                    CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                      Notes to financial statements (Continued)
                                         For the six months ended 30 June 2017
                      (All amounts in Renminbi “RMB” unless otherwise stated)
V    Notes to the consolidated financial statements (Continued)
15. Goodwill
(1) Goodwill cost
                                                                                  Increase    Decrease
    30 June 2017                              Opening balance     Business combination not               Closing balance
                                                                involving enterprises under
                                                                           common control     Disposal
    Jiangmen Renren Medical Co., Ltd.
       (“Sinopharm Jiangmen”)                 27,392,317.73                             -          -    27,392,317.73
    Sinopharm     Holding      Shenzhen
       Yanfeng Co., Ltd.    (“Sinopharm
       Yanfeng”)                               16,868,644.87                             -          -    16,868,644.87
    Sinopharm Holding Zhaoqing Co., Ltd.
       (“Sinopharm Zhaoqing”)                  2,594,341.53                             -          -     2,594,341.53
    Sinopharm Holding Shaoguan Co.,
       Ltd. (“Sinopharm Shaoguan”)             1,686,496.80                             -          -     1,686,496.80
    Sinopharm Holding Meizhou Co., Ltd.
       (“Sinopharm Meizhou”)                   1,610,819.66                             -          -     1,610,819.66
    Sinopharm Holding Huizhou Co., Ltd.
       (“Sinopharm Huizhou”)                     923,184.67                             -          -       923,184.67
    Sinopharm Holding Zhanjiang Co.,
       Ltd. (“Sinopharm Zhanjiang”)              282,135.55                             -          -       282,135.55
    Sinopharm Holding Dongguan Co.,
       Ltd. (“Sinopharm Dongguan”)                 1,499.02                             -          -         1,499.02
    South Pharma & Trade                         2,755,680.62                             -          -     2,755,680.62
    Foshan Nanhai                               88,877,850.51                             -          -    88,877,850.51
    Sinopharm        Holding        Zhuhai
    Co.,Ltd.(Sinopharm Zhuhai)                              -                4,073,195.23            -     4,073,195.23
    Sinopharm Holding Guoda ForMe
       Medicines (Shanghai) Co., Ltd.
       ( “ForMe Medicines”)                    3,033,547.53                             -          -     3,033,547.53
    Shijiazhuang     Lerentang Yikang
      Pharmacy Chain Store Co., Ltd.
      (“Hebei Yikang”)                        29,482,149.57                             -          -    29,482,149.57
    Xiaoyi Guoda Wanmin Baicaotang
       Pharmacy Chain Store Co., Ltd.
       (“Xiaoyi Wanmin”)                      15,866,680.00                             -          -    15,866,680.00
    Shanxi Guoda Wanmin Pharmacy
      Chain Store Co., Ltd.                     65,025,000.00                             -          -    65,025,000.00
    Sinopharm Holding Guoda ForMe
       Pharmacy Chain Store Co., Ltd.
       (“ForMe Pharmacy Chain Store”)         19,405,450.23                             -          -    19,405,450.23
    Sinopharm Holding Guoda Pharmacy
       Chain Store Shanghai Co., Ltd.            5,028,638.00                             -          -     5,028,638.00
    Sinopharm Holding Guoda Yangzhou
       Dadesheng Pharmacy Chain Store
       Co., Ltd.                                 7,979,000.00                             -          -     7,979,000.00
    Zhejiang Guoda Pharmacy Co., Ltd.            3,045,183.85                             -          -     3,045,183.85
    Guoda    Shenyang            Tianyitang
      Pharmacy Chain                             1,687,942.92                             -          -     1,687,942.92
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                         Notes to financial statements (Continued)
                             For the Year ended 30 June 2017
                 (All amounts in Renminbi “RMB” unless otherwise stated)
                                                                         Increase     Decrease
30 June 2017                         Opening balance     Business combination not                Closing balance
                                                       involving enterprises under
                                                                  common control      Disposal
Sinopharm Holding Guoda Nanjing
   Pharmacy Chain Store Co., Ltd.      11,598,341.12                              -          -    11,598,341.12
Fujian Guoda Pharmacy Chain Store
 Co., Ltd.                              1,567,250.76                          -              -     1,567,250.76
Sinopharm Holding Guoda Shandong
 Pharmacy Chain Store Co., Ltd.        29,110,409.46                          -              -    29,110,409.46
Sinopharm Holding Guoda Shenyang
 Pharmacy Chain Store Co., Ltd.        39,360,015.16                          -              -    39,360,015.16
Liyang Guoda People Pharmacy Chain
 Store Co., Ltd.                      107,275,095.74                          -              -   107,275,095.74
Sinopharm Holding Hunan Guoda
 Minshengtang Pharmacy Chain Co.,
 Ltd.                                  41,165,574.64                          -              -    41,165,574.64
Quanzhou Guoda Pharmacy Chain
 Store Co., Ltd.                       41,298,622.59                          -              -    41,298,622.59
Sinopharm Holding Guoda Henan
 Pharmacy Chain Store Co., Ltd.        22,666,179.77                          -              -    22,666,179.77
Sinopharm Holding Guoda Neimenggu
 Pharmacy Chain Store Co., Ltd.        70,485,777.00                          -              -    70,485,777.00
Sinopharm     Guoda       Pharmacy
 Jiangmen Chain Co., Ltd.              77,350,000.00                          -              -    77,350,000.00
Sinopharm Holding Guoda Shanxi
 Yiyuan Pharmacy Chain Store Co.,
 Ltd.                                   9,080,100.00                          -              -     9,080,100.00
Shenzhen Guanganli Pharmacy Chain
 Store Co., Ltd. store acquisition     13,420,000.00                          -              -    13,420,000.00
Beijing Golden Elephant Pharmacy
 Medicine Chain Company Limited
 (“Beijing Golden Elephant”)         63,546,507.81                          -              -    63,546,507.81
Beijing Yangqiao Rongzhi Golden
 Elephant   Pharmacy    Company
 Limited                                  593,616.55                          -              -       593,616.55
Guoda Taishan                          26,826,120.55                          -              -    26,826,120.55
                                      848,890,174.21              4,073,195.23               -   852,963,369.44
                      CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                               Notes to financial statements (Continued)
                                   For the Year ended 30 June 2017
                       (All amounts in Renminbi “RMB” unless otherwise stated)
V       Notes to the consolidated financial statements (Continued)
15. Goodwill (Continued)
(2) Provision of impairment loss
      Changes in provision for impairment of goodwill are presented as follows:
       2017                                       Opening balance       Increase          Decrease         Closing balance
                                                                        Provision          Disposal
       Quanzhou Guoda Pharmacy
            Chain Store Co., Ltd.                  25,000,000.00                -                  -       25,000,000.00
The method of goodwill impairment testing process, parameter and recognition of impairment loss:
The recoverable amount of asset groups and groups of asset groups is calculated by using the
estimated cash flows according to the five-year budget approved by management. Management
determines budgeted gross margin based on historical experience and forecast on market development.
The discount rates determined by management are the pre-tax interest rates which reflect the risks
specific to the related asset groups and groups of asset groups. The above assumptions are used to
assess the recoverable amount of each asset group and group of asset groups within the corresponding
operating segment.
