China National Accord Medicines Corporation Ltd.
Annual Report 2017
March 2018
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 2017 Annual
Report is authentic, accurate and complete.
Other directors attending the Meeting for annual report deliberation except for
the followed
Name of director absent Title for absent director Reasons for absent Attorney
Xiao Shengfang Independent director Official business Xiong Chuxiong
Concerning the forward-looking statements with further plans and development
strategy involved in the Report, they do not constitute a substantial commitment
for the investors. Investors are advised to exercise caution of investment risks.
The possible risks and countermeasures are well-described, majority of the
investors please pay attention on review.
1.The management risk from continuous expansion of sales network of GuoDa
Drugstore. In recent years, the sales network of GuoDa Drugstore has been
maintaining a steady growth by means of opening new stores and inorganic
growth. Expansion on sales regions and an increase in the number of retail
stores have put pressure on store site selection, delivery, cash management,
marketing and human resources management. The Company will strengthen the
management and construction in aspects of merchandise procurement, logistics,
distribution and sales, draw up management methods for each part, ensuring
unified standards and management quality for expanding retail stores. 2.The
growing risk from market competition. At present, the domestic medicine retail
market features relatively low concentration ratio and all the national and
regional medicine retail enterprises have been fiercely competing with each
other in the market. With relative policies issued by the government to
encourage the integration of medicine retail industry, the major medicine retail
enterprises within industry have been accelerating the paces of mergers and
acquisitions, continuing to expand the sales networks, improving the
construction of logistics centers, innovating the business and profit models,
continuously enhancing its sales scale and comprehensive strengths. Meanwhile,
with upgrading of consumption and stepwise development of the market, some
strong foreign capital medicine circulation enterprises have entered into the
domestic medicine circulation market by all means, which have been
intensifying the industry competition. Sinopharm Accord will integrate all
available resources, create a new development model driven by both wholesales
and retails, exert synergistic effects, take measures in respects of category
complementation, capital collaboration, supply chain synergy and international
development, directly face the patients and end users, realize global branding by
capital operation at the same time. 3.Risks from the changes of industry policy.
The development of medicine retail industry has been regulated and influenced
by relative national policies. The government has issued a series of documents
such as Good Supply Practice for Pharmaceutical Products and a trial method
of Classified Control System for Prescription and Non-prescription
Pharmaceuticals, which have proposed specific requirements on industry
operation. As medicine retail industry management standard has been enhanced
year by year in China, all these rules have been continuously revised and
improved, which putting forward higher demands on enterprise operation.
In addition, with the promotion and implementation of new health-care policy
since 2009, the government has carried out various works in respects of essential
medicine system, public hospital reform and biding system for medicine
centralized procurement, moreover, the government has put forward several
policies to lower the upper limit of medicine retail price so as to reduce the
burden of people's basic drug costs. If policies that restrict the industry
development of retail drugstores, limit the product prices of retail drugstore or
influence the sales of retail drugstores during the implementation of new
medical reform, it is possible that GuoDa Drugstore will suffer a certain
challenge in operation and profitability. 4. Risks from the competition within
the industry. In medicine retail field, the distribution subsidiary of Sinopharm
Group has also opened up some social retail drugstores, competing with GuoDa
Drugstore (subordinate enterprise of the Company) to a extend. Sinopharm
Holding and SINOPHARM have been committed to take effective measures to
cope with every possible competition within industry.
The profit distribution plan that deliberated and approved by the Board is:
based on total stock issued 428,126,983 shares, distributed 3.00 Yuan (tax
included) bonus in cash for every 10-share hold by all shareholders, 0 shares
bonus issued (tax included) and no capitalizing of common reserves carried out.
Contents
Section I Important Notice, Contents and Paraphrase .................................................................. 1
Section II Company Profile and Main Financial Indexes .............................................................. 7
Section III Summary of Company Business .................................................................................. 13
Section IV Discussion and Analysis of the Operation................................................................... 17
Section V Important Events ............................................................................................................ 42
Section VI Changes in shares and particular about shareholders .............................................. 72
Section VII Preferred Stock ............................................................................................................ 82
Section VIII Particulars about Directors, Supervisors, Senior Executives and Employees ..... 83
Section IX Corporate Governance ................................................................................................. 94
Section X Corporate-bond............................................................................................................. 103
Section XI Financial Report .......................................................................................................... 104
Section XII Documents available for reference ........................................................................... 324
Paraphrase
Items Refers to Contents
Listed Company, Company, the Company,
Refers to China National Accord Medicines Corporation Ltd.
Sinopharm Accord, the Group
Sinopharm Refers to China National Pharmaceutical Group Corporation
Sinopharm Holding Refers to Sinopharm Group Co., Ltd.; Controlling shareholder of the Company
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 Yuan Refers to RMB, RMB 10 thousand, RMB 100 million
Terminology: Refers to
The first invoice refers to the invoice from the manufacturer to the
distributor, and the second invoice refers to the invoice from the
Two Invoices System Refers to distributor to the medical service provider. By this way, circulation
links have been greatly reduced and the number of distributors for
each medicine category shall not exceed two.
It is a kind of operation activity that the medical organization has
medicine enterprise with strong management ability and larger risk
appetites to operate and manage their drugstores in the form of
contracts with payment, which has clearly stated the relationship of
Pharmacy Trust Refers to right and duty between hospitals and pharmacy owners and operators,
ensuring preservation and appreciation of hospital and pharmacy
property and creating a kind of management activity with
considerable social benefit and economic benefit, under the condition
that there is no change in the ownership of drugstores
GPO Refers to Group purchasing organizations
Direct selling Refers to A sales method of selling drug to the hospital directly
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 Holding Guangzhou Refers to Sinopharm Holding Guangzhou Co., Ltd.
Guoda Drugstore Refers to Sinopharm Holding Guoda Drugstore Co., Ltd.
Sinopharm Holding Guangxi Refers to Sinopharm Holding Guangxi Co., Ltd.
Foshan Nanhai Refers to Foshan Nanhai Pharmaceutical Group Co., Ltd.
Nanfang Pharmaceutical Foreign Trade Refers to Guangdong Nanfang Pharmaceutical Foreign Trade Co., Ltd.
Main Luck Pharmaceuticals Refers to Shenzhen Main Luck Pharmaceuticals Inc.
Section II. Company Profile and Main Finnaical Indexes
I. Company information
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
Short form of foreign name of the Company (if applicable) Sinopharm Accord
the Company (if applicable)
Legal representative Lin Zhaoxiong
Registrations add. Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong Province
Code for registrations add 518029
Offices add. Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong Province
Codes for office add. 518029
Company’s Internet Web Site http://www.szaccord.com.cn
E-mail gyyz0028@sinopharm.com
II. Person/Way to contact
Secretary of the Board
Name Chen Changbing
Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen,
Contact add.
Guangdong Province
Tel. +(86)755 25875195；+(86)755 25875222
Fax. +(86)755 25195435
E-mail gyyzinvestor@sinopharm.com
III. Information disclosure and preparation place
Newspaper appointed for information disclosure Securities Times; China Securities Journal; Hong Kong Commercial Daily
Website for annual report publish appointed by CSRC http://www.szse.cn; http://www.cninfo.com.cn
Preparation place for annual report Secretariat of the Board of Directors
IV. Registration changes of the Company
Organization code 19218626-7
Changes of main business since listing (if
No change.
applicable)
Previous changes for controlling
No change.
shareholders (if applicable)
V. Other relevant information
CPA engaged by the Company
Name of CPA Ernst & Young CPA (Special General partnership)
Offices add. for CPA 21/F, China Resources Building, No. 5001, Shennan East Road, Luohu District, Shenzhen
Signing Accountants Li Jianguang, Yan Ping
Sponsor engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable √ Not applicable
Financial consultant engaged by the Company for performing continuous supervision duties in reporting period
√Applicable □Not applicable
Name of the financial Offices add. for the financial
Financial advisor Continuous supervision period
consultant consultant
27/F-28/F, Building 2,
China International Capital International Trade Mansion,
Zhang Lei, Chen Chao 2017-2018
Corporation Limited No.1 Jianguomen Outer Street,
Beijing
VI. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data
√ Yes □No
Retroactive adjustment or reasons of re-statement
Enterprise merger under the same control
Changes
2016 over last
2017 year
Before the After the After the Before the After the
adjustment adjustment adjustment adjustment adjustment
Operating income
0.04%
(RMB) 41,263,629,118.85 41,248,429,322.91 41,248,341,665.46 37,819,277,959.01 37,830,587,448.53
Net profit attributable
1,057,791,930.67 1,186,601,899.27 1,186,539,201.93 -10.85% 927,610,234.41 929,120,385.13
to shareholders of the
listed company
(RMB)
Net profit attributable
to shareholders of the
listed company after
1,035,461,581.00 834,359,349.80 834,359,349.80 24.10% 709,923,823.36 709,923,823.36
deducting non-
recurring gains and
losses (RMB)
Net cash flow arising
from operating 1,285,291,911.82 1,472,545,587.85 1,472,342,476.16 -12.70% 1,457,416,143.80 1,628,881,174.94
activities (RMB)
Basic earnings per
2.47 2.80 2.80 -11.79% 2.19 2.20
share (RMB/Share)
Diluted earnings per
2.47 2.80 2.80 -11.79% 2.19 2.20
share (RMB/Share)
Return on Equity 11.91% 15.06% 15.05% -3.14% 13.43% 13.40%
Changes
End of 2016 over end of End of 2015
End of 2017 last year
Before the After the After the Before the After the
adjustment adjustment adjustment adjustment adjustment
Total assets (RMB) 4.82%
22,343,643,527.77 21,312,754,511.97 21,316,548,247.95 20,313,335,694.54 20,362,562,254.72
Net assets attributable
to shareholder of
9,396,572,345.88 8,450,150,621.93 8,452,426,863.52 11.17% 7,352,924,544.29 7,381,133,140.87
listed company
(RMB)
Note: In October 2016, the Group sales the overall operational assets of Pingshan Medical R&D Based and 51%
equity respectively of three subordinate medical industry subsidiaries (including Zhijun Pharmaceutical, Zhijun
Medical Trading and Pingshan Pharmaceutical) by means of shares subscription, that is the 15.56% new shares
issued by related party- Modern Pharmaceutical. Correspondingly, profit statement and cash flow statement under
the name of the above mentioned three industrial companies recorded from January to October of 2016, are
included in the comparative statement in aspect of consolidate profit statement and cash flow statement of the
period.
VII. 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 either IAS (International
Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period.
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 either foreign accounting rules or
Chinese GAAP (Generally Accepted Accounting Principles) in the period.
VIII. Quarterly main financial index
In RMB
First quarter Second quarter Third quarter Fourth quarter
Operating income 10,222,459,812.55 10,302,347,857.02 10,753,911,112.98 9,984,910,336.30
Net profit attributable to
272,564,318.71 283,560,999.48 246,977,990.75 254,688,621.73
shareholders of the listed company
Net profit attributable to
shareholders of the listed company
271,249,398.43 275,003,991.57 244,923,007.75 244,285,183.25
after deducting non-recurring gains
and losses
Net cash flow arising from
-502,263,276.11 730,600,707.51 282,746,006.48 774,208,473.94
operating activities
Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial
index disclosed in the company’s quarterly report and semi-annual report
□ Yes √ No
IX. Items and amounts of extraordinary profit (gains)/loss
√Applicable □ Not applicable
In RMB
Item 2017 2016 2015 Note
Gains/losses from the disposal of non-
The gains from fixed
current asset (including the write-off that -203,279.86 11,931,729.24 5,863,107.27
assets disposal
accrued for impairment of assets)
Governmental subsidy reckoned into current Mainly for receiving
gains/losses (not including the subsidy 26,854,027.03 34,000,702.25 34,025,749.62 of all kinds of special
enjoyed in quota or ration according to subsidies and fiscal
national standards, which are closely interest discount in the
relevant to enterprise’s business) period.
Investment costs while acquiring
subsidiaries, joint ventures and associated Negative goodwill
enterprise, less than fair value of the 58,022.12 from subsidiary
identifiable net assets from invested acquisition
enterprise which should be enjoined
The current net
gains/losses (from
period-beginning to
combination date) of
Current net gain/losses of the subsidiary the Sinopharm
merger under the same control from -1,096.00 260,423,077.82 250,406,618.44 Lerentang
beginning of the period to combination date Shijiazhuang
Medicine Co., Ltd.
which purchased by
enterprise combined
under the same control
Switch back of provision for depreciation of
account receivable which was singly taken 1,642,360.26 5,952,565.52 7,421,904.86
depreciation test
The gains obtained
from offering entrust
Gains and losses on foreign entrusted loans 1,907,519.89 2,880,583.33 loans to China
National Zhijun
(Suzhou)
Consigning fee received for consigned
393,081.77 750,000.00
operation
Other non-operating income and expenditure
377,281.07 6,300,281.94 19,155,803.67
except for the aforementioned items
Gains of the remainder re-measured by faire
35,080,116.91
value after losing the right of control
Investment income from long-term equity
86,674,065.35
investment disposal
Remeasurement of original equity under fair
value method to confirm investment income 134,740.70
after step-by-step purchase of subsidiary
Less: Impact on income tax 6,690,220.38 28,392,824.03 11,848,624.93
Impact on minority shareholders’
1,749,005.16 63,063,527.97 86,577,997.16
equity (post-tax)
Total 22,330,349.67 352,179,852.13 219,196,561.77 --
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
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
Reference disclosure
Retailing industry
The Company complies with the disclosure requirement of “Information Disclosure Guidelines for the Shenzhen Stock Exchange
No. 8- Listing Company Engaged in Retailing Industry”
In the reporting period, the main business of China National Accord Medicines includes pharmaceutical
distribution, pharmaceutical retail and pharmaceutical industry, specifically as follows:
(I) In the pharmaceutical distribution field, the company continues to integrate the distribution and logistics
business, deeply penetrates into the end markets, improves the multistep distribution network, creates intelligent
supply chain, and devotes to become a provider for pharmaceutical and healthcare products and services with the
strongest influence, the highest share, the most complete variety, the best service, and the fastest delivery in south
district of China.
1. The Company’s pharmaceutical distribution business is established in Guangdong and Guangxi, the company
has completed the network construction of Guangdong and Guangxi in 2013, and the business has extended to the
county-level regions; the Company achieved an operation all over the network in 214 and 2015 by speeding up the
integration of regional companies, moreover, the distribution network has further expansion in 2016 and 2017,
including: 1660 A-grade hospitals, 3348 community-oriented primary cares and 1447 retail terminal clients.
2. The Company’s pharmaceutical distribution business has achieved the first scale in Guangdong and Guangxi
and the leading position in market segment of Guangdong and Guangxi, and has obtained the relatively leading
position in vaccine, instrument, and e-commerce industries.
(II) In the pharmaceutical retail field, Guoda Drugstore is a pharmaceutical retail enterprise that ranks the first in
the sales volume throughout the country, and is one of the few enterprises in China with national direct sales drug
retail network. The retail chain network of Guoda Drugstore spreads over 19 provinces, autonomous regions and
municipalities, covers nearly 70 large and medium-sized cities,.
By the end of 2017, Guoda Drugstore has operated 3,834 stores, covering 19 provinces, autonomous regions and
municipalities, entering nearly 70 large and medium sized cities, which has formed a drugstore networks covering
eastern and northern China, southern coastal cities, and gradually expanded into northeast, central plains and
inland cities, the sales scale of which has exceeded 10 billions, ranking the first within industry. Guoda , the
business of which were mainly relying on modern retail drugstores, has been putting great attention on the
development of professional service system with medical resources as core competitiveness, building a group of
stores with professional commercial activities, which are able to provide retails and therapy services that
integrating medical service and health-care products sales and cooperate with hospitals; at the same time, the
Company has been vigorously developing new business, exploring and expanding new sales channels, improving
professional services, being dedicated to transit from a traditional medical retail into an innovative service
enterprise. By means of conventional products retail management, improving major brands and exploring business
cooperation with supplier, accelerating the establishment of DTP business and continuous health care service
system, Guoda has built industry-leading professional service ability. Besides, the leading scale of Guoda is
regarded as one of the core competitiveness, for the reason that the advantage in scale has reduced its procurement
cost and enhanced its negotiation advantages.
II. Major changes in main assets
1. Major changes in main assets
Major assets Note of major changes
Equity assets Increased 237.5852 million Yuan over that of period-begin with 16.65% rate of change,
mainly the investment income from joint ventures..
Increased 64.7008 million Yuan over that of period-begin with 13.29% rate of change,
Fixed assets mainly because the logistic system transfer to fixed assets and purchasing office building
by the subsidiary
Increased 5.316 million Yuan over that of period-begin with 1.66% rate of change,
Intangible assets mainly because purchasing system software in the period and established B2B E-
commerce platform
Decreased 24.1166 million Yuan over that of period-begin with -51.24% rate of change,
Construction in progress mainly because the ERP project completed and new warehouse transfer-out for
completed the acceptance check
Increased 63.8693 million Yuan over that of period-begin with 33.90% rate of change,
Long-term deferred expenses mainly because the ERP project completed and new warehouse transfer-in for completed
the acceptance check
Increased 47.373 million Yuan over that of period-begin with 50.05% rate of change,
Other non current assets
mainly due to the investment of China National Zhongjin 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
Reference disclosure
Retailing industry
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, established 28
regional chain enterprises, with retail network spreading over 19 provinces and municipalities and autonomous
regions and covering nearly 70 cities.
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.
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. The advantages of medical insurance resources
Regarding medicine retails, the subsidiaries of Guoda Drugstore have featured generally higher medical insurance
acquiring ability, with higher medical insurance sales ratio and steady operation.
5. The advantages of Compliance: the Company had a big lead
under an increasingly stringent regulatory environment for the reason that it has kept emphasizing legalization and
compliance in the process of operation and management.
6. Unique-influence Sinopharm brand
Brand of the Company and distribution, industry child-brand and controlling shareholder and actual controller’s
brand come down in one continuous line, depending on powerful force of central enterprises, the Company’s
popularity and influence are prominent day by day in the industry.
Section IV. Discussion and Analysis of Business
1. Introduction
In the year of 2017, one of the most challenging years, Sinopharm Accord Corporation Ltd. was faced with a
historical opportunity of strategic restructuring and great reform in medicine industry. On one hand, the Company
has been based on traditional business, growing excellent and strong, seeking for breakthrough with constantly
innovative models. On the other hand, the Company has taken challenges from the market in the form of
organization transformation, business innovation and cultural drive. With the construction and motivation of new
structure, new model and new business, the Company has realized the goal of making progress from innovation
that set at the beginning of the year.
(I) The overview of the development of macro economy and medicine industry
In 2017, the total amount of GDP in China exceeded 82 trillion Yuan, with full-year growth seen at 6.9 percent
(Data source: State Statistics Bureau). The economy of China held up well as a whole and the macro economy has
been transit from high speed growth stage to high quality development stage. Focusing on the medicine industry
where Company was located, it featured acceleration in plate split and co-existence between difficulties and
opportunities:
(1)The health input from the government has been increased ever year. The fiscal budget on national medical and
health-care expenditure of 2017 was seen at 1.4 trillion Yuan (Data source: ministry of finance) , which was 4.4
times as much as that before the start of medical reform in 2008, and the ratio of medical and health-care
spending in total national fiscal expenditure was up to 7.2 percent;
(2)The market featured vast capacity and there were great potential in its segments. By the end of 2016, the
medical and health-care industry market in China had reached approximately 5.6 trillion Yuan (Data source: big
data base of CISource), and the market structure was as below:
(3)The split in regional business format of medicine industry has been accelerated. During the reporting period,
the general growth of distribution has been slowing down, but it has still been maintaining corresponding growth
with competitors in Guangdong and Guangxi provinces; in retail plat, the Company started a program as
producted an streategy investor (“Walgreens Boots Alliance”) leading international industry, in the future, the
Company will introduce mergers and acquisitions for boosting development.
(4)Constantly issued medicine policies have posed a great challenge for medicine enterprises.
The year of 2017 was one of the most important years for medicine policies. By the end of that year, national and
regional authorities have successively issued over 2,000 medicine and health-care industry related policies and
administrative orders, including “two invoice system”, “pharmacy trust”, implementation of “GPO”, and “bidding
price reduction”. All the above policy factors combined with market factors have brought a great challenge for
enterprise development.
(II)The business condition of the Company in 2017
In 2017, the Company achieved operation revenue of 41.264 billion Yuan with 0.04% growth on a y-o-y basis;
the net profit attributable to shareholder of listed company has 1.058 billion Yuan, a 10.85% down from a year
earlier. Decrease of net profit attributable to parent company mainly caused by the major assts reorganization
occurred in October 2016, the comparative statement has the data (recorded from January to October 2016) under
the name of three industrial companies which have been replace-out. Except the factor, operation revenue has 3.01%
growth on a y-o-y basis and the net profit attributable to parent company has growth of 9.08%. 1. Distribution
business:
During the reporting period, the distribution business of the Company has gained revenue of 31.522 billion Yuan,
with year-on-year growth of 1.24 percent, among which, the net margin was seen at 640 million Yuan, rose 5.99
percent from a year earlier. Affected by the factors as two invoices system, competitive hospital trust, GPO and
depreciation in medicine category, the sales growth of distribution has been slowing down, and total amount of
sales affected in 2017 cumulated was 3.3 billion Yuan, growth range of the business shrink down.
During the reporting period, the income growth of distribution innovation business has enjoyed a sound
momentum, and its year-on-year growth of sales volume increased by 18.33 percent, accounting for 30.95 percent
of its total income, among which, the medical cooperation, medical devices and retail business have contributed a
revenue of 5.3 billion Yuan, with year-on-year growth of 21.43 percent. During the reporting period, the revenue
of distributor-owned drugstores has been up to 574 million Yuan, with year-on-year growth of 34 percent, among
which, there are 24 DTP drugstores, seven in-hospital cooperation drugstores and nine hospital surrounding
drugstores.
2. Retail business:
During the reporting period, Guoda Drugstore have earned a revenue of 10.031 billion Yuan in its retail business,
with year-on-year growth up to 10.11 percent, making a net profit of 262 million Yuan, increased 17.57 percent
from a year earlier. net profit attributable to owners of parent company amounted as 192 million Yuan, a 16.10%
gwoth on a y-o-y basis. Separately in commercial activity, the shares of direct selling and conventional business
as well as DTP sales have been increased, driving the rising of overall revenue. Among which, the revenue from
direct selling and conventional business has reached 6.43 billion Yuan, with year-on-year growth up to 12.47
percent, with share rising by 1.38 percent; the revenue from DTP sales was seen at 1.22 billion Yuan, with year-
on-year growth of 20.33 percent and share increased by 1.06 percent; the number of regions that developing OTO
business has been increased to thirteen and OTO sales has gained a sales revenue of 210 million Yuan, with year-
on-year growth up to 127.65 percent.
During the reporting period, the Company has made a new record on expanding new stores and the quality of the
stores have been much better than that of the same period.
During the reporting period, Guoda Drugstore has taken active efforts to explore new store type and drastically
improved the quality of the stores. Stores surrounding the hospitals are the bridgehead to seize prescription drain.
By the end of 2017, Guoda Drugstore has opened up 253 stores surrounding hospitals. During the reporting period,
it has opened up 53 new stores surrounding hospitals (28 stores among which supporting medical insurance
business), and 16 stores surrounding hospitals have achieved accumulative profits.
During reporting period, Guoda Drugstore have brought new forth to its business model and strengthened refined
management. E-commercial business has earned a revenue of 247 million Yuan (tax included), with year-on-year
growth up to 118 percent; commercial insurance business has earned a revenue of 135 million Yuan (tax included),
increased by 49 percent from a year earlier, with a gross profit of 40 million Yuan; the sales income from pre-paid
cards has reached 82.98 million Yuan (tax included),with year-on-year growth up to 19 percent; the total amount
of mobile payment was up to 860 million Yuan (tax included), increased by 365 percent from a year earlier.
The Company complies with the disclosure requirement of “Information Disclosure Guidelines for the Shenzhen Stock Exchange
No. 8- Listing Company Engaged in Retailing Industry”
1. The business activities of entity management and business condition of stores during the reporting period
By the end of 2017, Guoda Drugstore has opened up 2801 direct-sale stores, with total revenue up to 7.83 billion
Yuan, increased by 15.8 percent from a year earlier, comparable stores increased by 5.0 percent year-on-year and
it also has 1033 franchised stores, which has earned 1.01 billion Yuan of distribution revenue, with year-on-year
growth of 14.1 percent.
Region Direct-sale store Franchised outlet
Numbers of Sales income y-o-y Turnover Numbersof the Dispatching y-o-y
the store (in 10 thousand from one store income
Yuan) square (10 thousand
meter Yuan)
North 1278 399,936 18.4% 2167 286 40,946 25.2%
East China 735 189,669 13.2% 1997 595 48,606 6.3%
South 366 111,675 14.6% 1510 58 7,118 7.5%
China
Central 230 40,277 15.5% 1283 94 4,438 23.7%
China
Northwest 192 41,686 7.5% 1612 - - -
Total 2801 783,243 15.8% 1949 1033 101,109 14.1%
Note: North: Liaoning, Shanxi, Inner Mongolia, Beijing, Tianjin, Hebei
East China: Shanghai, Jiangsu, Anhui, Shandong, Fujian, Zhejiang
South China: Guangdong, Guangxi
Central China: Henan, Hunan
Northwest: Ningxia Xinjiang
(1) Details of top ten sales stores
No Region Store Name Address Opening Operating Business Actual Property
Year Mode Activity Dimension(unit: Belonging
square meters)
1 Inner Headquarter No. 65 Tongdao north street, 2003 Direct-sale 5+X 1,689 Rental
Huimin District, Huhhot (1F,
Mongoli
2F)
an
2 YiYuan Zhongli Opposite of outpatient 2002 Direct-sale 5+X 820 Rental
Branch department, first affiliated
hospital of Shanxi Medical
University, No. 88, Jiefang
South Rd.
