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一致B:2018年半年度报告(英文版) 下载公告
公告日期:2018-08-24

China National Accord Medicines Corporation Ltd.

Semi-Annual Report 2018

August 2018

Section I. Important Notice, Contents and Paraphrase

Board of Directors, Supervisory Committee, all directors, supervisors and seniorexecutives of China National Accord Medicines Corporation Ltd. (hereinafterreferred to as the Company) hereby confirm that there are no any fictitiousstatements, 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 ofaccounting works and Wang Ying, person in charge of accounting organ(accounting principal) hereby confirm that the Financial Report of Semi -Annual Report 2018 is authentic, accurate and complete.All directors are attended the Board Meeting for report deliberation.The Company plans not to pay cash dividends, bonus and carry out capitalizingof common reserves.

Contents

Section I Important Notice and Paraphrase ...... 1

Section II Company Profile and Main Financial Indexes ...... 5

Section III Summary of Company Business ...... 8

Section IV Discussion and Analysis of Business ...... 12

Section V Important Events ...... 28

Section VI Changes in Shares and Shareholders ...... 49

Section VII Preferred Stock ...... 55

Section VIII Particulars about Directors, Supervisors and Senior Executives ...... 55

Section IX Corporate Bonds ...... 56

Section X Financial Report ...... 57

Section XI Documents Available for Reference ...... 223

Paraphrase

ItemsRefers toContents
Listed Company, Company, the Company, Sinopharm Accord, the GroupRefers toChina National Accord Medicines Corporation Ltd.
SinopharmRefers toChina National Pharmaceutical Group Corporation
Sinopharm HoldingRefers toSinopharm Group Co., Ltd; Controlling shareholder of the Company
Company LawRefers toCompany Law of the People’s Republic of China
Securities LawRefers toSecurities Law of the People’s Republic of China
Yuan, 10 thousand Yuan, 100 million YuanRefers toRMB, RMB 10 thousand, RMB 100 million
Terminology:Refers to
Two Invoices SystemRefers toThe first invoice refers to the invoice from the manufacturer to the distributor, and the second invoice refers to the invoice from the 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.
Pharmacy TrustRefers toIt 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 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
GPORefers toGroup purchasing organizations
Direct sellingRefers toA sales method of selling drug to the hospital directly
GSP certificateRefers toGood Supply Practice certificate
Supply Chain ManagementRefers toThat is CMS, and information system processing workflow & procurement, inventory & sales documents
Abbreviation:Refers to
Sinopharm Holding GuangzhouRefers toSinopharm Holding Guangzhou Co., Ltd.
Guoda DrugstoreRefers toSinopharm Holding Guoda Drugstore Co., Ltd.
Sinopharm Holding GuangxiRefers toSinopharm Holding Guangxi Co., Ltd.
Foshan NanhaiRefers toFoshan Nanhai Pharmaceutical Group Co., Ltd.
Southern Pharmaceutical Foreign TradeRefers toGuangdong Southern Pharmaceutical Foreign Trade Co., Ltd.
Zhijun PharmaceuticalRefers toChina National Zhijun (Shenzhen) Pharmaceutical Co., Ltd.
Zhijun Pharmacy TradeRefers toShenzhen Zhijun Pharmacy Trade Co., Ltd.
Pingshan PharmaceuticalRefers toChina National Zhijun (Shenzhen) Pingshan Pharmaceutical Co., Ltd.
Main Luck PharmaceuticalsRefers toShenzhen Main Luck Pharmaceuticals Inc.

Section II Company Profile and Main Finnaical Indexes

I. Company profile

Short form of the stockSinopharm Accord ; Accord BStock code000028, 200028
Stock exchange for listingShenzhen Stock Exchange
Name of the Company (in Chinese)国药集团一致药业股份有限公司
Short form of the Company (in Chinese)国药一致
Foreign name of the Company (if applicable)China National Accord Medicines Corporation Ltd.
Short form of foreign name of the Company (if applicable)Sinopharm Accord
Legal representativeLin Zhaoxiong

II. Person/Way to contact

Secretary of the BoardRepresentative of security affairs
NameChen ChangbingWang Zhaoyu
Contact add.Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong ProvinceAccord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong Province
Tel.+(86)755 25875195+(86)755 25875222
Fax.+(86)755 25195435+(86)755 25195435
E-mailgyyzinvestor@sinopharm.comgyyz0028@sinopharm.com

III. Others

1. Way of contact

Whether registrations address, offices address and codes as well as website and email of the Company changed in reporting period ornot

□ Applicable √ Not applicableRegistrations address, offices address and codes as well as website and email of the Company has no change in reporting period,found more details in Annual Report 2017

2. Information disclosure and preparation place

Whether information disclosure and preparation place changed in reporting period or not□ Applicable √ Not applicableThe newspaper appointed for information disclosure, website for semi-annual report publish appointed by CSRC and preparation

place for semi-annual report have no change in reporting period, found more details in Annual Report 2017

IV. Main accounting data and financial indexes

Whether it has retroactive adjustment or re-statement on previous accounting data□Yes √ No

Current periodSame period of last yearIncrease/decrease in this report y-o-y
Operating revenue (RMB)20,779,166,699.6720,524,807,669.571.24%
Net profit attributable to shareholders of the listed Company(RMB)641,727,034.93556,125,318.1915.39%
Net profit attributable to shareholders of the listed Company after deducting non-recurring gains and losses(RMB)623,296,339.34546,253,390.0014.10%
Net cash flow arising from operating activities(RMB)225,357,709.20228,337,431.40-1.30%
Basic earnings per share (RMB/Share)1.501.3015.38%
Diluted earnings per share (RMB/Share)1.501.3015.38%
Weighted average ROE6.62%6.41%0.21%
End of current periodEnd of last periodIncrease/decrease in this report-end over that of last period-end
Total assets (RMB)24,013,015,677.3222,343,643,527.777.47%
Net assets attributable to shareholder of listed Company(RMB)9,910,258,628.129,396,572,345.885.47%

V. Difference of the accounting data under accounting rules in and out of China

1. Difference of the net profit and net assets disclosed in financial report, under both IAS (InternationalAccounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not applicableThe Company had no difference of the net profit or net assets disclosed in financial report, under both IAS (International AccountingStandards) and Chinese GAAP (Generally Accepted Accounting Principles)

2. Difference of the net profit and net assets disclosed in financial report, under both foreign accountingrules and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not applicableThe Company had no difference of the net profit or net assets disclosed in financial report, under both foreign accounting rules andChinese GAAP (Generally Accepted Accounting Principles)

VI. Items and amounts of extraordinary profit (gains)/loss

√ Applicable □ Not applicable

In RMB

ItemAmountNote
Gains/losses from the disposal of non-current asset (including the write-off that accrued for impairment of assets)4,254,942.60The income from disposal of intangible assets by subsidiary Sinopharm Holding Guangxi
Logistic Co., Ltd.
Governmental subsidy calculated into current gains and losses(while closely related with the normal business of the Company, excluding the fixed-amount or fixed-proportion governmental subsidy according to the unified national standard)11,938,416.85The vary taxation subsidiary and financial incentive received in the period
Investment costs while acquiring subsidiaries, joint ventures and associated enterprise, less than fair value of the identifiable net assets from invested enterprise which should be enjoined729.29Income from acquisition of subsidiary Sinopharm Holding Guangzhou Huadu Co., Ltd. in the period
Reversal of impairment reserve for account receivable with separate impairment testing4,203,173.20The bad debt provision of receivables which has accrual independently of a prior year was collected in the period
Gains/losses on entrusted loans1,549,650.99
Other non-operating income and expenditure except for the aforementioned items2,377,946.75
Less: impact on income tax5,505,057.19
Influenced amount of minority shareholders’ equity (after tax)389,106.90
Total18,430,695.59--

Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for CompaniesOffering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according tothe lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering TheirSecurities to the Public --- Extraordinary Profit/loss, explain reasons□ Applicable √ Not applicableIn reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists ofextraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities tothe 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 industryReference disclosureRetailing industryThe Company complies with the disclosure requirement of “Information Disclosure Guidelines for the Shenzhen Stock ExchangeNo. 8- Listing Company Engaged in Retailing Industry”

In the reporting period, the main business of Sinopharm Accord includes pharmaceutical distribution andpharmaceutical retail, specifically as follows:

(i) In the pharmaceutical distribution field, the Company continues to integrate the distribution and logisticsbusiness, deeply penetrates into the end markets, improves the multistep distribution network, creates intelligentsupply chain, and devotes to become a provider for pharmaceutical and healthcare products and services with thestrongest influence, the highest share, the most complete variety, the best service, and the fastest delivery in southdistrict of China.1. The Company’s pharmaceutical distribution business is established in Guangdong and Guangxi, the networkconstruction of Guangdong and Guangxi has completed in 2013 with business extended to the county-levelregions, furthermore, we speed up integration of the three tier companies in 2014. In year of 2015, the Companyachieved an operation all over the network, the network has further expansion in first half of 2018, including 1785A-grade hospitals, 3433 community-oriented primary cares and 1538 retail terminal clients.2. Pharmaceutical distribution business has achieved the first scale in Guangdong and Guangxi and the leadingposition in market segment of Guangdong and Guangxi. In terms of traditional business, relying on the network

layout of distribution, accelerated the optimization of terminal network construction, and ranked top 3 in themarket competition of hospital direct marketing in 31 prefecture-level cities; in terms of logistics networkconstruction, transformed from the traditional commercial trade services to the professional supply chain services,established the first third-party logistics in Guangdong and Guangxi.3. While steadily developing the traditional business, the Company actively carried out innovative business:

comprehensively carried out instrument business, adopted advanced supply chain management methods andmodern technology, possessed professional medical supply chain companies, expanded 4D business, and createdSPD core competitiveness; developed retail diagnosis and treatment business, complied with the general trend ofseparating pharmacies from medical institutions, integrated national retail resources, developed a variety of retailpharmacy models, and provided patients with professional, high-quality, convenient and affordable medicine,pharmacy and distribution services. By the first half of 2018, the Company has 51 types of pharmacies in socialpharmacies, dispensaries at the grassroots level, pharmacies for chronic disease management, and drug stores.

(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 drugretail network. The retail chain network of Guoda Drugstore spreads over 19 provinces, autonomous regions andmunicipalities, covers nearly 70 large and medium-sized cities,.By the end of first half of 2018, Guoda Drugstore has operated 4004 stores, covering 19 provinces, autonomousregions and municipalities, entering nearly 70 large and medium sized cities, which has formed a drugstorenetworks 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 attentionon the development of professional service system with medical resources as core competitiveness, building agroup of stores with professional commercial activities, which are able to provide retails and therapy services thatintegrating medical service and health-care products sales and cooperate with hospitals; at the same time, theCompany has been vigorously developing new business, exploring and expanding new sales channels, improvingprofessional services, being dedicated to transit from a traditional medical retail into an innovative serviceenterprise. By means of conventional products retail management, improving major brands and exploring businesscooperation with supplier, accelerating the establishment of DTP business and continuous health care servicesystem, Guoda has built industry-leading professional service ability. Besides, the leading scale of Guoda isregarded as one of the core competitiveness, for the reason that the advantage in scale has reduced its procurementcost and enhanced its negotiation advantages.

II. Major changes in main assets

1. Major changes in main assets

Major assetsNote of major changes
Equity assetsIncreased 106.1159 million Yuan over that of period-begin with 6.38% up, mainly because the investment income from joint ventures increased
Fixed assetsDecreased 1.6079 million Yuan over that of period-begin with 0.29% down, mainly due to the depreciation of fixed assets
Intangible assetsDecreased 10.9347 million Yuan over that of period-begin with 3.36% down, mainly due to the amortization of intangible assets
Construction in progressIncreased 7.8586 million Yuan over that of period-begin with 34.25% up, mainly due to the ERP system update from headquarter of Guoda Drugstore

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 disclosureRetailing industry

As an enterprise with both wholesale and retail business, Sinopharm Accord has the following competitiveadvantages:

1. Strong network coverage and layout

Take the lead in scale and cover the countrywide retail network: Guoda Drugstore is a pharmaceutical retailenterprise with sales volume ranking first for five consecutive years throughout the country, established 28regional chain enterprises, with retail network spreading over 19 provinces and municipalities and autonomousregions and covering nearly 70 cities.

Leading layout and complete distribution network in Guangdong and Guangxi: the Company has completepharmaceutical distribution networks in Guangdong and Guangxi, which comprehensively cover the medicalinstitutions above second grade and the large-scale chain drugstores in Guangdong and Guangxi, and provide drugdistribution services for numerous drugstores, community health care service networks, clinics and the thirdterminals represented by new rural cooperative medical system. The Company is a leading provider of drugdistribution and supply chain services in Southern China.

2. Abundant variety resources

Guoda Drugstore operates nearly 120,000 merchandises. With its relatively comprehensive purchasing networkand years of experience in commodity management, Guoda Drugstore has established a merchandise system withwide coverage, high professionalization, and rich varieties.In the pharmaceutical distribution, the Company has established extensive cooperative relations with thousands ofdomestic manufacturers and commercial enterprises and established stable business relationships with hundreds ofimport and joint venture manufacturers, and has rich variety resources.

3. Complete logistics and distribution systemGuoda Drugstore has a nationwide modern logistics and distribution system, and has established the logistics anddistribution network covering all the stores throughout the country, including Shanghai National Logistics Centerand 23 provincial and municipal distribution centers.Accord distribution adopts supply chain management and warehouse management solutions system, it has builtlarge-scale first-grade logistics centers in Guangzhou, Nanning, Shenzhen and other places and establisheddistribution centers in Guangdong and Guangxi which has formed ladder logistics and distribution networks, it isthe first enterprise in Guangdong and Guangxi that has achieved the third-party logistics qualification and has theprofessional pharmaceutical logistics capabilities with the largest scale, the most extensive network, and the mostcomplete modes in southern China.

4. The advantages of medical insurance resources

Regarding medicine retails, the subsidiaries of Guoda Drugstore have featured generally higher medical insuranceacquiring 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 regulatoryenvironment for the reason that it has kept emphasizing legalization and compliance in the process of operationand management.

6. Unique-influence Sinopharm brand

Brand of the Company and distribution, industry child-brand and controlling shareholder and actual controller’sbrand come down in one continuous line, depending on powerful force of central enterprises, the Company’spopularity and influence are prominent day by day in the industry.

Section IV. Discussion and Analysis of Business

1. Introduction

In the first half of 2018, Sinopharm Accord focused on a clear development strategy and clear goals, transformedboth foreground and background, innovated together, and took serious measures to business landing, and madesteady growth in business performance, and showed potential in business models.

(i) Performance completion in first half of 2018Sinopharm Accord achieved a revenue from operation amounted as 20.779 billion Yuan with a y-o-y growth1.24%; the net profit attributable to parent Company comes to 642 million Yuan with 15.39% up on a y-o-y basis.The pharmaceutical distribution has operation revenue of 15.879 billion Yuan with y-o-y growth of 0.79%; netprofit attributable to parent Company has 333 million Yuan with y-o-y growth of 8.93%. As for thepharmaceutical retail, the Company gains 5.144 billion Yuan in operation revenue, a y-o-y growth of 5.23% andthe net profit attributable to parent Company amounted as 139 million Yuan, a 40.66% up on a y-o-y basis.(ii) Analysis of policy environment2018 is a year of domestic adjustment and increasing international pressure. On the one hand, the domesticeconomy has significant resilience characteristics; on the other hand, the advance of the US interest rate hike cyclehas led to a tendency of shock upstream of global capital costs. The evolution of trade friction is accompanied byunexpected changes in the external environment, and financial deleverage and other complex externalenvironment have brought more pressure in business operation.1. Industry growth rate continued to slow down, and the trend of leading concentration ratio remained unchangedIn the first quarter of 2018, the growth of drug distribution and sales increased by 7.9%, a decline of 0.5% on ayear-on-year basis; the growth of drug retail and sales increased by 9.1%, and an increase of 0.1% on a year-on-year basis. The growth rate of large pharmaceutical wholesale enterprises slowed down noticeably, the mainbusiness income of top 100 wholesale enterprises increased by 8.4% in 2017, a decline of 5.6% on a year-on-yearbasis; the top 100 market share was 70.7%, a decline of 0.2% on a year-on-year basis; the market share of 4leading enterprises was 37.6%, a rise of 0.2 % on a year-on-year basis.