16.    Long-term prepaid expenses
       2017                           Opening balance       Additions      Amortization Other decrease      Closing balance
       Fixed asset     improvement
    expenditure                    158,483,260.94   48,704,866.85   (26,821,863.38)                -    180,366,264.41
       Acquisition expenditure to
    obtain the right to operate     28,493,593.63    5,697,437.95    (4,107,222.47)                -      30,083,809.11
       Others                            1,400,871.07    1,358,336.63      (445,437.29)                -       2,313,770.41
                                       188,377,725.64   55,760,641.43   (31,374,523.14)                -    212,763,843.93
                   CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                Notes to financial statements (Continued)
                                    For the Year ended 30 June 2017
                        (All amounts in Renminbi “RMB” unless otherwise stated)
V      Notes to the consolidated financial statements (Continued)
17. Deferred tax assets/liabilities
(a)   Deferred tax assets before offseting
                                                30 June 2017                                     31 December 2016
                                                       Deductible temporary                                  Deductible temporary
                               Deferred tax assets               differences        Deferred tax assets                differences
      Provision         for
      impairment of assets          18,924,053.88            82,183,379.30               19,118,314.97             83,604,722.45
      Deductible tax loss           22,144,103.00            88,809,460.60               21,393,844.91             85,575,379.60
      Accrued payroll              18,158,094.98             74,322,136.82               11,524,213.88             48,767,983.92
      Employee      benefits
      payable                        8,600,423.61            36,117,454.63               14,668,802.63             60,272,948.20
      Deferred revenue               5,727,325.55            23,819,800.26                 6,196,507.49            25,425,419.68
      Others                         1,001,860.39              4,388,198.38                   445,778.06             2,065,022.05
                                   74,555,861.41            309,640,429.99               73,347,461.94            305,711,475.90
(b)   Deferred tax liabilities before offseting
                                                30 June 2017                                     31 December 2016
                                      Deferred tax      Taxable temporary                                      Taxable temporary
                                         liabilities           differences        Deferred tax liabilities            differences
      Fair value adjustment
      for          business
      combination       not
      involving enterprises
      under        common
      control                       61,720,973.26           271,956,988.31               63,557,328.29            254,229,313.19
      Changes in fair value          8,374,731.01            33,826,462.15                 8,734,282.98            35,313,052.96
      Others                         3,773,319.00            15,093,276.00                 4,676,832.38            18,707,329.48
                                    73,869,023.27           320,876,726.46               76,968,443.65            308,249,695.63
(c)   The deductible temporary differences and deductible losses that were not recognized as
      deferred tax assets are presented as follows:
                                                                               30 June 2017                    31 December 2016
            CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                          Notes to financial statements (Continued)
                              For the Year ended 30 June 2017
                  (All amounts in Renminbi “RMB” unless otherwise stated)
Deductible temporary differences                     3,106,315.98              1,300,000.00
Deductible loss                                     22,385,879.19             20,729,807.46
                                                    25,492,195.17             22,029,807.46
                   CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                              Notes to financial statements (Continued)
                                  For the Year ended 30 June 2017
                      (All amounts in Renminbi “RMB” unless otherwise stated)
V      Notes to the consolidated financial statements (Continued)
17.   Deferred tax assets/liabilities (Continued)
      The aforesaid unrecognized deductible losses will due:
                                                                  30 June 2017                    31 December 2016
      2017                                                        6,047,670.28                         6,047,670.28
      2018                                                        6,102,981.86                         5,630,816.89
      2019                                                        4,187,138.75                         3,324,752.13
      2020                                                        4,397,395.68                         4,075,875.54
      2021                                                        1,650,692.62                         1,650,692.62
                                                                 22,385,879.19                       20,729,807.46
      Deferred tax assets and liabilities are presented after being offset against each other:
                                            30 June 2017                               31 December 2016
                                    Deferred tax            Temporary          Deferred tax                Temporary
                                 assets/liabilities        differences     assets/liabilities -           differences
                                              -Net         after set-off                   Net            after set-off
      Deferred tax assets         74,555,861.41       309,640,429.99           72,914,722.30         303,980,517.34
      Deferred tax liabilities    73,869,023.27       320,876,726.46           76,535,704.01         306,518,737.07
 (note) As some subsidiaries are still making loss, and it’s uncertainty that the loss-making subsidiarie
can obtain enough taxable income to offset against the loss in the future.So the group do not recognised
deferred tax assets which came from the deductible loss of RMB 22,385,879.19 .
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                           Notes to financial statements (Continued)
                               For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
V      Notes to the consolidated financial statements (Continued)
18. Other non-current assets
                                                            30 June 2017          31 December 2016
      Medical reserve fund                                44,905,302.61               43,605,016.10
      Prepayment for project and equipment                12,056,482.37               27,155,022.78
      Prepayment for a rental fee (Note)                  19,281,120.66               17,021,937.21
      Prepayment for apartments                                         -               6,867,500.00
      Investment deposit                                  60,000,000.00                              -
                                                         136,242,905.64               94,649,476.09
      Note: The prepayment for a rental fee which is over one year is recognized at other non-current
      assets for the Group.
19. Short-term borrowings
                                                               30 June 2017      31 December 2016
      Credit borrowings (Note a)                           1,522,372,886.70       1,276,073,615.32
      Guaranteed borrowings (Note b)                          73,041,217.14          50,915,736.83
      Discounted notes (Note c)                                5,242,378.62         154,468,694.89
      Pledged borrowings                                                    -        31,255,582.91
                                                           1,600,656,482.46       1,512,713,629.95
(a) As at 30 June 2017, credit borrowings of RMB1,192,142,348.83were guaranteed by the
    Company and its subsidiaries (31 December 2016: credit borrowings of RMB832,710,742.83
    were guaranteed by the Company and its subsidiaries.).
(b)   As at 30 June 2017, guaranteed borrowings of RMB73,041,217.14 (31 December 2016:
      RMB50,915,736.83) were guaranteed by Sinopharm Group.
               CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                         Notes to financial statements (Continued)
                             For the Year ended 30 June 2017
                 (All amounts in Renminbi “RMB” unless otherwise stated)
(c)   As at 30 June 2017, commercial acceptance bills that were discounted but not decognized
      amounted to RMB5,242,378.62 (2016: RMB154,468,694.89).
(d)   As at 30 June 2017, the annual interest rate for the above borrowings was 4.22% (31
      December 2016: 4.13%).
(e)   As at 30 June 2017 and at 31 December 2016, there were no short-term borrowings of the
      group that were overdue but not yet paid.
                    CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                              Notes to financial statements (Continued)
                                  For the Year ended 30 June 2017
                      (All amounts in Renminbi “RMB” unless otherwise stated)
V          Notes to the consolidated financial statements (Continued)
20.       Notes payable
                                                               30 June 2017      31 December 2016
          Commercial acceptance notes                         79,649,424.54          117,104,256.84
          Bank acceptance notes                            2,108,395,088.42        2,289,538,326.02
                                                           2,188,044,512.96        2,406,642,582.86
    21.    Accounts payable
                                                               30 June 2017      31 December 2016
          Trade payables                                   7,374,938,495.12        6,701,558,514.10
          At 30 June 2017, the total amount of accounts payable aged over one year was
          RMB279,540,793.92(31 December 2016: RMB263,362,685.91 ), and the payment has not yet been
          cleared.
    22.    Advances from customers
                                                               30 June 2017      31 December 2016
          Sales received in advance                          167,151,483.39         163,450,365.92
          At 30 June 2017, the total amount of accounts payable aged over one year was
          RMB9,345,822.77(31 December 2016: RMB10,366,456.25 ).