3 Hebei Le Ren Tang 1F, No. 57 NanYuan Street 2010 Direct-sale Traditional 1,206 Rental
Chinese
Headquarter
Medicine
outpatient
store
4 Jinxiang Xidan Jinxiang No. 114 Beidajie, Xidan, 1997 Direct-sale Modern 773 Rental
Pharmacy
Xicheng District, Beijing
5 Yangzho Jiangsu No. 511 Wenchang Middle Rd. 1991 Direct-sale Modern 620 Rental
Pharmacy
u Baiyulan
6 Shenyan Zhongjie No. 83 Rd, Zhongjie Rd, Shenhe 2002 Direct-sale Traditional 1,300 Rental
Chinese
g district
Medicine
outpatient
store
7 Xiamen Xiamen No.14 store of Zhenhai Garden, 2005 Direct-sale Modern 133 Rental
Xinteyao No. 97 Zhenhai Rd. Pharmacy
8 YiYuan E Yuan Branch On the opposite of second 2011 Direct-sale 5+X 600 Rental
affiliated hospital of Shanxi
Medicine University, No.232
Wuyi Rd.
9 Shanxi TaiYuan No. 255 Jiefang Rd. 2003 Direct-sale 5+X 1,560 Rental
Jiefang TaiYuan(current house number
is No. 89)
10 Jiangme Donghu Center No.12 First Road, Gangkou, 1990 Direct-sale Traditional 570 Rental
n Store Jiangmen Chinese
Medicine
outpatient
store
（2） In 2017, the Company has opened 432 new direct-sale stores and closed 135 stores, with a net increase of
297 stores, 39,989 square meters of opening areas, approximately 200 million Yuan of net sales volume.
Region Direct-sale store Franchised outlet
Number of store Total area Number of Number of store Number of stores
increased stores shut down increased shut down
North 241 32,091 67 81
East China 77 7,815 22 11
South China 52 5,974 26 8
Central China 33 4,814 7 16
Northwest 29 3,453 13 - -
Total 432 54,146 135 116
2. The on-line sales in 2017 has been carried out steadily. Since the Company has started to establish on-line sales
platform on its own from October, two subsidiaries have been launched and there will be ten subsidiaries
launching in succession in 2018; meanwhile, the third-party platforms have still taken a major share of the on-line
sales, details as below:
In 10 thousand yuan
Cooperation platform Trading Volume Business revenue
T-Mall (Sinopharm On-line) 22,644 2,491
Yaofangwang (www.yaofangwang.com) 911
Yiyaowang (www.111.com.cn) 389
JD daojia (http://daojia.jd.com) 367
800FANG.CN 56
(www.800pharm.com)
Meituan Waimai 30
(waimai.meituan.com)
Yaopin Daojia 11
ele.me 2
(www.ele.me/home)
3.The condition of procurement and inventory in headquarter and suppliers: in 2017, the total amount of
procurement (tax included) in headquarter was up to 1.351 billion Yuan and the inventory costs reached 103
million Yuan. The details are as below:
In 10 thousand yuan
Category Purchasing Amount (tax included) Inventory Cost Amount in 2017
Health-care food 9,567
Convenience food 15
kids 3,520
Gynecology 1,023
Liver and gall 2,123
Cold 4,122
Personal care 576
Orthopedics 1,165
Respiratory 1,450
Household 19
Family health 5,431
Antipyretic analgesicss 1,002
Anti-infection 2,500
Antiallergic and antivertigo 482
Genitourinary 6,189
Internal secretion 2514
Other efficacy 58,960 2,053
Clearing heat and detoxitating 2,021
Neurology 1,488
Drugs for external use 7,648 1,028
Vitamin-mineral 1,407
Drugs for otolaryngology 2,937
Digestive system 2,891
cardiovascular and cerebrovascular 7,737
Chinese herbal pieces 3,576
Nourishing food 4,755
Total 135,118 10,270
Top 5 suppliers:
In 10 thousand yuan
Supplier Purchase amount (tax included) Ratio of the purchase
amount
Shanghai Roche Pharmaceuticals Ltd. 39,905 30%
Shanghai Yi-An Pharmaceutical Co., Ltd. 10,445 8%
Jiangsu Xiansheng Pharmaceutical Co., Ltd. 7,127 5%
China National Medicines Corporation Ltd. 6,718 5%
BY-HEALTH Pharmaceutical Co. Ltd. 6,696 5%
4. The status of warehousing logistics:
In 2017, Guoda Drugstore has 27 large and small sized logistic warehouses in total, covering more than 110,000
square meters, spreading out across 17 provinces. The inventory management of Guoda was in the charge of
commodity department, which has been monitoring the inventory status of headquarters and subsidiaries, and
managing inventory by month, providing reports on inventory analysis and management and giving advice on
optimizing inventory structure, while the operational department has been in charge of tracing the achievement of
inventory circulating index as well as providing business inventory assess data; the procurement department has
been responsible for making reasonable replenishment, ensuring smooth and steady supply channels, and making
an effective control of commodity inventory turnover while ensuring the fill rate of enquiry, and it also had to
handle dead stocks and valid goods every month.
Province Reginal Area (in square Management Load standards Logistic charge in Rate
enterpreise meters) ownership
(in 10 thousand
Yuan)
Liaoning Shenyang 14,200 Self-directed 1,146 0.86%
Guangdong Guangzhou 5,000 Guangzhou 628 0.92%
Hengchang
Shanzhen
Logistic entrusted
Jiangmen 5,432 Self-directed 444 1.84%
Shanxi Shanxi 5,214 Self-directed Full load 751 1.05%
Wanmin
Shanxi Yiyuan 4,350 Self-directed Full load 523 0.75%
Jiangsu Dadesheng 4,840 Self-directed 280 1.03%
Nanjing 3,700 Self-directed(rente 224 1.82%
by minority
shareholder )
Liyang 3,840 Self-directed 185 1.08%
Fujian Fujian 2,395 Self-directed Full load 262 0.97%
Quanzhou 1,100 Self-directed 50 0.88%
Hebei Hebei 3,772 Self-directed 400 0.72%
Shandong Shandong 5,800 Self-directed(Rent 383 1.43%
in system)
Ningxia Ningxia 3,330 Self-directed 288 1.34%
Hunan Hunan 3,353 Self-directed 291 1.32%
Henan Henan 3,500 Self-directed(Rent 327 1.44%
in system)
Inner Mongolia Inner Mongolia 1,870 Self-directed 324 0.90%
Guangxi Guangxi 1,950 Self-directed Full load 230 1.15%
Beijing Beijing Guoda 4,943 Self-directed 776 1.29%
Jinxiang
Tianjin Tianjin 1,700 Self-directed 122 1.36%
Anhui Anhui 1,000 Self-directed 91 1.47%
Xinjiang Xinjiang 3,842 Self-directed 243 1.20%
Shanghai Fumei 17,067 Self-directed 2,631 1.49%
Shanghai
Guoda
Hangzhou
HQ 8,000 Sinopharm
Logistic entrusted
Total 110,198 —— 10,599 1.13%
5. Most of commodity suppliers of Guoda Drugstore are from external, with some relative enterprises and private
own brand of Sinopharm Group as auxiliary. At present, the sales of private owned brand of Guoda Drugstore has
been remained in a stage of exploratory and beginning. The sales of 2017 were as below:
In RMB
Private brand Property Category Turnover (tax included) Ratio
a Group-buying OEM Pesonal care 1,297 0.00%
b Group-buying OEM Family health 994,044 0.26%
c Group-buying OEM Refined drink 273,268 0.11%
┈ Total 1,268,609 0.15%
II. Main business analysis
1. Note
Found more in I. Introduction in Discussion and Analysis of Business
2. Revenue and cost
(1) Constitute of operation revenue
In RMB
2017
Increase/decrease y-
Ratio in operation Ratio in operation
Amount Amount o-y
revenue revenue
Total of operation
41,263,629,118.85 100% 41,248,341,665.46 100% 0.04%
revenue
According to industries
Medicine wholesale 31,022,967,423.15 75.18% 30,982,394,963.30 75.11% 0.13%
Medicine retail 9,892,835,784.75 23.97% 8,761,101,587.23 21.24% 12.92%
Pharmaceutical
0.00 0.00% 1,174,241,370.22 2.85% -100.00%
manufacturing
Logistic & storage
29,568,712.15 0.07% 20,551,062.91 0.05% 43.88%
service
Lease and other 318,257,198.80 0.78% 310,052,681.80 0.75% 2.65%
According to products
Medicine 39,683,832,010.20 96.17% 40,238,426,935.39 97.55% -1.38%
Apparatus 1,125,368,079.05 2.73% 678,860,843.04 1.65% 65.77%
Other 454,429,029.60 1.10% 331,053,887.03 0.80% 37.27%
According to region
Domestic revenue 41,263,629,118.85 100.00% 41,193,952,679.88 99.87% 0.17%
Foreign revenue 54,388,985.58 0.13% -100.00%
(2) About the industries, products, or regions accounting for over 10% of the company’s operating income
or operating profit
√Applicable □ Not applicable
Whether the company needs to comply with the disclosure requirements of the particular industry
Reference disclosure
Retailing industry
In RMB
Increase/decrease Increase/decrease Increase/decrease
Operating revenue Operating cost Gross profit ratio of operating of operating cost of gross profit
revenue y-o-y y-o-y ratio y-o-y
According to industries
Medicine
31,022,967,423.15 29,315,028,286.33 5.51% 0.13% -0.02% 0.14%
wholesale
Medicine
9,892,835,784.75 7,457,091,704.13 24.62% 12.92% 12.90% 0.01%
retail
According to products
Medicine 39,683,832,010.20 35,629,437,791.07 10.22% -1.38% -0.95% -0.38%
According to region
Domestic
41,263,629,118.85 36,819,552,915.80 10.77% 0.17% 0.58% -0.37%
revenue
Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on
latest one year’s scope of period-end
□Applicable □Not applicable
(3) Income from physical sales larger than income from labors
Yes
(4) Fulfillment of the company’s signed significant sales contracts up to this reporting period
√Applicable □ Not applicable
Yes
Retailing industry
(5) Constitute of operation cost
In RMB
2017
Increase/decrea
Industries Item Ratio in operation Ratio in
Amount Amount se y-o-y
cost operation cost
Medicine
Sales cost 29,315,028,286.33 79.62% 29,319,921,602.61 80.00% -0.02%
wholesale
Medicine retail Sales cost 7,457,091,704.13 20.25% 6,605,050,729.00 18.02% 12.90%
Pharmaceutical
Sales cost 0.00% 677,553,586.23 1.85% -100.00%
manufacturing
Logistic & Transportation
11,065,889.25 0.03% 13,271,551.53 0.04% -16.62%
storage service & storage cost
Lease and other Service cost 36,367,036.09 0.10% 32,363,280.78 0.09% 12.37%
Sales cost of pharmaceutical manufacture has 100% declined from a year earlier, mainly because affected by
reorganization last period, cost of the pharmaceutical manufacture refers to the data from January to October of
2016 in industrial plate while there was no such data in the period.
(6) Whether the changes in the scope of consolidation in Reporting Period
√Yes □ No
Details of the changes in the scope of consolidation in reporting Period can be seen in Note VI of Financial Report.
(7) Major changes or adjustment in business, product or service of the Company in Reporting Period
□ Applicable √ Not applicable
(8) Major sales and main suppliers
Major sales client of the Company
Total top five clients in sales (RMB) 1,999,334,655.25
Proportion in total annual sales volume for top five clients 4.88%
Ratio of related parties in annual total sales among the top
0.00%
five clients
Information of top five clients of the Company
Serial Name Sales (RMB) Proportion in total annual sales
1 First 473,455,201.11 1.16%
2 Second 425,815,771.78 1.04%
3 Third 398,127,297.49 0.97%
4 Fourth 397,764,380.29 0.97%
5 Fifth 304,172,004.58 0.74%
Total -- 1,999,334,655.25 4.88%
Other situation of main clients
□ Applicable √ Not applicable
Main suppliers of the Company
Total purchase amount from top five suppliers (RMB) 4,415,379,019.02
Proportion in total annual purchase amount for top five
8.75%
suppliers
Ratio of related parties in annual total sales among the top
1.88%
five suppliers
Information of top five suppliers of the Company
Serial Name Purchases (RMB) Proportion in total annual purchases
1 First 997,010,837.71 1.98%
2 Second 949,934,468.99 1.88%
3 Third 834,637,962.11 1.65%
4 Fourth 831,049,090.45 1.65%
5 Fifth 802,746,659.76 1.59%
Total -- 4,415,379,019.02 8.75%
Other notes of main suppliers of the Company
□ Applicable √ Not applicable
3. Expenses
In RMB
Increase/decrease
2017 2016 Note of major changes
y-o-y
Sales expense 2,305,909,071.71 2,198,243,216.29 4.90% No major change.
Management expense 735,953,967.13 859,773,090.07 -14.40% No major change.
Financial expense 110,360,539.56 101,856,594.98 8.35% No major change.
4. R&D expenses
□ Applicable √ Not applicable
5. Cash flow
In RMB
Item 2017 2016 Y-o-y changes
Subtotal of cash in-flow from
46,751,355,521.20 45,589,048,039.64 2.55%
operation activity
Subtotal of cash out-flow from
45,466,063,609.38 44,116,705,563.48 3.06%
operation activity
Net cash flow from operation
1,285,291,911.82 1,472,342,476.16 -12.70%
activity
Subtotal of cash in-flow from 1,670,220,737.03
138,275,319.85 -91.72%
investment activity
Subtotal of cash out-flow from 1,679,286,473.62
424,456,513.79 -74.72%
investment activity
Net cash flow from investment
-286,181,193.94 -9,065,736.59 -3,056.73%
activity
Subtotal of cash in-flow from
514,921,208.46 1,037,266,668.95 -50.36%
financing activity
Subtotal of cash out-flow from
991,944,325.18 1,513,509,387.78 -34.46%
financing activity
Net cash flow from financing
-477,023,116.72 -476,242,718.83 -0.16%
activity
Net increased amount of cash
522,583,265.99 986,470,984.16 -47.02%
and cash equivalent
Main reasons for y-o-y major changes in aspect of relevant data
√Applicable □ Not applicable
(1) Subtotal of cash in-flow from investment activity: a 91.72% declined from a year earlier, mainly because the subsidiary, replaced
for reorganization, has a y-o-y decrease of business in cash pooling with its former parent company;
(2) Subtotal of cash out-flow from investment activity: a 74.72% declined from a year earlier, mainly because the subsidiary,
replaced for reorganization, has a y-o-y decrease of business in cash pooling with its former parent company;
(3) Net cash flow from investment activity: a 3,056.73% down from a year earlier, mainly because the subsidiary, replaced for
reorganization, has a y-o-y decrease of business in cash pooling with its former parent company;
(4) Subtotal of cash in-flow from financing activity: a 50.36% declined from a year earlier, mainly because the restructured equity
funds received at last period while no such amount occurred in the perido;
(5) Subtotal of cash out-flow from financing activity: a 34.46% declined from a year earlier, mainly because the loans paid in the
period has declined over that of last period;
(6) Net increased amount of cash and cash equivalent: a 47.02% declined from a year earlier, mainly because the subsidiary,
replaced for reorganization, has a y-o-y decrease of business in cash pooling with its former parent company.
Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company
□ Applicable √ Not applicable
III. Analysis of the non-main business
□ Applicable √ Not applicable
IV. Assets and liability
1. Major changes of assets composition
In RMB
End of 2017 End of 2016
Ratio
Ratio in total Ratio in total Notes of major changes
Amount Amount changes
assets assets
Monetary fund 4,191,655,438. 3,519,961,564.
18.76% 16.51% 2.25% No major change.
51
Account
7,589,412,679. 7,654,225,510.
33.97% 35.91% -1.94% No major change.
receivable 88
Inventory 3,781,858,238. 4,049,482,529.
16.93% 19.00% -2.07% No major change.
12
Investment
153,678,339.1
0.69% 166,715,848.80 0.78% -0.09% No major change.
property
Long-term equity
1,650,619,373. 1,413,034,165.
7.39% 6.63% 0.76% No major change.
investment 09
Fix assets 551,710,434.0
2.47% 487,009,600.10 2.28% 0.19% No major change.
Construction in 22,947,258.99 0.10% 47,063,868.49 0.22% -0.12% Mainly because some of the ERP
process project completed and part of the
reconstruction of logistic warehouse
are transfer-out
Short-term loans 1,561,354,521. 1,512,713,629.
6.99% 7.10% -0.11% No major change.
64
Mainly due to the borrowing from
Long-term loans 31,600,000.00 0.14% 0.00% 0.14%
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
V. Investment
1. Overall situation
During the reporting period, the Company has acquired Sinopharm Holding Zhuhai Co.,Ltd (90 percent),
Sinopharm Holding Maoming Co.,Ltd.(100 percent) and Sinopharm Holding HeYuan Co.,Ltd (70 percent) with
cash payment, and realized control merger of these three companies not under the same control. The third-level
subsidiary of the Company, Sinopharm Hebei Le Ren Tang Medicine Chain Co.,Ltd. has finally acquired 100
percent of stock rights of Sinopharm Le Ren Tang Shi Jia Zhuang Medicine Co., Ltd with cash payment, which is
the subsidiary under the same control party of Sinopharm Le Ren Tang Co.,Ltd, realized control merger of
Sinopharm Le Ren Tang Shi Jia Zhuang Medicine Co., Ltd under the same control. The Company has set up two
new third-level subsidiaries, Sinopharm Guangzhou Medicine Technology Co., Ltd (51 percent) and Sinopharm
Guangzhou Medicine Supply Chain Service Co., Ltd(51 percent); the Company has also set up four forth-level
subsidiaries, that are Sinopharm Guoda Drugstore Anshan Chain Co., Ltd. (51 percent), Guoda Drugstore
Manzhouli Co., Ltd (51 percent), Sinopharm Guoda Drugstore Yongsheng (Shanghai) Co.,Ltd (55 percent) and
Sanhe city Lixing Jinxiang Drugstore Co.,Ltd (100 percent). See the note(six) in financial report for detailed
investment information.
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
5. Application of raised proceeds
√Applicable □ Not applicable
(1) Overall application of raised proceeds
√Applicable □ Not applicable
In 10 thousand Yuan
Usage of
Cumulativ Ratio of the
Total
e raised cumulative retained
Total Total raised Total Raised
capitals raised raised
Total raised accumulati capital has accumulati capitals
has capitals capitals
Year Way raised capital ve raised purpose of ve raised idle for
purpose of has and what
capitals used capitals uses capitals more than
uses purpose of is expected
in Period used changed in unused two years
changed in uses to invested
Period
total changed with those
capitals
Non-
public Deposit
2016 27,361.49 16,417.12 16,996.94 10,364.54
offering of bank
shares
Total -- 27,361.49 16,417.12 16,996.94 0 0 0.00% 10,364.54 --
Explanation on General usage of raised capital
More details of the use of raised capitals can be seen in “Special report on the storage and the actual use of raised capitals of
Sinopharm Accord in 2017” disclosed on 22 March 2018.
(2) Situation of committed project of raised proceeds
√Applicable □ Not applicable
In 10 thousand Yuan
Projects Amount of
Project
Committed investment changed Total Total accumulateInvestment
Amount Reach the feasibility
projects and capital or not committed investment d program till Predicted Realized
invested in predicted was
invested in areas with (includin investment after investmentthe period-useable date interests
report interest or changed
fund raising out of the g of raised adjustment till the end of project in Period
period not hugely or
plan changed capitals (1) period-end (3)=(2)/(1)
not
partially) (2)
Committed investment projects
Cash consideration of
49% equity of
Not
Guangdong Nanfang
267,816,6 267,816,6 164,171,2 164,171,2
No 61.30% 0 applicabl No
Pharmaceutical 89.5 89.5 47.91 47.91
e
Foreign Trade Co., Ltd.
paid
Not
Payment of issuance
No 5,798,200 5,798,200 5,798,200 100.00% 0 applicabl No
cost
e
Subtotal of committed
273,614,8 273,614,8 164,171,2 169,969,4
-- -- -- 0 -- --
investment projects 89.5 89.5 47.91 47.91
Capital invested in areas with fund raising out of the plan
Not applicable
Total 273,614,8 273,614,8 164,171,2 169,969,4
-- -- -- 0 -- --
89.5 89.5 47.91 47.91
Situation about not
coming up to schemed
progress or expected
Not applicable
revenue and the
reason(In specific
project)
Explanation on major
changes on project Not applicable
feasibility
Not applicable
Amount, usage and
progress of using for
fund raising out of the
plan
Not applicable
Change of
implementation place
of investment project
of raised capitals
Not applicable
Regulation of
implementation ways
of investment project
of raised capitals
Preliminary investment Not applicable
and replacement of
investment project of
raised capitals
Not applicable
Temporarily
supplement for the
current capitals with
idle raised capitals
Not applicable
Amount and reason for
surplus of raised
capitals when
implementing projects
Usage of the retained
raised fund and what is
Not applicable
expected to invested
with those fund
Issues or other
conditions found in use Use of the fund raised are strictly execute in line with the “tri-party supervision agreement for fund raised”,
of fund raised and and no related issues or other conditions been found
disclosure
(3) The changed project of raised proceeds
□ Applicable √ Not applicable
The Company has no project of raised proceeds changed in the Period.
VI. Sales of major assets and equity
1. Sales of major assets
□ Applicable √ Not applicable
The Company has no sales of major assets 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 Register Operating Operating
Type Main business Total assets Net Assets Net profit
name capital revenue profit
Chinese
traditional patent
medicine,
chemical
preparations,
antibiotics, bio-
chemical
medicine,
biological
Sinopharm
medicine,
Holding
diagnosis 1,953,203,12
Guoda Subsidiary 1,010,000,00 5,468,132,36 10,030,768,8 358,338,470. 262,174,187.
medicine, 0.00 3.83 7.87 69.22 17
Drugstore
biological
Co., Ltd.
medicine with
features of
treatment and
diagnosis,
shaped packing
food, chemical
products, 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 unloading,
glass wares,
cosmetics and
Sinopharm
daily
Holding
Subsidiary merchandise; 1,530,000,00 5,721,484,20 1,857,188,00 15,074,320,2 245,449,593. 182,926,405.
Guangzhou 0.00 1.53 3.25 16.77 18
other business
Co., Ltd.
services, other
professional
consultation,
various goods
agency and for
self-operation,
import & export
of technology,
houses leasing
Retail and
distribution in
respect of
pharmaceutical
Sinopharm
products and
Holding
Subsidiary medical 500,000,000. 2,255,988,55 721,146,070. 4,074,493,15 135,865,812. 116,745,842.
Guangxi Co., 00 3.24 55 0.80 95
apparatus and
Ltd.
instruments,
wholesale and
retails of health
products
Particular about subsidiaries obtained or disposed in report period
√Applicable □ Not applicable
Company Name The method of obtaining and handling The influence to the whole production and
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
Further consolidated the pharmaceutical
distribution business in Guangxi &
Sinopharm Holding Heyuan Co., Ltd. Acquisition
Guangdong and without major influence
on performance of the Company
Providing value-added services of
pharmaceutical distribution, and without
Sinopharm Holding Guangzhou Medical
Establishment
Supply Chain Service Co., Ltd. major influence on performance of the
Company
Expand local medicine retail business
Sinopharm Guoda Yongsheng Drug Store layout, and without major influence on
Establishment
(Shanghai) Co., Ltd.
performance of the Company
Expand local medicine retail business
Sinopharm Guoda Drug Store Anshan layout, and without major influence on
Establishment
Chain Co., Ltd.
performance of the Company
Expand local medicine retail business
Sanhe Lixin Jinxiang Drug Store Co., Ltd. Establishment layout, and without major influence on
performance of the Company
。Consolidating the distribution of local
Sinopharm Guoda Yianyitang Drug Store Absorb and merge to Sinopharm Holding pharmaceutical retail business and no
Chain (Shengyang) Co., Ltd. Guoda Drugstore Shenyang Chain Co.,Ltd major impact on business performance of
the Company
Notes of main holding company and stock-jointly companies
VIII. Structured vehicle controlled by the Company
□ Applicable √ Not applicable
IX. Future Development Prospects
(I)The analysis on industry environment
1. Medicine industry has been getting more and more complicated in terms of policy, market and technology.
(1)New policy
With the coordination of medical insurance, medical service and medicine, new medical policies have been issued
in succession, including consistency evaluation on generic drugs, GPO, two invoices system, hierarchical
diagnosis, remove medicine markups, cancel the proportion of drugs in hospital total income and the regulation on
medical insurance expenditure. Public hospitals have been forced by medicine and medical insurance to carry out
reform from the supply and demand terminals.
(2)New technology
Technology innovation has greatly influenced the whole medical industry and hospital information systems have
been gradually upgraded. In addition, internet giants have been engaged in medicine and medical service fields
over information, internet and the cloud, and several artificial intelligence medical products have been launched in
succession.