2. The total number of medical institutions was expanding, and the process of rational allocation of medicalresources was acceleratingUnder the policy promoting, more than 19,000 new-level medical and health institutions have been added, and thegrowth rate of the number of medical treatments and inpatient number has far exceeded that of class hospitals, andthe medical resources are constantly leaning toward the basic level.(iii) The main work completed by the Company in the first half of 20181. Built new dynamic organizational capability and consolidated the foundation of transformationIn the first half of the year, the Company introduced the third-party organizations, initiated the research work atheadquarters, distribution, and Guoda, and provided research basis for organizational optimization throughresearch and analysis. Among them, distribution implemented the integration of departments and regions atdifferent levels through organizational structure optimization and re-design, region penetrated deeply, andplatform concentrated on profession; retail promoted the organizational structure design of Guoda so as to matchwith the business internationalization.2. Integrated wholesale and retail, and dug deep into resource advantagesDuring the reporting period, the Company’s catalogue management of wholesale and retail integration varietyincreased from 33 brands to 77 brands, and the number of articles increased from 255 to 430. Through theplanning for wholesale and retail integration suppliers, seven suppliers were promoted to boost the wholesale andretail integration project, at the same time, further promoted the wholesale and retail cooperation project of GuodaDrugstore.3. Implemented information technology projects, and strengthened new competence of technologyThe Company attached great importance to the construction of IT talent team, increased recruitment efforts,comprehensively strengthened the “informatization” orientation, and established a matching performanceincentive mechanism. During the reporting period, the Company optimized the basic management by informationtechnology, created a dual information platform of “Hospital Supply Chain Management” and “Retail ProfessionalSupply Chain Management”, and promoted the new business model through the integration of technology:

(1) In terms of business flow, the retail direct sales mobile order APP popped up online; the self-owned pharmacyonline prescription APP ensured the prescription to be undertaken; the settlement management completed thethird-party payment platform and the medical insurance settlement docking of five regions; the first-level

inventory management of instrument consumables popped up online.(2) In terms of logistics, the APP of Android version was developed, and the non-pharmaceutical system onlineimplementing of six warehouses in Guangzhou, Foshan and Zhuhai were completed; the third-party logisticsconstruction added six third-party cargo owners.(3) In terms of the initial introduction of AI intelligence, the AGV machine site investigation has been completed,and the system flow and docking plan have been initially confirmed; the vending machine has been put into use insome areas and would be distributed in other parts of the country in succession; the unmanned pharmacy hascompleted the prototype test and would be put into operation as soon as possible.4. Organized the full docking with Walgreens Boots Alliance, and the projects were implemented smoothlyAfter many times of communication and combining the research on the market, the new term of board of directorsof the joint-ventured Guoda Drugstore reached a consensus on the strategic planning for the next 3-5 years andformed specific strategic measures.5. Distribution focused on four major directions, transformation and innovation for development(1) Primary care:

The Company actively responded to the “two-vote system”, made overall plans, made variety planning, resourcedocking and channel merging; improved the supply chain efficiency by building invoice management system,procurement tax refund process optimization, multi-warehouse operation inventory management, etc.; in order tomeet the business needs, the Company established standardized prepayment and cash deposit operationprocedures to effectively control payment risks.In response to the “GPO”, various regions and multiple channels actively proposed suggestions for the GPOprogram, and signed strategic cooperation framework agreements with Taishan, HeYuan, Maoming and otherplaces; actively affected the variety catalogue of Foshan implementation plans, and strived to supplement the keyvarieties, improved the maximum match between the varieties and the implementation catalog; the GPOs inShenzhen and Dongguan entered the implementation stage, and the Company maintained active communicationand responded well.The Company directly faced the pharmacy custody at various regions, actively participated in the bidding ofvarious custody projects, strengthened the front-end business management, actively interpreted and responded tothe bidding work, formulated the bidding tools, and formed the standardization process of the universal template +customized solution; and insisted on the individualized response in the hospitals in trust, integrated the varietiesand business resources, adjusted the cooperation models, and maintained the share and improved the gross profit.(2) Retail diagnosis and treatment:

During the reporting period, there were 51 retail clinics, including 10 ones newly established in Guangdong andtwo ones newly established in Guangxi in the first half of the year. Foshan Pharmacy and Foyi Pharmacy becamethe specific pharmacies in Foshan City. Shenzhen Pharmacy and Zhaoqing Pharmacy won the first batch of“Guangdong Provincial Demonstration Pharmacies”.1) Integrated management synergy, and improved profitabilityThe Company continued to improve the pharmacy system process and standard operation, carried through the

foreground-background integrated management in the operation, procurement, information, quality management,logistics, and brand; refined and strengthened the daily operation management, carried out more than 60 audits inthe first half of the year; the Company enriched the retail categories through commodity negotiations, reasonablyplanned the varieties on the basis of hospital nature and local disease spectrum, and created superior prescriptioncategories.2) All regions exerted their strength and innovated the cooperation methodsWith the help of the “Internet + Medical” project, the Company joined hands with Tencent and has signed the“Internet + Smart Hospital” framework agreement with the three-level hospitals in Nanning, Baise and Guilin;Sinopharm Group Guangxi and Guangxi Fudi Finance Investment Group signed the “Healthy Baise” ProjectCooperation Agreement, and opened a hospital pharmacy.(3) Retail direct sales:

The B2B platform completed the background upgrade, and the online marketing terminal customers reached 789;docked to Guoda platform, integrated the marketing resources of Guoda, exported the standardized services, andcarried out deep distribution projects to achieve full coverage of network sales.(4) Instrument consumables:

All regions promoted in an all-round way, won the bidding of 10 medical projects, newly increased 4 SPDprojects, and promoted the project landing of 3 hospitals in the province; promoted the deployment of 4Dservices, established the top three hospitals in the reagent business; and established a medical joint venture modelfor instrument maintenance service in Haizhu District; the disinfection supply business actively carried outbusiness promotion and gradually put into supply.6. Guoda Drugstore ensured stock and made increment, and elaborately operated new features(1) Accelerated the distribution speed according to strategic deploymentAs of the end of the reporting period, the total number of Guoda Drugstore reached 4,004, and accumulatively hada net increase of 169 stores in the first half of the year, including 163 direct-sale stores. The distribution points ofadvantageous areas were scattered, strengthened the regional management, formulated the implementation plan ofthe store transfer shop model, carried out help guidance on the spot, and grasped the local policies throughanalysis and continued to follow up. Guoda Drugstore pre-judged the policy changes and market trends, andincreased the expansion speed of stores around hospitals. In the first half of the year, 29 new stores aroundhospitals were added, and there were totally 332 stores around hospitals as of the end of the reporting period.(2) Dug the potential benefits of stock stores and created specialized pharmacies with chronic diseases as the core1) Optimized store management and managed the loss-making storesGuoda Drugstore concerned and helped regional companies to improve their marketing capabilities, formulatedassessment plans and budgets, gradually increased the proportion of high-margin sales, took measures to controlretail prices, monitored the rationality of price adjustments and pricing and corrected errors, and carried out dailymonitoring and maintenance to the prices of centralized purchasing varieties throughout the country.2) Established records and set up warehouses, implemented chronic disease services and membershipmanagement

Guoda Drugstore focused on promoting chronic disease work in various regions, organized the preparation ofpharmaceutical service manuals, and tried out the chronic disease learning cases at online platforms within 17companies across the country, meanwhile, the DTP pharmacies upgraded the service models which is centering onpatients.(3) Implemented the integration strategy of wholesale and retail, and strengthened the fine management ofmerchandize purchaseImplemented the provincial-level platform construction of Guoda Drugstore step by step, docked the project ofwholesale and retail integration, implemented the strategic requirements, completed the docking withmanufacturers, and sought a new cooperation mode; carried through the fine management to merchandizepurchase and sales, promoted the application planning guidebook and tapped the potential in inter-regionalbenchmarking; focused on the category inside, used the benchmarking method of same type of commodity to findthe superior goods, and increased the sales quota of superior goods.(4) Accelerate the exploration of e-commerce business new modelGuoda Drugstore has negotiated cooperation with a number of internet hospitals and reached a nationwidecooperation agreement with Yaofangyun. At present, the cooperation in Ningxia and Xiamen has already beenimplemented.The Company is required to comply with the disclosure requirements of the Industry Information DisclosureGuide of the Shenzhen Stock Exchange No. 8 - Listed Companies Engaged in Retail-Related Businesses.

1. The entity business operations and the business condition of the stores during the reporting period:

As of the end of June 2018, Guoda had 2,965 direct-operated stores, with sales revenue of 4.04 billion Yuan, ayear-on-year growth of 10.6%, and the same stores had an increase of 5.0% on a year-on-year basis, 1,039franchise stores with distribution revenue of 580 million Yuan, an increase of 9.7% on a year-on-year basis.

RegionDirect-sale storeFranchised outlet
Numbers of the storeSales income (in 10 thousand Yuan)y-o-yNumbersof the storeDispatching income (10 thousand Yuan)y-o-y
North1,369209,772.9813.52%30523,545.0521.97%
East China75995,094.956.06%58027,203.890.48%
South China38757,263.517.14%604,264.788.86%
Central China24121,621.6913.28%942,736.9217.43%
Northwest20921,043.8910.18%--0.00%
Total2,965404,797.0210.57%1,03957,750.649.73%

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) Top 10 stores in sales

SerialRegionNameYear for starting businessOperating modeBusiness activityActual operating area (in M2)Property belonging
1TaiYuan Shanxi ProvinceZhongli Branch2002Direct-sale5+X820.00Rental
2Hohhot Inner MongoliaHohhot HQ2003Direct-sale5+X1,689.26Rental
3TaiYuan Shanxi ProvinceEr Yuan Branch2011Direct-sale5+X600.00Rental
4Shenzhen Guangdong ProvinceShenzhen Exhibition Hall2006Direct-saleModern pharmacy260.00Rental
5Shijiazhuang Hebei ProvinceLe Ren Tang HQ2010Direct-saleTCM diagnosis shops1,206.00Rental
6BeijingJinxiang Store, Xidang1997Direct-saleModern pharmacy773.16Rental
7Shijiazhuang Hebei ProvinceKangning Store, Lerentang2000Direct-saleTCM diagnosis shops280.00Rental
8Yangzhou Jiangsu ProvinceBaiyulan Store, Jiangsu1991Direct-saleModern pharmacy620.00Rental
9Shenzhen Guangdong ProvinceZhenxing Store2002Direct-saleModern pharmacy200.00Rental
10Shenyang Liaoning ProvinceZhongjie Store2002Direct-saleTCM diagnosis shops1,300.00Rental

(2) In first half of 2018, new 207 direct-sale shops are operates, and 44 shops closed with 163 shops net increased,the operating area has 27462 M

icnreased, and has net increase of almost 200 million Yuan in sales

In M

RegionDirect-sale storeFranchised outlet
Number of store increasedTotal areaNumber of stores shut downNumber of store increasedNumber of stores shut down
North10815,206.60-1721-2
East China364,522.25-136-21
South China263,014.70-57-5
Central China161,964.31-513-13
Northwest212,754.46-4--
Total20727,462.32-4447-41

2. In first half of 2018, online sales growth in a steady pace; totally 13 third party platform online one afteranother so far. Details are:

In 10 thousand Yuan

Cooperation platformTrading VolumeBusiness revenue
T-Mall (Sinopharm On-line)10,357.0610,357.06
Yaofangwang (www.yaofangwang.com)810.02810.02
Yiyaowang (www.111.com.cn)131.13131.13
JD daojia (http://daojia.jd.com)222.34222.34
800FANG.CN (www.800pharm.com)142.21142.21
Meituan Waimai (waimai.meituan.com)36.7036.70
Yaopin Daojia0.880.88
ele.me (www.ele.me/home)67.9067.90
Wanda E-business1.801.80
Baidu takeout13.5313.53
BAHEAL Pharmaceutical Easy Referral25.4225.42
Other B2B E-business648.03648.03
We Chat Mall89.5289.52
Total12,546.5312,546.53

3. procurement, inventory and supplier from the headquarter: headquarter of the Company has total amount of4.894 billion Yuan (tax included) for procurement for the first half of 2018, and inventory costs amounted as 960million Yuan, details are:

In 10 thousand Yuan

CategoryPurchasing Amount (tax included)Inventory cost
Health-care food20,6914,690
Convenience food4,774763
Kids11,2752,214
Gynecology14,2012,206
Liver and gall7,8691,439
Cold10,0312,324
Personal care4,9771,265
Orthopedics16,8934,895
Respiratory16,9423,398
Household conveniences1,393329
Family health products17,8344,633
Antipyretic analgesicss4,106695
Anti-infection12,3212,283
Anti-allergic4,013779
Temporary coding818212
Urination10,2212,248
Endocrine16,9703,092
Other117,2088,970
Clearing heat and detoxitating16,0433,357
Neurology17,8223,151
Drugs for external use23,4507,163
Vitamin-mineral10,5001,966
Five sense organs15,2523,383
Digestion20,4734,867
Heart brain49,8249,368
Chinese herbal pieces20,2834,837
Nourishing food23,25811,458
Total489,441.5495,981.09

Top 5 suppliers:

In 10 thousand Yuan

RanksSupplierProcurement amount (tax included)Purchase ratio
1No. 18,57712%
2No. 26,7279%
3No. 35,8088%
4No. 45,1347%
5No. 54,6726%

4. Warehousing and logistics:

In the first half of 2018, logistics warehouses of Guoda Drugstore spread over 17 provinces, there were 27 largeand small logistics warehouses and the total warehouse area was over 110,000 square meters. For the inventorymanagement of Guoda Drugstore, the commodity department is responsible for monitoring the inventorydynamics of the headquarters and subsidiaries, and managing inventory on a monthly basis, providing inventoryanalysis and management reports, and giving suggestions on the optimization of inventory structure, while theoperation department is responsible for the inventory turnover index of the monthly tracking business andproviding business inventory assessment data, and the purchasing department is responsible for rationalreplenishment, ensuring smooth and stable supply channels, and effectively controlling the inventory turnover ofcommodity while ensuring the satisfaction rate of goods, and handling and resolving the dead stock andcommodity with expiry date every month. .

In M

(Square Metters)

ProvinceReginal enterpreiseWarehouse area
LiaoningShenyang14,200
GuangdongGuangzhou5,300
Shanzhen
Jiangmen5,432
ShanxiShanxi Wanmin5,214
Shanxi YiYuan4,350
JiangsuDadesheng4,840
Nanjing1,800
Liyang3,840
FujianFujian2,395
Quanzhou1,100
HebeiHebei3,772
ShandongShandong5,800
NingxiaNingxia3,330
HunanHunan3,353
HenanHenan3,500
Inner MongoliaInner Mongolia1,870
GuangxiGuangxi1,950
BeijingBeijing Guoda4,943
Beijing Jinxiang
TianjinTianjin1,700
AnhuiAnhui1,000
XinjiangXinjiang3,842
ShanghaiShanghai Fumei20,000
Shanghai Guoda
Hangzhou1,000
Guoda HQHQ8,000
Total112,531

5. The commodity suppliers of Guoda Drugstore are mainly external suppliers, and also assisted by someSinopharm affiliated enterprises and private brands. The sale for the first half of 2018 was as follows:

In 10 thousand Yuan

Private brandPropertyCategoryTurnover (tax included)Ratio
1Group-buying OEMHealth-care food1,7730.31%
2Group-buying OEMKids250.00%
3Group-buying OEMGynecology190.00%
4Group-buying OEMCold270.00%
5Group-buying OEMPersonal care230.00%
6Group-buying OEMFamily health1,7540.30%
7Group-buying OEMAnti-infection1170.02%
8Group-buying OEMAnti-allergic&antidinic350.01%
9Group-buying OEMClearing heat and detoxitating1600.03%
10Group-buying OEMExternal use drugs1370.02%
11Group-buying OEMFive sense organs drugs1620.03%
12Group-buying OEMChinese herbal pieces1,5150.26%
Total5,745.350.99%

II. Main business analysis

Found more in I. Introduction in Discussion and Analysis of BusinessY-o-y changes of main financial data

In RMB

Current periodSame period of last yearY-o-y increase/decreaseReasons for changes
Operating revenue20,779,166,699.6720,524,807,669.571.24%No major changes
Operating costs18,367,643,723.8418,364,034,450.830.02%No major changes
Sales expenses1,273,588,756.071,110,446,938.1714.69%No major changes
Administration expenses351,820,063.78340,636,051.113.28%No major changes
Finance expenses57,541,544.3244,498,778.7629.31%No major changes
Income tax expenses164,486,734.32160,041,107.632.78%No major changes
R&D input0.000.000.00%No major changes
Net cash flow arising from operating activities225,357,709.20228,337,431.40-1.30%No major changes
Net cash flow arising from investment activities-18,211,602.74-92,279,892.0680.26%Increased 80.26% on a y-o-y basis, mainly because medical industry fund subscription at same period of last year while no such amount occurred in the period
Net cash flow arising from financing activities-288,243,874.04-262,782,332.86-9.69%No major changes
Net increase of cash and cash equivalent-80,782,904.11-126,724,793.5236.25%Increased 36.25% on a y-o-y basis, mainly because the net cash flow arising from investment activities increased from a year earlier

Major changes on profit composition or profit resources in reporting period□ Applicable √ Not applicableNo major changes on profit composition or profit resources occurred in reporting period.Constitution of main business

In RMB

Operating revenueOperating costGross profit ratioIncrease or decrease of operating revenue over same period of last yearIncrease or decrease of operating cost over same period of last yearIncrease or decrease of gross profit ratio over same period of last year
According to industries
Pharmaceutical wholesale15,430,407,519.0514,487,704,805.416.11%-0.69%-1.53%0.81%
Pharmaceutical retail5,153,485,000.113,856,696,974.6325.16%6.99%6.25%0.52%
Logistics and warehousing services15,527,964.869,313,229.3940.02%14.36%21.97%-3.75%
Leasing and other179,746,215.6513,928,714.4192.25%14.36%3.54%0.81%
According to products
Drugs19,730,368,030.4217,408,684,324.8811.77%0.61%-1.34%1.75%
Apparatus922,013,116.87864,692,352.966.22%68.50%70.15%-0.91%
Other126,785,552.3894,267,046.0025.65%-65.39%-55.16%-16.97%
According to region
Internal revenue20,779,166,699.618,367,643,723.811.61%1.24%0.02%1.08%
74

III. Analysis of non-main business

□ Applicable √ Not applicable

IV. Assets and liability

1. Major changes of assets composition

In RMB

End of current periodEnd of last periodRatio changesNotes of major changes
AmountRatio in total assetsAmountRatio in total assets
Monetary fund3,943,595,560.5816.42%4,191,655,438.5118.76%-2.34%No major changes
Account receivable9,441,542,367.1939.32%7,589,412,679.8833.97%5.35%No major changes
Inventory4,245,354,625.2217.68%3,781,858,238.1216.93%0.75%No major changes
Investment property149,409,723.790.62%153,678,339.110.69%-0.07%No major changes
Long-term equity investment1,756,735,242.447.32%1,650,619,373.097.39%-0.07%No major changes
Fix assets550,102,564.292.29%551,710,434.022.47%-0.18%No major changes
Construction in process30,805,874.110.13%22,947,258.990.10%0.03%Mainly due to the ERP system update from Guoda Drugstore
Short-term loans2,051,139,651.678.54%1,561,354,521.646.99%1.55%Mainly by increase of short-term loans of Holding Guangzhou
Long-term loans31,600,000.000.13%31,600,000.000.14%-0.01%No major changes

2. Assets and liability measured by fair value

√Applicable □Not applicable

In RMB

ItemOpening amountGain/loss of changes in fair value in the periodCumulative fair value changes reckoned into equityImpairment accrual in the periodAmount purchased in the periodAmount for sold in the periodEnding amount
Financial assets
3. Financial assets available for sale13,685,760.0013,685,760.00
Total13,685,760.0013,685,760.00
Financial liability0.000.00

Whether the main asset measurement attributes has major changes in the period√Yes □No

Reasons for major changes in the measurement attributes of the Company’s prime assets during the reporting

period and the impact on its operating results and financial statusAccording to the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement ofFinancial Instruments and the Accounting Standards for Business Enterprises No. 37 - Presentation of Financial

Instruments, the board of directors of the Company decided to adopt the “financial assets measured at fair valuethrough other comprehensive income ” to confirm this part of the assets.This change had no impact on the Company’s operating results and financial status.

3. Assets right restriction till end of reporting period

Nil

V. Investment

1. Overall situation

During the reporting period, the Company paid cash to acquire Sinopharm Holding Guangzhou Huadu Co., Ltd.

(70% shareholding) to achieve the business mergers under non-identical control. The Company has newlyestablished three-level subsidiaries, including Sinopharm Holding Foshan Supply Chain of Medical ConsumablesCo., Ltd. (70% shareholding), Sinopharm Holding Supplier Chain Service (Guangxi) Co., Ltd. (30.6%shareholding) and Sinopharm Holding Baiyi Drugstore Guangxi Co., Ltd. (51% shareholding), the Company alsohas newly established four-level subsidiary Shanghai Guoda Pharmacy Co., Ltd. (51% shareholding). For specificinvestment, please refer to Notes (VIII) of the financial report.

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 applicableThe Company had no securities investment in the reporting period.