                 CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                           Notes to financial statements (Continued)
                               For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
23.    Employee benefits payable
                                   At beginning of                                       At end of the
      2017                                the year         Increase         Decrease             year
      Short-term    employee
       benefits (a)                191,157,671.41    747,272,197.36   (814,261,819.14) 124,168,049.63
      Post-employment
       benefits        (defined
       contribution plan)(b)         2,686,932.17     75,860,822.60    (68,630,363.54)   9,917,391.23
      Termination benefits (c)       1,293,476.27       630,209.04        (558,462.75)   1,365,222.56
                                   195,138,079.85    823,763,229.00   (883,450,645.43) 135,450,663.42
                      CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                Notes to financial statements (Continued)
                                    For the Year ended 30 June 2017
                        (All amounts in Renminbi “RMB” unless otherwise stated)
V       Notes to the consolidated financial statements (Continued)
23.    Employee benefits payable (Continued)
(a)    Short-term employee benefits
                                      At beginning of
       2017                                      year         Increase         Decrease      At end of year
      Salaries, bonuses, allowances
       and grants                     175,148,646.81    654,303,444.47   (720,611,188.68)   108,840,902.60
      Staff welfare                     1,477,025.98     19,142,370.78    (20,267,467.38)      351,929.38
      Social security contribution      1,570,365.14     36,096,439.55    (35,393,659.61)     2,273,145.08
      Incl:    Medical insurance        1,329,989.27     31,741,459.74    (31,673,756.99)     1,397,692.02
              Work injury insurance        20,708.23      1,828,368.53     (1,750,927.66)        98,149.10
              Maternity insurance        219,667.64       2,526,611.28     (1,968,974.96)      777,303.96
      Housing funds                      327,217.21      25,018,429.38    (24,588,659.00)      756,987.59
      Labor  union   funds     and
    employee education funds       11,765,134.16     11,871,393.13    (12,460,698.60)    11,175,828.69
      Other short-term benefits           869,282.11       840,120.05        (940,145.87)      769,256.29
                                      191,157,671.41    747,272,197.36   (814,261,819.14)   124,168,049.63
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                           Notes to financial statements (Continued)
                               For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
V      Notes to the consolidated financial statements (Continued)
23.   Employee benefits payable (Continued)
(b)   Defined contribution plan
                            At beginning of
      2017                            year          Increase            Decrease     At end of year
      Basic pension
       insurance                  619,514.34   72,149,465.49    (66,287,370.91)      6,481,608.92
      Contribution to
       pension fund           1,961,232.61      1,011,324.60          (25,464.62)    2,947,092.59
      Unemployment
       insurance                  106,185.22    2,700,032.51        (2,317,528.01)     488,689.72
                              2,686,932.17     75,860,822.60    (68,630,363.54)      9,917,391.23
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                           Notes to financial statements (Continued)
                               For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
V      Notes to the consolidated financial statements (Continued)
23.   Employee benefits payable (Continued)
(c)   Termination benefits
                             At beginning of
      2017                             year                        At end of year
      Retirement
       benefits payable
       – within 1 year
       (Note V(35))            1,093,992.97                         1,206,035.84
      Other termination
       benefits (i)              199,483.30                           159,186.72
                               1,293,476.27                         1,365,222.56
      (i) The Group provided other termination benefits for severing labor relations of RMB117,149.03,
      as at 30 June 2017. (2016: Other termination benefits for severing labor relations of RMB
      RMB960,188.89).
                         CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                     Notes to financial statements (Continued)
                                         For the Year ended 30 June 2017
                             (All amounts in Renminbi “RMB” unless otherwise stated)
V          Notes to the consolidated financial statements (Continued)
    24.        Tax payable
                                                                30 June 2017             31 December 2016
          Corporate Income taxes                                90,524,245.18                90,177,731.06
          Value-added tax                                       45,688,581.72                61,767,738.60
          Land appreciation tax                                               -               6,600,717.72
          Stamp duty                                             2,445,433.61                 5,449,224.41
          Individual income tax payable                          9,126,838.06                 5,028,775.01
          Water conservancy fund payable                         8,393,653.54                 4,880,965.03
          City maintenance and construction surtax               4,427,834.30                 4,844,305.96
          Educational surcharge payable                          3,266,457.23                 3,499,732.78
          Property tax                                            764,022.69                  1,102,254.64
          Land use tax payable                                    227,270.73                    341,494.13
          Others                                                 7,025,781.26                 3,350,778.18
                                                               171,890,118.32               187,043,717.52
    25. Interest payable
                                                               30 June 2017              31 December 2016
          Interest payable
           -    interest on short-term borrowings               5,845,355.20                  6,918,661.52
           -    interest on long-term borrowings                   35,440.27                     37,801.50
                                                                5,880,795.47                  6,956,463.02
    26. Dividend payable
                                                                30 June 2017             31 December 2016
               CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                         Notes to financial statements (Continued)
                             For the Year ended 30 June 2017
                 (All amounts in Renminbi “RMB” unless otherwise stated)
Shanghai Fosun Pharmaceutical (Group) Co., Ltd.     4,835,511.58             4,835,511.58
Haiping Qiao                                        2,094,049.25             2,094,049.25
Zhenfang Zhang                                      1,389,639.31             1,389,639.31
Meiluo Pharmaceutical Co., Ltd.                      164,170.07               164,170.07
Xiaobing Zhang                                       553,594.01                         -
                                                    9,036,964.22             8,483,370.21
                     CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                Notes to financial statements (Continued)
                                    For the Year ended 30 June 2017
                        (All amounts in Renminbi “RMB” unless otherwise stated)
V       Notes to the consolidated financial statements (Continued)
    27. Other payables
                                                         30 June 2017               31 December 2016
      Payables arising       from   acquisition   of
          subsidiaries                                  171,808,258.00                 273,914,900.00
      Payables for factoring programs                   250,456,844.49                 146,008,376.21
      Payables for construction in progress and
          equipment                                     130,265,643.39                  99,860,228.96
      Accrued selling and distribution expenses          99,225,575.59                  82,576,148.19
      Deposit                                            72,002,429.94                  56,640,346.01
      Payables to related parties                        20,388,724.72                  33,804,087.79
      Payables for rentals                               18,857,005.97                  25,866,767.64
      Payables to individuals                            29,488,195.33                  19,297,062.31
      Temparary loan                                     15,800,000.00                  19,230,000.00
      Collection of others                               32,717,129.91                  16,980,734.50
      Others                                             62,526,839.60                 143,015,259.73
                                                        903,536,646.94                 917,193,911.34
At 30 June 2017, other payables due within 1 year amounted to RMB 230,290,495.14(31 December
2016: RMB 123,866,395.59 ). It is mainly consisted of construction cost payable, company borrowings
payable, deposits and etc.
    28. Non-current liabilities due within 1 year
                                                          30 June 2017              31 December 2016
       Long-term borrowings due within 1 year                            -              31,600,000.00
       Finance lease payables                             5,038,700.43                   4,811,339.96
                                                          5,038,700.43                  36,411,339.96
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                           Notes to financial statements (Continued)
                               For the Year ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
29. Other current liabilities
                                                     30 June 2017              31 December 2016
    Output VAT to be recognized                         76,143.06                    123,294.77
                       CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                     Notes to financial statements (Continued)
                                         For the Year ended 30 June 2017
                             (All amounts in Renminbi “RMB” unless otherwise stated)
  V          Notes to the consolidated financial statements (Continued)
      30.     Long-term borrowings
                                                                        30 June 2017                 31 December 2016
      Credit borrowings                                                31,600,000.00                                     -
      Entrusted borrowings (a)                                                     -                                     -
                                                                       31,600,000.00                                     -
(a)    At 30 June 2017, the entrusted borrowings of RMB31,600,000.00 were provided by Sinopharm Group
       through Group Financial Co.
       At 30 June 2017, the annual interest rate of above-mentioned borrowings was 4.04% (31 December
       2016: 4.82%).