(3)New model
New models have been emerged one after another. From pharmacy trust, supply chain extension, GPO to medical
treatment combination, the innovation under policy, government and market have become more and more
intensified and all the industry leaders are exploring the most practical model within innovation.
2.The overall medical market has grown steadily and industry differentiation trend has accelerated
The industry has been benefited from the growth of medical insurance coverage and average medical consumption,
aging of population and technology innovation, but it also has to suffer the pressures from medical insurance
expenditure regulation and downward price.
(1)With the implementation of two invoice system, the allocating market scale has been shrunk sharply.
Distribution enterprises directly contact with manufacturers and the channels of all hospitals have been centralized,
which was good for improving the concentration ratio of large enterprises, and forcing them to build a standard
process in terms of retails, logistics and information.
(2)Under the pressures from expenditure regulation, payment by scores and zero-markups, more and more
prescriptions have been drained out from hospital, so how to make an effective connection has become the focus
of the competition among all the medical chain enterprises.
3.Competitors have been making innovation and layout in terms of industry merger and acquisition, industry
chain integration, service and cooperation extension.
Mergers and acquisitions of medicine retails have been uprising. Comprehensively influenced by focus and
concern from the capitals, promotion of policy trend and current industry structure adjustment, the momentum of
mergers and acquisition will be continuing. With the changes of industry policies, the business model will have a
huge change; the Company will create a control and operation pattern integrating wholesales and retails, and build
new core competitiveness by taking full advantages of integrating distribution and retail resources.
(II)Major works of the Company in 2018
1. Enhance information and technology capability, inject new technology energy
Technology innovation is the primary force guiding development. Since the technologies represented by internet,
big data and artificial intelligence have been rebuilding and reconstructing all the traditional industries and
traditional models, the Company will continue to build a wisdom medical technology platform with integration of
wholesales and retails as the core.
(1)Increase information input
Change management mode and try to introduce mixed ownership reform mechanism; enrich and cultivate IT
talent teams, inspire information values; create matched salary incentive mechanism.
(2) Build an absolute intelligent and smart platform
Upgrade and introduce IoT(Internet of Things) devices, accelerate logistics efficiency; build a cloud platform and
take full advantages of big data, enhance the management and operation ability of smart supply chain.
2. Implement the strategy of integrating wholesales and retails, expand retails market
(1)Integrate wholesales and retails to exchange and share resources
Integrate market demands and resources of distribution and retails, make a plan for the target supplier and
category of integrating wholesales and retails; strengthen the promotion and extension of integrating wholesales
and retails, satisfy the end demands of national retails of business center and distribution-owned drugstores;
realize the uniform of brand, information and standards, and make efforts to develop marketable varieties suitable
for drugstores.
(2)Integrate wholesales and retails and build provincial platform
Improve the construction of provincial platform and make a good integration of provincial resources; give full
play to synergy and make a good plan and coordination for resources, enhance the ability of business
centralization and organization, take standard operation and well controlled risk, improve the service level and
reduce management cost for end stores; build an integrating operation system so as to achieve the target of
integrating management and control with flexible coordination and high-efficient operation.
3. Focus on strategic direction of the Company and drive the development with two wheels
(1)Distribution business: focus on terminals, transformation and innovation
Accelerate the second merger and acquisition, make a good arrangement on distribution points at the empty areas,
create matched management and incentive mechanism; take full advantages of two invoices system and work hard
to develop retails terminal business; advance distribution retails business in an all-around manner, establish a
business model with core competitiveness; new business network will be completed in a fast way, speed up the
development of B2B,equipment and 4D business at the same time; the procurement and supply chain department
shall accelerate to build high efficient multi-warehouse operation, which will be completed in the first half year
and included in performance assessment.
Accelerate the efficiency of opening up new stores. Conform with changes of policies, seize the market
opportunity of prescription drained out and integrate with hospital prescription; realize fast opening of drugstore
surrounding hospital by replication to satisfy various business demands; develop drugstores cooperated with
hospitals in various way and explore the diversity of approaches to cooperation;
Expand new business field of medical devices and seize the high land of SPD strategy. Keep improving internal
management and take advantages of platform resources to promote the plan and development of category;
strengthen the construction of SPD project operation team, take the initiative to bid and follow up; optimize
system and explore new models with all manner of synergy and support.
(2)Guoda Drugstore: innovative models and development of scale
Enhance the management and efficiency of functional departments of headquarter, and make full use of resource
support. Take full advantages of risk control and resources integration of operation headquarter; make the design
of national unified brand and spare no efforts to build brand strengths; create a national and regional centralized
procurement model, build the core competitiveness belonging to Guoda Drugstore itself; reinforce the category
management and sort out all the categories, make a OEM development plan; enhance management ability to
business activities; introduce AI and set up professional drugstores; establish systematic membership management
mechanism.
Accelerate and improve the construction of provincial platform, integrate provincial resources; unify category and
resources and introduce distribution category resources; take full advantages of synergy, make a good planning
and coordination on resources, improve business concentration ability and management ability, work with
standard operation and controlled risk, sink the store to terminals, reduce management cost and improve service
level; by information and supply chain thinking, establish an integrating operation system and achieve the target
of uniform management and control, flexible synergy and high- efficient operation; make a reasonable
configuration of logistics planning and human resources.
Bring forth new ideas to business model. Guide in technology: big data, membership management, enterprise
cloud, IT technical support, back-end support: be proficient in expertise, improve service and configure resources,
escort for business development; build smart medical model with service oriented and form differentiated
competitiveness.
Increase inventory and achieve increments by means of opening new stores and mergers and acquisition, increase
expanding efficiency of the stores; the first-tier cities of Beijing, Shanghai and Guangzhou: concentrate on making
breakthroughs in hospital cooperative stores and hospital surrounding stores; provide guidance in development for
those with relatively weak development ability and encourage them to open stores; explore the experience of
replicating stores, and form reference samples and provide experience sharing; accelerate investment as well as
mergers and acquisitions, improve the efficiency of project approval and cooperation.
(III) Risk
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
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.
5. The risk of goodwill impairments
Sinopharm Accord Corporation Ltd. has conducted a major asset restructuring in 2016, and the company merged
was under the same control of Sinopharm Accord, therefore this restructuring has not taken any goodwill
impairments and there was no risk of the goodwill impairments caused by this restructuring.
X. Reception of research, communication and interview
1. In the report period, reception of research, communication and interview
√Applicable □ Not applicable
Time Way Type Basic situation index of investigation
Found more in “record chart of investor
relations activities dated 21 April 2017 ”
2017-04-21 Field research Institute
uploaded to interactive easy of Shenzhen
Stock Exchange
2017-05-10 Field research Institute Resolution Notice of AGM of 2016
Resolution Notice of Fourth
2017-12-27 Field research Institute Extraordinary Shareholders General
Meeting of 2017
Reception (times)
Number of hospitality
Number of individual reception
Number of other reception
Disclosed, released or let out major undisclosed No disclosed, released or let out major undisclosed information
information
Section V. Important Events
I. Profit distribution plan of common stock and capitalizing of common reserves plan
Formulation, Implementation and Adjustment of common stock Profit Distribution Policy Especially Cash Dividend policy during
the Reporting Period
√Applicable □ Not applicable
On 10 May 2017, the profit distribution plan for year of 2016 was deliberated and approved by annual general
meeting of 2016, that is taking total 428,126,983 shares as the radix, distributed RMB 3.30 (tax included) for each
10 shares in cash. The announcement of 2016 interest distribution implementation was released on 14 June 2017
by the Board (published in Securities Times, China Securities Journal, Hong Kong Commercial Daily and Juchao
Website http://www.cninfo.com.cn), the profit distribution plan for year of 2016 was completed, and dividend for
public shares was distributed to the account of shareholders dated 20 June 2017 (A-share) and 22 June 2017 (B-
share) respectively.
Special explanation on cash dividend policy
Satisfy regulations of General Meeting or requirement of Article
Y
of Association (Y/N):
Well-defined and clearly dividend standards and proportion
Y
(Y/N):
Completed relevant decision-making process and mechanism
Y
(Y/N):
Independent directors perform duties completely and play a
Y
proper role (Y/N):
Minority shareholders have opportunity to express opinions and
Y
demands totally and their legal rights are fully protected (Y/N):
Condition and procedures are compliance and transparent while
Not applicable
the cash bonus policy adjusted or changed (Y/N):
Profit distribution plan (pre-plan) of common stock and capitalizing of common reserves plan (pre-plan) in latest three years
(including the reporting period)
(1) Profit distribution plan for year of 2015
Taking the total 362,631,943 shares as of 31 December 2015 as the radix, cash bonus of RMB 3.00 (before tax)
each 10 shares will be distributed to the whole shareholders. This profit distribution did not convert capital reserve
into share capital.
(2) Profit distribution plan for year of 2016
Taking the total 428,126,983 shares as the radix, cash bonus of RMB 3.30 (before tax) each 10 shares will be
distributed to the whole shareholders. This profit distribution did not convert capital reserve into share capital.
(3) Profit distribution plan for year of 2017
Taking the total 428,126,983 shares as the radix, cash bonus of RMB 3.00 (before tax) each 10 shares will be
distributed to the whole shareholders. This profit distribution did not convert capital reserve into share capital.
Cash dividend of common stock in latest three years (including the reporting period)
In RMB
Net profit Ratio in net profit
attributable to attributable to
common stock common stock
Year for bonus Amount for cash shareholders of shareholders of Amount for cash Proportion for cash
shares bonus (tax included) listed company in listed company bonus by other ways bonus by other ways
consolidation contained in
statement for bonus consolidation
year statement
2017 128,438,094.90 1,057,791,930.67 12.14% 0.00 0.00%
2016 141,281,904.39 1,186,601,899.27 11.91% 0.00 0.00%
2015 108,789,582.90 761,312,261.06 14.29% 0.00 0.00%
The Company gains profits in reporting period and the retained profit of common stock shareholders provided by parent company is
positive but no plan of cash dividend proposed of common stock
□ Applicable √ Not applicable
II. Profit distribution plan and capitalizing of common reserves plan for the Period
√Applicable □ Not applicable
Bonus shares for every 10-share (Share)
Dividends for every 10-share (RMB) (Tax
3.00
included)
Equity base of distribution plan (Share) 428,126,983
Total cash dividend(RMB) (Tax included) 128,438,094.90
Distributable profits (RMB) 3,326,479,555.13
Ratio of cash dividend in total profit distribution 100%
Cash dividend policy:
If the company’s development is at the growth stage with significant capital expenditures, the minimum proportion of cash
dividend in the profit distribution should reach 40%.
Detail explanation on profit distribution or capitalization from capital public reserve
III. Implementation of commitment
1. 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
Comm Commit
Commitmen of Implementat
Promise Content of commitments itment ment
ts commi ion
date term
tments
Commitmen
ts 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
Commitmen transfer of shares of Sinopharm Holding Guangzhou it held to Accord
Comm
ts in report Pharma, “1. it will not newly-establish or broaden within Guangdong any Normally
itment Long-
of Sinopharm business operation that actually compete with that of Accord Pharma, or set 2005- implementin
of term
acquisition Holding up any new subsidiaries or subordinate enterprises who engage in such 06-21 g
shareh effective
or equity business. 2. It will enter into business delineation with Accord Pharma and
olders
change 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 Holding and Sinopharm Foreign Trade made commitments in
Sinopharm the Report about China National Accord Medicines Corporation Ltd.
Group Purchasing Assets and Raising Supporting Funds and Related Transactions
Co., Ltd.; by Asset Sale, Stock Issuance and Cash Payment that the non-public
Comm
China offering of shares of Sinopharm Accord obtained from this transaction shall
Commitmen itment
National not be transferred within 36 months since the finish date of issuance and Normally
ts in assets on 2016- 36
Pharmace shall be unlocked after 36 months since the date of listing. Within 6 months implementin
reorganizati restrict 05-31 months
utical after the completion of this transaction, if the closing price of the stock of g
on ed
Foreign Sinopharm Accord is less than the issue price in continuous 20 trading
shares
Trade days, or the closing price at the end of 6 months after the completion of this
Corporatio transaction is less than the issue price, the lockup period of the stock of
n Sinopharm Group and Sinopharm Foreign Trade obtained from Sinopharm
Accord by this transaction will automatically prolong at least 6 months.
The shares 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.
Comm Purchasing Assets and Raising Supporting Funds and Related Transactions
Ping’an
itment by Asset Sale, Stock Issuance and Cash Payment that the non-public
Assets Normally
on offering of shares of Sinopharm Accord obtained from this transaction shall 2016- 36
Managem implementin
restrict not be transferred within 36 months since the finish date of issuance and 05-31 months
ent Co., g
ed shall be unlocked after 36 months since the date of listing. After placement
Ltd.
shares 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,
Perfor Guangdong Uptodate & Special Medicines and Guoda Drugstore should
mance respectively be no less than RMB 47,385,600.00, RMB 19,167,000.00, and
commi RMB 98,466,100.00, while the 2017 annual net profits should respectively
tment be no less than RMB 49,394,500.00, RMB 20,209,700.00, and RMB
Sinopharm Normally
and 110,998,90.00, and the 2018 annual net profits should respectively be no 2016- 2018-
Group implementin
compe less than RMB 51,148,200.00, RMB 21,330,100.00, and RMB 05-31 12-31
Co., Ltd. g
nsatio 131,275,500.00. Net profit refers to the lower one between the after-tax net
n profit attributable to the owners of parent company planning to invest in the
arrang target company and the net profit attributable to the owners of parent
ement 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 Compensation Agreement for the Stock Issuance and
Assets Purchase.”
Sinopharm Foreign Trade made commitments in the Report about China
Perfor
National Accord Medicines Corporation Ltd. Purchasing Assets and
China mance
Raising Supporting Funds and Related Transactions by Asset Sale, Stock
National commi
Issuance and Cash Payment that the 2016 annual net profits of Southern
Pharmace tment
Medical Trade should be no less than RMB 39880700, while the 2017 Normally
utical and 2016- 2018-
annual net profits should be no less than RMB 47323200, and should not implementin
Foreign compe 05-31 12-31
less than RMB 55364600 in 2018. Net profit refers to the lower one g
Trade nsatio
between the after-tax net profit attributable to the owners of parent
Corporatio n
company planning to invest in the target company and the net profit
n arrang
attributable to the owners of parent company after deducting the non-
ement
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
Jiancheng;
Fu Yuequn “Fu Yuequn and other 10 natural person made commitments in the Report
Gu about China National Accord Medicines Corporation Ltd. Purchasing
Chaoqun; Assets and Raising Supporting Funds and Related Transactions by Asset
Perfor
Guo Sale, Stock Issuance and Cash Payment that the 2016 annual net profits of
mance
Shu’er; Southern Medical Trade should be no less than RMB 39,880,700, while the
commi
Huang 2017 annual net profits should be no less than RMB 47,323,200, and
tment
Qiufang; should not less than RMB 55,364,600 in 2018. Net profit refers to the lower Normally
and 2016- 2018-
Li one between the after-tax net profit attributable to the owners of parent implementin
compe 05-31 12-31
Hongbing; company planning to invest in the target company and the net profit g
nsatio
Liao Zhi; attributable to the owners of parent company after deducting the non-
n
Lin recurring gains and losses. If the actual net profit of the Southern Medical
arrang
Wanqun; Trade doesn’t reach the committed net profit, Fu Yuequn and other 10
ement
SunWei; natural person will need to compensate according to the stipulations of the
Zhang \"Profit Forecast Compensation Agreement for the Stock Issuance and
Zhaohua; Assets Purchase.”
Zhang
Zhaotang
\"“Sinopharm Accord 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 net profits attributable to the owners of
parent company after deducting the non-recurring gains and losses
committed by Zhijun Pharmaceutical in 2016, 2017 and 2018 should be
Perfor
respectively no less than RMB 222,671,700.00, RMB 232,561,600.00, and
mance
RMB 241,878,700.00; the net profits attributable to the owners of parent
China commi
company after deducting the non-recurring gains and losses committed by
National tment
Zhijun Pharmacy Trade in 2016, 2017 and 2018 should be respectively no Normally
Accord and 2016- 2018-
less than RMB 2,379,600.00, RMB 2,335,100.00, and RMB 2,345,600.00; implementin
Medicines compe 05-31 12-31
the net profits attributable to the owners of parent company after deducting g
Corporatio nsatio
the non-recurring gains and losses committed by Pingshan Pharmaceutical
n Ltd. n
in 2016, 2017 and 2018 should be respectively no less than RMB
arrang
39,716,300.00, RMB 43,033,500.00, and RMB 50,325,500.00. If the actual
ement
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
National
Accord
Medicines
“The listed company, controlling shareholders, the actual controllers made
Corporatio
commitments in the Report about China National Accord Medicines
n Ltd.;
Corporation Ltd. Purchasing Assets and Raising Supporting Funds and
Sinopharm
Other Related Transactions by Asset Sale, Stock Issuance and Cash Payment that Long- Normally
Group 2016-
commi the Company shall not violate the relevant regulations of Article 16 in term implementin
Co., 05-31
tments Securities Issuance and Underwriting Management Approach, and directly effective g
Ltd.;China
or indirectly providing financial assistance or compensation for the
National
subscription objects and its shareholders / partners / clients (if any) of this
Pharmace
non-public offering does not exist and will not occur in the future.”
utical
Group
Corporatio
n
“Ping An Asset Management Co., Ltd. Promises 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
Ping’an restructuring process, and has the ability to subscribe the shares, the
Assets Other relevant capital sources are legitimate, there is no hierarchical income and Long- Normally
2016-
Managem commi other structured arrangements, and there is no use of leveraged funds. The term implementin
03-24
ent Co., tments unit does not receive financial assistance or compensation from Sinopharm effective g
Ltd. Accord and its controlling shareholders, or the actual controllers. The
investors’ structure of above - mentioned products do 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.”
Comm “Sinopharm Group made commitments in the Report about China National
itment Accord Medicines Corporation Ltd. Purchasing Assets and Raising
s on Supporting Funds and Related Transactions by Asset Sale, Stock Issuance
horizo and Cash Payment that the Company shall be the controlling shareholder of
ntal China National Accord Medicines Corporation Ltd. (hereinafter referred to
Sinopharm compe as Sinopharm Accord) up to the issue date of this commitment letter, after Long- Normally
2016-
Group tition, the completion of this major assets reorganization (hereinafter referred to as term implementin
12-28
Co., Ltd. relatio “this reorganization”), Sinopharm Accord shall no longer hold shares or effective g
n operate relevant businesses of pharmaceutical industry, the main business
transac will become the national pharmaceutical retail and pharmaceutical
tion distribution business in Guangdong and Guangxi. In order to support the
and business development of Sinopharm Accord and avoid horizontal
capital competition with Sinopharm Accord and its controlling enterprises, the
occupa Company made following irrevocable commitments and promises:1, after
tion the completion of this reorganization, as for the social retail drugstore
assets except for Sinopharm Group Guoda Drugstore 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 to 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 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.”
“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 the Company shall be the actual controller 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
Comm
following irrevocable commitments and promises:1, after the completion of
itment
this reorganization, as for the social retail drugstore assets except for
s on
Sinopharm Group Guoda Drugstore Co., Ltd. and its subsidiaries and
horizo
branches owned or controlled by the Company, the Company promised to
China ntal
take appropriate measures to solve the horizontal competition problem in
National compe
the pharmaceutical retail business between the Company and Sinopharm
Pharmace tition, Long- Normally
Accord within 5 years since the completion date of this reorganization. 2. 2016-
utical relatio term implementin
The Company's way of resolving horizontal competition problems includes 12-28
Group n effective g
and is not limited to purchasing the social retail drugstore assets
Corporatio transac
subordinated to the Company by Sinopharm Accord, taking the entrusted
n tion
operation, leasing or contracting operation by Sinopharm Accord and its
and
controlling enterprises in accordance with the methods permitted to
capital
national laws to hold or control the social retail drugstore assets, or
occupa
transferring the controlling stake of the social retail drugstore assets by the
tion
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 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 Holding made commitments in the Commitment Letter About
Sinopharm Group Co., Ltd. to Avoid Horizontal Competition: “First, the
Company and the Company’s wholly-owned, controlling or other
enterprises with actual control (in addition to Sinopharm Accord and its
controlling enterprises, hereinafter the same) don’t have businesses and Controlling
operations constituting the substantial horizontal competition to Sinopharm shareholder
Accord and its controlling enterprises. Second, the Company and the is implement
Company’s wholly-owned, controlling or other enterprises with actual in real
control shall not engage, participate in or do businesses and activities in earnest,
Guangdong and Guangxi which constitute substantial competition to Sinopharm
Comm
Sinopharm Accord and pharmaceutical business services. Third, the Accord will
itment Long-
Sinopharm Company and the Company’s wholly-owned, controlling or other 2013- actively
Commitmen of term
Holding enterprises with actual control shall not engage, participate in or do 09-05 urged the
ts make in shareh effective
businesses and activities which constitute substantial competition to controlling
initial public olders
Sinopharm Accord and pharmaceutical industry businesses. Fourth, the shareholder
offering or
Company shall not take advantage of the control to Sinopharm Accord to and actual
re-financing
damage the legitimate rights and interests of Sinopharm Accord and other controller to
shareholders (especially medium and small shareholders). This fulfill
commitment letter takes effect from the issue date, and remains in effect for commitment
the entire period when the Company acts as the controlling shareholder or s
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.”
Comm Sinopharm Holding made commitments in the Commitment Letter About Controlling
Long-
Sinopharm itment Sinopharm Group Co., Ltd. to Regulate the Related Transactions with 2013- shareholder
term
Holding of China National Accord Medicines Corporation Ltd.: “First, when the 09-05 is implement
effective
shareh Company is controlling Sinopharm Accord, the Company and the in real
olders companies and enterprises directly and indirectly controlled by the earnest,
Company (“related party” for short) will strictly regulate the related Sinopharm
transactions with Sinopharm Accord and its controlling enterprises. Second, Accord will
for the related transactions that can not be avoided nor have reasonable actively
reasons to occur, the Company and related party shall sign normative urged the
related transaction agreement in accordance with relevant laws with controlling
Sinopharm Accord. Sinopharm Accord implements the approval procedures shareholder
and fulfills the information disclosure obligations of the related transactions and actual
according to relevant laws, regulations, rules, other normative documents controller to
and the constitutions of Sinopharm Accord. Third, for the related fulfill
transactions that can not be avoided or have reasonable reasons to occur, commitment
the Company and related party shall abide by the open, fair and just market s
principles and confirm the price of related transactions in accordance with
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 Letter About China Controlling
Comm
National Pharmaceutical Group Corporation to Avoid Horizontal shareholder
itment
Competition with China National Accord Medicines Corporation Ltd.: Long- is implement
Sinopharm of 2013-
“First, in the next five years, Sinopharm plans to take appropriate measures term in real
Group actual 10-16
(including assets replacement or acquisition, equity reorganization, etc.) to effective earnest,
control
resolve the horizontal competition between Sinopharm Weiqida and Sinopharm
ler
Sinopharm Accord. Second, in addition to the past matters and matters Accord will
disclosed in this commitment letter, the Company and the Company’s actively
wholly-owned, controlling or other enterprises with actual control rights urged the
(except for Sinopharm Accord and its controlling enterprises, the same as controlling
below) shall not directly engaged in, participate in or do the businesses an shareholder
activities constituting actual competition to the production and operation of and actual
Sinopharm Accord in China. The relevant commitments about avoiding controller to
horizontal competition that the Company made in the past still remain in fulfill
effect. Third, the Company shall not take advantage of the control commitment
relationship to Sinopharm Accord to damage the legitimate rights and s
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 National Accord Medicines Corporation Ltd.: “First, when the
Company is controlling Sinopharm Accord, the Company and the
companies and enterprises directly and indirectly controlled by the
Company (“related party” for short) will strictly regulate the related
transactions with Sinopharm Accord and its controlling enterprises. Second,
Controlling
for the related transactions that can not be avoided or have reasonable
shareholder
reasons to occur, the Company and related party shall sign normative
is implement
related transaction agreement in accordance with relevant laws with
in real
Sinopharm Accord. Sinopharm Accord implements the approval procedures
earnest,
and fulfills the information disclosure obligations of the related transactions
Comm Sinopharm
according to relevant laws, regulations, rules, other normative documents
itment Accord will
and the constitutions of Sinopharm Accord. Third, for the related Long-
Sinopharm of 2013- actively
transactions that can not be avoided or have reasonable reasons to occur, term
Group actual 09-22 urged the
the Company and related party shall abide by the open, fair and just market effective
control controlling
principles and confirm the price of related transactions in accordance with
ler shareholder
the price that the independent third party without association sets for the
and actual
same and similar transactions, and ensure the fairness of the price of the
controller to
related transactions. Fourth, when the board of directors and the general
fulfill
meeting of stockholders of Sinopharm Accord vote on the related
commitment
transactions involving the Company and other enterprises controlled by the
s
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
commitment
s for
medium and
small
shareholders
Completed
on time Yes
(Y/N)
2. Concerning assts or project of the Company, which has profit forecast, and reporting period still in
forecasting period, explain reasons of reaching the original profit forecast
√Applicable □ Not applicable
Reasons of
Current Current
fails to
Assets or project forecast actually Disclosure date
achieved the
with profit Starting time Terminal time performance performance for former Index
forecast
forecasted (in 10 thousand (in 10 thousand prediction
number (if
Yuan) Yuan)
applicable)
”Sinopharm
Accord:
Acquiring
Assets by
Offering
Foshan Nanhai 2016-01-01 2018-12-31 4,939.45 5,010.61 nil 2016-05-31
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
Guangdong ”Sinopharm
Uptodate & Accord:
2016-01-01 2018-12-31 2,020.97 2,030.62 nil 2016-05-31
Special Acquiring
Medicines Assets by
Offering
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Acquiring
Assets by
n i l Offering
Guoda Drugstore 2016-01-01 2018-12-31 11,099.89 18,299.08 2016-05-31
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Acquiring
Assets by
Southern Offering
2016-01-01 2018-12-31 4,732.32 4,744.53 nil 2016-05-31
Medical Trade Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Shanghai
Shyndec
Pharmaceutical
Major changes Co., Ltd..and
in policy, the Company
Zhijun
2016-01-01 2018-12-31 23,256.16 20,572.91 operating 2016-05-31 of Acquiring
Pharmaceutical
environment Assets by
and market. Offering
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
Zhijun Pharmacy 2016-01-01 2018-12-31 233.51 267.04 nil 2016-05-31 ”Sinopharm
Trade Accord:
Shanghai
Shyndec
Pharmaceutical
Co., Ltd.. and
the Company
of Acquiring
Assets by
Offering
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Shanghai
Shyndec
Pharmaceutical
Major changes Co., Ltd.. and
in policy, the Company
Pingshan
2016-01-01 2018-12-31 4,303.35 4,214.76 operating 2016-05-31 of Acquiring
Pharmaceutical
environment Assets by
and market. Offering
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
Commitment made by shareholders of the Company and counterparty in annual operation performance
□ Applicable √ Not applicable
IV. 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.
V. Explanation from Board of Directors, Supervisory Committee and Independent Directors
(if applicable) for “Qualified Opinion” that issued by CPA
□ Applicable √ Not applicable
VI. Particulars about the changes in aspect of accounting policy, estimates and calculation
method compared with the financial report of last year
√Applicable □Not applicable
On 10 May 2017, the Notice of the Ministry of Finance on Issuing and Revising the Accounting standards
for Business Enterprise No.16- Government subsidy (Cai Kuai [2017] No.15) was promulgated, and come into
effect since 12 June 2017. The prospective application method shal be adopted by an enterprise for treating the
government subsidy on 1 January 2017, and the new government subsidy occurred during 1 January 2017 to
implementation of the Notice shall be adjusted in line with the Standards. The above mentioned Standards are
come into force since 12 June 2017 by the Group and relevnat accounting policy are changed pursuite to the
Standards. As for the government subsidy since 1 January 2017 with routine activities concerned of the
enterprise, they will re-classify to “Other income” and “Financial expenses” from “Non-operation revenue”. In
the reporting period, amount of “Other income”increased7, 958,493.67 Yuan, the “Financial expenses” has
179,700.00 Yuan declined and “Non-operation revenue” decreased 8,138,193.67 Yuan. Net profit of the
Company and shareholder’ equity has no influence for the above mentioned adjustment, and no retroactive
adjustment involved for the data in comparative period either.