(2) Derivative investment

□ Applicable √ Not applicable

The Company has no derivatives investment in the Period

VI. Sales of major assets and equity

1. Sales of major assets

□ Applicable √ Not applicableThere are no major assets sell in the period

2. Sales of major equity

□ Applicable √ Not applicable

VII. Analysis of main holding Company and stock-jointly companies

√Applicable □ Not applicableParticular about main subsidiaries and stock-jointly companies net profit over 10%

In RMB

Company nameTypeMain businessRegister capitalTotal assetsNet AssetsOperating revenueOperating profitNet profit
Sinopharm Holding Guoda Drugstore Co., Ltd.SubsidiaryRetail and distribution in respect of pharmaceutical products and medical apparatus and instruments, wholesale and retails of health products1,010,000,000.005,605,478,618.092,098,354,006.835,143,601,636.87230,393,417.53172,985,004.03
Sinopharm Holding Guangzhou Co., Ltd.SubsidiaryChinese traditional patent medicine, chemical preparations, antibiotics, bio-chemical medicine, biological medicine, diagnosis medicine, biological 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 technology1,530,000,000.006,339,988,123.821,787,383,309.367,314,439,697.7698,350,491.8772,732,408.60
SinopharmSubsidiarSales of drugs,500,000,000.2,504,188,78727,501,084.2,076,759,8176,022,89665,903,710.92
Holding Guangxi Co., Ltd.ymedical apparatus and instruments, freightage, storage, loading and unloading, glass wares, cosmetics and daily merchandise; other business services, other professional consultation, various goods agency and for self-operation, import & export of technology, houses leasing006.77724.93.58

Particular about subsidiaries obtained or disposed in report period√Applicable □ Not applicable

CompanyThe method of obtaining and handling subsidiaries during the report periodThe influence to the whole production and performance
Shanghai Guoda Pharmacy Co., Ltd.EstablishmentExpand local medicine retail business layout, and without major influence on performance of the Company
Sinopharm Holding Foshan Supply Chain of Medical Consumables Co., Ltd.EstablishmentFurther expand the distribution business for equipment consumables, and without major influence on performance of the Company
Sinopharm Holding Guangzhou Huadu Co., Ltd.AcquisitionFurther consolidated the pharmaceutical distribution business in Guangxi & Guangdong and without major influence on performance of the Company
Sinopharm Holding Supplier Chain Sercice (Guangxi) Co., Ltd.EstablishmentFurther expand distribution business and without major influence on performance of the Company
Sinopharm Holding Baiyi Drugstore Guangxi Co., Ltd.EstablishmentExpand local medicine retail business layout, and without major influence on performance of the Company
Tangshan Le Ren Tang Drugstore Chain Co., Ltd.De-registrationCompressed the management hierarchy and without major influence on performance of the Company

Notes of main holding Company and stock-jointly companies

VIII. Structured vehicle controlled by the Company

□ Applicable √ Not applicable

IX. Prediction of business performance from January – September 2018

Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or thewarning of its material change compared with the corresponding period of the last year and explanation on reason□ Applicable √ Not applicable

X. Risks and countermeasures

1. The management risks in sustainable expansion of marketing network of Guoda DrugstoreThe marketing network of Guoda Drugstore has maintained stable growth trend in recent years through newlyopened stores and extended mergers. The expansion of sales area and increase of stores have brought pressure onthe site selection, distribution, cash management, marketing and human resource management of the stores ofGuoda Drugstore. The Company will strengthen the management and construction in merchandise procurement,logistics and distribution, marketing and other links and establish corresponding management methods for eachlink so as to ensure the unified standards and management quality for store expansion.

2. Risks of intensifying market competitionAt present, the market concentration ratio of domestic pharmaceutical retail market industry is relatively low, andthe national and regional pharmaceutical retail enterprises have fierce market competition. As the countrycontinues to introduce corresponding policies to encourage the integration of pharmaceutical retail industry, themajor pharmaceutical retail enterprises in the industry have accelerated the pace of mergers and acquisitions, andcontinued to expand the marketing networks, improve the logistics center constructions, and innovate the businessand 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 distributionenterprises with powerful strength are entering the domestic pharmaceutical distribution markets through a varietyof ways, so the industry competition is further intensifying. Sinopharm Accord will integrate the existingresources, 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 brandglobalization through capital operation.

3. Risks of changes in industry policyThe 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 forPrescription Drug and Over-The-Counter Drug (Pilot), which put forward specific requirements to the industryoperation. Along with the gradual increase of management standards for management standard, the regulations areconstantly 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 theessential 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 onthe industrial development and the product price of retail drug stores, the operation and profitability of GuodaDrugstore 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 GuodaDrugstore. Sinopharm Group and Sinopharm have pledged to take effective measures to resolve the possiblehorizontal competition.5. Risk of goodwill impairments

On June 30, 2018, the book value of goodwill in the Group’s consolidated financial statements was RMB

830,729,152.75 and was allocated to the asset groups of distribution branches and retail branches. The Groupconducts impairment test on goodwill annually in accordance with the provisions of the Accounting Standards forBusiness Enterprises. Disclosures relating to the impairments of goodwill are set out in Notes V. 22 and 32 andNotes VII. 27 of the financial statements

Section V. Important Events

I. In the report period, the Company held annual shareholders’ general meeting andextraordinary shareholders’ general meeting

1. Shareholders’ General Meeting in the report period

Session of meetingTypeRatio of investor participationDateDate of disclosureIndex of disclosure
Annual General Meeting of 2017AGM63.00%2018-04-172018-04-18Juchao Website—(http://www.cninfo.com.cn) “Resolution Notice of AGM of 2017 No.: 2018-32
First extraordinary general meeting of 2018Extraordinary general meeting62.98%2018-06-152018-06-16Juchao Website—(http://www.cninfo.com.cn) “Resolution Notice of First extraordinary general meeting of 2018 No.: 2018-29

2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore

□ Applicable √ Not applicable

II. Profit distribution plan and capitalizing of common reserves plan for the Period

□ Applicable √ Not applicableThe Company has no plans of cash dividend distributed, no bonus shares and has no share converted from capital reserve either forthe semi-annual year.

III. Commitments completed in Period and those without completed till end of the Period from actualcontroller, shareholders, related parties, purchaser and companies

√Applicable □ Not applicable

CommitmentsPromiseType of commitmentsContent of commitmentsCommitment dateCommitment termImplementation
Commitments in report of acquisition or equity changeSinopharm Group Co., LtdCommitment of shareholdersAs a large pharmaceutical commercial enterprise whose business involves pharmaceutical wholesale and retail, Sinopharm Holding may overlap with the Company in geographical segmentation during its future business development. To avoid the potential peer competition brought by such geographical overlap, Sinopharm Holding undertakes that, upon the transfer of shares of Sinopharm Holding Guangzhou it held to Accord Pharma, “1. it will not newly-establish or broaden within Guangdong any business operation that actually compete with that of Accord2005-06-21Long-term effectiveNormally implementing
Pharma, or set up any new subsidiaries or subordinate enterprises who engage in such business. 2. It will enter into business delineation with Accord Pharma and Sinopharm Holding Guangzhou, thereby giving the three parties clear geographical areas to carry out pharmaceutical wholesale and retail businesses, so as to avoid potential peer competition. Apart from above, Sinopharm Holding will no longer newly-establish any enterprise that may compete with Accord Pharma in the production and R&D of pharmaceutical products.”"
Commitments in assets reorganizationSinopharm Group Co., Ltd;China National Pharmaceutical Foreign Trade CorporationCommitment on restricted shares“Sinopharm Group and Sinopharm Foreign Trade made commitments in the Report about China National Accord Medicines Corporation Ltd. Purchasing Assets and Raising Supporting Funds and Related Transactions by Asset Sale, Stock Issuance and Cash Payment that the non-public offering of shares of Sinopharm Accord obtained from this transaction shall not be transferred within 36 months since the finish date of issuance and shall be unlocked after 36 months since the date of listing. Within 6 months after the completion of this transaction, if the closing price of the stock of Sinopharm Accord is less than the issue price in continuous 20 trading days, or the closing price at the end of 6 months after the completion of this transaction is less than the issue price, the lockup period of the stock of Sinopharm Group and Sinopharm Foreign Trade obtained from Sinopharm Accord by this transaction will automatically prolong at least 6 months. The shares 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.”2016-05-3136 monthsNormally implementing
Ping’an Assets Management Co., LtdCommitment on restricted shares"Ping An Asset Management Co., Ltd. made commitments in the Report about China National Accord Medicines Corporation Ltd. Purchasing Assets and Raising Supporting Funds and Related Transactions by Asset Sale, Stock Issuance and Cash Payment that the non-public offering of shares of Sinopharm Accord obtained from this transaction shall not be transferred within 36 months since the finish date of issuance and shall be unlocked after 36 months since the date of listing. After placement completed, the shares of the listed Company increased due to bonus shares and turning to increase capital should pursuit to the restriction arrangement the above mentioned.2016-05-3136 monthsNormally implementing
Sinopharm Group Co., LtdPerformance commitment and compensation arrangement“Sinopharm Group made commitments in the Report about China National Accord Medicines Corporation Ltd. Purchasing Assets and Raising Supporting Funds and Related Transactions by Asset Sale, Stock Issuance and Cash Payment that the 2016 annual net profits of Foshan Nanhai, Guangdong Uptodate & Special Medicines and Guoda Drug Store should respectively be no less than RMB 47,385,600.00, RMB 19,167,000.00, and RMB 98,466,100.00, while the 2017 annual net profits should respectively be no less than RMB 49,394,500.00, RMB 20,209,700.00, and RMB 110,998,90.00, and the 2018 annual net profits should respectively be no less than RMB 51,148,200.00, RMB 21,330,100.00, and RMB 131,275,500.00. Net profit refers to the lower one between the after-tax net profit attributable to the owners of parent Company planning to invest in the target Company and the net profit attributable to the owners of parent Company after deducting the non-recurring gains and losses. If2016-05-312018-12-31Normally implementing
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.”
China National Pharmaceutical Foreign Trade CorporationPerformance commitment and compensation arrangementSinopharm Foreign Trade made commitments in the Report about China National Accord Medicines Corporation Ltd. Purchasing Assets and Raising Supporting Funds and Related Transactions by Asset Sale, Stock Issuance and Cash Payment that the 2016 annual net profits of Southern Pharmaceutical Foreign Trade should be no less than RMB 39,880,700, while the 2017 annual net profits should be no less than RMB 47,323,200, and should not less than RMB 55,364,600 in 2018. Net profit refers to the lower one between the after-tax net profit attributable to the owners of parent Company planning to invest in the target Company and the net profit attributable to the owners of parent Company after deducting the non-recurring gains and losses. If the actual net profit of the Southern Pharmaceutical Foreign 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.”2016-05-312018-12-31Normally implementing
Fu Jiancheng; Fu Yuequn Gu Chaoqun; Guo Shu’er; Huang Qiufang; Li Hongbing; Liao Zhi; Lin Wanqun; SunWei; Zhang Zhaohua; Zhang ZhaotangPerformance commitment and compensation arrangement“Fu Yuequn and other 10 natural person made commitments in the Report about China National Accord Medicines Corporation Ltd. Purchasing Assets and Raising Supporting Funds and Related Transactions by Asset Sale, Stock Issuance and Cash Payment that the 2016 annual net profits of Southern Pharmaceutical Foreign Trade should be no less than RMB 39,880,700, while the 2017 annual net profits should be no less than RMB 47,323,200, and should not less than RMB 55,364,600 in 2018. Net profit refers to the lower one between the after-tax net profit attributable to the owners of parent Company planning to invest in the target Company and the net profit attributable to the owners of parent Company after deducting the non-recurring gains and losses. If the actual net profit of the Southern Pharmaceutical Foreign Trade doesn’t reach the committed net profit, Fu Yuequn and other 10 natural person will need to compensate according to the stipulations of the "Profit Forecast Compensation Agreement for the Stock Issuance and Assets Purchase.”2016-05-312018-12-31Normally implementing
China National Accord Medicines Corporation Ltd.Performance commitment and compensation arrangement“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 respectively no less than RMB 222,671,700.00, RMB 232,561,600.00, and RMB 241,878,700.00; the net profits attributable to the owners of parent Company after deducting the non-recurring gains and losses committed by Zhijun Pharmacy Trade in 2016, 2017 and 2018 should be respectively no less than RMB 2,379,600.00, RMB 2,335,100.00, and RMB 2,345,600.00; the net profits attributable to the owners of parent Company after deducting the non-recurring gains and losses committed by Pingshan Pharmaceutical in 2016, 2017 and 2018 should be respectively no less than RMB 39,716,300.00, RMB 43,033,500.00, and RMB 50,325,500.00. If the actual net profits attributable to the owners of parent Company after deducting the non-recurring gains and losses of Zhijun Pharmaceutical / Zhijun Pharmacy Trade / Pingshan Pharmaceutical don’t reach the committed net profits attributable to the owners of parent Company after deducting the non-recurring gains and losses, Sinopharm Accord should compensate in accordance with the stipulations of the Profit Forecast Compensation Agreement for2016-05-312018-12-31Normally implementing
the Stock Issuance and Assets Purchase.”
China National Accord Medicines Corporation Ltd.; Sinopharm Group Co., Ltd;SinopharmOther commitments“The listed Company, controlling shareholders, the actual controllers 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 not violate the relevant regulations of Article 16 in Securities Issuance and Underwriting Management Approach, and directly or indirectly providing financial assistance or compensation for the subscription objects and its shareholders / partners / clients (if any) of this non-public offering does not exist and will not occur in the future.”2016-05-31Long-term effectiveNormally implementing
Ping’an Assets Management Co., LtdOther commitments“Ping An Asset Management Co., Ltd. has made commitments that the unit intends to utilize Ping An Asset Xinxiang No.3 asset management product and Ping An Asset Xinxiang No.7 asset management product to fund and subscribe some non-public offering of shares of Sinopharm Accord in this major asset restructuring process, and has the ability to subscribe the shares, the relevant capital sources are legitimate, there is no hierarchical income and other structured arrangements, and there is no use of leveraged funds. The unit does not receive financial assistance or compensation from Sinopharm Accord and its controlling shareholders, or the actual controllers. The investors’ structure of above-mentioned products does not change from the issue date of the commitment letter to the end date of the lockup period of the stock that the unit subscribes from Sinopharm Accord.”2016-03-24Long-term effectiveNormally implementing
China National Pharmaceutical Group CorporationIncrease holding commitment“Sinopharm made commitments in the Report about China National Accord Medicines Corporation Ltd. Purchasing Assets and Raising Supporting Funds and Related Transactions by Asset Sale, Stock Issuance and Cash Payment that 1. if the stock intraday price of Sinopharm Accord on any trading day of the 30 trading days after the listing of newly increased shares in this transaction is less than the issue price of newly increased shares in this transaction, Sinopharm will accumulatively invest no more than RMB 150 million in these 30 trading days to increase the holding by the stock trading system of the Shenzhen Stock Exchange (this increase of holding) until the earlier one of below two situations occurs: (1) the above-mentioned funds are use up; (2) the intraday price of Sinopharm Accord is no less than the issue price of newly increased shares in this transaction. 2. Sinopharm shall not sell the shares obtained from this increase of holding within 3 years after the end of this increase of holding.”2017-01-06Three years from the end of increase holding (if applicable)There is no need for actual controllers to increase holdings
Sinopharm Group Co., LtdCommitments on horizontal competition, relation transaction and capital occupation“Sinopharm Group made commitments in the Report about China National Accord Medicines Corporation Ltd. Purchasing Assets and Raising Supporting Funds and Related Transactions by Asset Sale, Stock Issuance and Cash Payment that the Company shall be the controlling shareholder of China National Accord Medicines Corporation Ltd. (hereinafter referred to as Sinopharm Accord) up to the issue date of this commitment letter, after the completion of this major assets reorganization (hereinafter referred to as “this reorganization”), Sinopharm Accord shall no longer hold shares or operate relevant businesses of pharmaceutical industry, the main business will become the national pharmaceutical retail and pharmaceutical distribution business in Guangdong and Guangxi. In order to support the business development of Sinopharm Accord and avoid horizontal competition with Sinopharm Accord and its controlling enterprises, the Company made following irrevocable commitments and promises:1, after the completion of this reorganization, as for the social retail drugstore assets except for Sinopharm Holding 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 52016-12-28Long-term effectiveNormally implementing
years since the completion date of this reorganization. 2. The Company's way of resolving horizontal competition problems includes and is not limited to purchasing the social retail drugstore assets subordinated to the Company by Sinopharm Accord, taking the entrusted operation, leasing or contracting operation by Sinopharm Accord and its controlling enterprises in accordance with the methods permitted bu national laws to hold or control the social retail drugstore assets, or transferring the controlling stake of the social retail drugstore assets by the Company. 3. If the shareholders of the social retail drugstore assets (hereinafter referred to as "the third party") of the Company or the enterprises controlled by the Company have or are going to perform the preemptive rights under the same conditions in accordance with relevant laws and corresponding Articles of Association, then the above commitment will not be applicable, but in this case, the Company should try its utmost to urge the third party to waive its preemptive rights. If the Company is unable to urge the third party to give up the preemptive rights, the Company will urge the enterprises controlled by the Company to transfer the social retail drugstore assets to the third party to solve the horizontal competition problem. 4. The pharmaceutical distribution assets currently owned or controlled by the Company are distributed outside Guangdong and Guangxi regions, there is no horizontal competition with Sinopharm Accord, the Company will not engage in the same or similar operation businesses to Sinopharm Accord in Guangdong and Guangxi in the future, if the Company and its holding enterprises obtain the new business opportunities constituting substantial horizontal competition (hereinafter referred to as competitive new business) within the pharmaceutical distribution business scope of Sinopharm Accord in Guangdong and Guangxi, the Company will send written notice to Sinopharm Accord and try its utmost to firstly provide the new business opportunities to Sinopharm Accord or its holding enterprises according to the reasonable and fair terms and conditions so as to avoid the horizontal competition with Sinopharm Accord and its holding enterprises. 5. Since the issue date of this commitment letter, the Company promises to indemnify Sinopharm Accord for all actual losses, damages and expenses caused by the Company in violation of any commitments under this commitment letter. 6. This commitment letter terminates when following circumstances occur (subject to the earlier one): (1) the Company is no longer the controlling shareholder of Sinopharm Accord; or (2) the shares of Sinopharm Accord terminate the listing at the stock exchange.”
China National Pharmaceutical Group CorporationCommitments on horizontal competition, relation transaction and capital occupation“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 following irrevocable commitments and promises:1, after the completion of this reorganization, as for the social retail drugstore assets except for Sinopharm Group Guoda Pharmacy Co., Ltd. and its subsidiaries and branches owned or controlled by the Company, the Company promised to take appropriate measures to solve the horizontal2016-12-28Long-term effectiveNormally implementing
competition problem in the pharmaceutical retail business between the Company and Sinopharm Accord within 5 years since the completion date of this reorganization. 2. The Company's way of resolving horizontal competition problems includes and is not limited to purchasing the social retail drugstore assets subordinated to the Company by Sinopharm Accord, taking the entrusted operation, leasing or contracting operation by Sinopharm Accord and its controlling enterprises in accordance with the methods permitted bu national laws to hold or control the social retail drugstore assets, or transferring the controlling stake of the social retail drugstore assets by the Company. 3. If the shareholders of the social retail drugstore assets (hereinafter referred to as "the third party") of the Company or the enterprises controlled by the Company have or are going to perform the preemptive rights under the same conditions in accordance with relevant laws and corresponding Articles of Association, then the above commitment will not be applicable, but in this case, the Company should try its utmost to urge the third party to waive its preemptive rights. If the Company is unable to 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.”
Commitments make in initial public offering or re-financingSinopharm HoldingCommitment of shareholdersSinopharm 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 operations constituting the substantial horizontal competition to Sinopharm Accord and its controlling enterprises. Second, the Company and the Company’s wholly-owned, controlling or other enterprises with actual control shall not engage, participate in or do businesses and activities in Guangdong and Guangxi which constitute substantial competition to Sinopharm Accord and pharmaceutical business services. Third, the Company and the Company’s wholly-owned, controlling or other enterprises with actual control shall not engage, participate in or do businesses2013-09-05Long-term effectiveControlling shareholder is implement in real earnest, Sinopharm Accord will actively urged the controlling shareholder and actual controller to fulfill commitments
and activities which constitute substantial competition to Sinopharm Accord and pharmaceutical industry businesses. Fourth, the Company shall not take advantage of the control to Sinopharm Accord to damage the legitimate rights and interests of Sinopharm Accord and other shareholders (especially medium and small shareholders). This commitment letter takes effect from the issue date, and remains in effect for the entire period when the Company acts as the controlling shareholder or its related party of Sinopharm Accord. Within the effective period of the commitment, if the Company violates this commitment and causes a loss to Sinopharm Accord, the Company will timely make full compensation for Sinopharm Accord.”
Sinopharm HoldingCommitment of shareholdersSinopharm Holding 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, for the related transactions that cannot be avoided or have reasonable reasons to occur, the Company and related party shall sign normative related transaction agreement in accordance with relevant laws with Sinopharm Accord. Sinopharm Accord implements the approval procedures and fulfills the information disclosure obligations of the related transactions according to relevant laws, regulations, rules, other normative documents and the constitutions of Sinopharm Accord. Third, for the related transactions that cannot be avoided or have reasonable reasons to occur, the Company and related party shall abide by the open, fair and just market 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.”2013-09-05Long-term effectiveControlling shareholder is implement in real earnest, Sinopharm Accord will actively urged the controlling shareholder and actual controller to fulfill commitments
China NationalCommitment ofSinopharm made commitments in the Commitment Letter About2013-10-16Long-term effectiveControlling
Pharmaceutical Group Corporationactual controllerChina National Pharmaceutical Group Corporation to Avoid Horizontal Competition with China National Accord Medicines Corporation Ltd.: “First, in the next five years, Sinopharm plans to take appropriate measures (including assets replacement or acquisition, equity reorganization, etc.) to resolve the horizontal competition between Sinopharm Weiqida and Sinopharm Accord. Second, in addition to the past matters and matters disclosed in this commitment letter, the Company and the Company’s wholly-owned, controlling or other enterprises with actual control rights (except for Sinopharm Accord and its controlling enterprises, the same as below) shall not directly engaged in, participate in or do the businesses an activities constituting actual competition to the production and operation of Sinopharm Accord in China. The relevant commitments about avoiding horizontal competition that the Company made in the past still remain in effect. Third, the Company shall not take advantage of the control relationship to Sinopharm Accord to damage the legitimate rights and interests of Sinopharm Accord and its shareholders (especially the medium and small shareholders). Fourth, this commitment letter comes into force from the issue date and remains in effect for the entire period when the Company acts as the controlling shareholder or its related party of Sinopharm Accord."shareholder is implement in real earnest, Sinopharm Accord will actively urged the controlling shareholder and actual controller to fulfill commitments
China National Pharmaceutical Group CorporationCommitment of actual controllerSinopharm 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, for the related transactions that can not be avoided or have reasonable reasons to occur, the Company and related party shall sign normative related transaction agreement in accordance with relevant laws with Sinopharm Accord. Sinopharm Accord implements the approval procedures and fulfills the information disclosure obligations of the related transactions according to relevant laws, regulations, rules, other normative documents and the constitutions of Sinopharm Accord. Third, for the related transactions that cannot be avoided or have reasonable reasons to occur, the Company and related party shall abide by the open, fair and just market 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 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 legitimate2013-09-22Long-term effectiveControlling shareholder is implement in real earnest, Sinopharm Accord will actively urged the controlling shareholder and actual controller to fulfill commitments
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.
Completed on time (Y/N)Y