      31.     Long-term payables
                                                                          30 June 2017              31 December 2016
    Finance lease payables                                          17,143,597.49                  19,427,938.30
    Less: due within one year                                       (5,038,700.43)                 (4,811,339.96)
                                                                        12,104,897.06                  14,616,598.34
      32.     Payable for specific projects
                                              At beginning of year   Increase            Decrease       At end of year
            Special  funds     granted   by
              government                              800,000.00            -                   -         800,000.00
              CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                         Notes to financial statements (Continued)
                             For the Year ended 30 June 2017
                 (All amounts in Renminbi “RMB” unless otherwise stated)
33. Deferred income
   2017                          Opening balance       Increase       Decrease     Closing balance
   Government grants              101,563,380.85                  (2,386,979.73)    99,176,401.12
   Promotion Rewards Program       22,390,081.96   3,418,345.56   (3,038,375.29)    22,770,052.23
                                  123,953,462.81   3,418,345.56   (5,425,355.02)   121,946,453.35
                      CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                 Notes to financial statements (Continued)
                                     For the Year ended 30 June 2017
                         (All amounts in Renminbi “RMB” unless otherwise stated)
V       Notes to the consolidated financial statements (Continued)
    33. Deferred income (Continued)
       As at 30 June 2017, deferred income from government grants are as follow:
       Government           grants         Opening    Addition in Amount included in Disposal of Closing balance Asset related/
    program                            balance     the year        non-operating subsidiaries                income related
                                                                   income in the year
       Resettlement
    Compensation (i)              80,952,258.29           -      (1,349,204.28)           -   79,603,054.01    Asset related
       Guangxi Logistics Project       7,446,239.38           -        (248,203.20)           -    7,198,036.18    Asset related
       Logistics   standardization
         project                       3,907,506.23           -        (273,123.42)           -    3,634,382.81    Asset related
       A            comprehensive
           experimental   modern
           service        industry
           subsidies                   2,100,000.00           -        (150,000.00)           -    1,950,000.00    Asset related
       Shared Logistics Center
        (completed)                     289,659.15            -          (9,400.20)           -      280,258.95    Asset related
       Economic   reward  of
    Sinopharm Guangzhou            2,950,437.77           -        (265,108.43)           -    2,685,329.34    Asset related
       Special funds for industry
    transformation       and
    upgrading of special
    funds of integration
    project                        1,570,000.00           -                               -    1,570,000.00    Asset related
       Special funds for the
    construction of R&D
    institutions       in
    Guangzhou                      1,000,000.00           -                               -    1,000,000.00    Asset related
                                                                                                                  Asset/income
       Other projects                  1,347,280.03           -         (91,940.20)           -    1,255,339.83          related
                                     101,563,380.85           -      (2,386,979.73)               99,176,401.12
Due to the implementation of urban planning for old town reconstruction in Nanning, the operating center
of Guangxi Logistics which was located in Longteng Road District, Nanning City, was to be
reconstructed in another place. According to the agreement signed between Guangxi Logistics and the
real estate developer, Guangxi Logistics would obtain a compensation of RMB120,250,000.00, including
cash of RMB50,000,000.00 and property in constructing equaling a value of RMB70,250,000.00. Cash
compensation of RMB 50,000,000.00 was received in May 2012. In year 2015, construction properties
with a value of RMB70,250,000.00 were built and delivered, and had been recognized as investment
properties (Note V (11)).
The compensation relating the capital expenditure in the reconstruction of the new logistic center in
another place, amounting to RMB93.32 million was recognized as deferred revenue, and would be
amortized and recognized in the income statement within the expected useful lives using the straight
line method (Note V(49)), and the other cash compensation, which amount approximates to RMB26.93
million, was recognized in the income statement in 2012.
                    CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                               Notes to financial statements (Continued)
                                   For the Year ended 30 June 2017
                       (All amounts in Renminbi “RMB” unless otherwise stated)
V          Notes to the consolidated financial statements (Continued)
    34.    Long-term employee benefits payable
                                                             30 June 2017             31 December 2016
          Early retirement benefits payable                  3,285,035.73                  2,816,592.86
          Less: Retirement benefits payable –
                                                            (1,206,035.84)                (1,093,992.97)
              within 1 year (Note V (24)(c))
                                                             2,078,999.89                  1,722,599.89
    35. Other non-current liabilities
                                                             30 June 2017            31 December 2016
          Governmental     medical    reserve
          funds                                             45,427,343.31                 45,427,343.31
          Certain medical reserves funds were received by the Group from the PRC government and local
          government for purchasing medical products (including medicines) required to respond to serious
          disasters, epidemics and other emergencies.
                        CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                        Notes to financial statements (Continued)
                                          For the six months ended 30 June 2017
                            (All amounts in Renminbi “RMB” unless otherwise stated)
V          Notes to the consolidated financial statements (Continued)
    36.     Share capital
                                                                           30 June 2017                         31 December 2016
          Listed shares without restriction of trading:
             -A shares, listed                                            307,744,355.00                           233,261,812.00
             -B shares, listed                                             54,885,600.00                            54,885,600.00
          Listed shares with restriction of trading:
            -State owned legal person shares                                 60,380,743                             74,482,543.00
            -Private Company owned legal person
                                                                            5,114,297.00                                          -
            shares
             -Natural person shares                                             1,988.00                                 1,988.00
                                                                          428,126,983.00                           362,631,943.00
    37. Capital surplus
           2017                                    At beginning of year       Increase               Decrease           At end of year
           Share premium (a)                       2,118,174,787.27                  -     -                      2,118,174,787.27
           Others (d)                              1,034,543,237.65          13,987.58     (1,200,000.00)         1,033,357,225.23
                                                   3,152,718,024.92          13,987.58     (1,200,000.00)         3,151,532,012.50
                      CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                     Notes to financial statements (Continued)
                                        For the six months ended 30 June 2017
                         (All amounts in Renminbi “RMB” unless otherwise stated)
V          Notes to the consolidated financial statements (Continued)
    38. Other equity instruments
                         At beginning of year              Increase                   Decrease                   At end of year
                            Shares         Amounts    Shares     Amounts            Shares        Amounts     Shares       Amounts
     Unlisted        65,495,040.00    65,495,040.00        -           -   (65,495,040.00 )   65,495,040.00        -                -
      shares
    39.     Surplus reserve
                                                                                  30 June 2017           31 December 2016
             Surplus reserve                                                    181,315,971.50                181,315,971.50
    40.     Retained earnings
                                                                           30 June 2017                   31 December 2016
     Retained earnings at the end of the prior year                           4,689,189,642.51                   3,045,551,246.71
     A business combination involving enterprises under
      common control                                                               1,076,241.59                   592,834,676.01
     Retained earnings at beginning of year after
    retrospective adjustment and restatement                              4,690,265,884.10                   3,638,385,922.72
     Add: Net profit attributable to the parent                                 556,125,318.19                   1,186,539,201.93
     Deduct: Ordinary share cash dividends payable                            (141,835,498.40)                   (134,659,240.55)
     Others(a)                                                                   (1,075,583.99)                                     -
     Retained earnings at end of year                                         5,103,480,119.90                   4,690,265,884.10
(a) On 10 March 2017, the Company acquired 100% equity interest of Sinopharm Lerentang
          Shijiazhuang Pharmaceutical Co., Ltd. (“Sinopharm Lerentang”) from Sinopharm Le -Ren-Tang
          Medicine Co., Ltd. for RMB3,792,639.98 to constitute business combination involving enterprises
          under common control and retained earning decreased by RMB1,076,241.59.