On 28 April 2017, the “Notice of Print and Distribute Accounting Standards for Business Enterprise No.42-
Holding of the non-current assets and dispoal group ready for sale and Discontinued Operation (Cai Kuai [2017]
No.13)” was issued by Ministry of Finance, which was came into effect since 28 May 2017.The Group exercise
the new Notice and change the accounting policy and re-classify relevant business. Owing to the Group has no
relevant business involved in year of 2017, the changes have no significant impact on business performance of the
Group.
On 25 December 2017, ministry of finance revised and issued an Announcement on Revising and Printing
Financial Report Format for General Enterprise, which has revised the financial report format, applying to the
financial reports for the year of 2017 and later. The Group has made relative changes to its related accounting
policies in conformity with the requirements stated in the above guideline, which including: increased items of
“Assets holding for sale” and “Liability holding for sale” in Balance Sheet, and increased items of “Income from
assets disposal”, “(i) Net profit of continuous operation” and ‘(ii) Net profit of discontinued operation” in Profit
Statement. The gains/losses from assets disposal which have listed as “Non-operation revenue” and “Non-
operation costs” in Profit Statement will re-classify to item of “Income from assets disposal”. In the reporting
period, “Income from assets disposal” has 792,138.38 Yuan increased, the “Non-operation revenue” decreased
1,195,098.24 Yuan and “Non-operation costs” decreased 402,959.86 Yuan. Change of the above mentioned
accounting policy adopted retrospective application, the “Income from assets disposal” for year of 2016 increased
to 9,175,103.65 Yuan, the “Non-operation revenue” decreased to 10,501,930.08 Yuan and “Non-operation costs”
decreased to 1,326,826.43 Yuan. This change has no material effects on the financial status, business performance
and cash flow of the Group.
VII. Major accounting errors within reporting period that needs retrospective restatement
□ Applicable √ Not applicable
No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.
VIII. Compare with last year’s financial report; explain changes in consolidation statement’s
scope
√Applicable □ Not applicable
Details of changes in consolidation statement’s scope can be seen in Note VI of Financial Report.
IX. Appointment and non-reappointment (dismissal) of CPA
Accounting firm appointed
Name of domestic accounting firm Ernst & Young CPA (Special General partnership)
Remuneration for domestic accounting firm (in 10
307.84
thousand Yuan)
Continuous life of auditing service for domestic
2-year
accounting firm
Name of domestic CPA Li Jianguang, Yan Ping
Name of foreign accounting firm (if applicable) N/A
Remuneration for foreign accounting firm (10
thousand Yuan) (if applicable)
Continuous life of auditing service for foreign
accounting firm (if applicable)
Name of foreign CPA (if applicable) N/A
Re-appointed accounting firms in this period
□ Yes √ No
Appointment of internal control auditing accounting firm, financial consultant or sponsor
√Applicable □ Not applicable
The Company engaged Ernst & Young CPA (Special General partnership) as the audit body for internal control, and auditing charge
for internal control amounting as RMB 0.797 million.
X. Particular about suspended and delisting after annual report disclosed
□ Applicable √ Not applicable
XI. Bankruptcy reorganization
□ Applicable √ Not applicable
No bankruptcy reorganization for the Company in reporting period.
XII. Significant lawsuits and arbitrations of the Company
□ Applicable √ Not applicable
No significant lawsuits and arbitrations occurred in the reporting period.
XIII. Penalty and rectification
□ Applicable √ Not applicable
No penalty and rectification for the Company in reporting period.
XIV. Integrity of the company and its controlling shareholders and actual controllers
□ Applicable √ Not applicable
XV. Implementation of the company’s stock incentive plan, employee stock ownership plan or
other employee incentives
□ Applicable √ Not applicable
During the reporting period, the company has no stock incentive plan, employee stock ownership plan or other employee incentives
that have not been implemented.
XVI. Major related transaction
1. Related transaction with routine operation concerned
√Applicable □ Not applicable
(1) Related transaction with routine operation concerned found more in the “X. Related relationship and
transactions” carried in Section XI. Financial Report;
(2) Related transactions are settled in cash and notes etc., relevant items released on 22 April 2017, found more in
“Sinopharm Accord: Notice of Supplementary of Routine Related Transactions Prediction for year of 2017”
(Notice No.: 2017-32)” on Juchao Website;
(3) According to the “Proposal of Routine Related Transaction Prediction with Related Parties for year of 2017”,
deliberated and approved by 22nd session of 7th BOD dated 17 April 2017, and the ”Notice of Supplementary of
Routine Related Transactions Prediction for year of 2017” (Notice No.: 2017-32) released on 22 April 2017, the
sales of related parties takes73.50% in total predicted number for the year in 2017 and purchasement of related
parties takes 78.32% in total predicted number for the year.
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. Main 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
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
The Company had no other related transaction in the reporting period.
XVII. Significant contract and implementations
1. Trusteeship, contract and leasing
(1) Trusteeship
□ Applicable √ Not applicable
The Company had no trusteeship in the 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
(1) Guarantees
In 10 thousand Yuan
Particulars about the external guarantee of the Company and the subsidiaries (Barring the guarantee for subsidiaries)
Related Guarante
Actual date of
Announce Actual e for
Name of the Company Guarantee happening (Date Guarantee Guarantee Implemen
ment guarantee related
guaranteed limit of signing type term ted (Y/N)
disclosure limit party
agreement)
date (Y/N)
Guarantee between the Company and the subsidiaries
Related Actual date of Actual Guarante
Name of the Company Guarantee Guarantee Guarantee Implemen
Announce happening (Date guarantee e for
guaranteed limit type term ted (Y/N)
ment of signing limit related
disclosure agreement) party
date (Y/N)
China National
General 2017.7.13-
Accord Medicines 2017-04-19 25,000 2017-07-13 23,512.64 N N
assurance 2018.7.13
Corporation Ltd.
China National
General 2017.11.23-
Accord Medicines 2017-04-19 20,000 2017-11-23 11,137.72 N N
assurance 2018.5.22
Corporation Ltd.
Sinopharm Holding
General 2017.10.12-
Shenzhen Medicine 2017-04-19 500 2017-10-12 104.92 N N
assurance 2018.10.11
Co., Ltd.
Sinopharm Holding
General 2017.10.12-
Shenzhen Jianmin 2017-04-19 500 2017-10-12 0 N N
assurance 2018.10.11
Co., Ltd.
Guangdong Nanfang
Pharmaceutical General 2017.6.14-
2017-04-19 15,000 2017-06-14 0 N N
Foreign Trade Co., assurance 2018.6.13
Ltd.
Guangdong Nanfang
Pharmaceutical General 2017.6.5-
2017-04-19 2,500 2017-06-05 292.25 N N
Foreign Trade Co., assurance 2017.12.31
Ltd.
Sinopharm Holding
General 2017.11.6-
Jiangmen Renren Co., 2017-04-19 1,000 2017-11-06 0 N N
assurance 2018.10.11
Ltd.
Sinopharm Holding General 2017.10.16-
2017-04-19 1,500 2017-10-16 755.29 N N
Foshan Co., Ltd. assurance 2018.10.11
Sinopharm Holding
General 2017.12.29-
Guangdong Hengxing 2017-04-19 3,000 2017-12-29 1,830.41 N N
assurance 2018.12.29
Co., Ltd.
Foshan Nanhai
General 2017.1.19-
Uptodate & Special 2016-12-30 5,000 2017-01-19 509.12 N N
assurance 2017.12.30
Medicines Co. Ltd.
Foshan Nanhai
General 2017.7.31-
Uptodate & Special 2017-04-19 5,000 2017-07-31 0 N N
assurance 2018.7.31
Medicines Co. Ltd.
Foshan Nanhai
General 2017.5.15-
Uptodate & Special 2017-04-19 5,000 2017-05-15 0 N N
assurance 2018.5.14
Medicines Co. Ltd.
Foshan Nanhai 2017-04-19 6,000 2017-10-16 1,546.96 General 2017.10.16- N N
Uptodate & Special assurance 2018.10.11
Medicines Co. Ltd.
Foshan Nanhai
General 2017.12.1-
Uptodate & Special 2017-04-19 5,000 2017-12-01 699.83 N N
assurance 2018.12.1
Medicines Co. Ltd.
Sinopharm Holding General 2017.10.26..
2017-04-19 2,000 2017-10-26 1,600 N N
Zhaoqing Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.11.15-
2017-04-19 20,000 2017-11-15 13,203 N N
Guangxi Co., Ltd. assurance 2018.11.18
Sinopharm Holding General 2017.10.13-
2017-04-19 28,000 2017-10-13 5,994.44 N N
Guangxi Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.11.9-
2017-04-19 25,000 2017-11-09 9,853.59 N N
Guangxi Co., Ltd. assurance 2018.11.8
Sinopharm Holding General 2016.9.14-
2016-03-26 5,000 2016-09-14 351.36 N N
Guangxi Co., Ltd. assurance 2017.9.13
Sinopharm Holding General 2017.11.23-
2017-04-19 10,000 2017-11-23 4,996 N N
Guangxi Co., Ltd. assurance 2018.5.22
Sinopharm Holding General 2017.9.4-
2017-04-19 10,000 2017-09-04 0 N N
Guangxi Co., Ltd. assurance 2018.9.4
Sinopharm Holding General 2017.8.31-
2017-04-19 10,000 2017-08-31 0 N N
Guangxi Co., Ltd. assurance 2018.8.31
Sinopharm Holding General 2017.5.20-
2017-04-19 35,000 2017-05-20 1,481.16 N N
Guangzhou Co., Ltd. assurance 2018.5.20
Sinopharm Holding General 2017.11.28-
2017-04-19 30,000 2017-11-28 5,040.94 N N
Guangzhou Co., Ltd. assurance 2018.11.27
Sinopharm Holding General 2017.7.24-
2017-04-19 25,000 2017-07-24 9,437.28 N N
Guangzhou Co., Ltd. assurance 2018.7.23
Sinopharm Holding General 2017.10.23-
2017-04-19 40,000 2017-10-23 27,562.16 N N
Guangzhou Co., Ltd. assurance 2018.9.24
Sinopharm Holding General 2017.3.3-
2016-03-26 15,000 2017-03-01 0 N N
Guangzhou Co., Ltd. assurance 2018.3.2
Sinopharm Holding General 2017.10.13-
2017-04-19 35,000 2017-10-11 0 N N
Guangzhou Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.8.31-
2017-04-19 30,000 2017-08-31 26,287.09 N N
Guangzhou Co., Ltd. assurance 2018.8.30
Sinopharm Holding General 2017.5.15-
2017-04-19 40,000 2017-05-15 21,878.29 N N
Guangzhou Co., Ltd. assurance 2018.5.14
Sinopharm Holding 2017-04-19 10,000 2017-10-27 9,840.15 General 2017.10.27- N N
Guangzhou Co., Ltd. assurance 2018.2.28
Sinopharm Holding General 2017.7.1-
2017-04-19 60,000 2017-07-01 30,357.18 N N
Guangzhou Co., Ltd. assurance 2018.6.30
Sinopharm Holding General 2017.5.10-
2017-04-19 20,000 2017-05-10 3,695.7 N N
Guangzhou Co., Ltd. assurance 2018.5.9
Sinopharm Holding General 2017.8.18-
2017-04-19 30,000 2017-08-18 7,856.97 N N
Guangzhou Co., Ltd. assurance 2018.8.17
Sinopharm Holding General 2017.4.19-
2017-04-19 85,000 2017-04-19 5,740.92 N N
Guangzhou Co., Ltd. assurance 2018.3.31
Sinopharm Holding
General 2017.5.20-
Guangdong Yuexing 2017-04-19 3,500 2017-05-20 2,348.5 N N
assurance 2018.5.20
Co., Ltd.
Sinopharm Holding
General 2017.10.13-
Guangdong Yuexing 2017-04-19 5,000 2017-10-12 4,728.84 N N
assurance 2018.10.11
Co., Ltd.
Sinopharm Holding
General 2016.9.18-
Guangdong Yuexing 2016-03-26 3,000 2016-09-18 249.01 N N
assurance 2017.9.17
Co., Ltd.
Sinopharm Holding
General 2017.1.18-
Guangdong Yuexing 2016-12-30 2,000 2017-01-18 1,856.77 N N
assurance 2018.1.17
Co., Ltd.
Sinopharm Holding General 2017.10.13-
2017-04-19 9,000 2017-10-13 0 N N
Liuzhou Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.6.21-
2017-04-19 5,000 2017-06-21 1,592.86 N N
Liuzhou Co., Ltd. assurance 2018.6.20
Sinopharm Holding General 2017.2.15-
2016-12-30 6,000 2017-02-15 1,594.08 N N
Liuzhou Co., Ltd. assurance 2018.1.2
Sinopharm Holding General 2017.10.12-
2017-04-19 1,000 2017-10-12 1,000 N N
Zhanjiang Co., Ltd. assurance 2018.10.11
Foshan Nanhai
General 2017.1.19-
Pharmaceutical Co., 2016-12-30 5,000 2017-01-19 86 N N
assurance 2017.12.30
Ltd.
Foshan Nanhai
General 2017.7.31-
Pharmaceutical Co., 2017-04-19 5,000 2017-07-31 0 N N
assurance 2018.7.31
Ltd.
Foshan Nanhai
General 2017.10.16-
Pharmaceutical Co., 2017-04-19 5,000 2017-10-16 2,954 N N
assurance 2018.10.11
Ltd.
Foshan Nanhai 2017-04-19 5,000 2017-12-01 0 General 2017.12.1- N N
Pharmaceutical Co., assurance 2018.12.1
Ltd.
Sinopharm Holding General 2017.10.12-
2017-04-19 500 2017-10-12 500 N N
Shantou Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.10.12-
2017-04-19 1,000 2017-10-12 0 N N
Zhongshan Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.10.12-
2017-04-19 1,000 2017-10-12 0 N N
Zhuhai Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.10.12-
2017-04-19 1,000 2017-10-12 0 N N
Meizhou Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.10.12-
2017-04-19 1,000 2017-10-12 0 N N
Huizhou Co., Ltd. assurance 2018.10.11
Sinopharm Holding General 2017.10.12-
2017-4-19 2,000 2017-10-12 0 N N
Dongguan Co., Ltd. assurance 2018.10.11
Sinopharm Holding
General 2017.10.17-
Shenzhen Yanfeng 2017-04-19 9,000 2017-10-17 1,200 N N
assurance 2018.10.11
Co., Ltd.
Sinopharm Holding
General 2017.11.23-
Shenzhen Yanfeng 2017-04-19 2,000 2017-11-23 2,000 N N
assurance 2018.05.22
Co., Ltd.
Sinopharm Holding
General 2017.08.18-
Shenzhen Yanfeng 2017-04-19 3,000 2017-08-18 3,000 N N
assurance 2018.08.17
Co., Ltd.
694,000 Total amount of actual 1,028,276.09
Total amount of approving
occurred guarantee for
guarantee for subsidiaries in report
subsidiaries in report period
period (B1)
(B2)
735,000 Total balance of actual 248,675.43
Total amount of approved
guarantee for subsidiaries at
guarantee for subsidiaries at the
the end of reporting period
end of reporting period (B3)
(B4)
Guarantee between the subsidiaries and the subsidiaries
Related Guarante
Actual date of
Announce Actual e for
Name of the Company Guarantee happening (Date Guarantee Guarantee Implemen
ment guarantee related
guaranteed limit of signing type term ted (Y/N)
disclosure limit party
agreement)
date (Y/N)
Sinopharm Holding
General 2017.6.9-
Guoda Drugstore 2017-04-19 3,000 2017-06-09 2,843 N N
assurance 2018.6.8
Guangdong Co.,Ltd
Sinopharm Holding
General 2017.6.1-
Guoda Drugstore 2017-04-19 3,000 2017-06-01 2,397 N N
assurance 2018.6.1
Guangdong Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.3.21-
2016-12-30 4,500 2017-03-21 1,440 N N
Shenyang Chain assurance 2018.1.24
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.9.1-
2017-04-19 5,000 2017-09-01 0 N N
Shenyang Chain assurance 2018.9.1
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.6.1-
2017-04-19 6,000 2017-06-01 5,498 N N
Shenyang Chain assurance 2018.6.1
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.8.23-
2017-04-19 6,000 2017-06-29 5,921 N N
Shenyang Chain assurance 2018.8.23
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.6.1-
2017-04-19 3,000 2017-06-01 2,101 N N
Shenyang Chain assurance 2018.6.1
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.6.28-
2017-04-19 6,000 2017-06-28 5,337 N N
Shenyang Chain assurance 2018.6.28
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.10.10-
2017-04-19 15,000 2017-10-10 3,955 N N
Shenyang Chain assurance 2018.10.9
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.7.20-
2017-4-19 4,200 2017-7-20 0 N N
Shenyang Chain assurance 2018.7.19
Co.,Ltd
Fujian Guoda
General 2017.2.1-
Drugstore Chain 2016-12-30 1,950 2017-02-01 1,662 N N
assurance 2018.2.1
Co.,Ltd
Sinopharm Holding General 2017.1.29-
2016-12-30 2,100 2017-01-29 275 N N
Guoda Drugstore assurance 2017.12.31
Guangxi Chain
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.10.10..
2017-04-19 2,000 2017-10-10 993 N N
Guangxi Chain assurance 2018.10.9
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.4.24-
2017-04-19 3,000 2017-04-24 1,903 N N
Inner Mongolia assurance 2018.4.23
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.4.23-
2017-04-19 5,000 2017-04-23 1,938 N N
Inner Mongolia assurance 2018.4.22
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.10.10-
2017-04-19 6,000 2017-10-10 1,967 N N
Inner Mongolia assurance 2018.10.9
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.5.15-
2017-04-19 6,000 2017-05-01 5,036 N N
Shanxi Yiyuan Chain assurance 2018.4.18
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.9.19-
2017-04-19 4,000 2017-08-31 3,881 N N
Shanxi Yiyuan Chain assurance 2018.9.18
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.12.25-
2017-04-19 2,800 2017-10-01 1,704 N N
Shanxi Yiyuan Chain assurance 2018.12.24
Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.4.5-
2017-04-19 8,000 2017-04-05 3,606 N N
Shanxi Yiyuan Chain assurance 2018.4.4
Co.,Ltd
Sinopharm Holding
Guoda Fumei General 2016.12.14-
2016-12-30 9,000 2016-12-14 3,896 N N
Pharmaceutical assurance 2017.12.13
(Shanghai) Co., Ltd.
Shanxi Guoda General 2017.5.1-
2017-04-19 3,000 2017-05-01 3,000 N N
Wanmin Drugstore assurance 2018.5.1
Chain Co.,Ltd
Shanxi Guoda
General 2017.4.1-
Wanmin Drugstore 2016-12-30 5,000 2017-04-01 3,600 N N
assurance 2018.4.1
Chain Co.,Ltd
Shanxi Guoda
General 2017.6.1-
Wanmin Drugstore 2017-04-19 3,000 2017-06-01 500 N N
assurance 2018.6.1
Chain Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.11.1-
2017-04-19 1,000 2017-11-01 20 N N
Yangzhou Dadesheng assurance 2018.11.1
Chain Co.,Ltd
Sinopharm Holding
Guoda Drugstore General 2017.10.10-
2017-04-19 2,000 2017-10-10 0 N N
Yangzhou Dadesheng assurance 2018.10.9
Chain Co., Ltd
Hunan Guoda
Minshengtang General 2017.10.16-
2017-04-19 2,400 2017-10-16 0 N N
Drugstore Chain Co., assurance 2018.10.15
Ltd.
Hunan Guoda
Minshengtang General 2017.10.20-
2017-04-19 2,000 2017-10-20 0 N N
Drugstore Chain Co., assurance 2018.10.9
Ltd.
Sinopharm Holding
Guoda Drugstore General 2017.10.10-
2017-04-19 2,000 2017-10-10 1,993 N N
Jiangmen Chain assurance 2018.10.9
Co.,Ltd
Total amount of actual
Total amount of approving
occurred guarantee for
guarantee for subsidiaries in report 103400 122,247.45
subsidiaries in report period
period (C1)
(C2)
Total balance of actual
Total amount of approved
guarantee for subsidiaries at
guarantee for subsidiaries at the 125950 65,466
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 797400 occurred guarantee in report 1,150,523.54
(A1+B1+C1) period (A2+B2+C2)
Total amount of approved Total balance of actual
860950 314,141.43
guarantee at the end of report guarantee at the end of
period (A3+B3+C3) report period (A4+B4+C4)
The proportion of the total amount of actually guarantee in the net
33.43%
assets of the Company (that is A4+ B4+C4)
Including:
Explanation on guarantee with composite way
(2) Guarantee outside against the regulation
□ Applicable √ Not applicable
No guarantee outside against the regulation in Period.
3. Entrust others to cash asset management
(1) Trust financing
□ Applicable √ Not applicable
The Company had no trust financing in the reporting period.
(2) Entrusted loans
□ Applicable √ Not applicable
The company had no entrusted loans in the reporting period.
4. Other material contracts
□ Applicable √ Not applicable
No other material contracts for the Company in reporting period.
XVIII. Social responsibility
1. Execution of social responsibility
“Social Responsibility Report of Sinopharm Accord in 2017” can be seen in Juchao website dated 22 March 2018.