IV. Appointment and non-reappointment (dismissal) of CPA

Financial report has been audit or not□ Yes √ NoNot been audited.

V. Explanation from Board of Directors, Supervisory Committee for “Qualified Opinion”

that issued by CPA

□ Applicable √ Not applicable

VI. Explanation from the Board for “Qualified Opinion” of last year’s

□ Applicable √ Not applicable

VII. Bankruptcy reorganization

□ Applicable √ Not applicableNo bankruptcy reorganization for the Company in Period.

VIII. Lawsuits

Material lawsuits and arbitration□ Applicable √ Not applicableNo significant lawsuits and arbitrations occurred in the reporting period.Other lawsuitsAs of the date of disclosing this report, the Company has 23 cases of contract disputes in the daily operation, with total amount ofRMB 16,408,700 involved; one labor dispute, involving a total amount of RMB 322,000; and 4 cases of equity transfer dispute,involving a total amount of RMB 64,329,000. The total amount involved in the above 28 cases was RMB 81,059,800, which neitherformed the expected liabilities, nor had an effect on normal operation and management of the Company.

IX. Penalty and rectification

□ Applicable √ Not applicableNo penalty and rectification for the Company in Period.

X. Integrity of the Company and its controlling shareholders and actual controllers

√Applicable □ Not applicableIn the reporting period, integrity of the Company and its controlling shareholders and actual controllers is good and they do not havea relatively large amount of due existing debt with court's effective judgments.

XI. Implementation of the Company’s stock incentive plan, employee stock ownership plan or

other employee incentives

□ Applicable √ Not applicable

The Company has no equity incentive plan, employee stock ownership plans or other employee incentives in Period.

XII. Major related transaction

1. Related transaction with routine operation concerned

(1) Related transaction with routine operation concerned can be found in “12. Related party and related transaction” carried inSection X. Financial Report;(2) The related transactions are settled in cash and by notes, found more in “Announcement on Expected Routine Related Transactionfor Year of 2018” (Notice No.: 2018-8) released on Juchao Website dated 22 March 2018;(3) The “Proposal of Expected Routine Related Transactions with Subordinate Enterprise for Year of 2018” was deliberated andapproved by 30

th

session of 7

th

BOD held on 21 March 2018. During the reporting period, related sales takes 22.39% in totalexpected amount for the whole year, and related procurement takes 40.40% in total expected amount for the whole year.

2. Related transactions by assets acquisition and sold

□ Applicable √ Not applicableNo related transactions by assets acquisition and sold for the Company in reporting period.

3. Related transactions of mutual investment outside

□ Applicable √ Not applicableNo main related transactions of mutual investment outside for the Company in reporting period.

4. Contact of related credit and debt

□ Applicable √ Not applicableThe Company had no contact of related credit and debt in the reporting period.

5. Other related transactions

□ Applicable √ Not applicableThe Company had no other related transaction in the period

XIII. Non-operational fund occupation from controlling shareholders and its related party

□ Applicable √ Not applicableNo non-operational fund occupation from controlling shareholders and its related party in period.

XIV. Significant contract and implementations

1. Trusteeship, contract and leasing

(1) Trusteeship

□ Applicable √ Not applicableNo trusteeship for the Company in reporting period.

(2) Contract

□ Applicable √ Not applicableNo contract for the Company in reporting period.

(3) Leasing

□ Applicable √ Not applicableNo 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 (Barring the guarantee for subsidiaries)
Name of the Company guaranteedRelated Announcement disclosure dateGuarantee limitActual date of happening (Date of signing agreement)Actual guarantee limitGuarantee typeGuarantee termImplemented (Y/N)Guarantee for related party (Y/N)
Total approving external guarantee in report period (A1)0Total actual occurred external guarantee in report period (A2)0
Total approved external guarantee at the end of report period ( A3)0Total actual balance of external guarantee at the end of report period (A4)0
Guarantee between the Company and the subsidiaries
Name of the Company guaranteedRelated Announcement disclosureGuarantee limitActual date of happening (Date of signing agreement)Actual guarantee limitGuarantee typeGuarantee termImplemented (Y/N)Guarantee for related party
date(Y/N)
Sinopharm Holding Shenzhen Jianmin Co., Ltd.2017-04-195002017-10-12310General assurance2017.10.12-2018.10.11NN
Sinopharm Holding Shenzhen Medicine Co., Ltd2017-04-195002017-10-1233.72General assurance2017.10.12-2018.10.11NN
China National Accord Medicines Corporation Ltd.2017-04-1925,0002017-07-1318,956.45General assurance2017.7.13-2018.7.13NN
China National Accord Medicines Corporation Ltd.2017-04-1920,0002017-11-2310,942.49General assurance2017.11.23-2018.5.22NN
Sinopharm Holding Shenzhen Yanfeng Co., Ltd.2017-04-199,0002017-10-173,008.65General assurance2017.10.17-2018.10.11NN
Sinopharm Holding Shenzhen Yanfeng Co., Ltd.2018-03-225,0002018-05-232,700General assurance2018.05.23-2018.11.22NN
Sinopharm Holding Shenzhen Yanfeng Co., Ltd.2018-03-227,0002018-06-135,500General assurance2018.06.13-2019.06.12NN
Sinopharm Holding Jiangmen Ren Ren Co., Ltd.2017-04-191,0002017-11-060General assurance2017.11.6-2018.10.11NN
Foshan Nanhai Medicine Co., Ltd.2017-04-195,0002017-07-310General assurance2017.7.31-2018.7.31NN
Foshan Nanhai Medicine Co., Ltd.2017-04-195,0002017-10-1695.75General assurance2017.10.16-2018.10.11NN
Foshan Nanhai Medicine Co., Ltd.2017-04-195,0002017-12-012,061.73General assurance2017.12.1-2018.12.1NN
Foshan Nanhai Uptodate & Special Medicines Co. Ltd.2017-04-195,0002017-07-310General assurance2017.7.31-2018.7.31NN
Foshan Nanhai Uptodate & Special Medicines Co. Ltd.2018-03-225,0002018-05-230General assurance2018.5.23-2019.5.22NN
Foshan Nanhai Uptodate & Special Medicines Co. Ltd.2017-04-196,0002017-10-16273.92General assurance2017.10.16-2018.10.11NN
Foshan Nanhai Uptodate & Special Medicines Co. Ltd.2017-04-195,0002017-12-011,155.6General assurance2017.12.1-2018.12.1NN
Sinopharm Holding Guangzhou Co., Ltd.2018-03-2235,0002018-05-209,885.95General assurance2018.5.20-2019.5.20NN
Sinopharm Holding Guangzhou Co., Ltd.2017-04-1930,0002017-11-2814,939.95General assurance2017.11.28-2018.11.28NN
Sinopharm Holding Guangzhou Co., Ltd.2017-04-1925,0002017-07-24888.51General assurance2017.7.24-2018.7.23NN
Sinopharm Holding Guangzhou Co., Ltd.2018-03-2260,0002018-06-0730,679.04General assurance2018.6.7-2018.9.24NN
Sinopharm Holding Guangzhou Co., Ltd.2017-04-1915,0002017-08-160General assurance2017.8.16-2018.8.16NN
Sinopharm Holding Guangzhou Co., Ltd.2017-04-1935,0002017-10-113,183.8General assurance2017.10.13-2018.10.11NN
Sinopharm Holding Guangzhou Co., Ltd.2018-03-2240,0002018-06-0525,841.32General assurance2018.6.5-2019.6.4NN
Sinopharm Holding Guangzhou Co., Ltd.2018-03-2240,0002018-05-0930,143.62General assurance2018.5.9-2019.5.8NN
Sinopharm Holding Guangzhou Co., Ltd.2018-03-2220,0002018-06-0115,343.73General assurance2018.6.22-2019.6.21NN
Sinopharm Holding Guangzhou Co., Ltd.2018-03-2250,0002018-05-2919,018.56General assurance2018.5.29-2019.5.29NN
Sinopharm Holding Guangzhou Co., Ltd.2017-04-1920,0002017-05-10291.39General assurance2017.5.10-2018.5.9NN
Sinopharm Holding Guangzhou Co., Ltd.2018-03-2260,0002018-06-1311,470.2General assurance2018.6.13-2019.6-12NN
Sinopharm Holding Guangzhou Co., Ltd.2018-03-2280,0002018-04-17916.88General assurance2018.4.17-2019.4.16NN
Sinopharm Holding Guangdong Yuexing Co., Ltd.2018-03-225,0002018-05-202,905.31General assurance2018.5.20-2019.5.20NN
Sinopharm Holding Guangdong Yuexing Co., Ltd.2017-04-195,0002017-10-124,676.23General assurance2017.10.13-2018.10.11NN
Sinopharm Holding Guangdong Yuexing Co., Ltd.2017-04-195,0002018-01-05676.55General assurance2018.1.5-2018.10.31NN
Sinopharm Holding Guangdong Yuexing Co., Ltd.2018-03-225,0002018-06-22198.92General assurance2018.6.22-2019.6.21NN
Sinopharm Holding Foshan Co., Ltd2017-04-191,5002017-10-161,086.18General assurance2017.10.16-2018.10.11NN
Sinopharm2017-04-193,0002017-12-29936.36General2017.12.29-NN
Holding Guangdong Hengxing Co., Ltd.assurance2018.12.29
Sinopharm Holding Zhaoqing Co., Ltd.2017-04-192,0002017-10-26General assurance2017.10.26--2018.10.11NN
Sinopharm Holding Liuzhou Co., Ltd.2017-04-199,0002017-10-130General assurance2017.10.13-2018.10.11NN
Sinopharm Holding Liuzhou Co., Ltd.2018-03-225,0002018-06-214,975.99General assurance2018.6.21-2019.6.20NN
Sinopharm Holding Liuzhou Co., Ltd.2017-04-196,0002018-03-145,169.93General assurance2018.3.14-2019.1.2NN
Guangdong Southern Pharmaceutical Foreign Trade Co., Ltd.2018-03-2215,0002018-07-0112,036.45General assurance2018.7.1-2019.6.30NN
Guangdong Southern Pharmaceutical Foreign Trade Co., Ltd.2018-03-222,5002018-04-17184.97General assurance2018.4.17-2019.4.16NN
Sinopharm Holding Guangxi Co., Ltd.2017-04-1920,0002017-11-1514,519.25General assurance2017.11.15-2018.11.18NN
Sinopharm Holding Guangxi Co., Ltd.2017-04-1928,0002017-10-134,397.31General assurance2017.10.13-2018.10.11NN
Sinopharm Holding Guangxi Co., Ltd.2017-04-1925,0002017-11-0910,447.96General assurance2017.11.9-2018.11.8NN
Sinopharm Holding Guangxi Co., Ltd.2018-03-2210,0002018-05-229,978.85General assurance2018.5.22-2018.11.22NN
Sinopharm Holding Guangxi Co., Ltd.2017-04-1910,0002017-09-040General assurance2017.9.4-2018.9.4NN
Sinopharm Holding Guangxi Co., Ltd.2018-03-225,0002018-06-052,999.86General assurance2018.6.5-2019.6.5NN
Sinopharm Holding Guangxi Co., Ltd.2018-03-225,0002018-06-050General assurance2018.6.5-2019.6.5NN
Sinopharm Holding Meizhou Co., Ltd.2017-04-191,0002017-10-120General assurance2017.10.12-2018.10.11NN
Sinopharm Holding Zhongshan Co., Ltd.2017-04-191,0002017-10-120General assurance2017.10.12-2018.10.11NN
Sinopharm Holding Zhongshan Co., Ltd.2018-03-221,0002018-06-140General assurance2018.6.14-2019.6.13NN
Sinopharm Holding Shantou2017-04-195002017-10-12500General assurance2017.10.12-2018.10.11NN
Co., Ltd.
Sinopharm Holding Huizhou Co., Ltd.2017-04-191,0002017-10-12396.45General assurance2017.10.12-2018.10.11NN
Sinopharm Holding Zhanjiang Co., Ltd.2017-04-191,0002017-10-1211.16General assurance2017.10.12-2018.10.11NN
Sinopharm Holding Zhuhai Co., Ltd.2017-04-191,0002017-10-120General assurance2017.10.12-2018.10.11NN
Sinopharm Holding Dongguan Co., Ltd.2017-04-192,0002017-10-120General assurance2017.10.12-2018.10.11NN
Total amount of approving guarantee for subsidiaries in report period (B1)455,500Total amount of actual occurred guarantee for subsidiaries in report period (B2)523,821.28
Total amount of approved guarantee for subsidiaries at the end of reporting period (B3)789,500Total balance of actual guarantee for subsidiaries at the end of reporting period (B4)283,738.99
Guarantee between the subsidiaries and the subsidiaries
Name of the Company guaranteedRelated Announcement disclosure dateGuarantee limitActual date of happening (Date of signing agreement)Actual guarantee limitGuarantee typeGuarantee termImplemented (Y/N)Guarantee for related party (Y/N)
Sinopharm Holding Guoda Drugstore Yangzhou Dadesheng Chain Co., Ltd.2017-04-191,0002017-11-010General assurance2017.11.1-2018.11.1NN
Fujian Guoda Drugstore Chain Co., Ltd.2018-03-222,2752018-04-20977.96General assurance2018.4.20-2019.4.19NN
Sinopharm HoldingGuoda Drugstore Guangdong Co., Ltd.2017-04-193,0002017-06-092,503.59General assurance2017.6.9-2019.6.8NN
Sinopharm Holding Guoda Drugstore Guangdong Co., Ltd.2017-04-193,0002017-06-012,124.69General assurance2017.6.1-2018.6.1NN
Taishan Sinopharm Holding Guoda Qunkang Drugstore Chain Co., Ltd.2018-03-225002018-06-02158General assurance2018.6.2-2019.6.1NN
Sinopharm Holding Guoda Drugstore Guangxi Chain Co., Ltd.2017-04-192,0002017-10-101,424.3General assurance2017.10.10-2018.10.9NN
Sinopharm Holding Guoda Drugstore Jiangmen Chain Co., Ltd.2017-04-192,0002017-10-283.6General assurance2017.10.28-2018.10.27NN
Sinopharm Holding Guoda Drugstore Inner Mongolia Co., Ltd.2017-04-193,0002017-04-241,329.12General assurance2017.4.24-2018.4.23NN
Sinopharm Holding Guoda Drugstore Inner Mongolia Co., Ltd.2018-03-223,0002018-04-250General assurance2018.4.25-2019.4.24NN
Sinopharm Holding Guoda Drugstore Inner Mongolia Co., Ltd.2017-04-196,0002017-10-105,581.83General assurance2017.10.10-2018.10.9NN
Shanxi Guoda Wanmin Drugstore Chain Co., Ltd.2017-04-193,0002017-05-013,000General assurance2017.5.1-2018.5.1NN
Shanxi Guoda Wanmin Drugstore Chain Co., Ltd.2018-03-225,0002018-05-160General assurance2018.5.16-2019.5.15NN
Shanxi Guoda Wanmin Drugstore Chain Co., Ltd.2017-04-193,0002017-06-010General assurance2017.6.1-2018.6.1NN
Sinopharm Holding Guoda Drugstore Shenyang Chain Co., Ltd.2017-04-195,0002017-09-014,668.36General assurance2017.9.1-2018.9.1NN
Sinopharm Holding Guoda Drugstore Shenyang Chain Co., Ltd.2018-03-226,0002018-04-231,367.09General assurance2018.4.23-2019.4.22NN
Sinopharm Holding Guoda Drugstore Shenyang Chain Co., Ltd.2017-04-193,0002017-06-010General assurance2017.6.1-2018.6.1NN
Sinopharm Holding Guoda Drugstore Shenyang Chain Co., Ltd.2017-04-196,0002017-06-281,328.76General assurance2017.6.28-2018.6.28NN
Sinopharm Holding Guoda Drugstore Shenyang Chain Co., Ltd.2017-04-196,0002017-06-295,161.54General assurance2017.8.23-2018.8.23NN
Sinopharm Holding Guoda Drugstore Shenyang Chain Co., Ltd.2017-04-1915,0002017-10-1010,540.16General assurance2017.10.10-2018.10.9NN
Sinopharm Holding Guoda Drugstore Shanxi YiYuan Chain Co., Ltd.2017-04-196,0002017-05-012,204.49General assurance2017.5.15-2018.4.18NN
Sinopharm Holding Guoda Drugstore Shanxi YiYuan Chain Co., Ltd.2017-04-194,0002017-09-223,516.88General assurance2017.9.22-2018.9.21NN
Sinopharm Holding Guoda Drugstore Shanxi YiYuan Chain Co., Ltd.2017-04-192,8002017-12-292,644.69General assurance2017.12.29-2018.12.28NN
Sinopharm Holding Guoda Drugstore Shanxi YiYuan Chain Co., Ltd.2017-04-192,8002018-02-052,784.47General assurance2018.2.5-2019.2.4NN
Hunan Guoda Minshentang Drugstore Chain Co., Ltd.2017-04-192,0002017-10-201,327.71General assurance2017.10.20-2018.10.19NN
Ningxia Guoda Drugstore Chain Co., Ltd.2017-04-192,0002018-01-121,113General assurance2018.1.12-2019.1.11NN
Sinopharm Holding Guoda Drugstore Yangzhou Dadesheng Chain Co., Ltd.2017-04-192,0002017-10-10963.73General assurance2017.10.10-2018.10.9NN
Sinopharm Holding Guoda Drugstore Jiangmen Chain Co., Ltd.2018-03-222,0002018-04-011,143.22General assurance2018.4.1-2019.4.1NN
Sinopharm Holding Guoda Drugstore Shanghai Chain Co., Ltd.2018-03-224,0002018-04-013,073.28General assurance2018.4.1-2019.4.1NN
Sinopharm Holding Guoda Drugstore Henan Chain Co., Ltd.2018-03-223,0002018-05-11247.38General assurance2018.5.11-2019.5.10NN
Shanxi Guoda Wanmin Drugstore Chain Co., Ltd.2018-03-225,0002018-04-282,247General assurance2018.4.28-2019.4.27NN
Sinopharm Holding Guoda Drugstore Shanxi YiYuan Chain Co., Ltd.2018-03-223,0002018-04-232,999.57General assurance2018.4.23-2019.4.22NN
Sinopharm Holding Guoda Drugstore Inner Mongolia Co., Ltd.2018-03-222,0002018-04-24300.74General assurance2018.4.24-2019.4.23NN
China National Hebei Lerentang Medicine Chain Co., Ltd.2018-03-222,0002018-04-12467.56General assurance2018.4.12-2019.4.11NN
Sinopharm HoldingGuoda Drugstore Guangdong Co., Ltd.2018-03-223,0002018-05-181,984.87General assurance2018.5.18-2019.5.17NN
Total amount of approving guarantee for subsidiaries in report period (C1)40,775Total amount of actual occurred guarantee for subsidiaries in report period87,203.39
(C2)
Total amount of approved guarantee for subsidiaries at the end of reporting period (C3)123,375Total balance of actual guarantee for subsidiaries at the end of reporting period (C4)67,187.59
Total amount of guarantee of the Company( total of three abovementioned guarantee)
Total amount of approving guarantee in report period (A1+B1+C1)496,275Total amount of actual occurred guarantee in report period (A2+B2+C2)611,024.67
Total amount of approved guarantee at the end of report period (A3+B3+C3)912,875Total balance of actual guarantee at the end of report period (A4+B4+C4)350,926.58
The proportion of the total amount of actually guarantee in the net assets of the Company (that is A4+ B4+C4)35.41%
Including:

Explanation on guarantee with composite way

(2) Guarantee outside against the regulation

□ Applicable √ Not applicableNo guarantee outside against the regulation in Period.

3. Other material contracts

□ Applicable √ Not applicableNo other material contracts for the Company in reporting period.

XV. Social responsibility

1. Major environment protection

The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection departmentvoluntary disclosure

Company /subsidiaryName of Major Pollutants and Particular PollutantsEmission MethodQuantity of Discharge OutletDistribution of Discharge OutletEmission ConcentrationExecuted Pollutant Discharge StandardsTotal EmissionsApproved Total EmissionsExcessive Discharge
China National ZhijunCODTube Discharge1Discharge Outlet of Waste Water21.91 mg/l“Water Pollution Emission Limits” of Guangdong Province (DB44/26-2001)0.656.6N
China National ZhijunBODTube Discharge1Discharge Outlet of Waste Water3.32 mg/l“Water Pollution Emission Limits” of0.0991.5N
Guangdong Province (DB44/26-2001)
China National ZhijunSSTube Discharge1Discharge Outlet of Waste Water2.46 mg/l“Water Pollution Emission Limits” of Guangdong Province (DB44/26-2001)0.0734.4N
China National ZhijunAmmonia NitrogenTube Discharge1Discharge Outlet of Waste Water2.22 mg/l“Water Pollution Emission Limits” of Guangdong Province (DB44/26-2001)0.0660.7N
China National ZhijunPhosphateTube Discharge1Discharge Outlet of Waste Water0.02 mg/l“Water Pollution Emission Limits” of Guangdong Province (DB44/26-2001)0.59336.9N
Zhijun PingshanCODTube Discharge1Discharge Outlet of Waste Water8mg/LCLASS GB3838-2002IV WATER QUALITY STANDARDS AND GB21908-2008 NEW PROJECT0.62.63N
Zhijun PingshanBODTube Discharge1Discharge Outlet of Waste Water2.3mg/LCLASS GB3838-2002IV WATER QUALITY STANDARDS AND GB21908-2008 NEW PROJECT0.20.53N
Zhijun PingshanSSTube Discharge1Discharge Outlet of Waste Water9mg/LCLASS GB3838-2002IV WATER QUALITY STANDARDS AND GB21908-2008 NEW PROJECT0.72.63N
Zhijun PingshanAmmonia NitrogenTube Discharge1Discharge Outlet of Waste Water0.3mg/LCLASS GB3838-2002IV WATER QUALITY0.020.18N

Construction and operation of pollution prevention and control facilitiesAt present, the above-mentioned environmental pollution key monitoring units in which the Company has ashareholding have established pollution prevention and control facilities for wastewater. In the daily managementprocess, enterprises establish management procedures and operating instructions for environmental protectionfacilities, and ensure the normal and compliant operation of anti-pollution facilities through systemimplementation and responsibility implementation. All enterprises are continuously investing funds and steppingup the transformation and improvement of pollution prevention and control facilities to ensure the stable operationof pollution prevention facilities and improve the disposal capacity of environmental protection facilities.Environmental impact assessment of construction projects and other environmental protection administrativelicensesAt present, the projects of all key monitoring units have carried out environmental impact assessments andobtained approvals. The projects to be built also carry out the relevant administrative review procedures according

to the “three simultaneous” requirements of the environmental protection facilities of the construction project.

Emergency plan for environmental emergenciesAt present, the above-mentioned environmental pollution key monitoring units in which the Company has ashareholding have formulated the Emergency Plan for Environmental Emergencies and reported them accordingto the regulatory requirements of the local regulatory authorities. According to the management requirements of

the emergency plan, the key units regularly carry out emergency plan drills to further provide the enterprises’

emergency response capability.Environmental self-monitoring schemeAt present, the above-mentioned environmental pollution key monitoring units in which the Company has ashareholding have established environmental self-detection scheme and plan, and implemented self-inspection,third-party detection and other monitoring methods according to the government requirements. Relevantmonitoring data and reports have been archived and saved.Other environmental information that should be disclosed

The above two companies are joint stock companies of the Company. The Company and its holding subsidiariesare not listed as key pollutant discharge units announced by the environmental protection department.

Relevant information on environment protection

Nil

2. Execution of social responsibility of targeted poverty alleviation

The Company temporarily not to carry out a targeted poverty alleviation in the peirod, and there are no follow-up plans either.

XVI. Explanation on other significant events

√Applicable □ Not applicable

The proposal on the wholly-owned subsidiary Sinopharm Holding Guoda Drugstore Co.,Ltd., Bringing inStrategic Investors by Means of Capital Increase and Share Expansion was deliberated and approved on the 25

th

meeting of the 7

th

session of Board of Directors On Sep. 4

th

, 2017, and the wholly-owned subsidiary SinopharmHolding Guoda Drugstore Co., Ltd (hereinafter referred to as “Guoda Drugstore”) has got the approval of bringingin one strategic investor by means of capital increase and share expansion, taking assets assessment report as thereference of pricing. The Company was publicly listed on the Shanghai United Assets and Equity Exchange on

September 20, 2017, and collected an intentional investor, Walgreens Boots Alliance (NASDAQ Code: WBA), asthe actual controller, it subscribed for the equity of Guoda Drugstore by taking its wholly-owned subsidiaryestablished in Hong Kong, Walgreens Boots Alliance (Hong Kong) Investments Limited (hereinafter referred to

as “WBAHKIL”), as the capital increase entity to subscribe the equity of Guoda Drugstore with the capital

increase amount of RMB 2,766,700,000. It holds 40% equity of Guoda Drugstore after the capital increase. At thebeginning of December 2017, in accordance with the equity transaction rules, the Company, Guoda Drugstore andWBAHKIL jointly signed the Registration Capital Increase and Subscription Agreement.On March 23, 2018, the Company received the Written Decision on Nonperformance of Further Review

(SFLCSH [2018] No. 104) issued by the Ministry of Commerce of the People’s Republic of China, which was

transferred from Walgreens Boots Alliance Investment Luxembourg Co., Ltd.At the end of June 2018, Guoda Drugstore obtained the registration receipt for the establishment of a foreign-

invested enterprise from the Commerce Commission of Jing’an District, Shanghai Municipality, and completed

the industrial and commercial registration on June 28, 2018.

OverviewDisclosure dateIndex for annoucement published on website
Notice of Progress of the wholly-owned subsidiary of the Company, Guoda Drugstore has brought in strategic investors by means of capital increase and share expansion:2018-03-24Juchao Website(http://www.cninfo.com.cn)
Notice of Progress of the wholly-owned subsidiary of the Company, Guoda Drugstore has brought in strategic investors by means of capital increase and share expansion:2018-06-30Juchao Website(http://www.cninfo.com.cn)

XVII. Significant event of subsidiary of the Company

√Applicable □ Not applicableSee “XVI. 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 ChangeIncrease/Decrease in the Change (+, -)After the Change
AmountProportionNew shares issuedBonus sharesCapitalization of public reserveOthersSubtotalAmountProportion
I. Restricted shares65,497,02815.30%65,497,02815.30%
2. State-owned legal person’s shares60,380,74314.10%60,380,74314.10%
3. Other domestic shareholding5,116,2851.20%5,116,2851.20%
Including: Domestic legal person’s shares5,114,2971.19%5,114,2971.19%
Domestic nature person shares1,9880.00%1,9880.00%
II. Unrestricted shares362,629,95584.70%362,629,95584.70%
1. RMB Ordinary shares307,744,35571.88%307,744,35571.88%
2. Domestically listed foreign shares54,885,60012.82%54,885,60012.82%
III. Total shares428,126,983100.00%428,126,983100.00%

Reasons for share changed□Applicable √Not applicable

Approval of share changed□Applicable √Not applicable

Ownership transfer of share changed□ Applicable √ Not applicableInfluence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to commonshareholders of Company in latest year and period□ Applicable √ Not applicableOther information necessary to disclose for the Company or need to disclosed under requirement from security regulators

□ Applicable √ Not applicable

2. Changes of restricted shares

□ Applicable √ Not applicable

II. Securities issuance and listing

□ Applicable √ Not applicable

III. Number of shareholders and share-holding

In Share

Total common shareholders at period-end19,539Total preference shareholders with voting rights recovered at end of reporting period (if applicable) (see Note 8)0
Particulars about shares held above 5% by common shareholders or top ten common shareholders
ShareholdersNature of shareholderProportion of shares heldNumber of common shares held at period-endChanges in reporting periodAmount of restricted common shares heldAmount of un-restricted common shares heldNumber of share pledged/frozen
State of shareAmount
Sinopharm Group Co., LtdState-owned corporate56.06%239,999,99155,057,700184,942,291
HTHK/CMG FSGUFP-CMG FIRST STATE CHINA GROWTH FDOverseas corporate2.37%10,141,182010,141,182
China Life Insurance Co., Ltd. – tradition –general insurance products -005L-CT001 ShenDomestic non state-owned corporate2.02%8,654,59208,654,592
China United Property Insurance CompanyDomestic non state-owned corporate1.42%6,092,90506,092,905
Limited – Traditional Insurance Products
China National Pharmaceutical Foreign Trade Corp.State-owned corporate1.24%5,323,0435,323,0430
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITEDOverseas corporate1.19%5,086,26005,086,260
New China Life Insurance Co., Ltd. – Bonus – Individual bonuses - -018L-FH002 ShenDomestic non state-owned corporate0.98%4,199,77204,199,772
# Beijing Haoqing Fortune Investment Management Co., Ltd. – Haoqing Value Stable No.8 Investment FundDomestic non state-owned corporate0.96%4,118,71604,118,716
UBS AG LONDON BRANCHOverseas corporate0.89%3,818,88403,818,884
Central Huijin Investment Ltd.State-owned corporate0.89%3,804,40003,804,400
Explanation on associated relationship among the aforesaid shareholdersSinopharm Group Co., Ltd. and China National Pharmaceutical Foreign Trade Corporation have the same actual controller, which is China National Pharmaceutical Group Corporation. It is unknown that there exists no associated relationship or belongs to the 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 common shareholders with un-restrict shares held
ShareholdersAmount of un-restrict common shares held at period-Type of shares
endTypeAmount
Sinopharm Group Co., Ltd184,942,291RMB ordinary shares184,942,291
HTHK/CMG FSGUFP-CMG FIRST STATE CHINA GROWTH FD10,141,182Domestically listed foreign shares10,141,182
China Life Insurance Co., Ltd. – tradition –general insurance products -005L-CT001 Shen8,654,592RMB ordinary shares8,654,592
China United Property Insurance Company Limited – Traditional Insurance Products6,092,905RMB ordinary shares6,092,905
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED5,086,260Overseas listed foreign share5,086,260
New China Life Insurance Co., Ltd. – Bonus – Individual bonuses - -018L-FH002 Shen4,199,772RMB ordinary shares4,199,772
# Beijing Haoqing Fortune Investment Management Co., Ltd. – Haoqing Value Stable No.8 Investment Fund4,118,716RMB ordinary shares4,118,716
UBS AG LONDON BRANCH3,818,884Domestically listed foreign shares3,818,884
Central Huijin Investment Ltd.3,804,400RMB ordinary shares3,804,400
Bank of China – Harvest Medical Care Securities Investment Fund2,943,225RMB ordinary shares2,943,225
Expiation on associated relationship or consistent actors within the top 10 un-restrict shareholders and between top 10 un-restrict shareholders and top 10 shareholdersIt is unknown that there exists no associated relationship or belongs to the consistent actionist among the other tradable shareholders regulated by the Management Measure of Information Disclosure on Change of Shareholding for Listed Companies.
Explanation on shareholders involving margin business about top ten common stock shareholders with un-restrict shares held (if applicable) (see note4)Beijing Haoqing Fortune Investment Management Co., Ltd. – Haoqing Value Stable No.8 Investment Fund holds shares of the Company through margin trading and negotiable securities account that is 4,118,716 shares in total.

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 √ NoThe top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have nobuy-back agreement dealing in reporting period.

IV. Changes of controlling shareholders or actual controller

Changes of controlling shareholders in reporting period□ Applicable √ Not applicableChanges of controlling shareholders had no change in reporting period.Changes of actual controller in reporting period□ Applicable √ Not applicableChanges of actual controller in reporting period had no change in reporting period.

Section VII. Preferred Stock

□ Applicable √ Not applicableThe Company has no preferred stock in reporting period.

Section VIII. Directors, Supervisors and Senior Executives

I. Changes of shares held by directors, supervisors and senior executives

□ Applicable √ Not applicableShares held by directors, supervisors and senior executives have no changes in reporting period, found more details in Annual Report

2017.

II. Resignation and dismissal of directors, supervisors and senior executives

√ Applicable □ Not applicable

NameTitleTypeDateReasons
Xiong ChuxiongIndependent directorExpiration of the term of office2018-04-17Expiration of the office term for 7th BOD
Xiao ShengfangIndependent directorExpiration of the term of office2018-04-17Expiration of the office term for 7th BOD
Wang HuaiqinStaff supervisorExpiration of the term of office2018-04-17Expiration of the office term for 7th Supervisory Committee
Lian WanyongDirectorElection2018-04-17New director of 8th BOD
Li DongjiuDirectorElection2018-04-17New director of 8th BOD
Ou YongliangIndependent directorElection2018-04-17New independent director of 8th BOD
Chen ShengqunIndependent directorElection2018-04-17New independent director of 8th BOD
Lang BaochunStaff supervisorElection2018-04-17New staff supervisor of 8th Supervisory Committee

Section IX. Corporate Bond

Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the datewhen semi-annual report approved for released or fail to cash in full on dueNo

Section X Financial ReportingI.Report of the Auditors

Consolidated financial statements for the six months ended 30 June 2018 haven’t been audited.