                  CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                 Notes to financial statements (Continued)
                                   For the six months ended 30 June 2017
                     (All amounts in Renminbi “RMB” unless otherwise stated)
41.    Operating revenue and cost
                                                     For the six months ended       For the six months ended
                                                                 30 June 2017                   30 June 2016
      Revenue of main operations                           20,372,097,755.35              20,423,590,439.55
      Other operating income                                  152,709,914.22                 138,811,608.27
                                                           20,524,807,669.57              20,562,402,047.82
                                                     For the six months ended       For the six months ended
                                                                 30 June 2017                   30 June 2016
      Cost of main operations                              18,352,591,276.82              18,231,366,449.67
      Other operating expenses                                 11,443,174.01                  15,523,614.02
                                                           18,364,034,450.83              18,246,890,063.69
42.    Tax and surcharges
                                                       For the six month ended            For the six month ended
                                                                       30 June                            30 June
                                                                          2017
      City maintenance and construction tax                  24,931,171.70                     26,057,977.33
      Educational surcharge                                  18,243,233.02                     18,739,158.19
      Stamp duty                                             14,569,034.12                       3,538,047.91
      Property tax                                            3,345,273.43                         846,920.53
      Business tax                                                              -                4,509,210.19
      Water conservancy fund                                    163,301.89                       1,893,324.60
      Land tax                                                  172,937.56                         444,007.52
      Vehicle and vessel use tax                                  98,180.93                         24,284.97
      Others                                                  1,662,488.21                       1,793,954.38
                                                             63,185,620.86                     57,846,885.62
             CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                          Notes to financial statements (Continued)
                           For the six months ended 30 June 2017
                (All amounts in Renminbi “RMB” unless otherwise stated)
43. Selling expenses
                                             For the six month ended   For the six month ended   30 June
                                                        30 June 2017
 Employees payroll and welfare benefits          582,798,944.53                      547,003,567.49
 Rental expenses                                 285,053,247.11                      247,600,562.35
 Transportation charges                           29,416,679.32                       45,064,185.12
 Promotion and marketing expenses                  16,881,877.36                      13,803,639.71
 Storage expenses                                 23,155,581.32                       26,220,502.83
 Depreciation expenses                            21,860,957.80                       17,367,421.52
 Office allowances                                15,153,489.34                       16,859,404.59
 Entertainment expenses                            11,158,406.02                      13,239,897.33
 Travel allowances                                  3,425,411.69                        8,877,501.94
 Conference expenses                                2,800,521.29                        3,499,137.62
 Market development fees                              250,938.26                      13,836,356.13
 Others                                          118,490,884.13                      113,128,923.52
                                               1,110,446,938.17                    1,066,501,100.15
                    CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                 Notes to financial statements (Continued)
                                   For the six months ended 30 June 2017
                          (All amounts in Renminbi “RMB” unless otherwise stated)
V         Notes to the consolidated financial statements (Continued)
    44.    Administrative expenses
                                                              For the six month ended   For the six month ended
                                                                         30 June 2017              30 June 2016
     Employees payroll and welfare benefits                       237,320,475.09            265,004,563.14
     Research and development expenses                                              -        25,988,200.63
     Depreciation expenses                                          14,130,107.15            24,142,228.81
     Agency service fees                                                                                      -
     Rental expenses                                                17,030,347.32            16,692,169.51
     Office allowances                                              13,498,455.92            13,196,730.02
     Amortization of intangible assets                               7,873,617.35            10,339,232.85
     Taxations                                                       4,087,147.80             11,172,658.42
     Entertainment expenses                                          5,878,571.05              5,115,630.99
     Travel allowances                                               3,538,432.83              3,741,536.93
     Conference expenses                                               718,993.59              1,033,266.87
     Utilities                                                       3,714,057.62              4,324,952.70
     Amortization         of   long-term   deferred
      expenses                                                       4,478,646.05              3,503,748.24
     Vehicle management expenses                                     4,100,271.65              4,156,926.61
     Promotion and marketing expenses                                               -                         -
     Repairing fees                                                  1,665,071.14              1,990,453.51
     Others                                                         22,601,856.55             40,942,374.18
                                                                   340,636,051.11           431,344,673.41
45.       Finance costs
                                                      For the six month ended           For the six month ended
                                                                 30 June 2017                      30 June 2016
     Interest expenses                                     59,569,071.77                     65,329,780.98
     Less: Interest income                                (17,460,371.42)                   (10,872,574.52)
                 Cash discount                            (13,655,314.59)                   (19,385,115.98)
     Exchanges loss/(gain)                                   (283,622.22)                          70,037.19
     Others                                                 16,329,015.22                     15,579,275.54
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
    Notes to financial statements (Continued)
          For the six months ended 30 June 2017
 (All amounts in Renminbi “RMB” unless otherwise stated)
                              44,498,778.76                  50,721,403.21
                      CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                   Notes to financial statements (Continued)
                                       For the six months ended 30 June 2017
                         (All amounts in Renminbi “RMB” unless otherwise stated)
V          Notes to the consolidated financial statements (Continued)
46.       Impairment loss
                                                            For the six month ended    For the six month ended
                                                                       30 June 2017               30 June 2016
          Inventories provision                                      (836,741.23)              5,268,863.04
          Bad debt allowance                                           933,498.39             (4,118,289.41)
          Impairment in fixed assets                                              -                          -
          Impairment in goodwill                                                  -                          -
                                                                        96,757.16              1,150,573.63
    47.     Investment income
                                                            For the six month ended    For the six month ended
                                                                       30 June 2017               30 June 2016
      Investment income from long-term equity investments
                                                                   146,775,417.29             27,607,440.12
    under the equity method
      Investment income from disposal of subsidiaries                             -           86,674,065.35
      Gain from remeasurement of fair value of remaining
       equity interest upon loss of control                                       -           35,080,116.91
      Investment income from available-for-sale financial                                                    -
                                                                         50,000.00
    assets
          Remeasurement loss of fair value when achieved
                                                                       (99,377.39)                           -
          subsidary in stages
                                                                   146,726,039.90            149,361,622.38
    48. Miscellaneous incomes
                                                             For the six month ended   For the six month ended
                                                                        30 June 2017              30 June 2016
          Government grants related to                              7,958,493.67                             -
          daily activities
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                               Notes to financial statements (Continued)
                                For the six months ended 30 June 2017
                   (All amounts in Renminbi “RMB” unless otherwise stated)
 49.   Non-operating income
                                                         For the six month ended      For the six month ended
                                                                    30 June 2017                 30 June 2016
  Government grants (Note a)                                      1,349,204.28                 8,256,111.78
  Gain on disposal of non-current assets                            579,658.49                4,017,585.64
  Incl:    Gain on disposal of fixed assets                         577,424.04                4,012,613.89
  Gain from writing off the unnecessary payment                   2,249,156.84                1,000,000.00
  Gain arising from donation                                                                                -
  Others                                                          2,456,418.01                4,484,131.87
                                                                  6,634,437.62               17,757,829.29
          All non-operating income was wholly classified as non-recurring profit or loss for the six month
ended.
                        CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                       Notes to financial statements (Continued)
                                         For the six months ended 30 June 2017
                           (All amounts in Renminbi “RMB” unless otherwise stated)
V          Notes to the consolidated financial statements (Continued)
    49.     Non-operating income (Continued)
(a)       Government grants
                                                       For the six month       For the six month                      Note
                                                                   ended                   ended
                                                           30 June 2017            30 June 2016
          - Government grants related to assets
           Resettlement Compensation of Guangxi                                                          Transfer from the
             Logistics                                                                             amortization of deferred
                                                           1,349,204.28            1,353,604.28                     income
           Transfer from other deferred amortization                                                     Transfer from the
              income                                                                               amortization of deferred
                                                                       -           5,732,580.73                     income
                                                           1,349,204.28            7,086,185.01
          - Government grants related to income
          Tax return                                                   -             200,000.00
           Others                                                                                               Subsidy for
                                                                       -             969,926.77           contribution, etc.
                                                                       -           1,169,926.77
                                                           1,349,204.28             8,256,111.78
    50.     Non-operating expenses
                                                                    For the six month ended        For the six month ended
                                                                               30 June 2017                   30 June 2016
          Penalty expenses                                                    1,925,449.66                     234,406.45
          Losses on disposal of non-current assets                              377,352.06                     591,341.17
          Incl: Losses on disposal of fixed assets                              307,374.47                     569,803.03
          Donation expenses                                                      59,900.00                                 -
          Others                                                              1,290,495.50                     814,790.71
                                                                              3,653,197.22                   1,640,538.33
                  CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                            Notes to financial statements (Continued)
                              For the six months ended 30 June 2017
                     (All amounts in Renminbi “RMB” unless otherwise stated)
      Non-operating cost was wholly classified as non-recurring profit or loss for the six month ended