(http://www.cninfo.com.cn)
2. Execution of social responsibility of targeted poverty alleviation
Nil
3. Environment protection
The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department
No
Found more in the “Social Responsibility Report of Sinopharm Accord for year of 2017” on Juchao Website
(http://www.cninfo.com.cn) dated 22 March 2018
XIX. Explanation on other significant events
√Applicable □ Not applicable
1.During the reporting period, the Company has successfully completed the related significant asset restructuring;
The Proposal on Asset Sales, Issue of Shares and Cash to Buy Assets and Raise Matching Funds and Related
Party Transaction of Sinopharm Accord. was announced on Mar. 10th and Mar. 25th of 2016 respectively; Asset
sales, Issue of Shares and Cash to Buy Assets and Raise Matching Funds and Related Party Transaction Report
(Draft Version) was released on May31st and Jun. 14th of 2016 respectively; Announcement on the formal Reply
from China Securities Regulatory Commission on Asset Sales, Issue of Shares, Cash to Buy Assets and Raise
Matching Funds and Related Party Transaction of Sinopharm Accord. And Report on Asset Sales, Issue of Shares
and Cash to Buy Assets and Raise Matching Funds and Related Party Transaction of Sinopharm Accord. (Revised
Version) were issued on Sep. 28th , 2016; Sinopharm Accord.: Announcement on the Assets transfer condition
under the Objective of Asset Sales, Issue of Shares and Cash to Buy Assets and Raise Matching Funds and
Related Party Transaction was announced on Dec. 13th , 2016; Sinopharm Accord.: Asset Sales, Issue of Shares
and Cash to Buy Assets and Raise Matching Funds and Related Party Transaction Implementation Condition and
New Stock Shares Listing Announcement was issued on Jan. 4th, 2017; Sinopharm Accord. : Announcement on
the Implementation Status of Significant Assets Restructuring was issued on Feb. 28th , 2017. The Company has
completed the registration procedures on the transfer of names of the real estate on the northern side of Lanzhu
East Road, Biological Medicine Base in Kenzi Street of Pingshan New District under the item of Pingshan base,
and related real estate has been registered under the name of Shanghai Modern Pharmaceutical Co., Ltd.; China
National Accord Corporation Ltd.: Announcement on the Implementation Status of Significant Assets
Restructuring was issued on Mar. 9th, 2017 and Shanghai Modern Pharmaceutical Co., Ltd, as the counter-party of
this assets sale, has completed the registration procedures of the private share placement to the Company.
2. During the reporting period, the wholly-owned subsidiary of the Company, Sinopharm Holding Guoda
Drugstore Co., Ltd., has brought in strategic investors by means of capital increase and share expansion:
The proposal on the wholly-owned subsidiary Sinopharm Group Guoda Drugstore Co.,Ltd., Bringing in Strategic
Investors by Means of Capital Increase and Share Expansion was deliberated and approved on the 25th meeting of
the 7th session of Board of Directors On Sep. 4th, 2017, and the wholly-owned subsidiary Sinopharm Group Guoda
Drugstore Co., Ltd (hereinafter referred to as “Guoda Drugstore”) has got the approval of bringing in one
strategic investor by means of capital increase and share expansion, taking assets assessment report as the
reference of pricing. After the completion of capital increase, the Company has a shareholding of 60 percent and
the strategic investor accounts for 40% stake. The project was approved to trade security through the listing
system at the trading floor of state-owned property rights. See announcement No. 2017-45 of the Company on
website: http://www.cninfo.com.cn on Sep. 5th, 2017 for details.
The Proposal on the Wholly-owned Subsidiary Sinopharm Group Guoda Drugstore Co., Ltd. Amassing Strategic
Investors in Public and Proposal on Giving up the Right of Priority of Subscribed Capital Contribution of the
Capital Increase and Share Expansion of the wholly-owned subsidiary Sinopharm Group Guoda Drugstore Co.,
Ltd. were deliberated and approved on Sep. 18th, 2017. See announcements No. 2017-47 and No. 2017-49 of the
Company on the website: http://www.cninfo.com.cn on Sep. 19th, 2017 for details.
The Company has been listed on stock exchanges at Shanghai United Assets and Equity Exchange on Sep. 20th ,
2017, with 40 working days of the term of announcement and the expiry date was Nov. 20th. Until the expiration
of the term of announcement, Guoda Drugstore has amassed an interested investor, that is Walgreens Boots
Alliance (Hong Kong) Investments Limited (hereinafter referred to as “WBAHKIL”) and its qualification of
investment has been examined and approved by Shanghai United Assets and Equity Exchange and it also got the
confirmation of Sinopharm Group Guoda Drugstore Co..Ltd. In line with the rule of property transactions, this
capital increase has been concluded by an agreement. As the actual controller, Walgreens Boots Alliance
(NASDAQ: WBA, hereinafter referred as “Walgreens” or “WBA”) has subscribed the stock rights of Guoda
Drugstore through taking its wholly-owned subsidiary Walgreens Boots Alliance (Hong Kong) Investments
Limited that is based in Hong Kong as the subject of capital increase, with capital increase by 2766.70 million
Yuan, it holds a 40 percent of stake of Guoda Drugstore. The Company has received the Announcement on the
Result of Capital Increase from Shanghai United Assets and Equity Exchange on Nov. 29th , 2017. See the
announcement No. 2017-54 of the Company on the website:http://www.cninfo.com.cn
on Nov. 30th., 2017 for details.
At beginning of the December in 2017,the Company, Sinopharm Group Guoda Drugstore Co.,Ltd. And
Walgreens Boots Alliance (Hong Kong) Investments Limited (the wholly-owned subsidiary of Walgreens in
Hong Kong), had signed up the Registered Capital Increase and Subscription Agreement. See announcement No.
2017-55 of the Company on the website http://www.cninfo.com.cn on Dec. 7th , 2017 for details.
By the end of date of disclosure, this project has not been required to apply for investigation by antitrust bureau of
ministry of commerce. The Company will continue to fulfill the obligation of information disclosure according to
the progress of this project.
XX. Significant event of subsidiary of the Company
√Applicable □ Not applicable
See “XIX. Explanation on other significant events”
Section VI. Changes in Shares and Particulars about Shareholders
I. Changes in Share Capital
1. Changes in Share Capital
In Share
Before the Change Increase/Decrease in the Change (+, -) After the Change
Capital
ization
Proportio New shares Bonus
Amount of Others Subtotal Amount Proportion
n issued shares
public
reserve
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 60,380,743 14.10%
person’s shares 14,101,800
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 nature
1,988 0.00% 1,988 0.00%
person shares
II. Unrestricted shares 288,147,412 79.46% 74,482,543 74,482,543 362,629,955 84.70%
1. RMB Ordinary shares 233,261,812 64.32% 74,482,543 74,482,543 307,744,355 71.88%
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
The reasons for the increase of restricted stock: the total amount of non-public offering of stock issued during the
significant assets restructuring of the Company was 65,495,040 shares (circulating stocks with restriction on sales),
which has been listed on Jan. 5th , 2017, among which, the amount of issuing stocks to purchase assets was
60,380,743 shares, the amount of issuing stocks to raise matching fund was 5,114,297 shares. The term of
restriction on sales of the above stocks was 36 months from the date of listing of the new shares. See the Asset
Sales, Issue of Shares and Cash to Buy Assets and Raise Matching Funds and Related Party Transaction
Implementation Condition and New Stock Shares Listing Announcement disclosed on the website:
http://www.cninfo.com.cn on Jan. 4th , 2017 for details.
The reasons for the decline of restricted stocks: the Company has offered 74,482,543 of non-public offering of
stock to Sinopharm Group Co., Ltd (hereinafter referred as Sinopharm Group). also the shareholder of the
Company, in March of 2014. The new stock shares has been list in Shenzhen Stock Exchange on Mar. 21st , 2014,
and the property of stock shares was circulating stocks with restriction on sales, and the term of restriction was 36
months from the date of listing of the new shares. The date of listing circulation of the restricted stock shares
released restrictions was Mar. 21st , 2017. See the Suggestive Announcement on Releasing the Restriction of the
Restricted Non-public Offering of Stock (No. : 2017-14) disclosed on website: http://www.cninfo.com.cn on Mar.
17th , 2017.
Approval of share changed
√Applicable □ Not applicable
See the Asset Sales, Issue of Shares and Cash to Buy Assets and Raise Matching Funds and Related Party
Transaction Implementation Condition and New Stock Shares Listing Announcement and Suggestive
Announcement on Releasing the Restriction of the Restricted Non-public Offering of Stock (No. : 2017-14)
respectively disclosed on the website: http://www.cninfo.com.cn on Jan. 4th , 2017 and Mar. 17th, , 2017 for details.
Ownership transfer of share changes
√Applicable □ Not applicable
See the Asset Sales, Issue of Shares and Cash to Buy Assets and Raise Matching Funds and Related Party
Transaction Implementation Condition and New Stock Shares Listing Announcement and Suggestive
Announcement on Releasing the Restriction of the Restricted Non-public Offering of Stock (No. : 2017-14)
respectively disclosed on the website: http://www.cninfo.com.cn on Jan. 4th , 2017 and Mar. 17th, , 2017 for details.
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 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 Increased Ending shares Restricted
Shareholders Date for released
restricted in Period In restricted reasons
the
Period
Sinopharm Private issuing of
74,482,543 74,482,543 0 0 2017-3-21
Holding Co., Ltd. Stock for 2013
Purchasing the
assets of private
Sinopharm issuing stock
0 0 55,057,700 55,057,700 2020-1-6
Holding Co., Ltd. with shares
issuing for year
of 2017
Purchasing the
China National assets of private
Pharmaceutical issuing stock
0 0 5,323,043 5,323,043 2020-1-6
Foreign Trade with shares
Corp. issuing for year
of 2017
Purchasing the
Ping An Assets-
assets of private
ICBC-Xinxiang
issuing stock
No.3 Assets 0 0 2,557,149 2,557,149 2020-1-6
with shares
Management
issuing for year
Products
of 2017
Ping An Assets-
Purchasing the
ICBC- Ping An
assets of private
Assets Xinxiang
issuing stock
No.7 Insurance 0 0 2,557,148 2,557,148 2020-1-6
with shares
Assets
issuing for year
Management
of 2017
Products
Total 74,482,543 74,482,543 65,495,040 65,495,040 -- --
II. Securities issuance and listing
1. Security offering (without preferred stock) in Reporting Period
√Applicable □ Not applicable
Stock and Issue date Issue price Circulation Listing date Approved Date of termination
derivative (interest rate) figures trading volume
securities
Stock
Purchase assets
with restructure 53.50
65,495,040 2017-01-05 60,380,743
privately offering Yuan/share
shares
Explanation on security (Preferred stock excluded) offering in reporting period
The Company had completed the listing of non-public offering of stock for issuing stocks to purchase assets on
Jan. 5th, 2017, and there was a mount of 65,495,040 restricted stocks increased. After the completion of this
transaction, the total amount of stock shares of the Company was up to 428,126,983. See the Asset Sales, Issue of
Shares and Cash to Buy Assets and Raise Matching Funds and Related Party Transaction Implementation
Condition and New Stock Shares Listing Announcement disclosed on the website: http://www.cninfo.com.cn on
Jan. 4th , 2017 for details.
2. Changes of total shares and shareholders structure as well as explanation on changes of assets and
liability structure
√Applicable □ Not applicable
Explaination on total shares and shareholdres structure: the Company issuing shares privately to purchased assets,
65,495,040 shares issued; and after transaction, shares of the Company comes to 428,126,983 shaers, details are:
Issuing object Counterpart assets Number of shares issued Proportion of the total equity
after issurance
100% equity of Guoda Drug Store 40,315,346 9.42%
100% equity of Guangdong New 3,966,947 0.93%
Sinopharm Holding Special Medicine
100% equity of Foshan Nanhai 10,775,407 2.52%
Subtotal 55,057,700 12.87%
Sinopharm Foreign 51% equity of South Medical 5,323,043 1.24%
Trade Trading
Subtotal of assets purchased by shares issuing 60,380,743 14.11%
Ping An Assets Collecting supporting funds 5,114,297 1.19%
Management
Total 65,495,040 15.30%
3. Existing internal staff shares
□ Applicable √ Not applicable
III. Particulars about shareholder and actual controller of the Company
1. Amount of shareholders of the Company and particulars about shares holding
In Share
Total preference
shareholders
Total preference
Total common with voting
Total common shareholders with
stock rights recovered
stock voting rights
shareholders at at end of last
shareholders in 18,357 18,122 recovered at end of 0
end of last month month before
reporting reporting period (if
before annual annual report
period-end applicable) (found
report disclosed disclosed (if
in note8)
applicable)
(found in note8)
Particulars about shares held above 5% by shareholders or top ten shareholders
Total Number of share pledged/frozen
Amount Amount of
Proportio sharehold
Changes of un-
Full name of Nature of n of ers at the
in report restricted restricted
Shareholders shareholder shares end of State of share Amount
period shares shares
held report
held held
period
Sinopharm State-owned 239,999,9 55,057,70 184,942,2
56.06%
Holding Co., Ltd. Corporation 91 0
HTHK/CMG
FSGUFP-CMG
Foreign
FIRST STATE 2.30% 9,867,349 0 9,867,349
Corporation
CHINA GROWTH
FD
China United
Property Insurance Domestic non
Company Limited state-owned 1.42% 6,092,905 0 6,092,905
- Traditional Corporation
insurance products
China Life
Insurance Co., Ltd. Domestic non
– tradition –general state-owned 1.26% 5,409,681 0 5,409,681
insurance products Corporation
-005L-CT001 Shen
China National State-owned
1.24% 5,323,043 5,323,043
Pharmaceutical Corporation
Foreign Trade
Corp.
GUOTAI JUNAN
SECURITIES(HO Foreign
1.19% 5,115,723 0 5,115,723
NGKONG) Corporation
LIMITED
TARGET VALUE Foreign
1.16% 4,957,162 0 4,957,162
FUND Corporation
New China Life
Insurance Co., Ltd.
Domestic non
– Bonus –
state-owned 0.98% 4,199,772 0 4,199,772
Individual bonuses
Corporation
- -018L-FH002
Shen
Beijing Haoqing
Fortune Investment
Domestic non
Management Co.,
state-owned 0.94% 4,037,516 0 4,037,516
Ltd. – Haoqing
Corporation
Value Stable No.8
Investment Fund
Central Huijin State-owned
0.89% 3,804,400 0 3,804,400
Investment Ltd. Corporation
Sinopharm Group Co., Ltd. and China National Pharmaceutical Foreign Trade Corporation
have the same actual controller, which is China National Pharmaceutical Group
Explanation on associated relationship
Corporation. It is unknown that there exists no associated relationship or belongs to the
among the aforesaid shareholders
consistent actionist among the other tradable shareholders regulated by the Management
Measure of Information Disclosure on Change of Shareholding for Listed Companies.
Particular about top ten shareholders with un-restrict shares held
Type of shares
Shareholders’ name Amount of un-restrict shares held at Period-end
Type Amount
RMB ordinary
Sinopharm Holding Co., Ltd. 184,942,291 184,942,291
shares
HTHK/CMG FSGUFP-CMG FIRST Domestic listed
9,867,349 9,867,349
STATE CHINA GROWTH FD foreign shares
China United Property Insurance
RMB ordinary
Company Limited - Traditional 6,092,905 6,092,905
shares
insurance products
China Life Insurance Co., Ltd. –
RMB ordinary
tradition –general insurance products - 5,409,681 5,409,681
shares
005L-CT001 Shen
GUOTAI JUNAN 5,115,723 Domestic listed 5,115,723
SECURITIES(HONGKONG) foreign shares
LIMITED
Domestic listed
TARGET VALUE FUND 4,957,162 4,957,162
foreign shares
New China Life Insurance Co., Ltd. –
RMB ordinary
Bonus – Individual bonuses - -018L- 4,199,772 4,199,772
shares
FH002 Shen
Beijing Haoqing Fortune Investment
RMB ordinary
Management Co., Ltd. – Haoqing 4,037,516 4,037,516
shares
Value Stable No.8 Investment Fund
RMB ordinary
Central Huijin Investment Ltd. 3,804,400 3,804,400
shares
VALUE PARTNERS CLASSIC Domestic listed
3,038,918 3,038,918
FUND foreign shares
Expiation on associated relationship or
consistent actors within the top 10 un- It is unknown that there exists no associated relationship or belongs to the consistent
restrict shareholders and between top actionist among the other tradable shareholders regulated by the Management Measure of
10 un-restrict shareholders and top 10 Information Disclosure on Change of Shareholding for Listed Companies.
shareholders
Explanation on shareholders involving
Beijing Haoqing Fortune Investment Management Co., Ltd. – Haoqing Value Stable No.8
margin business about top ten common
Investment Fund holds shares of the Company through margin trading and negotiable
stock shareholders with un-restrict
securities account that is 4,037,516 shares in total.
shares held (if applicable) (see note4)
Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-back
agreement dealing in reporting period
□Yes √ No
The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have no
buy-back agreement dealing in reporting period.
2. Controlling shareholder of the Company
Nature of controlling shareholders: central state-owned holding
Type of controlling shareholders: legal person
Legal
Controlling person/person Organization
Date of foundation Main operation business
shareholders in charge of code
the unit
Sinopharm Holding Li Zhiming 2003-01-08 74618434-4 Industrial investment holding; management and assets
Co., Ltd. reorganization entrusted by pharmaceutical enterprise;
Chinese medicine, Chinese medicine tablets, chemical
medicine preparations, chemical raw materials,
antibiotics, biochemical drugs, biological products,
narcotic drugs, psychotropic substances, toxic drugs for
medical use (compatible with the business scope),
medicine IVD Reagents, vaccine, anabolic agents,
Peptide hormone and medical equipment. III: injection
puncture instruments, hygienic materials & dressings,
medical polymer materials and products, categories II:
medical X-ray ancillary equipment and components;
food marketing management (non-physical way), and
domestic trade (other than special licensing), logistics
and other consulting services, cosmetics, stationeries and
related consulting services, operating various types of
goods and import and export of technology (not attached
directory of import and export commodities), but
excluded the import and export of goods and technology
the State limits or prohibit the company. [In right of
exequatur to run if refers to permission operation].
Equity of other
domestic/oversea
listed company
control by Sinopharm Group Co., Ltd. hold 44.01 percent equity of China National Medicines Corporation Ltd (Stock
controlling code: 600511) up to the end of Period.
shareholder as well
as stock-joint in
report period
Changes of controlling shareholders in reporting period
□ Applicable √ Not applicable
The Company had no changes of controlling shareholders in reporting period.
3. Actual controller of the Company
Nature of actual controller: central state-owned assets management
Type of actual controller: legal person
Legal
Actual controlling person/person in Date of Organizatio
Main operation business
shareholders charge of the foundation n code
unit
Chinese patent drug, traditional Chinese medicines
prepared in ready-to-use forms, traditional Chinese
medicinal materials, chemical API, chemical medicine
preparation, antibiotics, biochemical drug and biologic
pharmacy (License for pharmaceutical trading runs until
China National 12 May 2020); mandatory for pharmaceutical enterprise,
Pharmaceutical Group She Lulin 1987-03-26 10000588-8 asset reorganization; consulting service of medicine
Corporation industrial investment; exhibition of medical devices;
consulting services with main business concerned. (the
enterprise has independent choices on operation items for
business; in right of exequatur to run if refers to
permission operation ; operation activity that prohibited or
restricted by the City Government are not allowed)
Name of listed Total shareholders
Name company with (10 thousand Proportion of shares held
shares held shares)
Sinopharm Group Jianmin Group 132.35 0.86%
Sinopharm
Sinopharm Group 272.84 0.10%
Holding
Sinopharm Holding
Sinopharm
Industrial Investment 157,155.60 56.79%
Holding
Equity of Co., Ltd.
domestic/oversea listed Sinopharm Holding Sinopharm 21,070.15 44.01%
company control by Sinopharm
Sinopharm Holding 24,000.00 56.06%
actual controller in Accord
report period Sinopharm JLPC 321.93 2.12%
Shanghai Institute of Modern
11,975.63 41.62%
Pharmaceutical Industry Pharmaceutical
Chinese Medicine Hengrui
10,621.86 4.52%
Industry Co., Ltd. Medicine
Tiantan
Biosino 27,472.50 53.30%
Biological
Sinopharm Group H.K.
China TCM 161,431.36 36.43%
Co., Ltd.
Changes of actual controller in reporting period
□ Applicable √ Not applicable
No changes of actual controllers for the Company in reporting period.
Property right and controlling relationship between the actual controller and the Company is as follow:
Actual controller controlling the Company by entrust or other assets management
□ Applicable √ Not applicable
4. Particulars about other legal person shareholders with over 10% shares held
□ Applicable √ Not applicable
5. Limitation and reducing the holdings of shares of controlling shareholders, actual controllers,
restructuring side and other commitment subjects
□ Applicable √ Not applicable
Section VII. Preferred Stock
□ Applicable √ Not applicable
The Company had no preferred stock in the Period.
Section VIII. Particulars about Directors, Supervisors, Senior
Executives and Employees
I. Changes of shares held by directors, supervisors and senior executives
Amount Amount
Shares Shares
Start of shares of shares
End date held at Other held at
Working dated of increased decreased
Title Sex Age of office period- changes period-
Name status office in this in this
term begin (share) end
term period period
(Share) (Share)
(Share) (Share)
Deputy
Chen GM,
Currently
Changbin Secretary M 2015-01-
50 2,651 0 0 2,651
in office
g of the
Board
Total -- -- -- -- -- -- 2,651 0 0 2,651
II. Changes of directors, supervisors and senior executives
√Applicable □ Not applicable
Name Title Type Date Reasons
Appointment and Mr. Liu Yong elected as director of the 7th BOD of the
Liu Yong Director 2017-01-18 Company in 1st extraordinary shareholders general
removal
meeting of 2017
Office leaving Resign from Independent Director of the Company due to
He Zhiyi N/A 2017-02-14
while term is due term of office has run out
Resign from Deputy GM of the Company due to
Pan Rangren N/A Dismissal 2017-02-22
individual reasons
Independent Appointment and Mr. Chen Honghui elected as director of the 7th BOD of
Chen Honghui 2017-03-14 the Company in 2nd extraordinary shareholders general
Director removal
meeting of 2017
Not in post of director of the Company for statutory
Wei Yulin Director Office leaving 2017-03-25
retirement age come
Appointment and
Appointed as the deputy GM of the Company, which has
Zhao Xiaochuan Deputy GM 2017-04-17
removal deliberated and approved by 22nd session of 7th BOD
Appointment and
Appointed as the deputy GM of the Company, which has
Chen Changbing Deputy GM 2017-04-17
removal deliberated and approved by 22nd session of 7th BOD
Resign from Director of the Company due to individual
Ma Wanjun Director Office leaving 2017-10-26
reasons
III. Post-holding
Professional background, major working experience and present main responsibilities in Company of directors,
supervisors and senior executive at the present in latest five years
1. Members of the Board
Mr. Liu Yong, joined Sinopharm Group Co., Ltd. In January 2003 and acted as the general manager and Party
Secretary of Sinopharm Holdings (Shenyang) Co., Ltd until November 2009. He currently serves as the president,
secretary of the board and chief legal advisor of Sinopharm Group. Mr. Liu own over 24 years of industry
experience, among which, over 21 years are related to management experience in medicine and health care
products industry. Mr. Liu graduated from China Pharmaceutical University in July 1992, where he obtained the
bachelor of science degree majoring in pharmaceutical business management, and obtained his master degree of
business administration from Fudan University in January 2000. He is a pharmacist-in-charge and licensed
pharmacist. During the period from July 1992 to July 1999, Mr. Liu worked in the Shanghai Pharma, and
successively served as deputy general manager of the marketing department of Shanghai Branch of Sinopharm
Group and Shanghai Guoda Drugstore Chain Company Limited from July 1999 to April 2003. currently, Mr. Liu
holds the position of chairman of Sinopharm Holding Guizhou Co., Ltd., Sinopharm Holding Yunnan Co., Ltd.,
Sinopharm Health Online Company, Sinopharm Lerentang Pharmacy Company, Sinopharm Holding Shandong
Co., Ltd., Sinopharm Holdings Shanghai Biological Medicine Co., Ltd. as well as Sinopharm Hainan Co., Ltd.,
and serves as the executive director of Sinopharm Distribution Center Co., Ltd. and Sinopharm Group Medicine
Logistics Company. He has acted as the director of Sinopharm Guoda Drugstore Company Limited from October
2017, director member of the 7th session of the Board of the Company since January 2017 and chairman of the
7th session of the Board of the Company since October 2017.
Mr. Li Zhiming, chairman of the board and the Party Secretary of Sinopharm Group Co., Ltd, joined the
Sinopharm Group in May 2010 as deputy president, served as executive director and president of Sinopharm
Group from November 2013 to March 2017, and has served as chairman of the board and the Party Secretary of
Sinopharm Group since November 2017. during the period from October 2012 to March 2017, Mr. Li held the
position of chief legal advisor, secretary of the discipline committee, chairment of the labor union and deputy
Party Secretary of Sinopharm Group. He owns more than 35 years of working experience, among which, 31 years
are related to management experience in medicine and health care products industry. Mr. Li obtained his associate
degree from Xinjiang Business College in July 1981 majoring in accounting, and the associate degree from
Urumqi Branch of Xi’an Military Academy in July 1997 majoring in economic management. He is a senior
economist and pharmacist-in-charge. During the period from July 1985 to July 1996, Mr. Li successively served
as deputy director of the financing department of Xinjiang Xinte Nationality Pharmacy Company Limited, deputy
general manager and chief accountant of Xinjiang Pharmaceutical Industry and Trading Corporation, deputy
general manager and chief accountant of Xinjiang Xinte Nationality Pharmacy Corporation, and deputy director
of the preparation office of Xinjiang Autonomous Region Medicine Administration Bureau. From July 1996 to
February 2016, Mr. Li worked in Xinjiang Xinte Nationality Pharmacy Corporation as general manager, chairman
of the board and party secretary, and worked in Xinjiang Pharmaceutical Group Corporation (currently known as
Sinopharm Group (Xinjiang) Co., Ltd.) as its director, general manager, vice chairman of the board, chairman of
the board and party secretary. Currently, he also serves as the director of China National Medicine Corporation
Ltd. And Sinopharm Guoda Drugstore Co., Ltd., vice chairman of Shanghai Modern Pharmaceutical Co., Ltd. as
well as chairman of Sinopharm Group (HK) Co., Ltd., Sinopharm Lingshang Hospital Management Service
(Shanghai) Co., Ltd., Sinopharm Medicine Equipments Co., Ltd., Sinopharm Medical Investment Management
Co., Ltd., Sinopharm (China) Financing Leasing Co., Ltd. And Sinopharm Zhongjin (Shanghai) Medical Care and
Health Investment Management Co., Ltd. He served as chairman of the Company from February 2014 to August
2016, and designated as director of the Company since August 2016.