CONSOLIDATED BALANCE SHEET

As at 30 June 2018

(Expressed in Renminbi Yuan)

ASSETSNote V30 June 201831 December 2017
Current assets
Cash and bank balances13,943,595,560.584,191,655,438.51
Notes receivable21,021,697,370.211,504,194,764.08
Accounts receivable39,441,542,367.197,589,412,679.88
Advances to suppliers4456,680,224.23516,778,117.47
Interest receivable547,507.8061,441.11
Other receivables6698,672,023.18657,871,058.54
Inventories74,245,354,625.223,781,858,238.12
Other current assets891,769,652.5678,947,644.62
Total current assets19,899,359,330.9718,320,779,382.33
Non-current assets
Financial assets available-for-sale913,685,760.0013,685,760.00
Long-term equity investments101,756,735,242.441,650,619,373.09
Investment properties11149,409,723.79153,678,339.11
Fixed assets12550,102,564.29551,710,434.02
Construction in progress1330,805,874.1122,947,258.99
Intangible assets14314,816,778.00325,751,430.88
Goodwill15830,729,152.75830,729,152.75
Long-term prepaid expenses16261,074,227.40252,247,050.79
Deferred tax assets1776,070,138.3379,472,883.06
Other non-current assets18130,226,885.24142,022,462.75
Total non-current assets4,113,656,346.354,022,864,145.44
Total assets24,013,015,677.3222,343,643,527.77

The accompanying notes form an integral part of these financial statements

CONSOLIDATED BALANCE SHEET (Continued)

As at 30 June 2018

(Expressed in Renminbi Yuan)

LIABILITIESNote V30 June 201831 December 2017
Current liabilities
Short-term borrowings192,051,139,651.671,561,354,521.64
Notes payable202,373,628,140.862,732,437,828.42
Accounts payable217,230,024,480.356,144,221,000.10
Advances from customers22178,425,087.30216,938,239.32
Employee benefits payable23150,685,442.26215,656,526.54
Tax payable24223,351,730.76223,752,900.24
Interest payable2510,378,213.917,311,819.65
Dividends payable268,889,443.1111,889,443.11
Other payables271,024,176,704.111,011,128,397.26
Non-current liabilities due within one year285,651,227.565,434,770.70
Other current liabilities29114,239.45112,817.65
Total current liabilities13,256,464,361.3412,130,238,264.63
Non-current liabilities
Long-term borrowings3031,600,000.0031,600,000.00
Long-term payables316,604,575.849,332,537.14
Payable for specific projects33800,000.00800,000.00
Deferred income34121,995,380.11125,082,372.53
Long-term employee benefits payable321,636,000.001,777,000.00
Deferred tax liabilities1869,864,262.8871,883,253.02
Other non-current liabilities3545,427,343.3145,427,343.31
Total non-current liabilities277,927,562.14285,902,506.00
Total liabilities13,534,391,923.4812,416,140,770.63

The accompanying notes form an integral part of these financial statements

CONSOLIDATED BALANCE SHEET (Continued)

As at 30 June 2018

(Expressed in Renminbi Yuan)

SHAREHOLDERS’ EQUITYNote V30 June 201831 December 2017
Shareholders’ equity
Share capital36428,126,983.00428,126,983.00
Capital surplus373,181,826,407.203,181,429,064.99
Other equity instruments--
Surplus reserve38214,063,491.50214,063,491.50
Retained earnings396,086,241,746.425,572,952,806.39
Shareholders’ equity attributable to shareholders of the parent9,910,258,628.129,396,572,345.88
Non-controlling interests568,365,125.72530,930,411.26
Total shareholders’ equity10,478,623,753.849,927,502,757.14
Total liabilities and shareholders’ equity24,013,015,677.3222,343,643,527.77

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

CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June 2018

(Expressed in Renminbi Yuan)

Note VFor the six months ended 30 June 2018For the six months ended 30 June 2017
Operating revenue4020,779,166,699.6720,524,807,669.57
Less: Operating costs4018,367,643,723.8418,364,034,450.83
Tax and surcharge4156,620,527.2563,185,620.86
Selling expenses421,273,588,756.071,110,446,938.17
Administrative expenses43351,820,063.78340,636,051.11
Finance costs4457,541,544.3244,498,778.76
Impairment loss45(517,852.98)96,757.16
Add: Investment income46162,693,771.35146,726,039.90
Incl: Investment income from associates162,662,271.35146,676,039.90
Gain on disposal of assets474,281,164.61485,085.66
Other income4810,589,212.577,958,493.67
Operating profits850,034,085.92757,078,691.91
Add: Non-operating income495,498,951.116,056,142.83
Incl: Gain from disposal of non-current assets--
Less: Non-operating expenses501,797,292.803,559,988.09
Incl: Loss from disposal of non-current assets--
Total profit853,735,744.23759,574,846.65
Less: Income taxes51164,486,734.32160,041,107.63
Net profit689,249,009.91599,533,739.02
Incl: Net profit of acquiree before business combinations involving enterprises under common control--
Net Profit from continuing operations689,249,009.91599,533,739.02
Net profit attributable to shareholders of the parent641,727,034.93556,125,318.19
Profit or loss of non-controlling interests47,521,974.9843,408,420.83
Total comprehensive income689,249,009.91599,533,739.02
Incl: Total comprehensive income for the year attributable to owners of the parent641,727,034.93556,125,318.19
Total comprehensive income for the year attributable to non-controlling interests47,521,974.9843,408,420.83
Earnings per share
Basic earnings per share1.501.30
Diluted earnings per share1.501.30

The accompanying notes form an integral part of these financial statements

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

For the six months ended 30 June 2018

(Expressed in Renminbi Yuan)

2018Shareholders’ equity attributable to shareholders of the parentNon-controlling interestsTotal equity
Share capitalOther equity instrumentCapital surplusSurplus reserveRetained earningsSubtotal
Closing balance of the preceding year428,126,983.00-3,181,429,064.99214,063,491.505,572,952,806.399,396,572,345.88530,930,411.269,927,502,757.14
Business combination involving enterprises under common control--------
Opening balance of the current year428,126,983.00-3,181,429,064.99214,063,491.505,572,952,806.399,396,572,345.88530,930,411.269,927,502,757.14
Movements in the current year--397,342.21-513,288,940.03513,686,282.2437,434,714.46551,120,996.70
(1) Total comprehensive income----641,727,034.93641,727,034.9347,521,974.98689,249,009.91
(2) Capital paid and reduced by owners--397,342.21--397,342.2126,721,512.7627,118,854.97
1.Capital injection by owners------24,381,200.0024,381,200.00
2.Business combination involving enterprises under common control--------
3.Others--397,342.21--397,342.212,340,312.762,737,654.97
(3) Profit distribution----(128,438,094.90)(128,438,094.90)(36,808,773.28)(165,246,868.18)
1.Distribution to equity owners----(128,438,094.90)(128,438,094.90)(36,808,773.28)(165,246,868.18)
2.Others--------
Closing balance of the current year428,126,983.00-3,181,826,407.20214,063,491.506,086,241,746.429,910,258,628.12568,365,125.7210,478,623,753.84

The accompanying notes form an integral part of these financial statements

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

For the year ended 31 December 2017

(Expressed in Renminbi Yuan)

2017Shareholders’ equity attributable to shareholders of the parentNon-controlling interestsTotal equity
Share capitalOther equity instrumentsCapital surplusSurplus reserveRetained earningsSubtotal
Closing balance of the preceding year362,631,943.0065,495,040.003,151,518,024.92181,315,971.504,689,189,642.518,450,150,621.93463,832,912.188,913,983,534.11
Business combination involving enterprises under common control--1,200,000.00-1,076,241.592,276,241.591,517,494.393,793,735.98
Opening balance of the current year362,631,943.0065,495,040.003,152,718,024.92181,315,971.504,690,265,884.108,452,426,863.52465,350,406.578,917,777,270.09
Movements in the current year65,495,040.00(65,495,040.00)28,711,040.0732,747,520.00882,686,922.29944,145,482.3665,580,004.691,009,725,487.05
(1) Total comprehensive income----1,057,791,930.671,057,791,930.6798,946,915.421,156,738,846.09
(2) Capital paid and reduced by owners65,495,040.00(65,495,040.00)28,711,040.07-(1,075,583.99)27,635,456.0820,214,810.6347,850,266.71
1.Capital injection by owners5,114,297.00(5,114,297.00)----14,873,000.0014,873,000.00
2.Significant reorganization60,380,743.00(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------6,858,866.626,858,866.62
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 year428,126,983.00-3,181,429,064.99214,063,491.505,572,952,806.399,396,572,345.88530,930,411.269,927,502,757.14

The accompanying notes form an integral part of these financial statements

CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30 June 2018

(Expressed in Renminbi Yuan)

Note VFor the six months ended 30 June 2018For the six months ended 30 June 2017
1.CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of good or rendering of services22,055,082,715.5921,970,884,180.09
Tax refunds1,593,193.215,740,675.89
Cash receipts related to other operating activities52311,984,787.6098,022,828.67
Sub-total of cash inflows from operating activities22,368,660,696.4022,074,647,684.65
Cash paid for goods and services19,799,894,631.8019,734,413,196.28
Cash paid to and on behalf of employees956,322,585.28864,562,267.50
Cash paid for all types of taxes548,616,793.36601,078,629.47
Cash payments related to other operating activities52838,468,976.76646,256,160.00
Sub-total of cash outflows from operating activities22,143,302,987.2021,846,310,253.25
Net cash flows from operating activities53225,357,709.20228,337,431.40
2.CASH FLOWS FROM INVESTING ACTIVITIES
Cash received from recovery of investments--
Cash received from returns on investments78,825,446.8558,647,191.65
Net cash received from disposal of fixed assets, intangible assets and other long-term assets6,064,099.87171,059.95
Net cash received from disposal of subsidiaries and other business units--
Cash receipts related to other investing activities5248,766,145.1587,027,340.19
Sub-total of cash inflows from investing activities133,655,691.87145,845,591.79

The accompanying notes form an integral part of these financial statements

CONSOLIDATED CASH FLOW STATEMENT (Continued)

For the six months ended 30 June 2018

(Expressed in Renminbi Yuan)

Note VFor the six months ended 30 June 2018For the six months ended 30 June 2017
2.CASH FLOWS FROM INVESTING ACTIVITIES(Continued)
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets97,867,494.6182,123,615.39
Cash paid for acquisition of investments10,000,000.0071,120,000.00
Net cash paid for acquisition of subsidiaries and other business units52-14,706,789.56
Net cash paid from disposal of subsidiaries and other business units52--
Cash payments related to other investing activities5243,999,800.0070,175,078.90
Sub-total of cash outflows from investing activities151,867,294.61238,125,483.85
Net cash flows from investing activities(18,211,602.74)(92,279,892.06)
3.CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from investments by others11,781,200.009,075,000.00
Incl: Cash received from capital contributions from non-controlling shareholders of subsidiaries11,781,200.009,075,000.00
Cash received from borrowings40,775,440.04233,533,871.46
Cash receipts related to other financing activities5383,745,164.6090,932,396.75
Sub-total of cash inflows from financing activities136,301,804.64333,541,268.21
Cash repayments for debts79,670,200.30201,503,745.30
Cash payments for distribution of dividends or profit and interest expenses226,149,759.15215,828,281.10
Incl: Profit and dividends paid to non-controlling shareholders of subsidiaries40,392,215.9830,408,202.08
Cash payments related to other financing activities53118,725,719.23178,991,574.67
Sub-total of cash outflows from financing activities424,545,678.68596,323,601.07
Net cash flows from financing activities(288,243,874.04)(262,782,332.86)

The accompanying notes form an integral part of these financial statements

CONSOLIDATED CASH FLOW STATEMENT (Continued)

For the six months ended 30 June 2018

(Expressed in Renminbi Yuan)

Note VFor the six months ended 30 June 2018For the six months ended 30 June 2017
4.EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS314,863.47-
5.NET INCREASE IN CASH AND CASH EQUIVALENTS53(80,782,904.11)(126,724,793.52)
Add: Cash and cash equivalents at beginning of the year3,673,498,691.483,150,915,425.49
6.CASH AND CASH EQUIVALENTS AT END OF YEAR533,592,715,787.373,024,190,631.97

The accompanying notes form an integral part of these financial statements

COMPANY BALANCE SHEET

As at 30 June 2018

(Expressed in Renminbi Yuan)

ASSETSNote XIV30 June 201831 December 2017
Current assets
Cash and bank balances1,521,055,158.901,776,696,342.87
Notes receivable63,423,575.4864,799,618.07
Accounts receivable1553,496,096.71480,467,760.92
Advances to suppliers1,230,913.181,138,312.26
Interest receivable1,861,132.761,844,294.10
Dividends receivable--
Other receivables21,629,938,110.281,516,037,945.71
Inventories193,931,164.48172,022,676.96
Other current assets39,482.38788,964.90
Total current assets3,964,975,634.174,013,795,915.79
Non-current assets
Long-term equity investments37,297,085,972.707,180,306,084.56
Investment properties2,359,843.192,763,831.92
Fixed assets17,398,259.5213,831,103.54
Construction in progress--
Intangible assets1,501,299.511,287,775.78
Long-term deferred expenses5,003,173.655,543,217.86
Deferred tax assets3,293,246.892,764,724.75
Other non-current assets67,397,698.1171,808,611.00
Total non-current assets7,394,039,493.577,278,305,349.41
Total assets11,359,015,127.7411,292,101,265.20

The accompanying notes form an integral part of these financial statements

COMPANY BALANCE SHEET (Continued)

As at 30 June 2018

(Expressed in Renminbi Yuan)

LIABILITIES30 June 201831 December 2017
Current liabilities
Short-term borrowings694,424,900.71707,000,000.00
Notes payable227,485,804.97239,563,961.30
Accounts payable462,200,812.82434,886,685.35
Advances from customers3,941,540.071,912,503.90
Employee benefits payable24,654,592.3333,592,851.93
Tax payables41,130,974.2742,386,907.00
Interest payable547,681.64669,533.78
Other payables1,056,082,762.671,415,053,655.18
Non-current liabilities due within one year--
Other current liabilities114,239.45112,817.65
Total current liabilities2,510,583,308.932,875,178,916.09
Non-current liabilities
Long-term borrowings31,600,000.0031,600,000.00
Payables for specific projects800,000.00800,000.00
Deferred income1,824,963.622,054,250.00
Long-term employee benefits payable--
Deferred tax liabilities3,773,319.003,773,319.00
Total non-current liabilities37,998,282.6238,227,569.00
Total liabilities2,548,581,591.552,913,406,485.09

The accompanying notes form an integral part of these financial statements

COMPANY BALANCE SHEET (Continued)

As at 30 June 2018

(Expressed in Renminbi Yuan)

SHAREHOLDERS’ EQUITY30 June 201831 December 2017
Shareholders’ equity
Share capital428,126,983.00428,126,983.00
Capital surplus4,407,488,826.344,407,091,484.13
Surplus reserves214,063,491.50214,063,491.50
Other equity instruments--
Retained earnings3,760,754,235.353,329,412,821.48
Total shareholders’ equity8,810,433,536.198,378,694,780.11
Total liabilities and shareholders’ equity11,359,015,127.7411,292,101,265.20

The accompanying notes form an integral part of these financial statements

COMPANY INCOME STATEMENT

For the six months ended 30 June 2018

(Expressed in Renminbi Yuan)

Note XIVFor the six months ended 30 June 2018For the six months ended 30 June 2017
Operating revenue41,687,621,355.831,658,600,818.96
Less: Operating costs41,614,717,473.911,600,647,589.46
Tax and surcharge2,016,368.935,062,317.16
Selling expenses25,894,795.4522,844,614.29
Administrative expenses33,679,106.7524,917,988.21
Finance costs(19,369,880.08)(37,042,967.55)
Impairment loss623,542.31(32,604.71)
Add: Investment income5534,840,744.46508,360,741.85
Incl: Investment income from associates173,326,290.14155,838,740.45
Gain on disposal of assets-1,087.38
Other income1,299,345.14641,300.00
Operating profits566,200,038.16551,207,011.33
Add: Non-operating income33.08184,531.96
Incl: Gain from disposal of non-current assets--
Less: Non-operating expenses127,688.631,011,760.15
Incl: Loss from disposal of non-current assets--
Total profit566,072,382.61550,379,783.14
Less: Income taxes6,292,873.8421,856,015.57
Net profit559,779,508.77528,523,767.57
Net Profit from continuing operations559,779,508.77528,523,767.57
Total comprehensive income559,779,508.77528,523,767.57

The accompanying notes form an integral part of these financial statements

COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

For the six months ended 30 June 2018

(Expressed in Renminbi Yuan)

2018Share capitalOther equity instrumentsCapital surplusSurplus reserveRetained earningsTotal equity
Closing balance of the preceding year428,126,983.00-4,407,091,484.13214,063,491.503,329,412,821.488,378,694,780.11
Others------
Opening balance of the current year428,126,983.00-4,407,091,484.13214,063,491.503,329,412,821.488,378,694,780.11
Movements in the current year--397,342.21-431,341,413.87431,738,756.08
(1) Total comprehensive income----559,779,508.77559,779,508.77
(2) Capital paid and reduced by owners--397,342.21--397,342.21
1. Capital injection by owners------
2. Significant reorganization------
3. Others--397,342.21--397,342.21
(3) Profit distribution----(128,438,094.90)(128,438,094.90)
1. Distribution to owners----(128,438,094.90)(128,438,094.90)
Closing balance of the current year428,126,983.00-4,407,488,826.34214,063,491.503,760,754,235.358,810,433,536.19

The accompanying notes form an integral part of these financial statements

COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)

For the Year ended 31 December 2017

(Expressed in Renminbi Yuan)

2017Share capitalOther equity instrumentsCapital surplusSurplus reserveRetained earningsTotal equity
Closing balance of the preceding year362,631,943.0065,495,040.004,381,845,619.03181,315,971.502,829,823,727.087,821,112,300.61
Others------
Opening balance of the current year362,631,943.0065,495,040.004,381,845,619.03181,315,971.502,829,823,727.087,821,112,300.61
Movements in the current year65,495,040.00(65,495,040.00)25,245,865.1032,747,520.00499,589,094.40557,582,479.50
(1) Total comprehensive income----673,618,518.79673,618,518.79
(2) Capital paid and reduced by owners65,495,040.00(65,495,040.00)25,245,865.10--25,245,865.10
1. Capital injection by owners5,114,297.00(5,114,297.00)----
2. Significant reorganization------
3. Others60,380,743.00(60,380,743.00)25,245,865.10--25,245,865.10
(3) Profit distribution---32,747,520.00(174,029,424.39)(141,281,904.39)
1. Transferred from surplus reserve---32,747,520.00(32,747,520.00)-
2. Distribution to owners---( -(141,281,904.39)(141,281,904.39)
Closing balance of the current year428,126,983.00-4,407,091,484.13214,063,491.503,329,412,821.488,378,694,780.11

The accompanying notes form an integral part of these financial statements

COMPANY CASH FLOW STATEMENT

For the six months ended 30 June 2018

(Expressed in Renminbi Yuan)

For the six months ended 30 June 2018For the six months ended 30 June 2017
1.CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of good or rendering of services1,787,065,555.601,691,499,935.88
Cash receipts related to other operating activities43,943,301.9216,864,750.56
Sub-total of cash inflows from operating activities1,831,008,857.521,708,364,686.44
Cash paid for goods and services1,655,107,446.181,590,317,986.60
Cash paid to and on behalf of employees44,855,325.8340,727,189.33
Cash paid for all types of taxes18,706,775.5128,888,466.38
Cash payments related to other operating activities36,183,479.2517,091,927.42
Sub-total of cash outflows from operating activities1,754,853,026.771,677,025,569.73
Net cash flows from operating activities76,155,830.7531,339,116.71
2. CASH FLOWS FROM INVESTING ACTIVITIES
Cash received from returns of investments187,137,437.23202,011,829.53
Cash receipts related to other investing activities857,940,000.001,979,269,200.00
Sub-total of cash inflows from investing activities1,045,077,437.232,181,281,029.53
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets6,044,462.783,921,020.07
Cash paid for investment10,000,000.001,019,000,000.00
Net cash paid for purchasing subsidiaries and other business-16,840,000.00
Cash payments related to other investing activities1,051,642,980.001,424,861,720.90
Sub-total of cash outflows from investing activities1,067,687,442.782,464,622,740.97
Net cash flows from investing activities(22,610,005.55)(283,341,711.44)

The accompanying notes form an integral part of these financial statements

COMPANY CASH FLOW STATEMENT (Continued)

For the six months ended 30 June 2018

(Expressed in Renminbi Yuan)

For the six months ended 30 June 2018For the six months ended 30 June 2017
3. CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from borrowings10,000,000.0041,600,000.00
Cash receipts related to other financing activities8,065,884,436.807,272,687,714.06
Sub-total of cash inflows from financing activities8,075,884,436.807,314,287,714.06
Cash repayments for debts10,000,000.0041,600,000.00
Cash payments for distribution of dividends or profit and interest expenses144,898,008.66143,087,008.08
Cash payments related to other financing activities8,230,488,300.787,131,182,482.56
Sub-total cash outflows from financing activities8,385,386,309.447,315,869,490.64
Net cash flows from financing activities(309,501,872.64)(1,581,776.58)
4.EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS314,863.47-
5. NET INCREASE IN CASH AND CASH EQUIVALENTS(255,641,183.97)(253,584,371.31)
Add: Cash and cash equivalents at beginning of the year1,776,696,342.871,342,041,409.86
6. CASH AND CASH EQUIVALENTS AT END OF YEAR1,521,055,158.901,088,457,038.55

The accompanying notes form an integral part of these financial statements

Notes to financial statements

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

I Profile of the Company

(1) Historical development and basic information

As approved by the People’s Government of Shenzhen (SFBF (1993) No.356), China National AccordMedicines Corporation Ltd. (hereinafter referred to as the “the Company”), formerly known as ShenzhenHealth Mineral Water Corp., Ltd., was registered as a joint stock liability limited company on 1 February1993 through stock transformation. In March 1993, with the approval from the Shenzhen Branch of thePeople’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 thisissuance, the Company’s share capital was RMB105 million. Through convert capital surplus into sharecapital, bonus issues and issuance of shares for years, the share capital of the Company increased toRMB428,126,983 as at 30 June 2018.