      30 June 2017.
51.    Income taxes
                                                          For the six month ended     For the six month ended
                                                                     30 June 2017                30 June 2016
      Current income tax                                          162,853,639.57              156,998,560.59
      Deferred income tax                                          (2,812,531.94)               4,785,567.17
                                                                  160,041,107.63              161,784,127.76
                    CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                 Notes to financial statements (Continued)
                                   For the six months ended 30 June 2017
                          (All amounts in Renminbi “RMB” unless otherwise stated)
V         Notes to the consolidated financial statements (Continued)
    51.   Income taxes (Continued)
           The reconciliation from income tax calculated based on applicable tax rates and total profit
           presented in the consolidated financial statements to the income taxes is listed below:
                                                                               For the six month ended
                                                                                          30 June 2017
           Total profit                                                            759,574,846.65
           Income taxes calculated at applicable tax rates                         189,893,711.66
           Lower tax rates enacted by local authorities                            (10,864,678.73)
           Income not subject to tax                                               (35,606,523.97)
           Expenses not deductible for tax                                            4,005,987.60
           Tax losses not recognized                                                  2,152,362.42
           Utilization of previously unrecognized tax losses                                         -
           Additional deduction for development cost                                 11,437,117.34
           Gain on deferred tax of beginning of the year from the
            changes of tax rate
           Adjustment of income tax expense of previous year                          (976,868.69)
           Income tax                                                              160,041,107.63
                     CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                  Notes to financial statements (Continued)
                                    For the six months ended 30 June 2017
                        (All amounts in Renminbi “RMB” unless otherwise stated)
V         Notes to the consolidated financial statements (Continued)
    52.    Notes to items in the cash flow statement
(a)       Cash receipts related to other operating activities
                                                                           2017
          Government grants except tax return                      1,349,204.28     1,694,661.05
          Rent income                                             28,140,527.98    24,364,072.97
          Operational restricted bank deposits received            4,067,748.35     6,338,067.32
          Interest income                                         17,412,415.01    10,654,439.57
          Others                                                  47,052,933.05    95,776,862.68
                                                                  98,022,828.67   138,828,103.59
(b)       Cash paid relating to other operating activities
                                                                           2017
          Rental expenses                                        302,083,594.43     274,949,115.95
          Entertainment expenses                                  17,036,977.07      18,672,440.52
          Shipping expenses                                       29,416,679.32      45,064,185.12
          Travel expenses                                          6,963,844.52      12,619,038.87
          Storage expenses                                        23,155,581.32      26,220,502.83
          Office expenses                                         28,651,945.26      27,471,574.82
          Advertising expenses                                    16,881,877.36      17,799,105.33
          Others                                                 222,065,660.72     222,758,813.28
                                                                 646,256,160.00     645,554,776.72
(c)       Cash received relating to other investing activities
                                                                         2017
          Received funds pool money returned by
                                                                             -       1,476,143,809.08
           Sinopharm
          Received deposits returned by Shyndec                  75,259,200.00                        -
          Received Entrusted loan payments from
                                                                             -          84,000,000.00
          Zhijun Suzhou
         CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                 Notes to financial statements (Continued)
                   For the six months ended 30 June 2017
          (All amounts in Renminbi “RMB” unless otherwise stated)
Others                                     11,768,140.19                  3,200,415.00
                                           87,027,340.19              1,563,344,224.08
                      CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                   Notes to financial statements (Continued)
                                     For the six months ended 30 June 2017
                         (All amounts in Renminbi “RMB” unless otherwise stated)
V         Notes to the consolidated financial statements (Continued)
    52.    Notes to items in cash flow statement (Continued)
(d)       Cash paid relating to other investing activities
                                                                                   2017
          Deposit money in funds pool of Sinopharm                                        -   1,179,277,272.40
          Purchased of equity sincerity Margin                                            -      20,000,000.00
          Entrusted loan payments to Zhijun Suzhou                         44,000,000.00                       -
          Others                                                           26,175,078.90          5,690,544.72
                                                                           70,175,078.90      1,204,967,817.12
(e) Cash received relating to other financing activities
                                                                                  2017
          Received borrowings from Sinopharm Group                                    -        94,000,000.00
          Received bank factoring money                                   59,676,813.84        67,788,435.41
          Received security deposit of pledged borrowings                 31,255,582.91       100,695,291.70
          Others                                                                      -        45,000,000.00
                                                                          90,932,396.75       307,483,727.11
(f)       Cash payments relating to other financing activities
                                                                                  2017
          Repayment of entrusted          borrowings     provided   by
                                                                          13,415,363.07       243,731,500.00
           Sinopharm Group
          Cash paid for acquisition of non-controlling interests         158,996,642.00         7,359,800.00
          Others                                                           6,579,569.60         4,719,443.79
                                                                         178,991,574.67       255,810,743.79
                   CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                Notes to financial statements (Continued)
                                  For the six months ended 30 June 2017
                      (All amounts in Renminbi “RMB” unless otherwise stated)
 V    Notes to the consolidated financial statements (Continued)
 53. Supplementary information of cash flow statement (Continued)
(a)   Reconciliation of net profit to cash flows from operating activities
                                                                For the six month ended   For the six month ended
                                                                           30 June 2017              30 June 2016
      Net profit                                                      599,533,739.02            711,642,133.69
      Adjustments: Provision for asset impairment                          422,321.11              6,574,093.17
               Depreciation of fixed assets and investment
                                                                       35,222,304.68             70,509,167.81
                properties
              Amortization of intangible assets                        12,273,709.34             10,127,735.19
                   Amortization of long-term prepaid expenses          31,374,523.14             24,932,947.50
               Gains on disposal of fixed assets, and other
                                                                         (202,306.43)           (11,176,526.34)
                non-current assets
              Financial expenses                                       28,528,443.16             65,527,178.60
              Investment income                                     (146,726,039.90)          (149,361,622.31)
              Decrease/(increase) of deferred tax assets               (1,641,139.11)            41,900,688.25
              Decrease of deferred tax liabilities                     (2,666,680.74)            (3,992,100.48)
              Decrease/(increase) of inventory                        113,733,297.36             86,444,370.26
               (Increase)/decrease in operating receivables
                                                                  (1,127,697,064.94)          (939,208,797.81)
                 items
              Increase/(decrease) in operating payables
                                                                      596,195,867.27            760,398,329.25
              items
              Others                                                   89,986,457.44            155,265,336.56
      Net cash generated from operating activities                    228,337,431.40            829,582,933.34
                  CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                              Notes to financial statements (Continued)
                                  For the six months ended 30 June 2017
                     (All amounts in Renminbi “RMB” unless otherwise stated)
V         Notes to the consolidated financial statements (Continued)
    53.   Supplementary information of cashflow statement (Continued)
(c)        Movement of cash
                                                             For the six month ended   For the six month ended
                                                                        30 June 2017              30 June 2016
           Cash at end of year                                 3,024,190,631.97          3,049,221,736.97
           Less: cash at beginning of year                    (3,150,915,425.49)       (2,164,444,441.33)
           Net increase in cash                                (126,724,793.52)            884,777,295.64
                  CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                              Notes to financial statements (Continued)
                                For the six months ended 30 June 2017
                     (All amounts in Renminbi “RMB” unless otherwise stated)
V         Notes to the consolidated financial statements (Continued)
    53.   Supplementary information of cashflow statement (Continued)
(d)        Acquisition of subsidiaries and operating units
                                                                     For the six month ended
                                                                                30 June 2017
           Cash and cash equivalents paid for acquisitions of
             subsidiaries and other business units                        16,640,000.00                        -
           Incl: Sinopharm Zhuhai                                         10,000,000.00                        -
              Maoming Yongsheng Medicines          Co.,      Ltd.                                              -
              (Maoming Yongsheng)                                         6,640,000.00
           Less: Cash held by subsidiaries at the acquisition
                date                                                        1,933,210.44
           Incl: Sinopharm Zhuhai                                           1,624,035.74                       -
                 Maoming Yongsheng                                            309,174.70                       -
           Net cash outflow on acquisition of the subsidiaries
            and business units                                            14,706,789.56
(e)       Cash
                                                                    30 June 2017               31 December 2016
          Cash on hand                                              2,352,467.38                    6,164,382.85
          Bank deposits on demand                             3,021,838,164.59                  3,144,751,042.64
          Cash                                                3,024,190,631.97                  3,150,915,425.49
                     CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                 Notes to financial statements (Continued)
                                  For the six months ended 30 June 2017
                      (All amounts in Renminbi “RMB” unless otherwise stated)
V       Notes to the consolidated financial statements (Continued)
    54. Assets under restricted ownership or right to use
                                                                 2017                                Reasons
                                                                          Deposits of bank acceptance notes,
                                                                              depostis for letter of credit and
      Cash and cash equivalents                    337,138,215.47            deposits of pledged borrowings.
                                                                    Notes receivable endorsed but not
                                                                  due, notes receivable discounted but
      Notes receivables                          1,075,857,770.01                             not due.
                                                 1,412,995,985.48
    55. Foreign monetary items
                                                                        30 June 2017
                                                 Original currency        Exchange rate         Equivalent to RMB
         Short-term borrowings
         US dollar                                  2,431,642.14                 6.7744             16,472,916.49
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                               Notes to financial statements (Continued)
                                  For the six months ended 30 June 2017
                      (All amounts in Renminbi “RMB” unless otherwise stated)
VI. Changes in the scope of consolidation
1.     Business combination not involving enterprises under common control
1.1 Acquired Sinopharm Zhuhai.
       On 3 March 2015, the Group acquired a 10% equity interest of Sinopharm Zhuhai.