Mr. Jiang Xiuchang, entered into Sinopharm Group as the director of Sinopharm Group in May 2010, and he has
also acted as vice president of Sinopharm Group since July 2013. Mr. Jiang owns over 30 years of working
experiences, among which, 19 years of management experiences are related to medicine and health-care industries.
Mr. Jiang obtained a bachelor degree in accounting at Zhongnan University of Economics in July 1986 and
graduated from postgraduate training classes majoring in enterprise management at international institution of
business administration of University of International Business and Economics. Mr. Jiang is a senior economist
and senior accountant. Mr. Jiang has worked as deputy director of information department, deputy director of
restructuring office, deputy director of financial department as well as deputy director of pharmaceutical
department in China National Pharmaceutical Group Corporation from July 1986 to March 2002; he has also
served as deputy director, director of financial department and chief financial officer of China National Medicines
Corporation Ltd. in succession from March 2002 to May 2010. Mr. Jiang currently serves as the chairman of
China National Medicines Corporation Ltd. Sinopharm Holding Jiangxi Co.,Ltd, Sinopharm Holding Tianjin
Co.,Ltd, Sinopharm Holding Shanxi Co.,Ltd, Sinopharm Holding Inner Mongolia Co.,Ltd, China National Group
Shanxi Corporation Ltd., and acted as the director of China National Medicines Corporation Ltd. And China
National Finance Corporation Ltd. as well as the executive director of Beijing Sinopharm Taiyuan Property
Management Co., Ltd and the director and general manger of Sinopharm Group Hong Kong Corporation Ltd; He
has been designated as the director of the Company from March 2011.
Mr. Lin Zhaoxiong, has served as deputy manager and manger of pharmaceutical department, manger of
Pharmaceutical corporations and director of operation and management department during his work in China
Pharmaceutical (Group) Guangzhou Co.,Ltd from January 1999 to December 2003 in succession; He has acted as
the deputy general manger of Sinopharm Holding Guangzhou Co.,Ltd; Mr. Lin has also worked as the general
manager of Sinopharm Holding Guangzhou Co.,Ltd from December 2006 to December 2008; He has served as
the deputy general manger of the Company from December 2008 to March 2016, and has served as the chairman
of the board of Sinopharm Holding Guoda Drugstore Co.,Ltd from December 2017 until now; He has acted as the
general manger of the Company since 2016 and designated as the director of the 7th session of board of directors
of the Company from April 2016.
Mr. Xiong Chuxiong, graduated with a doctor’s degree of economies from Xiamen University, has been teaching
in accounting major at Shenzhen University from 1992 and now he works as a professor of Shenzhen University.
Mr. Xiong has been a visiting scholar at University of Manchester in UK. He has acted as the independent director
of the 6th and 7th session of board of directors of the Company since April 2011.
Mr. Xiao Shengfang, he acts as director of Sino-Win Law Firm, whose social functions including national
people’s congress,vice director of Labor and Social Security Law Committee of All China Lawyers Association,
president of Guangdong Lawyers Association, legal adviser of Guangzhou Municipal People’s Government,
counselor of CPPCC Guangzhou Committee, legal consultant of the People’s Government of Guangzhou Baiyun
District, adjunct professor at Lawyer College of Renmin University of China, adjunct professor at School of Law
of South China Normal University, executive vice president of MBA sodality in Jinan University, arbitrator at
South China International Economic and Trade Arbitration Commission, arbitrator at Guangzhou Arbitration
Commission, and mediation expert at South China International Economic and Trade Arbitration Commission. He
has acted as the independent director for the Company’s sixth and seventh board of director since April 2011.
Mr. Chen Honghui, professor of Lingnan (University) College of Sun Yat-Sen University, a doctoral supervisor of
management. He worked in school of management, Wuhan University of Science & Technology from July 1993
to June 2003 and successively acted as a tutor and instructor; he works in Lingnan (University) College of Sun
Yat-Sen University since July 2003 and also served as deputy professor and professor; vice president of the
Lingnan (University) College of Sun Yat-Sen University from 2007 to 2012; the director of department of
business administration in Lingnan College since 2008 and deputy chairman of the GDISR. He serves as
independent director of Cabbeen Fashion Co., Ltd. since October 2013 and Guangzhou Grandbuy Co., Ltd. since
September 2016. Serves as independent director of 7th BOD of the Company since March 2017.
2. Members of supervisors:
Mr. Wu Yijian, a postgraduate background. He currently serves as the assistant president of Shanghai Fosun
Pharmaceutical Group Co., Ltd. and director of pharmaceutical business management committee. He worked in
Sanjiu Enterprise Group since July 1993, and successively served as the sales director of Sanjiu Medical Trading
Co., Ltd., COO of Sanjiu Medical Chain Co., Ltd. and deputy GM of Shanghai Sanjiu Technology Development
Co., Ltd. He also works in Fosun Pharma Group since June 2004 and successively took post of Gm of the
Shanghai Fosun Pharmaceutical Investment Co., Ltd., GM of Shanghai Fosun Pharmaceutical Co., Ltd. and GM
of Shanghai Fumei Drugstore Co., Ltd. Mr. Wu served as deputy president of the Shanghai Yuyuan Tourist Mart
Co., Ltd. from 2014 to 2015. now he serves as the chairman of supervisory committee of the Company since
September 2016.
Ms. Liu Jingyun, postgraduate background. Currently she serves as the director of financial and asset management
and director of assets and credit management dept. in Sinopharm Group Co., Ltd. and he successively hold a
teaching post in Nanjing Radio and Television University, works in Sinopharm Group Co., Ltd. since November
2003 and serves as deputy director of assets management department, director of the financial & assets
management dept. and Director of ministry of finance and credit management. She serves as supervisor of the 7th
supervisory committee of the Company since September 2016.
Mr. Wang Huaiqin, he served as first union chairman from September 2005 to March 2009; and serves as member
of the party committee, deputy secretary and union chairman of the Company since September 2008; and serves
as the staff supervisor of 5th, 6th and 7th supervisory of the Company since September 2007.
3. Senior executive
Mr. Lin Zhaoxiong, found in aforesaid previous work experience
Mr. Lin Min, worked in China National Pharmaceutical Group Guangzhou Corporation with successively taking
the posts of assistant to manager, deputy general manger of Pharmacy Department and deputy general manger of
purchasing in Pharmaceutical Company from Jan. 2001 to Nov. 2003; supervisor of Guangzhou pharmacy sales of
Sinopharm Holding Guangzhou Co., Ltd from Nov. 2003 to Jan. 2005; took deputy general manager of
Sinopharm Holding Guangzhou Co., Ltd from Jan. 2005 to Dec. 2008; he also acting as the GM of distribution
business dept. of the Sinopharm Accord and Sinopharm Holding Guangzhou Co., Ltd. he serves as deputy GM of
the Company since December 2008.
Mr. Lin Xinyang, he took the turns of deputy GM of Nanfang Pharm. Co., deputy GM of China Medicine Group
(Guangzhou) Company Yuexing Company, general supervisor of PD of Sinopharm Holding Guangzhou
Company successively since January 1996; took the post of deputy GM of Sinopharm Holding Guangzhou
Company from Jan. to Dec. 2004; serves as deputy GM of the Company since January 2005.
Mr. Wei Pingxiao, took the turns of Financial department of State-owned Beijing Electronic Tube Plant, Modern
Electronic Shenzhen Industrial Company, China Electronic Industrial Headquarter since August 1985; and took
the turns of deputy section chief of financial department of China Electronic Information Industry Group,
financial director of AMOI, section chief of planning financial department of China Electronic Finance Leasing
Company, Deputy GM of AMOI Beijing branch, financial charger of AMOI and director of its subsidiary since
April 1993; and he hold the post of CFO of the Company since December 2004.
Mr. Zhao Xiaochuan, has served as the general manager of Liaoning Accord Chain Co., Ltd from December 2001
to April 2008; served as the general manger of Sinopharm Holding Guoda Tian Yi Tang Drugstore Chain
(Shenyang) Co., Ltd and Sinopharm Holding Guoda Shenyang Chain Co., Ltd from May 2008 to June 2015; he
has acted as general manager of Sinopharm Holding Guoda Drugstore Co., Ltd since June 2015; He has worked
as the deputy general mange of the Company since July 2017.
Mr. Chen Changbin, has served as secretary of board of directors of the Company since December 2000; he has
also worked as the director of planning investment management department of the Company as well as assistant
general manager, in charge of strategic planning, investment and mergers and acquisitions, capital operation and
affairs related to three major meetings. He has acted as the deputy general manger of the Company since April
2017.
Post-holding in shareholder’s unit
√ Applicable □ Not applicable
Received
Position in
Start dated of End date of remuneration from
Name Name of shareholder’s unit shareholder’s
office term office term shareholder’s unit
unit n
(Y/N)
Deputy
president,
Secretary of
Liu Yong Sinopharm Group Co., Ltd. 2009-01-09 Y
the Board,
General
counsel
Chairman,
Li Zhiming Sinopharm Group Co., Ltd. 2013-11-08 Y
President
Vice
Jiang Xiuchang Sinopharm Group Co., Ltd. President, 2010-06-01 Y
CFO
Director of
ministry of
finance and
credit
management,
Liu Jingyun Sinopharm Group Co., Ltd. 2016-07-01 Y
director of the
financial &
assets
management
dept.
Post-holding in other unit
√ Applicable □ Not applicable
Name Name of other units Position in Start dated of End date of office Received
other unit n office term term remuneration
from other unit
(Y/N)
Sinopharm Xinjiang Pharmaceutical Co.,
Li Zhiming Chairman 2013-05-01 N
Ltd.
Li Zhiming Sinopharm Holding Ningxia Co., Ltd Chairman 2011-06-01 N
Li Zhiming Sinopharm Holding Shaanxi Co., Ltd Chairman 2011-10-01 N
Li Zhiming Sinopharm Holding Gangsu Co., Ltd Chairman 2011-10-01 N
Li Zhiming Sinopharm Holding Qinghai Co., Ltd Chairman 2011-10-01 N
Li Zhiming China National Medicines Corporation Ltd. Chairman 2011-10-01 N
Li Zhiming Sinopharm Holding Hong Kong Co.,Ltd Director 2014-01-01 N
Sinopharm Holding Sub Marketing Center Executive
Li Zhiming 2014-01-01 N
Co., Ltd. Director
Sinopharm Holding Guoda Drugstore Co.,
Jiang Xiuchang Supervisor 2010-06-01 N
Ltd.
Jiang Xiuchang Yujia Medical Co., Ltd. Supervisor 2010-09-01 N
Jiang Xiuchang China National Medicines Corporation Ltd. Director 2011-02-01 N
Sinopharm Le -Ren-Tang Medicine Co.,
Jiang Xiuchang Director 2011-04-01 N
Ltd.
Jiang Xiuchang Sinopharm Holding Hong Kong Co.,Ltd Director 2011-11-01 N
Jiang Xiuchang Sinopharm Group Financial Co.,Ltd Director 2011-11-01 N
Jiang Xiuchang Sinopharm Group Shanxi Co., Ltd. Director 2011-04-01 N
Sinopharm Holding Sub Marketing Center
Jiang Xiuchang Supervisor 2011-04-01 N
Co., Ltd.
Jiang Xiuchang Sinopharm Holding Beijing Co.,Ltd Supervisor 2011-11-01 N
Liu Yong Sinopharm Holding Beijing Co.,Ltd Chairman 2010-08-02 N
Sinopharm Holding Beijing Kangchen Bio-
Liu Yong Chairman 2010-07-01 N
Pharmaceutical Co., Ltd.
Liu Yong China National Medicines Corporation Ltd. Director 2014-01-01 N
Sinopharm Holding Beijing Tianxing Puxin
Liu Yong Chairman 2011-10-10 N
Biological Medical Co.,Ltd
Sinopharm Holding Guoda Drugstore Co.,
Liu Yong Chairman 2011-11-01 N
Ltd.
Sinopharm Holding Beijing Huahong
Liu Yong Chairman 2013-09-02 N
Biological Medicine Co.Ltd
Liu Yong Sinopharm Holding Guizhou Co., Ltd. Chairman 2014-01-06 N
Liu Yong Sinopharm Holding Yunnan Co., Ltd. Chairman 2014-01-06 N
Sinopharm Guohua Network Technology
Liu Yong Director 2015-04-01 N
Co., Ltd.
Liu Yong Sinopharm Health On-line Co., Ltd. Chairman 2015-07-02 N
Punishment of securities regulatory authority in recent three years to the company’s current and outgoing directors, supervisors and
senior management during the reporting period
□ Applicable √ Not applicable
IV. Remuneration for directors, supervisors and senior executives
Decision-making procedures, recognition basis and payment for directors, supervisors and senior executives
(I) Remuneration decision procedure of directors, supervisors, senior management:
The Company implemented the annual salary system for senior executives based on the 2017 annual performance
appraisal (scheme) on management staff, paid annual salary remuneration according to the appraisal results.
Remuneration and appraisal committee of the company's board of directors is responsible for the formulation and
examination of salary plan and program as well as formulation and examination of salary plan and assessment
standards of directors (not including the independent directors), supervisors and senior executives. They also
evaluate the performance assessment of directors, supervisors and senior officers in accordance with the
assessment criteria, compensation scheme.
(II) Remuneration determining basis
The main principles of making standard of compensation are: (1) the company's overall business and the profit
level; (2) the overall salary level and dynamic index over past years; (3) difference in position and duty; (4)
relative importance and risks of position; (5) related post salary level in the same industry; (6) individual
professional ability.
(III) Actual payment
Executives get monthly basic salary and annual salary after the issuance of annual examination.
Remuneration for directors, supervisors and senior executives in reporting period
In 10 thousand Yuan
Total Received
remuneration remuneration
Post-holding
Name Title Sex Age before tax from related party
status
obtained from the of the Company
Company (Y/N)
Currently in
Liu Yong Chairman M 48 0Y
office
Ma Wanjun Chairman M 48 Office leaving 0Y
Wei Yulin Director M 60 Office leaving 0Y
Currently in
Li Zhiming Director M 54 0Y
office
Currently in
Jiang Xiuchang Director M 54 0Y
office
Cui Dieling Vice Chairman F 52 Office leaving 0Y
Currently in
Lin Zhaoxiong Director, GM M 50 225 N
office
Yan Zhigang Director, GM M 58 Office leaving 0N
Independent
He Zhiyi M 62 Office leaving 1.59 N
Director
Independent Currently in
Xiong Chuxiong M 62 10.64 N
Director office
Independent Currently in
Xiao Shengfang M 48 10.64 N
Director office
Independent Currently in
Chen Honghui M 46 9.08 N
Director office
Chairman of
Currently in
Wu Yijian supervisory M 47 0Y
office
committee
Currently in
Liu Jingyun Supervisor F 41 0Y
office
Currently in
Wang Huaiqin Supervisor M 60 63.75 N
office
Currently in
Lin Min Deputy GM M 53 202.5 N
office
Currently in
Lin Xinyang Deputy GM M 53 157.5 N
office
Deng Baojun Deputy GM M 56 Office leaving 0N
Pan Rangren Deputy GM M 53 Office leaving 22 N
Currently in
Wei Pingxiao CFO M 54 157.5 N
office
Currently in
Zhao Xiaochuan Deputy GM M 54 157.5 N
office
Deputy GM, Currently in
Chen Changbing M 50 125 N
Secretary of the office
Board
Total -- -- -- -- 1,142.7 --
Delegated equity incentive for directors and senior executives in reporting period
□ Applicable √ Not applicable
V. Particulars of workforce
1. Number of staff, professional composition and education background
The number of current employees of parent company (people)
The number of current employees of main subsidiaries (people) 22,373
Total number of current employees (people) 22,480
The total number of employees in payroll (people) 22,480
The total number of retired staff and workers that the parent
1,934
company and main subsidiaries need to bear the costs (people)
Professional composition
Category of professional composition Number of professional composition (people)
Production staff
Salesman 16,272
Technical staff
Financial staff
Administrative staff 3,863
Logistics Staff 1,649
Total 22,480
Education background
Category of education Number (people)
Post-graduate qualification and above
Undergraduate 3,313
Junior college 7,933
Junior college below 11,090
Total 22,480
2. Remuneration policy
Sinopharm Accord and the subordinate enterprises provide perfect compensation and benefits for the staff, the
compensation level is closely combined with organization (total amount of labor, compensation strategy, job
value), staff (capacity development, performance results), and market (market level, talent competition). The
company adjusts the remuneration for staff having abilities and contributions every year by the responsibility
sorting, position evaluation, target remuneration range positioning, and the staff annual work performance and
ability assessment; at the same time, performance bonuses and performance closely link together, and realize win-
win of the interests of company and the interests of employees. Pay attention to the income growth requirements
of low-income groups, develop annual wage growth program, and implement after the deliberation and approval
of the workers' congress.
3. Training programs
Sinopharm Accord and its subsidiaries have put great emphasis on the development and cultivation of employee’s
career, built and improved training management system of the Company so as to cultivate the employee in a more
efficient way. The first, a training system has been built and the management system for employee training,
employee continuing education, interns and intern trainers have been promoted and conducted. The second, the
leadership of the Company has made a plan on the organization of training, and a specific position posted in
human resources department was dedicated for assisting the management at all levels to conduct employee
training. The third, regarding the category and curriculum of the training, the category included new employee
training, employee on-post training and leadership development training; the curriculum consisted of management
curriculum, genetic competency curriculum as well as professional skills curriculum. In addition, one-to-one on-
post coaching from the management to employee was also included. The forth, As to the assessment of training,
assessment methods at all levels were made to ensure the effects of employee training. By the end of 2017, the
input in the training for the headquarter of Sinopharm Accord Corporation, distribution operation and Guoda
Drugstore was seen at 1.75 million Yuan, by conducting various training on generic competency, professional
quality and management, on-post skills and continuing education of vocational qualification. A total number of
19,362 person-times of training and continuing education have been conducted, covering the middle and senior
management, junior management, specialty technical staffs as well as operators, with average learning time up to
more than 50 hours.
4. Labor outsourcing
√ Applicable □ Not applicable
Total number of working hours of labor outsourcing (Hour) 584,640
Total remuneration paid of labor outsourcing (RMB) 33,774,261.84
Section IX. Corporate Governance
I. Corporate governance of the Company
Articles of Association are formulated at governance level. In compliance with requirements of Articles, rules of
procedures for shareholders’ meeting, board and board of supervisors, working system of strategy committee,
nomination committee, internal risk control and audit committee, remuneration and evaluation committee, general
manager and secretary to board, corporate governance system regarding information disclosure, connected
transactions, fund raising, performance of social responsibilities, inside information and informant management,
investor relation management, engagement of accounting firm and prevention of occupation by major
shareholders and connected parties of capital of listing companies are also established.
During the Reporting Period, the Article of Association has been revised according to regulatory requirements and
governance needs. The effective implementation of corporate governance system ensures the effective
performance of duties and responsibilities of respective committees, thereby facilitating the board of supervisors
to play a supervisory role and offering help for the board to make scientific decisions.
Is there any difference between the actual condition of corporate governance and relevant regulations about corporate governance for
listed company from CSRC?
□Yes √ No
There are no differences between the actual condition of corporate governance and relevant regulations about corporate governance
for listed company from CSRC.
II. Independency of the Company relative to controlling shareholders’ in aspect of businesses,
personnel, assets, organization and finance
The Company totally separates from the controlling shareholders in business, personnel, assets, institutions,
financial and other aspects, with independent and complete self-management ability.
1. The business: the Company was independent from controlling shareholders, having a complete business system
and self-managing ability; the company has independent procurement and sales system thus all procurement and
sales of drugs and raw materials is in charge of the purchasing department and subordinate subsidiary, branch and
production enterprises; production, supply, marketing and R & D separate from each other; the Company is a
legal market person with independent operation.
2. Personnel: procedures of the controlling shareholder nominating directors and general and deputy general
manager are legal; no intervene on the appointment and removal of personnel made by the board of directors and
shareholders’ meeting happened; the Company set up independent human resource department, responsible for
assessment, training and salary review on staff, making rules and regulations and handbook the employees should
abide by. Labor, personnel, wages and pension, medical insurance and other insurance are independently managed.
3. Institution: production and operation mechanism and administrative management is completely independent
from the controlling shareholder or actual controller; offices and sites of business operation separate from the
controlling shareholder; the Company established corporate governance structure where the board of directors,
board of supervisors and managers carry out their duties and exercise their respective duties in accordance with
relevant provisions of the articles of association.
4. Asset: property and rights relationship between the Company and the controlling shareholder is clear, with
independent operations; the company has independent production system, auxiliary production system and
supporting system; industrial property rights, trademarks, non-patented technology and other intangible assets
owned by the Company and its subsidiary.
5. Financial aspects: the Company established independent financial departments and independent financial
accounting system; the Company opened a bank account independently; the financial staff is independent without
taking part-time and receiving remuneration in the controlling shareholder; the Company pays tax independently.
III. Horizontal competition
√ Applicable □ Not applicable
Name of controlling Nature of controlling Work schedule and
Type Reason Solution measure
shareholder shareholder follow-up plan
In March 2016,
Sinopharm Holding
issued a commitment
Distribution
letter of avoiding
subsidiary of
horizontal
Sinopharm Holding
competition with
established some
Sinopharm Accord,
social retail
and promise to solve
pharmacy, which
Horizontal the horizontal Normally
Sinopharm Holding SASAC might has horizontal
competition competition in performing
competition with the
respect of
Guoda Drugstore,
pharmaceutical retail
the subordinate
business in an
enterprise of the
appropriate way
listed company after
within five years
restructuring
since the date when
reorganization
completed
Distribution In March 2016,
subsidiary of Sinopharm Holding
Horizontal Normally
Sinopharm Group SASAC Sinopharm Holding issued a commitment
competition performing
established some letter of avoiding
social retail horizontal
pharmacy, which competition with
might has horizontal Sinopharm Accord,
competition with the and promise to solve
Guoda Drugstore, the horizontal
the subordinate competition in
enterprise of the respect of
listed company after pharmaceutical retail
restructuring business in an
appropriate way
within five years
since the date when
reorganization
completed
IV. AGM (Annual General Meeting) and extraordinary shareholders’ general meeting held in
the Period
1. AGM
Ratio of investor
Session of meeting Type Date Date of disclosure Index of disclosure
participation
Juchao Website—
(http://www.cninfo.c
First extraordinary om.cn) “Resolution
Extraordinary
general meeting of 60.77% 2017-01-18 2017-01-19 Notice of First
general meeting
2017 extraordinary
general meeting of
2017” No.: 2017-05
Juchao Website—
(http://www.cninfo.c
Second
om.cn) “Resolution
extraordinary Extraordinary
61.05% 2017-03-14 2017-03-15 Notice of Second
general meeting of general meeting
extraordinary
2017
general meeting of
2017” No.: 2017-13
Juchao Website—
(http://www.cninfo.c
Annual general
AGM 61.37% 2017-05-10 2017-05-11 om.cn) “Resolution
meeting 2016
Notice of AGM of
2016” No.: 2017-36
Third extraordinary Extraordinary Juchao Website—
60.70% 2017-07-14 2017-07-15
general meeting of general meeting (http://www.cninfo.c
2017 om.cn) “Resolution
Notice of Third
extraordinary
general meeting of
2017” No.: 2017-40
Juchao Website—
(http://www.cninfo.c
Fourth extraordinary om.cn) “Resolution
Extraordinary
general meeting of 62.97% 2017-12-27 2017-12-28 Notice of Fourth
general meeting
2017 extraordinary
general meeting of
2017” No.: 2017-61
2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore
□ Applicable √ Not applicable
V. Responsibility performance of independent directors
1. The attending of independent directors to Board meetings and general meeting
The attending of independent directors to Board Meeting
Times of Absent the
Times of
Name of Board meeting Times of Meeting for Times
Times of attending by Times of
independent supposed to entrusted the second attending the
Presence communicatio Absence shareholders
director attend in the presence time in a row meeting
n
report period (Y/N)
Xiong Chuxiong 12 1 11 0 N
Xiao Shengfang 12 1 11 0 N
Chen Honghui 10 1 9 0 N
He Zhiyi 2 0 2 0 N
Explanation of absent the Board Meeting for the second time in a row
2. Objection for relevant events from independent directors
Independent directors come up with objection about Company’s relevant matters
□Yes √No
Independent directors has no objections for relevant events in reporting period
3. Other explanation about responsibility performance of independent directors
The opinions from independent directors have been adopted
√ Yes □ No
Explanation on advice that accepted/not accepted from independent directors
During the reporting period, the independent directors performed their duties in a careful, diligent, dedicated
attitude in accordance with requirements of the \"Working System of Independent Director\", offered some useful
suggestions and opinions on business decision-making, legal affairs, financial management and other aspects;
carefully examined important matters those needed opinions of independent directors, made independent
judgments and issued a written independent opinion on major related transactions, daily related transactions,
accountancy hiring and other matters, playing a positive role in safeguarding the legitimate rights and interests of
small shareholders. Besides, independent directors played an important role in operation of special committee. At
the same time, the Company can guarantee independent directors and other directors of the same right to know.