In November 2000, the Company entered into an Assets Exchange Agreement with ShenzhenInvestment Management Company, the original major shareholder of the Company, to exchange all theassets and liabilities of the Company as of 31 August 2000 for Shenzhen Investment ManagementCompany’s 100% equity interests in 11 pharmaceutical companies and certain properties as well as 51%equity interests in Shenzhen Tefa Modern Computer Co., Ltd. The above assets exchange proposal wasapproved by shareholders in the Second Extraordinary General Meeting on December 29, 2000. Thetransaction was completed on 8 January 2001.

On 18 February 2004, the Company’s original major shareholder, Shenzhen Investment ManagementCompany, entered into a Stock Transfer Agreement with Sinopharm Group Co., Ltd. (hereinafter referredto as “Sinopharm Group”) to transfer its 43.33% shares in the Company to Sinopharm Group. The legalprocedures of the above equity transfer were completed on 9 December 2004. At the same time, asapproved 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), thenature of these shares was changed from state-owned stock to state-owned legal entity stock andSinopharm Group became the largest shareholder of the Company.

On 14 April 2006, the Company’s proposal on reformation of segregated stocks was approved. To gainliquidity for the restricted stocks of the Company, the holders of the restricted stocks of the Companyagreed to pay the following consideration: based on the stock registration as of 27 April 2006, theCompany issued bonus shares on 28 April 2006 at the ratio of 3 shares to every 10 A shares toliquidated A-shareholders which went public on the same day. After this bonus issue, the total number ofshares of the Company remained unchanged with corresponding changes in the composition ofshareholdings.

On March 14 2014, the company issued 74,482,543 ordinary shares (A shares) through the non-publicoffering. Par value per share is RMB1 yuan. The shares shall not be transferred within 36 months sincethe issued day. The total number of shares of the Company was 362,631,943 since the date of issue.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

I Profile of the Company (Continued)

(1) Historical development and basic information (Continued)

As of 31 October 2016, the company issued RMB65,495,040.00 ordinary shares (A shares) through thenon-public offering. Par value per share is RMB1 yuan. Through the non-public offering, the Companyacquired the companies under common control, including Sinopharm Holding Guoda Pharmacy Co.,

Ltd. (“Guoda Pharmacy”), Foshan Nanhai Medicine Group Co., Ltd.(“Foshan Nanhai”),GuangdongSouth Pharmaceutical Foreign Trade Co., Ltd. (“South Pharma & Trade), Guangdong Dong FangUptodate & Special Medicines Co., Ltd. (“ Guangdong Uptodate & Special Medicines”) by issuingshares and raised supporting funds by issuing shares to Ping An Asset Management Co., Ltd.(“Ping AnAsset Management”) to acquire non-controlling interest of South Pharma & Trade. The relevant shares

were successfully issued and listed on 5 January 2017.

As of 30 June 2018, the total share capital was RMB428,126,983.

The Company is registered with Shenzhen Administration for Industry & Commerce. Its Uniform SocialCredit Code is 91440300192186267U. The operation period of the Company is from 2 August 1986 tothe long term. The registered capital of the Company is RMB428,126,983. The legal representative ofthe Company is Lin Zhaoxiong.

The approved scope of business of the Company and its subsidiaries (together “the Group”) includes:

the wholesale of traditional Chinese medicine preparations, bulk pharmaceutical drugs, chemicalpreparations, 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 dietarysupplement; research, development and consultation services of pharmaceutical packaging materialsand pharmaceutical industry products; industrial investment holding; domestic trade; material supplyand marketing industry (other than special licensing); sale of ambulances; trade of second-class andthird- class medical equipment; project investment; property management and lease of self-ownedproperties; pharmacovigilance and medical information consulting; parking operation; logistics andrelated services; package agency business; logistic design; import and export services (excludingprojects that are prohibited by the country; limited projects has to be approved before operating).

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

I Profile of the Company (Continued)

(2) The Group’s parent and ultimate parent company is Sinopharm Group and China National

Pharmaceutical Group Corporation respectively.

(3) These financial statements were authorized for issue by the board of directors of the Company

on 24 Augustl 2018.

II Basis of preparation

The financial statements were prepared in accordance with the Basic Standard and specific standardsof the Accounting Standards for Business Enterprises issued by the Ministry of Finance on 15 February2006 and the specific accounting standards and the relevant regulations issued thereafter (hereafter

collectively referred to as the “Accounting Standards for Business Enterprises” or “CAS”), and the

disclosure requirements in the Preparation Convention of Information Disclosure by Companies

Offering Securities to the Public No.15 – General Rules on Financial Reporting issued by the China

Securities Regulatory Commission.

These financial statements are prepared on a going concern basis.

Except for certain financial instruments, the financial statements have been prepared using historicalcost as the principle of measurement. Where assets are impaired, provisions for asset impairment aremade in accordance with the relevant requirements.

The Group has made accounting policies and accounting estimates according to its own operation andproduction characteristics, which are mainly reflected in the bad debt provision for account receivables

(NoteⅢ(10)), inventory costing methods (NoteⅢ(11)), depreciation methods for fixed assets andamortization method for intangible assets (NoteⅢ(14),Note III(17)), judgement basis for capitalization ofdevelopment costs (NoteⅢ(17)) , impairment of long-term assets (NoteⅢ(20)), revenue recognition(NoteⅢ(24)).

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

III Summary of significant accounting policies and accounting estimates

(1) Statement of compliance with the Accounting Standards for Business Enterprises

The financial statements of the Company for the period ended 30 June 2018 are in compliance with theAccounting Standards for Business Enterprises, and truly and completely present the financial positionof the Group and the Company as of 30 June 2018 and the operating results, cash flows and otherinformation of the Group and the Company for the year then ended.

(2) Accounting year

The Company’s accounting year starts on 1 January and ends on 31 December.

(3) Functional currency

The functional currency is Renminbi (RMB).

(4) Business combinations

(a) Business combinations involving entities under common control

Assets and liabilities (including goodwill arising from ultimate controlling shareholder’s acquisition of the

party being absorbed) that are obtained by the absorbing party in a business combination shall bemeasured 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 theconsideration 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 recognitionamount 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 combinationare 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 recognizedas goodwill; where the cost of combination is lower than the acquirer’s interest in the fair value of theacquirer’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 areincurred. Transaction costs associated with the issue of equity or debt securities for the businesscombination are included in the initially recognized amounts of the equity or debt securities.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(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 theacquiree 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. For the acquirer’s previously held other equity instruments, the fair value of OCI accumulated

before the acquisition date are transferred into retained earnings.

(5) Preparation of consolidated financial statements

The consolidated financial statements comprise the financial statements of the Company and all of itssubsidiaries.

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 businesscombination involving enterprises under common control, it is included in the consolidated financialstatements from the date when it, together with the Company, comes under common control of theultimate controlling party. The portion of the net profits realized before the combination date ispresented separately in the consolidated income statement.

In preparing the consolidated financial statements, where the accounting policies and the accountingperiods of the Company and subsidiaries are inconsistent, the financial statements of the subsidiariesare adjusted in accordance with the accounting policies and the accounting period of the Company. Forsubsidiaries acquired from business combinations involving enterprises not under common control, theindividual financial statements of the subsidiaries are adjusted based on the fair value of the identifiablenet 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 arerecognized as non-controlling interests and presented separately in the consolidated financialstatements within equity, net profits and total comprehensive income respectively. Unrealized gain orloss from selling assets to subsidiaries fully offsets the net income attributable to equity holders of thecompany. Unrealized gain or loss from purchasing assets from subsidiaries offsets the net incomeattributable to equity holders of the company and attributable to the non-controlling interest by thedistribution proportion regarding the Company and the subsidiary. Unrealized gain or loss fromtransaction between subsidiaries offsets the net income attributable to equity holders of the companyand attributable to the non-controlling interest by the distribution proportion regarding the Company andthe 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.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

III Summary of significant accounting policies and accounting estimates (Continued)

(6) Acquisition of non-controlling interests in controlled subsidiaries

The Company acquires equity from the minority shareholders after taking control of the subsidiary, in

the consolidated financial statements, the subsidiary’s assets, liabilities should be measured from the

combination or acquisition date. The difference between the carrying amount of acquisition of non-controlling interest and the net assets proportion calculated by the original share percentage since theacquisition date should be recognized in capital surplus. If the capital surplus is insufficient to dilute, theretained earnings shall be adjusted.

(7) Cash and cash equivalents

Cash and cash equivalent comprise cash on hand, deposits that can be readily drawn on demand, andshort-term and highly liquid investments that are readily convertible to known amounts of cash and aresubject to an insignificant risk of changes in value.

(8) Foreign currency translation

Foreign currency transact translated into RMB using the exchange rates prevailing at the dates of thetransactions.

At the balance sheet date, monetary items denominated in foreign currencies are translated into RMBusing the spot exchange rates on the balance sheet date. Exchange differences arising from thesetranslations are recognized in profit or loss for the current period, except for those attributable to foreigncurrency borrowings that have been taken out specifically for the acquisition or construction ofqualifying assets, which are capitalized as part of the cost of those assets. Non-monetary itemsdenominated in foreign currencies that are measured at historical costs are translated at the balancesheet date using the spot exchange rates at the date of the transactions. The effect of exchange ratechanges 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, including: financialassets measured at amortised cost, financial assets measured at fair value through othercomprehensive income, and financial assets measured at fair value through profit or loss. At initialrecognition, the Group measures a financial assets at its fair value plus, in the case of a financial assetnot at a fair value through profit or loss, transaction costs that are directly attributable to the acquisitionof the financial asset.

Transaction expenses of financial assets measured at fair value through profit or loss are expensed in

profit or loss, and those of others are included in receivables’ original book value.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(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

Subsequent measurement of financial assets depends on the Group’s business model for managing the

asset and the cash flow characterisitics of the asset.

Financial assets measured at amortised cost

Assets that are held for collection of contractual cash flows where those cash flows represent solelypayments of principal and interest are measured at amortised cost. A gain or loss on a debt investmentthat is measured at amortised cost and is not part of a hedging relationship is recognized in profit orloss when the asset is derecognized or impaired. Interest income from thses financial asset is includedin finance income using the effective interest rate method.

Financial assets measured at fair value through other comprehensive income

Where the Group’s management has elected to present fair value gains and losses on equity

investments in other comprehensive income, there is no subsequence reclassification of fair value gainsand losses to profit or loss. Dividends from such investments continue to be recognized in investment

income when the Group’s right to receive payments is established.

Financial assets measured subsequently at fair value through profit or loss

For this kind of fincial asset, it measured subsequently at fair value, and the movement of fair value isrecorded in profit or loss

(iii) Impairment of financial assets

The Group assesses the expected credit losses associated with its financial assets measured atamortised cost on a forward looking basis. The impairment methodology applied depends on whetherthere has been a significant increase in credit risk .

For trade receivables, the Group applies the simplified approach, which requires expected lifetimelosses to be recognized from initial recognition of the receivables.

(iv) Derecognition of financial assets

A financial asset is derecognized when any of the following criteria is met: (i) the contractual rights toreceive the cash flows from the financial asset expire; (ii) the financial asset has been transferred andthe Group transfers substantially all the risks and rewards of ownership of the financial asset to thetransferee; or (iii) the financial asset has been transferred and the Group has not retained control of thefinancial asset, although the Group neither transfers nor retains substantially all the risks and rewards ofownership of the financial asset.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(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)

(iv) Derecognition of financial assets (Continued)

On derecognition of a financial asset, the difference between the carrying amount and the sum of theconsideration received and the cumulative changes in fair value that had been recognized directly inequity is recognized in profit or loss.

(b) Financial liabilities

Financial liabilities are classified into the following categories at initial recognition, including financialliabilities measured at fair value through profit or loss, and other financial liabilities. Transactionexpenses of financial liabilities measured at fair value through profit or loss are expensed in profit or

loss, and those of others are included in receivables’ original book value.

Subsequent measurement of financial liabilities depends on their catagories:

Other financial liabilitiesFor other fincial liabilities, it measured subsequently at amortized value.

(c) Offset of financial instruments

A financial asset and a financial liability shall be offset and the net amount presented in the balancesheet when both of the following conditions are satisfied: 1) the enterprise has a legal right to set off therecognized amounts and the legal right is currently enforceable; 2) the enterprise intends either to settleon 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 rewardsof the asset to the referee. A financial asset is not derecognized when the Group retains substantially allthe 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, inwhich case, the Group also recognizes an associated liability.

Continuing involvement that takes the form of a guarantee over the transferred financial asset ismeasured at the lower of the original carrying amount of the asset and the guarantee amount. Theguarantee amount is the maximum amount of consideration that the Group could be required to repay.III Summary of significant accounting policies and accounting estimates (Continued)

(10) Receivables

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

Receivables comprise notes receivable, accounts receivable and other receivables. Accountsreceivable arising from the sale of goods or rendering of services are initially recognized at fair value ofthe 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 forimpairment on the individual basis. If there exists objective evidence that the Group will not beable to collect the amount under the original terms, a provision for impairment of that receivableis made.

The criterion for determining individually significant amounts is that any individual amount ismore than RMB5 million.

The method of providing for bad debts for those individually significant amounts is as follows:

the amount of the present value of the future cash flows expected to be derived from thereceivable 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 havebeen individually assessed for impairment and have not been found impaired are classified intocertain groupings based on their credit risk characteristics. The provision for bad debts isdetermined based on the historical loss experience for the groupings of receivables with similarcredit 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 thefollowing percentage:

Provision ratios used for accounts receivableProvision ratios used for other receivables
Within 1 year0-5%0-5%
1 to 2 years5-10%5-10%
2 to 3 years10-30%10-30%
3 to 4 years20-50%20-50%
4 to 5 years20-80%20-80%
More than 5 years20-100%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 existsobjective evidence that the Group will not be able to collect the amount under the original termsof the receivable.

The provision for bad debts is determined based on the amount of the present value of thefuture cash flows expected to be derived from the receivable below its carrying amount.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(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 amountsand the related taxes is recognized in profit or loss for the current period.

(11) Inventories

(a) Classification

Inventories include raw materials, work in progress, finished goods, delegate processingsupplies and turnover materials, and are measured at the lower of cost and net realizablevalue.

(b) Costing of inventories

Cost is determined on the weighted average method. The cost of finished goods and work inprogress comprises raw materials, direct labor and an allocation of systematically allocatedoverhead expenditures incurred based on the normal operating capacity.

(c) Basis for determining net realizable values of inventories and method for making provisions for

decline in the value of inventories

Provisions for declines in the value of inventories are determined at the excess amount of thecarrying value of the inventories over their net realizable value. Net realizable value isdetermined based on the estimated selling price in the ordinary course of business, less theestimated costs to completion and estimated costs necessary to make the sale and relatedtaxes.

(d) The Group adopts the perpetual inventory system.

(e) Amortization methods of low value consumables and packaging materials

Turnover materials include low value consumables and packaging materials, which areexpensed when issued.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(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 subsidiariesand the Group’s long-term equity investments in its associates.

Subsidiaries are the investees over which the Company is able to exercise control. Associates are theinvestees 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 equityinvestments 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 abusiness combination involving enterprises not under common control, the investment cost shall be thecombination 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 initialinvestment costs, and cash dividends or profit distribution declared by the investees are recognized asinvestment 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 theinvestee’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.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(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 theinvestment income according to its share of net profit or loss of the investee. The Group discontinuesrecognizing 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 additionallosses and the criteria with respect to recognition of provisions under the accounting standards oncontingencies are satisfied, the Group continues recognizing the investment losses and the provisions.

For changes in shareholders’ equity of the investee other than those arising from its net profit or loss,

other comprehensive income, and profit distribution, the Group adjusts the book value of the investmentand records capital surplus accordingly. The carrying amount of the investment is reduced by the

Group’s share of the profit distribution or cash dividends declared by an investee.

The unrealized profits or losses arising from the intra-group transactions amongst the Group and its

investees are eliminated in proportion to the Group’s equity interest in the investees, and then based on

which the investment gains or losses are recognized. For the loss on the intra-group transactionamongst the Group and its investees attributable to asset impairment, any unrealized loss is noteliminated.

(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 obtainbenefits from its operating activities. In determining whether the Company is able to exercise controlover the investee, the effect of potential voting rights over the investee is considered, such asconvertible debts and warrants currently exercisable.