       In 2017, the Company acquired the rest 90% equity interest of Sinopharm Zhuhai. from Li Xiang
       Jiang for RMB10,000,000 to constitute business combination involving enterprises not under
       common control. The acquisition was completed on 10 January 2017and included in the
       consolidation scope of the Company.
       The 10% equity’s book value is RMB1,283,613.91, and the revalued value is RMB 1,113,720.00,
       a remeasurement loss of fair value of RMB169,893.91 was recorded
       The fair value and carrying amount of identifiable assets and liabilities and contingent liabilities
       of Sinopharm Zhuhai on acquisition date are presented as follows:
                                                                     31 January 2017       31 January 2017
                                                                           Fair value      Carrying amount
       Cash and bank balances                                           1,624,035.74          1,624,035.74
       Accounts receivable                                             45,089,047.61         45,089,047.61
       Advances to suppliers                                             685,409.69             685,409.69
       Inventories                                                      7,168,900.86          7,168,900.86
       Fixed assets                                                      220,990.39             220,990.39
       Deferred tax assets                                                 80,569.45             80,569.45
       Short-term borrowings                                            5,000,000.00          5,000,000.00
       Accounts payable                                                40,668,336.31         40,668,336.31
       Advance from customers                                               2,890.29              2,890.29
       Employee benefits payable                                         432,562.41             432,562.41
       Tax payables                                                      385,477.18             385,477.18
       Interest payable                                                    19,717.04             19,717.04
       Dividends payable                                                2,070,425.74          2,070,425.74
       Net assets                                                       6,289,544.77          6,289,544.77
       Less: Non-controlling interests                                              -
       Net assets obtained                                              6,289,544.77
       Consideration                                                   10,362,740.00
       Goodwill arising from acquisition                                4,073,195.23
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                               Notes to financial statements (Continued)
                                  For the six months ended 30 June 2017
                      (All amounts in Renminbi “RMB” unless otherwise stated)
VI. Changes in scope of consolidation (Continued)
1.2 Acquired Maoming Yongsheng
       On 31 May 2017, the Company acquired 100% equity interest of Maoming Yongsheng from Bai
       Ganyin、Bai Fuyou and Lai Hongmei for RMB7,823,457.43 to constitute business combination
       involving enterprises not under common control. The acquisition was completed on 31 May
       2017and included in the consolidation scope of the Company.
       The fair value and carrying amount of identifiable assets and liabilities and contingent liabilities
       of Maoming Yongsheng on acquisition date are presented as follows:
                                                                     31 January 2017       31 January 2017
                                                                           Fair value      Carrying amount
       Cash and bank balances                                            309,174.70             309,174.70
       Accounts receivable                                             24,212,454.90         24,212,454.90
       Advances to suppliers                                             187,299.70             187,299.70
       Inventories                                                      4,591,053.97          4,591,053.97
       Fixed assets                                                        70,993.59             70,993.59
       Deferred tax assets                                               275,185.44             275,185.44
       Accounts payable                                                21,592,415.65         21,592,415.65
       Employee benefits payable                                                1.49                  1.49
       Tax payables                                                      230,287.73             230,287.73
       Net assets                                                       7,823,457.43          7,823,457.43
       Less: Non-controlling interests                                              -
       Net assets obtained                                              7,823,457.43
       Consideration                                                    7,823,457.43
       Goodwill arising from acquisition                                            -
                CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                               Notes to financial statements (Continued)
                                  For the six months ended 30 June 2017
                    (All amounts in Renminbi “RMB” unless otherwise stated)
VI. Changes in scope of consolidation (Continued)
2.     Business combination involving enterprises under common control
       On 10 March 2017, the Company acquired 100% equity interest of Sinopharm Lerentang
       Shijiazhuang Pharmaceutical Co., Ltd. (“Sinopharm Lerentang”) from Sinopharm Le -Ren-Tang
       Medicine Co., Ltd. for RMB3,792,639.98 to constitute business combination involving enterprises
       under common control. The acquisition was completed on 10 March 2017and included in the
       consolidation scope of the Company.
       The carrying amounts of assets and liabilities of Sinopharm Lerentang at the
       combination date and at the balance sheet date of the last accounting period are
       presented as follows:
                                                               28 February 2017          31 December 2016
    Cash and bank balances                                          4,903.95                 5,999.95
    Accounts receivable                                         3,785,780.34              3,785,780.34
    Other current assets                                            1,955.69                  1,955.69
                                                                    3,792,639.98              3,793,735.98
    Less: Non-controlling interests                                        -                         -
    Net assets obtained                                         3,792,639.98              3,793,735.98
3.     Establishment of subsidiaries
                                                    30 June 2017         30 June 2017
                                                       Net assets         Net revenue                Remarks
     GuoDa Drugstore Manzhouli Co.,
      Ltd.                                            500,000.00                     -         Establishment
     Sinopharm Holding            Guangzhou
       Medical Treatment          Technology
       Co., Ltd.                                      681,008.39          (318,991.61)         Establishment
                          CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                           Notes to financial statements (Continued)
                                              For the six months ended 30 June 2017
                               (All amounts in Renminbi “RMB” unless otherwise stated)
VII      Interests in other entities
1.        Interests in subsidiaries
(1)        The composition of the Group:
                                                                              Registered       Shareholding
                                  Principal
                                                    Place of      Nature of       capital                             Voting          Ways of
      Subsidiaries                 place of
                                               incorporation      business         (RMB       Direct     Indirect   proportion      acquisition
                                  business
                                                                                  0.000)
      Sinopharm Guilin               Guilin           Guilin   Commercial          1,000           -    100.00%      100.00%     Establishment
      Sinopharm Baise              Baise              Baise    Commercial          1,000           -    100.00%      100.00%     Establishment
      Sinopharm Holding
         Zhongshan Co.,
         Ltd. (“Sinopharm
         Zhongshan\")            Zhongshan       Zhongshan      Commercial          1,000    100.00%             -    100.00%     Establishment
      Sinopharm Guigang           Guigang          Guigang     Commercial          1,000           -    100.00%      100.00%     Establishment
      Sinopharm Beihai              Beihai           Beihai    Commercial            500           -    100.00%      100.00%     Establishment
      Guangzhou Medical
    Treatment               Guangzhou       Guangzhou      Commercial          2,000           -     51.00%       51.00%     Establishment
                                                                                                                                      Business
      Shenzhen     Jianmin                                                                                                       combinations
         Pharmaceutical                                                                                                                involving
         Co.,          Ltd.                                                                                                      entities under
         (“Sinopharm                                                                                                                  common
         Jianmin\")               Shenzhen        Shenzhen      Commercial          2,000    100.00%             -    100.00%             control
      Sinopharm Holding
         Shenzhen
         Traditional    &                                                                                                             Business
         Herbal Medicine                                                                                                         combinations
         Co.,         Ltd.                                                                                                             involving
         (“Sinopharm                                                                                                            entities under
         Traditional    &                                                                                                              common
         Herbal Medicine\")       Shenzhen        Shenzhen      Commercial          1,500    100.00%             -    100.00%             control
                                                                                                                                      Business
      Sinopharm Holding                                                                                                          combinations
         Shenzhen                                                                                                                      involving
         Logistics Co., Ltd.                                                                                                     entities under
         (“Shenzhen                                                                                                                   common
         Logistics\")             Shenzhen        Shenzhen         Services           500    100.00%             -    100.00%             control
                                                                                                                                      Business
                                                                                                                                 combinations
      Sinopharm Holding                                                                                                                involving
         Guangzhou Co.,                                                                                                          entities under
         Ltd. (“Sinopharm                                                                                                             common
         Guangzhou\")            Guangzhou       Guangzhou      Commercial        153,000    100.00%             -    100.00%             control
                                                                                                                                      Business
      Sinopharm Holding                                                                                                          combinations
         Guangdong                                                                                                                     involving
         Hengxing      Co.,                                                                                                      entities under
         Ltd. (“Sinopharm                                                                                                             common
         Hengxing\")             Guangzhou       Guangzhou      Commercial          5,000    100.00%             -    100.00%             control
                                                                                                                                      Business
                                                                                                                                 combinations
                                                                                                                                       involving
                                                                                                                                 entities under
                                                                                                                                       common
      Sinopharm Yulin                 Yulin            Yulin   Commercial            500           -    100.00%      100.00%             control