During the reporting period, the independent directors have no objection on the related issues of the Company.
VI. Duty performance of the special committees under the board during the reporting period
(I) Duties fulfillment of the board of directors and audit committee on internal control over risk
Internal control on risk and Audit Committee of the board of directors of the company comprises 3 independent
non-executive directors and three directors, including the convener (professional accountant) is an independent
director. In accordance with relevant provisions of China Securities Regulatory Commission and Shenzhen Stock
Exchange and working system, Internal control on risk and Audit Committee of the board of directors seriously
performed duties in a dedicated attitude. In the annual financial report audit, they acted as supervisors, maintained
individuality of audit and issued a series of notices such as the Written Opinion on Financial Accounting
Statements Issued by the Company before CPA of Annual Examination Entered, the Written Opinion on Financial
Accounting Statements after Preliminary Audit Issued by CPA of Annual Examination, the Summary Report of
Internal Risk Control and Audit Committee on the Annual Audit Work of CPA as well as the Resolution on
Rehire the Audit Institution. Its main duties comprise the following:
1. Risk internal control and audit committee is responsible for determining the audit work schedule, negotiating
with CPA who engages in audit;
2. Before CPA enters, audit committee should review the financial statements prepared by the Company and issue
written opinions;
3. Strengthen communication with the CPA, and urge them to submit audit report within stipulated time with
urgency letter;
4. Review again the financial statements after the CPA issues preliminary opinion, and issue written opinions;
5. The Committee held annual work conference 2017, approved proposal of financial accounting report, summary
report of annual audit work of CPA and rehiring Ernst & Young CPA (Special General Partnership) as the audit
institution, and then formed a resolution to submit to board of directors for approval.
(II) Duties fulfillment of Remuneration and Appraisal Committee
As special working mechanism of the board of directors, the remuneration and appraisal committee is responsible
for approving the assessment standard of directors and senior executives, formulating and reviewing
compensation policies and programs of directors and executive. And they take charge in examining according to
the standard and policies. The remuneration and appraisal committee is composed of three directors, including
two independent directors; convener is Chen Honghui, an independent director.
During the reporting period, remuneration and assessment committee actively performed duty; clearly defined
their responsibilities; did serious research and appraisal on the remuneration and appraisal system, especially
salary, assessment system and program over directors, supervisors and senior executive. According to working
rules of the remuneration and appraisal committee, they have rights to check regular reports, meetings records,
business planning and other materials by telephone, interviews and other methods to learn the performance of
directors, executives. And they’re required to submit problems existing in implementation of system to the Board
of Directors and raise up suggestion on them. Their contents are as follows:
1. In 2017, the remuneration and appraisal committee carried out the performance evaluation of executives
according to the 2016 Annual operation standard and performance.
2. It proposed the \"2018 Evaluation Scheme of Operating Performance\", and submitted it to the board of directors
for approval.
3. The remuneration and appraisal committee approved salary of directors, supervisors and senior executives
disclosed in 2017 annual report. And it issued the following opinions:
Compensation decision procedures of directors, supervisors and senior management personnel was in accordance
with the provisions; the standard was in accordance with the remuneration system; the disclosure of 2017 annual
report about personnel salary of the directors, supervisors and senior management is real and accurate.
VII. Works from Supervisory Committee
The Company has risks in reporting period that found in supervisory activity from supervisory committee
□ Yes √ No
Supervisory committee has no objection about supervision events in reporting period
VIII. Examination and incentives of senior management
Senior executives of the Company took responsibility for the board of directors, in the reporting period, the board
of directors implemented the performance checking mechanism that the remuneration of senior executives related
with their performance checking, with achievement as direction, and made relevant reward and punishment
according to target completion. The Company’s relevant incentive and restriction mechanism gradually in order to
further exert the enthusiasm and creativity of senior executives, urge the senior executives to perform the
obligations of being honest and diligent. The Company had no incentive mechanism for senior executives such as
stock option, purchase of management team and equity held by owner.
IX. Internal Control
1. Details of major defects in IC appraisal report that found in reporting period
□Yes √ No
2. Appraisal Report of Internal Control
Disclosure date of full internal control
2018-03-22
evaluation report
Disclosure index of full internal control ”Self-evaluation report of internal control for 2017” in Juchao website
evaluation report (www.cninfo.com.cn) appointed by Shenzhen Stock Exchange
The ratio of the total assets of units
included in the scope of evaluation
accounting for the total assets on the 100.00%
company's consolidated financial
statements
The ratio of the operating income of units
included in the scope of evaluation
accounting for the operating income on the 100.00%
company's consolidated financial
statements
Defects Evaluation Standards
Category Financial Reports Non-financial Reports
Financial report defects are mainly judged
Non-financial report defects are mainly
and decided by the degree of influence and
judged and decided by the degree of
the likelihood of occurrence to the
influence and the likelihood of
misstatements of financial reports caused by
occurrence of defects to the validity of
defects. (1) Significant defects: a
business process. (1) Significant defects:
combination of one or multiple internal
a combination of one or multiple internal
control defects that exists in internal control
control defects that may cause the
and may cause the material misstatements in
enterprise’s serious deviation to internal
financial statements cannot be prevented,
Qualitative criteria control objectives; (2) Major defects: a
found or corrected in time; (2) Major
combination of one or multiple internal
defects: a combination of one or multiple
control defects whose severity level and
internal control defects that exists in internal
economic consequences are lower than
control and has lower severity level than
significant defects but still may cause the
significant defects but still should be
enterprise’s deviation to internal control
concerned by the superintendents of
objectives; (3) Common defects: other
enterprise financial reports; (3) Common
defects except for significant and major
defects: other defects except for significant
defects.
and major defects.
Quantitative criteria: a quantitative
criterion determines the degree of
importance of the company’s defects
based on the amount of direct loss and
the degree of significant influence to the
company. (1) Significant defects: the
amount of direct property loss is or more
than 10 million Yuan, or has been
Quantitative criteria: a quantitative criterion
officially disclosed and caused negative
determines the degree of importance of
effects to periodic report disclosure of
misstatements (including missing reports) in
the joint-stock companies; (2) Major
the consolidated statements of listed
defects: the amount of direct property
companies based on the consolidated
Quantitative standard loss is between 5 million and 10 million
statement data. (1) Significant defects: equal
Yuan, or has been punished by the
to or greater than 5% of profit before tax (2)
national government departments but has
Major defects: between 1% and 5% of profit
not caused negative effects to periodic
before tax; (3) Common defects: less than or
report disclosure of the joint-stock
equal to 1% of profit before tax.
companies;(3) Common defects: the
amount of direct property loss is between
0.1 million and 5 million Yuan, or has
been punished by the provincial or sub-
provincial government departments but
has not caused negative effects to
periodic report disclosure of the joint-
stock companies.
Amount of significant defects in financial
reports
Amount of significant defects in non-
financial reports
Amount of important defects in financial
reports
Amount of important defects in non-
financial reports
X. Auditing report of internal control
√ Applicable □ Not applicable
Deliberations in Internal Control Audit Report
According to relevant regulations and “Basic Rules of Internal Control for Enterprises”, China National Accord Medicines
Corporation Ltd. in all major aspects, keeps an efficiency of internal control of financial report dated 31 December 2017.
Disclosure details of audit report of
Disclosed
internal control
Disclosure date of audit report of
2018-03-22
internal control (full-text)
Index of audit report of internal Audit Report of Internal Control under the name of China National Accord Medicines
control (full-text) Corporation Ltd. released on Juchao Website (http://www.cninfo.com.cn)
Opinion type of auditing report of
Standard unqualified
IC
Whether the non-financial report
No
had major defects
Carried out modified opinion for internal control audit report from CPA
□Yes √ No
The internal control audit report, issued by CPA, has concerted opinion with self-evaluation report, issued from the Board
√ Yes □ No
Section X. Corporate Bond
Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when
annual report approved for released or fail to cash in full on due
No
Section XI. Financial Report
AUDITOR’S REPORT
Ernst & Young Hua Ming (2018) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
To the shareholders of China National Accord Medicines Corporation Ltd.
(I) Opinion
We have audited the financial statements of China National Accord Medicines Corporation Ltd. (the
“Company”), which comprise the consolidated and the Company’s balance sheets as at 31 December 2017,
and the consolidated and the Company’s income statements, the consolidated and the Company’s
statements of changes in equity and the consolidated and the Company’s statements of cash flows for the
year then ended, and notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated
and the Company’s financial position as at 31 December 2017, and the consolidated and the Company’s
financial performance and cash flows for the year then ended in accordance with Accounting Standards for
Business Enterprises (“ASBEs”).
(II) Basis for opinion
We conducted our audit in accordance with China Standards on Auditing (“CSAs”). Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial statements
section of our report. We are independent of the Company in accordance with China Code of Ethics for
Certified Public Accountants (the “Code”), and we have fulfilled our other ethical responsibilities in accordance
with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
(III) Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial
statements section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement of
the financial statements. The results of our audit procedures, including the procedures performed to address
the matters below, provide the basis for our audit opinion on the accompanying financial statements.
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2018) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
(III) Key audit matters (continued)
Key audit matter How our audit addressed the key audit
matter
Impairment of goodwill
The carrying value of goodwill amounted to Our audit procedures included, involving our
RMB830,729,152.75 as at 31 December 2017 valuation specialists to assist us in evaluating
and was allocated to the Company’s cash- the assumptions and methodologies used by
generating units (“CGUs”) of pharmaceutical the Company, in particular, the discount rate
distribution, retail pharmacy. Under ASBEs, and the long term growth rate. We assessed
the Company is required to annually perform the forecasts used with respect to future
the impairment test for goodwill. The revenues and operating results by comparing
impairment test is based on the recoverable the forecasts with the historical performance of
amount of the respective CGUs to which the the respective CGUs and the business
goodwill is allocated. Management performed development plan. We also read and assessed
the impairment test using the value in use the Company’s disclosures of goodwill.
calculation based on the discounted cash flow
method. Assumptions such as the discount
rate and the growth rate are set up applying
estimates and significant judgements by
management.
The Company’s disclosures about impairment
of goodwill are included in note III (20, 30) and
note V (16) to the financial statements, which
specifically explains the key assumptions that
management used for value-in-use
calculations.
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2018) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
(III) Key audit matters (continued)
Key audit matter How our audit addressed the key audit
matter
Impairment of trade receivables
At as 31 December 2017, the Company had Our audit procedures included, evaluating the
trade receivables of RMB7,589,412,679.88, analysis prepared by management for the
total current assets of RMB18,320,779,382.33, impairment assessment.
total assets of RMB22,343,643,527.77, ratio of
accounts receivable over current asset and In assessing the overall provision for
total asset is 41.43% and 33.97%, impairment, we assessed management’s
respectively. The assessment of impairment policy for recognizing provisions.
involves management’s judgement and
estimates. Specific factors management We selected samples of individually significant
considers include the age of the balance, trade receivable balances where a provision
location of customers, existence of disputes, for impairment of trade receivables was
recent historical payment patterns and any recognised and obtained an understanding of
other available information concerning the the rationale behind management’s judgement.
creditworthiness of counterparties. We reviewed the overdue analysis, the
Management uses this information customer’s historical payment patterns and
to determine whether a provision for subsequent payments.
impairment is required either individually or
collectively. We focused on this area because We assessed the ageing reports of trade
it requires significant management’s receivables, by tracing to the invoice dates on
judgement and estimates. a sample basis.
The Company’s disclosures about impairment We also read and assessed the relevant
of trade receivables are included in note III disclosures made in the financial statements,
(10) and note V (3) to the financial statements. including disclosures of the basis for this
estimation.
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2018) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
(IV) Other information
The management of the Company is responsible for the other information. The other information comprises
the information included in the annual report, other than the financial statements and our auditor’s report
thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
(V) Responsibilities of the management and those charged with governance for the financial
statements
The management of the Company is responsible for the preparation and fair presentation of the financial
statements in accordance with ASBEs, and for designing, implementing and maintaining such internal control
as the management determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting, unless the management either intends to liquidate the Company or to cease
operations or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2018) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
(VI) Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with CSAs will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are generally considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with CSAs, we exercise professional judgement and maintain professional
scepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the management.
(4) Conclude on the appropriateness of the management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify
our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Company to cease to continue as a going
concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2018) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
(VI) Auditor’s responsibilities for the audit of the financial statements (continued)
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were
of most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Ernst & Young Hua Ming LLP Chinese Certified Public Accountant: Li Jian Guang
(Engagement partner)
Chinese Certified Public Accountant: Yan Ping
Beijing, the People’s Republic of China 21 March 2018
Important Notice
This auditor’s report is an English translation of the auditor’s report for the audit engagements which adopt CSAs.
In case the English version does not conform to the Chinese version, the Chinese version prevails.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET
As at 31 December 2017
(Expressed in Renminbi Yuan)
ASSETS Note V 31 December 2017 31 December 2016
Current assets
Cash and bank balances 1 4,191,655,438.51 3,519,961,564.93
Notes receivable 2 1,504,194,764.08 1,504,000,909.21
Accounts receivable 3 7,589,412,679.88 7,654,225,510.89
Advances to suppliers 4 516,778,117.47 424,867,581.80
Interest receivable 5 61,441.11 450,722.67
Other receivables 6 657,871,058.54 478,573,423.62
Inventories 7 3,781,858,238.12 4,049,482,529.71
Other current assets 8 78,947,644.62 57,209,263.04
Total current assets 18,320,779,382.33 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 1,650,619,373.09 1,413,034,165.56
Investment properties 11 153,678,339.11 166,715,848.80
Fixed assets 12 551,710,434.02 487,009,600.10
Construction in progress 13 22,947,258.99 47,063,868.49
Intangible assets 14 325,751,430.88 320,435,400.89
Development costs 15 - -
Goodwill 16 830,729,152.75 823,890,174.21
Long-term prepaid expenses 17 252,247,050.79 188,377,725.64
Deferred tax assets 18 79,472,883.06 72,914,722.30
Other non-current assets 19 142,022,462.75 94,649,476.09
Total non-current assets 4,022,864,145.44 3,627,776,742.08
Total assets 22,343,643,527.77 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 31 December 2017
(Expressed in Renminbi Yuan)
LIABILITIES AND SHAREHOLDERS’
Note V 31 December 2017 31 December 2016
EQUITY
Current liabilities
Short-term borrowings 21 1,561,354,521.64 1,512,713,629.95
Notes payable 22 2,732,437,828.42 2,406,642,582.86
Accounts payable 23 6,144,221,000.10 6,701,558,514.10
Advances from customers 24 216,938,239.32 163,450,365.92
Employee benefits payable 25 215,656,526.54 195,138,079.85
Tax payable 26 223,752,900.24 187,043,717.52
Interest payable 27 7,311,819.65 6,956,463.02
Dividends payable 28 11,889,443.11 8,483,370.21
Other payables 29 1,011,128,397.26 917,193,911.34
Non-current liabilities due within one year 30 5,434,770.70 36,411,339.96
Other current liabilities 31 112,817.65 123,294.77
Total current liabilities 12,130,238,264.63 12,135,715,269.50
Non-current liabilities
Long-term borrowings 32 31,600,000.00 -
Long-term payables 33 9,332,537.14 14,616,598.34
Payable for specific projects 34 800,000.00 800,000.00
Provision 35 - -
Deferred income 36 125,082,372.53 123,953,462.81
Long-term employee benefits payable 37 1,777,000.00 1,722,599.89
Deferred tax liabilities 18 71,883,253.02 76,535,704.01
Other non-current liabilities 38 45,427,343.31 45,427,343.31
Total non-current liabilities 285,902,506.00 263,055,708.36
Total liabilities 12,416,140,770.63 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 31 December 2017
(Expressed in Renminbi Yuan)
LIABILITIES AND Note V 31 December 2017 31 December 2016
SHAREHOLDERS’ EQUITY
Shareholders’ equity
Share capital 39 428,126,983.00 362,631,943.00
Capital surplus 40 3,181,429,064.99 3,152,718,024.92
Other equity instruments 41 - 65,495,040.00
Surplus reserve 42 214,063,491.50 181,315,971.50
Retained earnings 43 5,572,952,806.39 4,690,265,884.10
Shareholders’ equity attributable
to shareholders of the parent 9,396,572,345.88 8,452,426,863.52
Non-controlling interests 530,930,411.26 465,350,406.57
Total shareholders’ equity 9,927,502,757.14 8,917,777,270.09
Total liabilities and shareholders’
equity 22,343,643,527.77 21,316,548,247.95
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
As at 31 December 2017
(Expressed in Renminbi Yuan)
Note V 2017
Operating revenue 44 41,263,629,118.85 41,248,341,665.46
Less: Operating costs 44 36,819,552,915.80 36,648,160,750.15
Tax and surcharge 45 119,920,418.18 124,271,433.05
Selling expenses 46 2,305,909,071.71 2,198,243,216.29
Administrative expenses 47 735,953,967.13 859,773,090.07
Finance costs 48 110,360,539.56 101,856,594.98
Impairment loss 49 (2,470,696.74) (8,549,989.81)
Add: Investment income 50 264,540,020.24 223,467,928.58
Incl: Investment income from
associates 263,825,834.56 97,075,494.40
Gain on disposal of assets 51 792,138.38 9,175,103.65
Other incomes 52 24,155,618.47 -
Operating profits 1,463,890,680.30 1,557,229,602.96
Add: Non-operating income 53 11,412,488.21 48,439,465.29
Less: Non-operating expenses 54 9,274,194.70 5,515,964.43
Total profit 1,466,028,973.81 1,600,153,103.82
Less: Income taxes 56 309,290,127.72 318,377,292.91
Net profit 1,156,738,846.09 1,281,775,810.91
Incl: Net profit of acquiree before business
combinations involving enterprises under
common control (1,096.00) 260,423,077.82
Net profit attributable to shareholders of the parent 1,057,791,930.67 1,186,539,201.93
Profit or loss of non-controlling interests 98,946,915.42 95,236,608.98
Total comprehensive income 1,156,738,846.09 1,281,775,810.91
Incl: Total comprehensive income for the year
attributable to owners of the parent 1,057,791,930.67 1,186,539,201.93
Total comprehensive income for the year
attributable to non-controlling interests 98,946,915.42 95,236,608.98
Earnings per share
Basic earnings per share 2.47 2.80
Diluted earnings per share 2.47 2.80
The accompanying notes form an integral part of these financial statements.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
As at 31 December 2017
(Expressed in Renminbi Yuan)
Shareholders’ equity attributable to shareholders of the parent
2017 Non-controlling interests Total equity
Other equity
Share capital instruments 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) 28,711,040.07 32,747,520.00 882,686,922.29 944,145,482.36 65,580,004.69 1,009,725,487.05
(1) Total comprehensive income - - - - 1,057,791,930.67 1,057,791,930.67 98,946,915.42 1,156,738,846.09
(2) Capital paid and reduced by owners 65,495,040.00 (65,495,040.00) 28,711,040.07 - (1,075,583.99) 27,635,456.08 20,214,810.63 47,850,266.71
1.Capital injection by owners 5,114,297.00 (5,114,297.00) - - - - 14,873,000.00 14,873,000.00
2.Significant reorganization 60,380,743.00 (60,380,743.00) (3,430,029.00) - - (3,430,029.00) - (3,430,029.00)
3.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)
4.Business combination not involving
enterprises under common control - - - - - - 6,858,866.62 6,858,866.62
5.Others - - 33,341,069.07 - - 33,341,069.07 - 33,341,069.07
(3) Profit distribution - - - 32,747,520.00 (174,029,424.39) (141,281,904.39) (53,581,721.36) (194,863,625.75)
1. Withdrawal of statutory surplus
reserve - - - 32,747,520.00 (32,747,520.00) - - -
2.Distribution to equity owners - - - - (141,281,904.39) (141,281,904.39) (53,581,721.36) (194,863,625.75)
Closing balance of the current year 428,126,983.00 - 3,181,429,064.99 214,063,491.50 5,572,952,806.39 9,396,572,345.88 530,930,411.26 9,927,502,757.14
The accompanying notes form an integral part of these financial statements.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
As at 31 December 2016
(Expressed in Renminbi Yuan)
Shareholders’ equity attributable to shareholders of the parent
2016 Non-controlling interests Total equity
Other equity
Share capital instruments 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 equity owners - - - - (108,789,582.90) (108,789,582.90) (32,266,371.11) (141,055,954.01)
2. Business combination involving
enterprises under common control - - - - (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
As at 31 December 2017
(Expressed in Renminbi Yuan)
Note V 31 December 2017 31 December 2016
1.CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of good or rendering of
services 46,403,001,555.00 45,257,537,860.36
Tax refunds 7,687,909.30 16,985,904.86
Cash receipts related to other operating activities 58 340,666,056.90 314,524,274.42
Sub-total of cash inflows from operating activities 46,751,355,521.20 45,589,048,039.64
Cash paid for goods and services 41,242,898,835.78 39,904,604,242.81
Cash paid to and on behalf of employees 1,684,046,853.72 1,794,695,502.08
Cash paid for all types of taxes 1,092,685,949.27 1,124,836,669.70
Cash payments related to other operating
activities 58 1,446,431,970.61 1,292,569,148.89
Sub-total of cash outflows from operating
activities 45,466,063,609.38 44,116,705,563.48
Net cash flows from operating activities 59 1,285,291,911.82 1,472,342,476.16
2.CASH FLOWS FROM INVESTING ACTIVITIES
Cash received from recovery of investments - 226,000.00
Cash received from returns on investments 61,204,993.30 41,420,278.36
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets 1,811,126.55 23,568,618.35
Cash receipts related to other investing activities 75,259,200.00 1,605,005,840.32
Sub-total of cash inflows from investing activities 138,275,319.85 1,670,220,737.03
The accompanying notes form an integral part of these financial statements.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED CASH FLOW STATEMENT (Continued)
As at 31 December 2017
(Expressed in Renminbi Yuan)
Note V 2017
2.CASH FLOWS FROM INVESTING ACTIVITIES (Continued)
Cash paid for acquisition of fixed assets,
intangible assets and other long-term assets 204,345,540.74 265,885,799.28
Cash paid for acquisition of investments 73,950,980.00 21,860,000.00
Net cash paid for acquisition of subsidiaries and
other business units 53,356,516.15 11,639,196.11
Net cash paid from disposal of subsidiaries and other
business units - 105,527,131.30
Cash payments related to other investing activities 58 92,803,476.90 1,274,374,346.93
Sub-total of cash outflows from investing activities 424,456,513.79 1,679,286,473.62
Net cash flows from investing activities (286,181,193.94) (9,065,736.59)
3.CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from investments by others 14,873,000.00 271,286,689.50
Incl: Cash received from capital contributions from
non-controlling shareholders of subsidiaries 14,873,000.00 3,470,000.00
Cash received from borrowings 261,571,499.94 467,980,655.24
Cash receipts related to other financing activities 58 238,476,708.52 297,999,324.21
Sub-total of cash inflows from financing activities 514,921,208.46 1,037,266,668.95
Cash repayments for debts 445,758,196.23 787,922,055.10
Cash payments for distribution of dividends or profit and
interest expenses 295,787,225.16 254,987,476.35
Incl: Profit and dividends paid to non-controlling
shareholders of subsidiaries 49,621,410.48 39,738,435.69
Cash payments related to other financing activities 58 250,398,903.79 470,599,856.33
Sub-total of cash outflows from financing activities 991,944,325.18 1,513,509,387.78
Net cash flows from financing activities (477,023,116.72) (476,242,718.83 )
The accompanying notes form an integral part of these financial statements.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED CASH FLOW STATEMENT (Continued)
As at 31 December 2017
(Expressed in Renminbi Yuan)
Note V 2017
4.EFFECT OF FOREIGN EXCHANGE RATE CHANGES
ON CASH AND CASH EQUIVALENTS 495,664.83 (563,036.58)
5.NET INCREASE IN CASH AND CASH EQUIVALENTS 59 522,583,265.99 986,470,984.16
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
3,673,498,691.48 3,150,915,425.49
The accompanying notes form an integral part of these financial statements.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY BALANCE SHEET
As at 31 December 2017
(Expressed in Renminbi Yuan)
ASSETS Note XIV 31 December 2017 31 December 2016
Current assets
Cash and bank balances 1,776,696,342.87 1,342,041,409.86
Notes receivable 64,799,618.07 79,868,867.49
Accounts receivable 1 480,467,760.92 397,351,577.24
Advances to suppliers 1,138,312.26 2,135,439.82
Interest receivable 1,844,294.10 2,029,125.06
Other receivables 2 1,516,037,945.71 1,801,567,851.50
Inventories 172,022,676.96 184,708,273.76
Other current assets 788,964.90 6,937,946.90
Total current assets 4,013,795,915.79 3,816,640,491.63
Non-current assets
Long-term equity investments 3 7,180,306,084.56 5,914,542,602.10
Investment properties 2,763,831.92 3,571,809.38
Fixed assets 13,831,103.54 16,555,996.92
Intangible assets 1,287,775.78 1,534,730.15
Long-term deferred expenses 5,543,217.86 6,645,211.13
Deferred tax assets 2,764,724.75 2,869,931.88
Other non-current assets 71,808,611.00 9,859,840.00
Total non-current assets 7,278,305,349.41 5,955,580,121.56
Total assets 11,292,101,265.20 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 31 December 2017
(Expressed in Renminbi Yuan)
LIABILITIES AND SHAREHOLDERS’
31 December 2017 31 December 2016
EQUITY
Current liabilities
Short-term borrowings 707,000,000.00 50,000,000.00
Notes payable 239,563,961.30 334,383,191.54
Accounts payable 434,886,685.35 391,726,381.93
Advances from customers 1,912,503.90 2,997,964.16
Employee benefits payable 33,592,851.93 30,618,183.84
Tax payables 42,386,907.00 3,308,582.29
Interest payable 669,533.78 37,801.50
Other payables 1,415,053,655.18 1,100,143,593.55
Non-current liabilities due within one
year - 31,600,000.00
Other current liabilities 112,817.65 123,294.77
Total current liabilities 2,875,178,916.09 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 2,054,250.00 1,570,000.00
Long-term employee benefits payable - 26,000.00
Deferred tax liabilities 3,773,319.00 3,773,319.00
Total non-current liabilities 38,227,569.00 6,169,319.00
Total liabilities 2,913,406,485.09 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 31 December 2017
(Expressed in Renminbi Yuan)
LIABILITIES AND SHAREHOLDERS’
31 December 2017 31 December 2016
EQUITY
Shareholders’ equity
Share capital 428,126,983.00 362,631,943.00
Capital surplus 4,407,091,484.13 4,381,845,619.03
Surplus reserves 214,063,491.50 181,315,971.50
Other equity instruments - 65,495,040.00
Retained earnings 3,329,412,821.48 2,829,823,727.08
Total shareholders’ equity 8,378,694,780.11 7,821,112,300.61
Total liabilities and shareholders’ equity 11,292,101,265.20 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
As at 31 December 2017
(Expressed in Renminbi Yuan)
Note XIV 2017
Operating revenue 4 3,346,941,845.38 3,138,854,618.97
Less: Operating costs 4 3,211,668,647.02 3,004,349,631.69
Tax and surcharge 10,375,051.96 7,524,958.43
Selling expenses 51,050,354.52 50,852,431.61
Administrative expenses 70,636,774.06 86,328,173.16
Finance costs (54,129,294.66) (60,205,031.57)
Impairment loss (72,116.23) 337,659.11
Add: Investment income 5 640,957,400.23 588,945,025.76
Incl: Investment income from associates 286,535,212.21 209,757,868.18
Gain on disposal of assets 884.46 -
Other income 4,069,902.74 -
Operating profits 702,440,616.14 638,611,822.30
Add: Non-operating income 39,253.56 13,669,692.02
Less: Non-operating expenses 1,861,760.18 698,639.61
Total profit 700,618,109.52 651,582,874.71
Less: Income taxes 26,999,590.73 12,348,207.78
Net profit 673,618,518.79 639,234,666.93
Total comprehensive income 673,618,518.79 639,234,666.93
The accompanying notes form an integral part of these financial statements.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
As at 31 December 2017
(Expressed in Renminbi Yuan)
Other equity
2017 Share capital Capital surplus Surplus reserve Retained earnings Total equity
instruments
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) 25,245,865.10 32,747,520.00 499,589,094.40 557,582,479.50
(1) Total comprehensive income - - - - 673,618,518.79 673,618,518.79
(2) Capital paid and reduced by owners 65,495,040.00 (65,495,040.00) 25,245,865.10 - - 25,245,865.10
1. Capital injection by owners 5,114,297.00 (5,114,297.00) - - - -
2. Significant reorganization 60,380,743.00 (60,380,743.00) (3,430,029.00) - - (3,430,029.00)
3. Others - - 28,675,894.10 - - 28,675,894.10
(3) Profit distribution - - - 32,747,520.00 (174,029,424.39) (141,281,904.39)
1. Distribution to owners - - - - (141,281,904.39) (141,281,904.39)
2. Withdrawal surplus reserves - - - 32,747,520.00 (32,747,520.00) -
Closing balance of the current year 428,126,983.00 - 4,407,091,484.13 214,063,491.50 3,329,412,821.48 8,378,694,780.11
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)
As at 31 December 2017
(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
As at 31 December 2017
(Expressed in Renminbi Yuan)
2017
1.CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of good or rendering
of services 3,618,686,142.56 3,401,302,572.88
Cash receipts related to other operating
activities 42,311,981.52 51,854,505.86
Sub-total of cash inflows from operating
activities 3,660,998,124.08 3,453,157,078.74
Cash paid for goods and services 3,317,975,162.52 3,186,087,599.05
Cash paid to and on behalf of employees 74,008,955.58 64,460,810.25
Cash paid for all types of taxes 45,705,409.43 41,496,603.39
Cash payments related to other operating
activities 45,906,623.45 24,972,169.45
Sub-total of cash outflows from operating
activities 3,483,596,150.98 3,317,017,182.14
Net cash flows from operating activities 177,401,973.10 136,139,896.60
2. CASH FLOWS FROM INVESTING ACTIVITIES
Cash received from returns of investments 456,706,957.70 418,909,426.90
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets - 5,580.00
Net cash paid from disposal of subsidiaries and
other business - 156,111,000.00
Cash receipts related to other investing activities 2,219,069,200.00 1,857,919,415.00
Sub-total of cash inflows from investing activities 2,675,776,157.70 2,432,945,421.90
Cash paid for acquisition of fixed assets,
intangible assets and other long-term assets 37,669,557.28 46,855,153.72
Cash paid for investment 1,046,650,980.00 -
Net cash paid for purchasing subsidiaries and
other business 17,549,020.00 -
Cash payments related to other investing
activities 2,067,489,918.90 2,005,548,023.10
Sub-total of cash outflows from investing
activities 3,169,359,476.18 2,052,403,176.82
Net cash flows from investing activities (493,583,318.48) 380,542,245.08
The accompanying notes form an integral part of these financial statements.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY CASH FLOW STATEMENT (Continued)
As at 31 December 2017
(Expressed in Renminbi Yuan)
2017
3. CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from investments by others - 267,816,689.50
Cash received from borrowings 41,600,000.00 80,100,000.00
Cash receipts related to other financing 16,514,221,231.02 9,255,846,037.96
activities
Sub-total of cash inflows from financing 16,555,821,231.02 9,603,762,727.46
activities
Cash repayments for debts 41,600,000.00 189,800,218.30
Cash payments for distribution of dividends,
150,643,594.49 116,941,247.37
profit or interest expenses
Cash payments related to other financing 15,613,029,417.64 8,901,099,071.96
activities
Sub-total cash outflows from financing activities 15,805,273,012.13 9,207,840,537.63
Net cash flows from financing activities 750,548,218.89 395,922,189.83
4.EFFECT OF FOREIGN EXCHANGE RATE
CHANGES ON CASH AND CASH
EQUIVALENTS 288,059.50 -
5. NET INCREASE IN CASH AND CASH
EQUIVALENTS 434,654,933.01 912,604,331.51
Add: Cash and cash equivalents at beginning of
the year 1,342,041,409.86 429,437,078.35
6. CASH AND CASH EQUIVALENTS
AT END OF YEAR 1,776,696,342.87 1,342,041,409.86
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 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
I Profile of the Company
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 converting capital surplus into
share capital, bonus issues and issuance of shares for years, the share capital of the Company
increased to 428.13 million as at 31 December 2017.