                         CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                        Notes to financial statements (Continued)
                                           For the six months ended 30 June 2017
                           (All amounts in Renminbi “RMB” unless otherwise stated)
VII    Interests in other entities (Continued)
1.     Interests in subsidiaries (Continued)
(1)    The composition of the Group (Continued):
                                       Principal                                 Registered      Shareholding         Voting
                                                        Place of     Nature of
      Subsidiaries                      place of                                 capital(RM                          proportio      Ways of acquisition
                                                   incorporation     business
                                       business                                    B 0.000)     Direct    Indirect      n
                                                                                                                                 Business combinations
                                                                                                                                 involving entities under
      Sinopharm Liuzhou                 Liuzhou        Liuzhou     Commercial     2,053.06    51.00%             -    51.00%             common control
      Guangdong             Huixin                                                                                               Business combinations
         Investment Co., Ltd.                                                                                                    involving entities under
         (“Huixin Investment”)     Guangzhou     Guangzhou          Service          500    100.00%            -   100.00%             common control
      Sinopharm Holding Foshan                                                                                                   Business combinations
         Co., Ltd. (“Sinopharm                                                                                                  involving entities under
         Foshan\")                       Foshan         Foshan      Commercial        1,500    100.00%            -   100.00%             common control
      Sinopharm          Holding
         Guangdong       Yuexing                                                                                                 Business combinations
         Co., Ltd. (“Sinopharm                                                                                                  involving entities under
         Yuexing”)                  Guangzhou     Guangzhou       Commercial       10,000    100.00%            -   100.00%             common control
      Sinopharm          Holding
         Guangdong      Logistics                                                                                                Business combinations
         Co., Ltd. (“Guangdong                                                                                                  involving entities under
         Logistic”)                 Guangzhou     Guangzhou          Service        1,000    100.00%            -   100.00%             common control
                                                                                                                                 Business combinations
                                                                                                                                 involving entities under
      Sinopharm Guangxi                Nanning        Nanning      Commercial       50,000    100.00%            -   100.00%             common control
                                                                                                                                 Business combinations
                                                                                                                                 involving entities under
      Guangxi Logistic                 Nanning        Nanning         Service       710.07           -   100.00%     100.00%             common control
                                                                                                                                 Business combinations
                                                                                                                                 involving entities under
      Sinopharm Wuzhou                 Wuzhou          Wuzhou      Commercial        1,000           -    99.90%      99.90%             common control
      Sinopharm       Holding
         Dongguan Co., Ltd.                                                                                                      Business combinations
         (“Sinopharm                                                                                                              involving entities not
         Dongguan\")                  Dongguan       Dongguan       Commercial        1,800    100.00%            -   100.00%     under common control
      Sinopharm          Holding                                                                                                 Business combinations
         Zhanjiang    Co.,    Ltd.                                                                                                 involving entities not
         (“Sinopharm Zhanjiang\")     Zhanjiang      Zhanjiang     Commercial        7,000    100.00%            -   100.00%     under common control
      Sinopharm Holding Yanfeng                                                                                                  Business combinations
         Co., Ltd. (“Sinopharm                                                                                                    involving entities not
         Yanfeng \")                   Shenzhen      Shenzhen       Commercial        3,000    51.00%             -    51.00%     under common control
      Sinopharm Holding Meizhou                                                                                                  Business combinations
         Co., Ltd. (“Sinopharm                                                                                                    involving entities not
         Meizhou\")                     Meizhou        Meizhou      Commercial        1,800    100.00%            -   100.00%     under common control
                        CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                                         Notes to financial statements (Continued)
                                              For the six months ended 30 June 2017
                            (All amounts in Renminbi “RMB” unless otherwise stated)
VII     Interests in other entities (Continued)
1.     Interests in subsidiaries (Continued)
(1)     The composition of the Group (Continued):
                                                                             Registered       Shareholding
                                                                                                                   Voting
                            Principal place         Place of     Nature of       capital
    Subsidiaries                                                                                              proportio        Ways of acquisition
                               of business     incorporation     business         (RMB       Direct    Indirect      n
                                                                                 0.000)
      Sinopharm Holding
         Huizhou     Co.,                                                                                                      Business combinations
         Ltd.(\"Sinophar                                                                                                          involving entities not
         m Huizhou\")              Huizhou          Huizhou     Commercial         1,800    100.00%            -   100.00%      under common control
      Sinopharm Holding
         Zhaoqing Co.,                                                                                                         Business combinations
         Ltd.(\"Sinophar                                                                                                          involving entities not
         m Zhaoqing\")            Zhaoqing         Zhaoqing     Commercial         1,500    100.00%            -   100.00%      under common control
      Sinopharm Holding
         Jiangmeng
         Renren Medical
         Co.,                                                                                                                  Business combinations
         Ltd.(“Sinopharm                                                                                                        involving entities not
         Jiangmen”)            Jiangmen          Jiangmen     Commercial         6,000    100.00%            -   100.00%      under common control
      Sinopharm Holding
         Shaoguan Co.,                                                                                                         Business combinations
         Ltd.(\"Sinophar                                                                                                          involving entities not
         m Shaoguan\")           Shaoguan         Shaoguan      Commercial           360    70.00%             -    70.00%      under common control
                                                                                                                               Business combinations
                                                                                                                                 involving entities not
      Sinopharm Shantou           Shantou          Shantou     Commercial           800    100.00%            -   100.00%      under common control
      Foshan     Nanhai                                                                                                        Business combinations
         Medicine Co.,                                                                                                         involving entities under
         Ltd.                      Foshan           Foshan     Commercial         7,000    100.00%            -   100.00%              common control
      Foshan     Nanhai
         Uptodate    &
         Special                                                                                                               Business combinations
         Medicines Co.,                                                                                                        involving entities under
         Ltd.                      Foshan           Foshan     Commercial         4,000           -   100.00%     100.00%              common control
      Foshan     Nanhai                                                                                                        Business combinations
         Medicine Co.,                                                                                                         involving entities under
         Ltd.                      Foshan           Foshan     Commercial         4,000           -   100.00%     100.00%              common control
      Guangdong
         Uptodate       &                                                                                                      Business combinations
         Special                                                                                                               involving entities under
         Medicines             Guangzhou        Guangzhou      Commercial         5,000    100.00%            -   100.00%              common control
      Guangdong South
         Pharmaceutical                                                                                                        Business combinations
         Foreign Trade                                                                                                         involving entities under
         Co., Ltd.             Guangzhou        Guangzhou      Commercial         3,000    100.00%            -   100.00%              common control
                                                                                                                                Business combination
      Sinopharm                                                                                                               not involving enterprises
         Zhuhai(i)                 Zhuhai          Zhuahai     Commercial           310    100.00%            -   100.00%       under common control
                                                                                                                                Business combination
      Maoming                                                                                                                 not involving enterprises
    Yongsheng(ii)            Maoming          Maoming      Commercial           200    100.00%            -   100.00%       under common control
      Sinopharm Holding
         Guangzhou
         Medical
         Treatment
         Technology Co.,
         Ltd.(iii)             Guangzhou        Guangzhou      Commercial           100       51%             -       51%              Establishment l
      Sinopharm Holding
         Guoda                                                                                                                 Business combinations
         Pharmacy Co.,                                                                                                         involving entities under
         Ltd.                    Shanghai         Shanghai     Commercial      101,000     100.00%            -   100.00%              common control
               CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
                              Notes to financial statements (Continued)
                                  For the six months ended 30 June 2017
                    (All amounts in Renminbi “RMB” unless otherwise stated)
Sinopharm Holding
   Guoda
   Pharmacy
   Chain    Store                                                                            Business combinations
   Shanghai Co.,                                                                             involving en

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