In November 2000, the Company entered into an Asset 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 asset exchange proposal was
approved by shareholders in the Second Extraordinary General Meeting on 29 December 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 14 March 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 issue date. 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 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
I Profile of the Company (Continued)
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 the non-controlling interest of South Pharma & Trade. The relevant
shares were successfully issued and listed on 5 January 2017. Afterwards, the total number of shares of
the Company increased to 428,126,983.
As of 31 December 2017, the total share capital is 428,126,983.
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 RMB428.13 million. 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 Chinese herbal slice, 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; industrial investment holding; domestic trade; material supply and marketing
industry (other than special licensing); sale of ambulances; trading of second-class and third- class
medical equipment; project investment; property management and leasing 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 have to be approved before operating).
Subsidiaries consolidated in the financial statements for the current year and change in the consolidation
scope are shown in Note VI.
The Group’s parent and ultimate parent company is Sinopharm Group and China National
Pharmaceutical Group Corporation respectively.
These financial statements were authorized for issue by the board of directors of the Company on 21
March 2018.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
II Basis of preparation
The financial statements were prepared in accordance with the Basic Standard and specific standards of
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 “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 the 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 accounts receivable
(Note Ⅲ (10)), inventory costing methods (Note Ⅲ (11)), depreciation methods for fixed assets and
amortization method for intangible assets (NoteⅢ(14) and Note III(17)), impairment of assets (NoteⅢ
(20)) and revenue recognition (NoteⅢ(25)).
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates
(1) Statement of compliance with Accounting Standards for Business Enterprises
The financial statements of the Company for the year ended 31 December 2017 are in compliance with
Accounting Standards for Business Enterprises, and truly and completely present the financial position
of the Group and the Company as of 31 December 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 Group’s accounting year begins 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 31 December 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 31 December 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 and 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 asset 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 equivalents 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 transactions are 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 cost are translated at the balance sheet date using the
spot exchange rates at the dates 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 receivable, 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 31 December 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 for the current period. Interest and
dividends relating to an available-for-sale financial asset are recognized in profit or loss for 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 31 December 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 judgment. In making this judgment, 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 31 December 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 cost 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) Offsetting of financial instruments
A financial asset and a financial liability shall be offset and the net amount is 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 31 December 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 is 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 is 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
The reason for making separate assessment for provision for bad debts is that there is objective
evidence that the Group will not be able to collect the amount under the original terms of the
receivables.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
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 31 December 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
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.
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.
Basis for determining the 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.
The Group adopts the perpetual inventory system.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(12) Long-term equity investments
Long-term equity investments comprise the Company’s long-term equity investments in its subsidiaries,
joint ventures and associates.
Long-term equity investments are accounted for using the coast method at the time it was acquired. 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.
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 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(12) 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 to
recognize 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 the recognition of provisions under the accounting standards on
contingencies are satisfied, the Group continues to recognize 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 interests in the investees, and then based on
which the investment gains or losses are recognized. For the loss on intra-group transactions 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)).
(13) 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
investment properties are included in the cost of 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 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(13) 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 lives 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 property is transferred to owner-occupied property, it is reclassified as a fixed asset
or intangible asset at the date of 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 transfer.
The investment properties’ estimated useful life, net residual value and depreciation (amortization)
method applied are reviewed and adjusted as appropriate at the end of each year.
An investment property is derecognized on disposal or when the investment property 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 property after its carrying amount
and related taxes and expenses is recognized in profit or loss for the current period.
The carrying amount of investment properties is reduced to the recoverable amount if the recoverable
amount is below the carrying amount (Note III (20)).
(14) Fixed assets
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 revalued 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
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 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(14) Fixed assets (Continued)
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 values 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 the end of each year.
Recognition basis and measurement method for financing leased fixed assets.
Finance leases are leases with the whole risks and rewards related to the asset being substantially
transferred. Fixed assets leased under finance leases are recognized at the lower 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 leasesare depreciated be applying the same policy as that those fixed
assets are owned by the company. For those leased assets of which the ownership 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 the estimated useful
lives.
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 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(15) 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 (20)).
(16) Borrowing costs
Borrowing costs refer to the interest and other relevant cost incurred from borrowing, which include loan
interest, discount or amortization of premiums, auxiliary expenses and exchange difference due to
foreign currency loans, etc.
Where the borrowing costs incurred to the Company can be directly attributable to the
acquisition and construction or production of assets eligible for capitalization, it shall be
capitalized and recorded into the costs of relevant assets. Other borrowing costs shall be
recognized as expenses on the basis of the actual amount incurred, and shall be recorded into
the current profits and losses. The term “assets eligible for capitalization” shall refer to the fixed
assets, investment real estate, inventories and other assets, of which the acquisition and
construction or production may take quite a long time to get ready for its intended use or for
sale.
The borrowing costs shall not be capitalized unless they simultaneously meet the following
requirements:
(1) The asset disbursements have already incurred;
(2) The borrowing costs have already incurred; and
(3) The acquisition and construction or production activities which are necessary to prepare
the asset for its intended use or sale have already started.
When the qualified asset under acquisition and construction or production is ready for the
intended use or sale, the capitalization of the borrowing costs shall be ceased. Borrowing costs
incurred after the intended use or sale shall be recorded into the current profits and losses.
During the period of capitalization, the capitalized amount of interest in each accounting period
shall be calculated and determined in the ways below:
The enterprise shall calculate and determine the interest of specific loan by deducting interest
income of loan capital deposit in the bank or investment income obtained from temporary
investment.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(16) Borrowing costs (Continued)
The enterprise shall calculate and determine the to-be-capitalized amount of interests on the
general borrowing by multiplying the weighted average asset disbursement of the part of the
accumulative asset disbursements minus the general borrowing by the capitalization rate of the
general borrowing used.
Where the acquisition and construction or production of a qualified asset is interrupted
abnormally and the interruption period lasts for more than 3 months, the capitalization of the
borrowing costs shall be suspended. The borrowing costs incurred during such period shall be
recognized as expenses, and shall be recorded into the profits and losses of the current period,
till the acquisition and construction or production of the asset restarts.
(17) Intangible assets
Intangible assets include land use rights, computer software, technology patents, trademarks and
distribution network.
Intangible assets can be recognized and initially measured by cost only when the relevant economic
benefits may flow into the Group and the cost can be measured in a reliable way. Intangible assets
contributed by state-owned shareholders during the Company’s reorganization were recorded based on
the valuation amount approved by the State-owned Assets Supervision and Management Department.
The Group shall analyze and judge if intangible assets can bring economic benefis to the Group and
classify as intangible assets with limited service life and intangible assets with uncertain service life.
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 the 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 the end of each year.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(17) Intangible assets (Continued)
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 the 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.
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 (20)).
(18) 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.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(19) 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, 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 them
as other non-current assets.
(20) 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.
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.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(21) 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.
(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.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(21) Employee benefits (Continued)
(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 met, with regard to the period from the staff leaving 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 profit or
loss.
Retirement benefits that are expected to be paid within one year from the balance sheet date are
disclosed as current liabilities.
(22) 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
amortization amount determined by the principles of revenue recognition.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(23) Dividend distribution
Cash dividend distribution is recognized as a liability in the period in which it is approved by
shareholders at the annual shareholders’ meeting.
(24) Share-based payments
The share-based payments shall consist of equity-settled share-based payments and cash-settled
share-based payments. The term \"equity-settled share-based payment\" refers to a transaction in which
the group grants shares or other equity instruments as a consideration in return for services.
The equity-settled share-based payment in return for employee services shall be measured at the fair
value of the equity instruments granted to the employees. As to an equity-settled share-based payment
in return for services of employees, if the right may be exercised immediately after the grant, the fair
value of the equity instruments shall, on the date of the grant, be included in the relevant cost or
expense and the capital reserves shall be increased accordingly. As to an equity-settled share-based
payment in return for employee services, if the right cannot be exercised until the vesting period comes
to an end or until the prescribed performance conditions are met, then on each balance sheet date within
the vesting period, the group shall make the best estimate of the number of vested equity instruments
based on the latest movement of granted employee 、the content of prescribed performance and other
condition. Based on the best estimate, the services obtained in the current period shall be included in the
relevant costs or expenses and the capital reserves at the fair value of the equities instruments on the
date of the grant.
For awards that do not ultimately vest because non-market performance and service conditions have not
been met, no expense is recognised. Where awards include a market or non-vesting condition, the
transactions are treated as vesting irrespective of whether the market or non-vesting condition is
satisfied, provided that all other performance and service conditions are satisfied.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if
the terms had not been modified, if the original terms of the award are met. In addition, an expense is
recognised for any modification that increases the total fair value of the share-based payments, or is
otherwise beneficial to the employee as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation,
and any expense not yet recognised for the award is recognised immediately. This includes any award
where non-vesting conditions within the control of either the Group or the employee are not met.
However, if a new award is substituted for the cancelled award, and is designated as a replacement
award on the date that it is granted, the cancelled and new awards are treated as if they were a
modification of the original award, as described in the previous paragraph.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(24) Share-based payments (Continued)
A cash-settled share-based payment shall be measured in accordance with the fair value of liability
calculated and confirmed based on the shares or other equity instruments undertaken by an enterprise.
As to a cash-settled share-based payment instruments, if the right may be exercised immediately after
the grant, the fair value of the liability undertaken by the enterprise shall, on the date of the grant, be
included in the relevant costs or expenses, and the liabilities shall be increased accordingly. As to a
cash-settled share-based payment, if the right may not be exercised until the vesting period comes to an
end or until the specified performance conditions are met, on each balance sheet date within the vesting
period, the services obtained in the current period shall, based on the best estimate of the information
about the exercisable right, be included in the relevant costs or expenses and the corresponding
liabilities at the fair value of the liability undertaken by the group. The group shall, on each balance sheet
date and on each account date prior to the settlement of the relevant liabilities, re-measure the fair
values of the liabilities and include the changes in the current profits and losses.
(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 be 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 the ownership nor effective control over the goods sold, and it is
probable that the economic benefits 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 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(26) Government grants
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.
Government grants related to assets refer to government assets which are granted to enterprises for the
long-term assets formed by acquisition, construction or in other manners. Government grants related to
income refer to government grants other than those related to assets.
Government grants related to income to be used as compensation for future expenses or losses shall be
recognized as deferred income and shall be charged to the current profit or loss or be used to write
down the relevant loss, during the recognition of the relevant cost expenses or losses; or used as
compensation for relevant expenses or losses already incurred by enterprises shall be directly charged
to the profit and loss account in the current period or used to write down the relevant cost.
The government grants related to assets shall be used to write down the book value of the relevant
assets or be recognized as deferred income. The government grants related to assets, recognized as
deferred income, shall be charged to the profit and loss reasonably and systematically in stages over the
useful lives of the relevant assets. The government grants measured at nominal amount shall be directly
charged to the current profit and loss.
If any related asset is sold, transferred, written off or destroyed before the end of its useful life, the
balance of the undistributed deferred income shall be transferred to the current gain or loss on disposal
of the asset.
(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 periods 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 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,
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
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 31 December 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 lower of the fair value and the 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 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(29) 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.
(30) Critical accounting estimates
The Group continually evaluates the critical accounting estimates and key judgements 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 .
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 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
III Summary of significant accounting policies and accounting estimates (Continued)
(30) Critical 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, 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, the Group’s management estimates the net realizable
value of the inventories. 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.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 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
Value added tax (“VAT”) tax 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%.
From May to December 2015, eight subsidiaries of the Group in Guangxi Province, 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
from 1 January 2014 to 31 December 2020, and that for the other five subsidiaries is from 1
January 2015 to 31 December 2020.
(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 CIT at a preferential rate of 15%.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
IV Taxation (Continued)
2. Tax preferences (Continued)
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 CIT at a 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, which
approved that the company was subject to CIT at a 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 the following conditions: 1. for industrial enterprises, the
annual taxable income do not exceed RMB300,000; the number of employees does not exceed 100
and the total assets do 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 2017, the annual taxable income tax of Shanghai ForMe Xuhui
Pharmacy Co., Ltd. was less than RMB500,000 and was in compliance with the conditions of small
low-profit enterprises. Therefore, the enterprise is subject to corporate income tax at a rate of 20%.
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) and 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%.
In 2017, the Group’s subsidiaries Shanghai ForMe Xuhui Pharmacy Co., Ltd,(“ForMe Xuhui”),
Sinopharm Guoda Drug Store Guangxi Chain Co., Ltd., Xinjiang New & Special Medicines,
Sinopharm Holding Guoda Pharmacy Hulun Buir Co., Ltd., the Shule Branch and Kashgar Branch
of Sinopharm Holding Xinjiang New & Special Medicines Chain Store Co., Ltd. were qualified for the
definition of small low-profit enterprises and the requirements under Cai shui [2014] No. 34.
Therefore, these companies enjoyed a tax reduction of 50% of the income and paid income tax at a
rate of 20%.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements
1. Cash and bank balances
31 December 2017 31 December 2016
Cash on hand 6,208,674.32 6,164,382.85
Cash at banks 3,667,290,017.16 3,144,751,042.64
Other cash balances 518,156,747.03 369,046,139.44
- Deposits for letters of credit 258,800.00 58,800.00
- Deposits for bank acceptance
notes 514,638,979.04 333,961,620.45
- Cash deposit for a pledged loan - 31,255,582.91
-Term deposits longer than 3
months 3,258,967.99 3,770,136.08
4,191,655,438.51 3,519,961,564.93
Current deposits earn interest at the rate based on current deposit interest rates. Maturities of short-
term time deposits range from 1 month to 6 months depending on the fund arrangements of the
Group, and earn interest at the respective deposit rates. The maturities of bank notice deposits are
7 days depending on the fund arrangement of the Group, and earn interest at respective deposit
rates.
2. Notes receivable
31 December 2017 31 December 2016
Trade acceptance notes 919,982,854.86 594,546,810.36
Bank acceptance notes 584,211,909.22 909,454,098.85
1,504,194,764.08 1,504,000,909.21
At 31 December 2017 and 2016, there were no notes receivable that were pledged.
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 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 31
December 2017 and 31 December 2016 are as follows:
31 December 2017 31 December 2016
Derecognized Not derecognized Derecognized Not derecognized
Trade acceptance
notes - 147,715,527.67 - 159,504,195.71
Bank acceptance
notes 1,034,911,970.56 - 844,012,721.90 -
1,034,911,970.56 147,715,527.67 844,012,721.90 159,504,195.71
As at 31 December 2017 and 31 December 2016, notes that were converted into accounts receivable
due to the drawer’s inability to settle the notes on the maturity date are as follows:
31 December 2017 31 December 2016
Trade acceptance notes - 148,322.25
Bank acceptance notes 1,050,000.00 -
1,050,000.00 148,322.25
3. Accounts receivable
31 December 2017 31 December 2016
Accounts receivable 7,633,338,145.29 7,703,120,162.25
Less: provision for bad debt (43,925,465.41) (48,894,651.36)
7,589,412,679.88 7,654,225,510.89
An aging analysis of accounts receivable is presented as follows:
31 December 2017 31 December 2016
Provision for bad Provision for bad
Carrying amount debts Carrying amount debts
Within 1 year 7,596,940,582.26 (24,467,494.62) 7,665,576,478.81 (26,371,938.74)
1 to 2 years 11,209,568.89 (947,671.54) 12,790,380.58 (1,297,920.86)
2 to 3 years 6,610,561.90 (1,291,671.02) 21,704,712.84 (19,101,203.39)
Over 3 years 18,577,432.24 (17,218,628.23) 3,048,590.02 (2,123,588.37)
7,633,338,145.29 (43,925,465.41) 7,703,120,162.25 (48,894,651.36)
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
Changes in provision for bad debts are presented as follows:
Reversal of
Opening Increases Reversal in Written off in write-off in Decreases in Increases in Closing
balance in the year the year the year previous reorganization merger balance
years
2017 48,894,651.36 4,082,799.01 (7,765,994.96) (2,279,035.42) 45,677.60 - 947,367.82 43,925,465.41
2016 73,694,193.30 1,786,013.00 (12,023,454.74) (14,517,375.00) 23,638.80 (68,364.00) - 48,894,651.36
The accounts receivable by category are analyzed below:
31 December 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 497,346,019.41 6.52% (11,968,509.21) 2.41% 445,672,816.82 5.79% (11,559,178.29) 2.59%
Items for
which
provision for
bad debt is
recognized by
group 7,106,178,799.93 93.09% (26,069,970.29) 0.37% 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 29,813,325.95 0.39% (5,886,985.91) 19.75% 20,670,369.77 0.26% (9,789,037.49) 47.36%
7,633,338,145.29 100.00% (43,925,465.41) 0.58% 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 31 December 2017
(All amounts in Renminbi “RMB” unless otherwise stated)
V Notes to the consolidated financial statements (Continued)
3. Accounts receivable (Continued)
At 31 December 2017, accounts receivable that are individually significant and individually assessed for
provisions are as follows:
Bad debt Assessment for
Carrying amount provision Age Rate impairment
Part of the medical
Receivable of insurance receivable
medical Within 1 takes longer to collect,
insurance 376,673,766.03 (409,330.92) year 0.11% and has risk of default
Receivable of franchises
Receivable of Within 1 within 1 year with low risk
franchises 40,524,166.39 - year - of recoverability
Receivable of credit
Receivable of Within 1 cards with low risk of
credit cards 22,467,724.90 - year - recoverability
Receivable due from a
Within 1 related party with low risk
Sinopharm Group 15,369,464.29 - year - of recoverability
Receivable due from a
fixed cooperative hospital
with no risk of
Daton Xin Jian Within 1 recoverability
Kang Hospital 13,958,565.55 - year -
Disputed receivable with
Hubei Xianning higher risk of
Pharmaceutical 3 to 4 recoverability which is
Co., Ltd. 11,559,178.29 (11,559,178.29) years 100.00% related to a lawsuit
Receivable due from a
Sinopharm Health Within 1 related party with low risk
Online Co., Ltd. 9,422,294.03 - year - of recoverability
Shanghai Pudong Receivable due from a
Pharmaceutical Within 1 related party with low risk
Co., Ltd 7,370,859.93 - year - of recoverability
497,346,019.41 (11,968,509.21