Significant influence is the power to participate in the financial and operating policy decisions of theinvestee, 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 therecoverable 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 areheld for the purpose of leasing, and buildings that are being constructed or developed for the purpose ofleasing in future, are measured initially at cost. Subsequent expenditures incurred in relation to anInvestment properties are included in the cost of the Investment properties when it is probable that theassociated 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.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(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 andland use rights are depreciated or amortized to their estimated net residual values over their estimateduseful lives. The estimated useful lives, the estimated net residual values that are expressed as apercentage of cost and the annual depreciation (amortization) rates of investment properties are asfollows:

Estimated useful life Estimated residual value Annual depreciation (amortization)rates

Buildings 12-35 years 0-5% 2.71-7.92%Land use rights 30-50 years - 2.00-3.33%

When an Investment properties is transferred to owner-occupied properties, it is reclassified as a fixedasset or intangible asset at the date of the transfer. When an owner-occupied property is transferred outfor earning rentals or for capital appreciation, the fixed asset or intangible asset is reclassified as aninvestment property at its carrying amount at the date of the transfer.

The Investment properties’ estimated useful life, net residual value and depreciation (amortization)

method applied are reviewed and adjusted as appropriate at each end of year.

An Investment properties is derecognized on disposal or when the Investment properties is permanentlywithdrawn from use and no future economic benefits are expected from its disposal. The net amount ofproceeds from sale, transfer, retirement or damage of an Investment properties after its carryingamount and related taxes and expenses is recognized in profit or loss for the current period.

The carrying amount of an Investment properties is reduced to the recoverable amount if therecoverable amount is below the carrying amount (Note III (20)).

(14) Fixed assets

(a) Recognition and initial measurement of fixed assets

Fixed assets comprise buildings, machinery and equipment, motor vehicles, other equipment andleasehold improvements.

Fixed assets are recognized when it is probable that the related economic benefits will flow to theGroup and the costs can be reliably measured. Fixed assets purchased or constructed by the Groupare initially measured at cost at the acquisition date. The fixed assets contributed by the Stateshareholders at the reorganization of the Company into a corporation entity are recognized based onthe revaluated amounts approved by the State-owned Assets Administration Department.

Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it isprobable that the associated economic benefits will flow to the Group and the related cost can bereliably measured. The carrying amount of the replaced part is derecognized. All the other subsequentexpenditures are recognized in profit or loss in the period in which they are incurred.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

III Summary of significant accounting policies and accounting estimates (Continued)

(14) Fixed assets (Continued)

(b) Depreciation methods of fixed assets

Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to theirestimated residual values over their estimated useful lives. For the fixed assets that have been providedfor impairment loss, the related depreciation charge is prospectively determined based upon theadjusted carrying amounts over their remaining useful lives.

The estimated useful lives, the estimated residual values expressed as a percentage of cost and theannual depreciation rates are as follows:

Estimated useful lives Estimated residual value Annual depreciationrates

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% andabove

The estimated useful life, the estimated net residual value of a fixed asset and the depreciation methodapplied to the asset are reviewed, and adjusted as appropriate at least at each end of year.

(c) The carrying amount of fixed assets is reduced to the recoverable amount when therecoverable amount is less than the carrying amount (Note III (20)).

(d) Recognition basis and measurement method for financing leased fixed assets.

Finance leases are leases with the whole risks and rewards related to the asset substantiallytransferred. Fixed assets leased under finance lease are recognized with at smaller value of the fairvalue and minimum lease payments. The difference between the book value and the minimum leasepayments should be recognized as unrecognized financing charges (Note III (27) (b)).

Fixed assets leased under finance lease are depreciated using the same policy as that those fixedassets owned by the company. For those leased assets that the ownership of the assets can beascertained 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 andestimated useful lives.

(e) Disposal of fixed assets

A fixed asset is derecognized on disposal or when no future economic benefits are expected from itsuse or disposal. The amount of proceeds from disposal on sale, transfer, retirement or damage of afixed asset net of its carrying amount and related taxes and expenses is recognized in profit or loss forthe current period.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(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 bringthe fixed assets ready for their intended use. Construction in progress is transferred to fixed assetswhen 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 therecoverable amount is less than the carrying amount (Note III (20)).

(16) Borrowing costs

The borrowing costs that are directly attributable to the acquisition and construction of a fixed asset thatneeds a substantially long period of time for its intended use commence to be capitalized and recordedas part of the cost of the asset when expenditures for the asset and borrowing costs have beenincurred, and the activities relating to the acquisition and construction that are necessary to prepare theasset for its intended use have commenced. The capitalization of borrowing costs ceases when theasset under acquisition or construction becomes ready for its intended use and the borrowing costsincurred thereafter are recognized in profit or loss for the current period. Capitalization of borrowingcosts is suspended during periods in which the acquisition or construction of a fixed asset is interruptedabnormally and the interruption lasts for more than 3 months, until the acquisition or construction isresumed.

For the specific borrowings obtained for the acquisition or construction of a fixed asset qualifying forcapitalization, the amount of borrowing costs eligible for capitalization is determined by deducting anyinterest income earned from depositing the unused specific borrowings in the banks or any investmentincome arising on the temporary investment of those borrowings during the capitalization period.

For the general borrowings obtained for the acquisition or construction of a fixed asset qualifying forcapitalization, the amount of borrowing costs eligible for capitalization is determined by applying theweighted average effective interest rate of general borrowings, to the weighted average of the excessamount of cumulative expenditures on the asset over the amount of specific borrowings. The effectiveinterest rate is the rate at which the estimated future cash flows during the period of expected durationof the borrowings or an applicable shorter period are discounted to the initial amount of the borrowings.

(17) Intangible assets

Intangible assets include land use rights, computer software, technology patents, trademarks anddistribution network, which are initially recognized at cost. Intangible assets contributed by state-ownedshareholders during the Company reorganization were recorded based on the valuation amountapproved by the State-owned Assets Supervision and Management Department.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

III Summary of significant accounting policies and accounting estimates (Continued)

(17) Intangible assets (Continued)

CategoriesUseful lives
Land use rightsBetween the approved useful period and the Company’s operating period
Software3-5 years
Trademarks5-10 years
Technology patents5 years
Distribution network20 years
Franchising rights10 years
Favorable leases17-20 years

A land use right granted by government with an infinite useful life would not be amortized. Other landuse rights are amortized on the straight-line basis over their approved useful period. If the acquisitioncosts of land use rights and the buildings located thereon cannot be reliably allocated between the landuse 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 isperformed at each end of year, with adjustments made as appropriate. For an intangible asset without adefinite useful life, review of its useful life is performed at each end of year.

The expenditure on an internal research and development project is classified into expenditure on theresearch phase and expenditure on the development phase based on its nature and whether there ismaterial uncertainty that the research and development activities can form an intangible asset at end ofthe project.

Expenditure for investigation, evaluation and selection of production process and new drugs researchesis 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, iscapitalized 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.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

III Summary of significant accounting policies and accounting estimates (Continued)

(17) Intangible assets (Continued)

Other development costs that do not meet the conditions above are recognized in profit or loss in theperiod in which they are incurred. Development costs previously recognized as expenses are notrecognized as an asset in a subsequent period. Capitalized expenditure on the development phase ispresented as development costs in the balance sheet and transferred to intangible assets at the datethat the asset is ready for its intended use.

The carrying amount of intangible assets is reduced to the recoverable amount when the recoverableamount 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 operatingleases, and other expenditures that have been made but should be recognized as expenses over morethan one year in the current and subsequent periods. Long-term prepaid expenses are amortized on thestraight-line basis over the expected beneficial period and are presented at actual expenditure net ofaccumulated amortization.

(19) Governmental medical reserve funds and specially approved reserving materials

Appointed by the PRC Government, CNPGC is responsible for purchasing, allocating and providing thegovernmental medical reserves, which include the medical products, traditional Chinese medicine andmedical 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 medicalreserves, which include the medical products needed for serious disasters, epidemics and otheremergencies as well as endemic diseases in Guangxi Province. In accordance with the regulation ofCNPGC, as being the enterprise who bears the obligation for specially approved medical reservingmaterials, the medical reserve funds received from the PRC Government or local government arerecognized as other non-current liabilities. The Group reserves the specially approved medicalreserving materials according to the reserve program (by category and by quantity), applies dynamicmanagement and recognizes as other non-current assets.

(20) Impairment of long-term assets

Fixed assets, construction in progress, intangible assets with finite useful lives, long-term prepaidexpenses and investment properties measured using the cost model and long-term equity investmentsin subsidiaries and associates are tested for impairment if there is any indication that an asset may beimpaired at the balance sheet date. If the result of the impairment test indicates that the recoverableamount 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 isdetermined and recognized on the individual asset basis. If it is not possible to estimate the recoverableamount of an individual asset, the recoverable amount of a group of assets to which the asset belongsis determined. A group of assets is the smallest group of assets that is able to generate independentcash inflows.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

III Summary of significant accounting policies and accounting estimates (Continued)

(20) Impairment of long-term assets (Continued)

Goodwill that is separately presented in the financial statements,intangible assets with infinite useful

lives and capitalized development costs are tested at least annually for impairment, irrespective ofwhether there is any indication that it may be impaired. In conducting the test, the carrying value ofgoodwill is allocated to the related asset groups or groups of asset groups which are expected to benefitfrom the synergies of the business combination. If the result of the test indicates that the recoverableamount of an asset group or group of asset groups, including the goodwill allocated, is lower than itscarrying amount, the corresponding impairment loss is recognized. The impairment loss is firstdeducted from the carryingamount of goodwill that is allocated to the asset group or group of asset groups, and then deductedfrom the carrying amount of other assets within the asset groups or groups of asset groups in proportionto the carrying amount of other assets.

Once the above Impairment loss is recognized, it will not be reversed for the value recovered in thesubsequent periods.

(21) Employee benefits

Employee benefits mainly include short-term employee benefits, post-employment benefits, terminationbenefits and other long-term employee benefits incurred in exchange for service rendered byemployees 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, staffwelfare, medical insurance, work injury insurance, maternity insurance, housing funds, and labor unionfunds and employee education funds. The employee benefits are recognized in the accounting period inwhich the service has been rendered by the employees, and as costs of assets or expenses towhichever 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 definedbenefit plans. Defined contribution plans are post-employment benefit plans under which the Companypays fixed contributions into a separate fund and will have no obligation to pay further contributions; anddefined benefit plans are post-employment benefit plans other than defined contribution plans. Duringthe 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 monthlyaccording to stipulated bases and proportions to local labor and social security contribution. Whenemployees retire, local labor and social security institutions have a duty to pay the basic pensioninsurance to them. The amounts payable are recognized as liabilities based on the above provisions inthe accounting period in which the service has been rendered by the employees, and as costs of assetsor expenses to whichever the employee service is attributable.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

III Summary of significant accounting policies and accounting estimates (Continued)

(21) Employee benefits (Continued)

(c) Termination benefits

The Group recognizes the debt and the gain or loss, when offering compensation for terminating thelabor contract before the due date, or encouraging the staff to resign voluntarily, at the earlier of whenthe Group cannot unilaterally withdraw the labor relation plan and when the Group recognizes the costrelating to recombinant involving the payment of termination benefits.

(d) Retirement benefits

The Group provides retirement benefits to employees who accept the internal retirement arrangements.Retirement benefits refer to the salary and social security contribution provided to those staff whovoluntarily 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 thestaff reaches the retirement age. The liability including salary and security contribution funds isrecognized when conditions for recognition are meet, regarding to the period from the staff leaves theposition to the normal retirement date. Difference arising from the changes in actuarial assumptions forretirement benefits and adjustments in welfare standard, will be accounted for in the current profits andlosses.

Retirement benefits that are expected to be paid within one year from the balance sheet date aredisclosed as current liabilities.

(22) Provisions

An obligation related to a contingency shall be recognized by the Group as a provision when all of thefollowing conditions are satisfied, except contingent considerations and contingent liabilities assumed ina 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 theobligation; 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 therelated 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 thebalance sheet date. Where there is clear evidence that the carrying amount of a provision does notreflect 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 valuein initial recognition. After initial recognition, subsequent measurement is conducted using the higher oftheamount recognized by provisions and the amount of initial recognition deducting the accumulatedamortization amount determined by the principles of revenue recognition.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(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 shareholder

at the annual shareholders’ meeting.

(24) Revenue recognition

Revenue is recognized when control of the goods or services has been transferred to customers.

Revenue from the sale of products directly to customers, is recognized when control the goodstransferred, being when the products are accepted by customers. The customers have full dicretion

over the products, and there is no un-fufilled obligation that could affect the cutomers’ acceptance of the

products.

The Group provides freight, storage and other services to external parties. The freights are recognizedon a percentage-of-completion basis, and determined on the time propotion method. Other revenue isdetermined in accordance with the amount provided in the service period stipulated in the contract.

The Group shall recognise a refund liability if the Group receives consideration from a customer andexpects to refund some or all of that consideration to the customer. A refund liability is measured at theamount of consideration received (or receivable) for which the entity does not expect to be entitled (ieamounts not included in the transaction price). The refund liability (and corresponding change in thetransaction price and, therefore, the contract liability) shall be updated at the end of each reportingperiod for changes in circumstances.

The Group, offers a customer loyalty programme where points earned through the purchase of goodscan 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 theinitial sale is allocated between the award credits and the other components of the sale. Fair value ofaward points is measured on the basis of the value of the awards (that is, goods or services) for whichthey could be redeemed, the fair value of the award credits should take account of expected forfeituresas well as the discounts or incentives that would otherwise be offered to customers who have notearned award credits from an initial sale.

Determing whether revenue of the Group should be reported gross or net is based on a continuingassessment of various factors. Since the Group has sole discretion in determing the pricing, takes fullresponsibility of a good or service provided to the customers, and also is responsible for the risk

associated with the goods before change of control over the goods, and the customers’ complaints and

requests, the Group considers it controls the specified goods or services before their delivery to itscustomers and is a principal in the transactions. Accordingly, the Group recognizes revenue in thegross basis. Otherwise, the Group records the net amount earned as commissions from products soldor services provided.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

III Summary of significant accounting policies and accounting estimates (Continued)

(24) Revenue recognition (Continued)

When another party is involved in providing goods or services to a customer, the Group determineswhether the nature of its promise is a performance obligation to provide the specified goods or servicesitself as a principal or to arrange for those goods or services to be provided by the other party as anagent. The Group determines whether it is a principal or an agent for each specified good or servicepromised to the customer. A specified good or service is a distinct good or service (or a distinct bundleof goods or services) to be provided to the customer. If a contract with a customer includes more thanone specified good or service, an entity could be a principal for some specified goods or services andan agent for others.

Interest income is recognized and measured based on the loan period and the actual interest rate.

Rental income is recognized and measured based to the straight-line method during the rental period.

(25) Government grants

Government grants are transfers of monetary or non-monetary assets from the government to theGroup at nil consideration, including refund of taxes and financial subsidies, etc.

A government grant is recognized when the conditions attached to it can be complied with and thegovernment 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 oftransfer ofnon-monetary assets, it is measured at fair value; if the fair value is not reliably determinable, the grantis measured at nominal amount.

A government grant related to an asset is a grant received aimed to create a long-term asset bycontracting or other methods. A government grant related to income is any grant other than governmentgrants related to assets.

A government grant related to an asset is recognized as deferred income, and evenly amortized toprofit or loss over the useful life of the related asset. Government grants measured at nominal amountsare recognized immediately in profit or loss for the current period.

For government grants related to income, where the grant is a compensation for related expenses orlosses to be incurred by the Group in the subsequent periods, the grant is recognized as deferredincome, and included in profit or loss over the periods in which the related costs are recognized; wherethe grant is a compensation for related expenses or losses already incurred by the Group, the grant isrecognized immediately in profit or loss for the current period.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

III Summary of significant accounting policies and accounting estimates (Continued)

(26) 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 abusiness combination or relates to a transaction or event which is recognized directly in shareholders’

equity.The Group measures a current tax asset or liability arising from the current and prior period based onthe amount of income tax expected to be paid by the Group or returned by tax authority calculatedaccording to related tax laws.

Deferred tax assets and deferred tax liabilities are calculated and recognized based on the differencesarising between the tax bases of assets and liabilities and their carrying amounts (temporarydifferences). Deferred tax asset is recognized for the deductible losses that can be carried forward tosubsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred taxliability is recognized for a temporary difference arising from the initial recognition of goodwill. Nodeferred tax asset or deferred tax liability is recognized for the temporary differences resulting from theinitial recognition of assets or liabilities due to a transaction other than a business combination, whichaffects neither accounting profit nor taxable profit (or deductible loss). At the balance sheet date,deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to applyto the period when the asset is realized or the liability is settled.

Deferred tax assets are only recognized for deductible temporary differences, deductible losses and taxcredits to the extent that it is probable that taxable profit will be available in the future against which thedeductible 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 subsidiariesand associates, except where the Group is able to control the timing of the reversal of the temporarydifference, 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, andassociates will be reversed in the foreseeable future and that the taxable profit will be available in thefuture against which the temporary differences can be utilized, the corresponding deferred tax assetsare recognized.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

III Summary of significant accounting policies and accounting estimates (Continued)

(27) Leases

Finance leases are leases with the whole risks and rewards related to the asset substantiallytransferred. 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 thelease, and are either capitalized as part of the cost of related assets or charged as an expense for thecurrent period.

Lease income under an operating lease is recognized on a straight-line basis over the period of thelease.

(b) Finance leases

Fixed assets leased under finance leases are recognized at the smaller value of the fair value andpresent value of the minimum lease payments. The difference between the book value and theminimum lease payments should be recognized as unrecognized financing charges, and amortizedwithin the leasing period. The minimum lease payments net off the unrecognized financing chargesshould be classified as long-term payables.

(28) Discontinued operations

A discontinued operation is a component of an enterprise that either has been disposed of or isclassified as held for sale, and is separately identifiable operationally and for financial reporting purpose,and satisfies one of the following conditions:

(1) Represents a separate major line of business or geographical area of operations;(2) Is part of a single coordinated plan to dispose of a separate major line of business or

geographical area of operation;(3) Is a subsidiary acquired exclusively with a view to resale.

(29) Segment information

The Group identifies operating segments based on the internal organization structure, managementrequirements and internal reporting system, and discloses segment information of reportable segmentswhich 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) thecomponent 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 financialposition, operating results and cash flows is available to the Group. If two or more operating segmentshave similar economic characteristics and satisfy certain conditions, they are aggregated into one singleoperating segment.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

III Summary of significant accounting policies and accounting estimates (Continued)

(30) Critical accounting estimates

The Group continually evaluates the critical accounting estimates and key judgments applied based onhistorical experience and other factors, including expectations of future events that are believed to bereasonable.

(a) Critical accounting estimates and key assumptions

The critical accounting estimates and key assumptions that have a significant risk of causing a materialadjustment to the carrying amounts of assets and liabilities within the next accounting year are outlinedbelow:

(i) Accounting estimates on impairment of goodwill

The Group tests annually whether goodwill has suffered any impairment. The recoverable amount ofasset groups and groups of asset groups is the present value of the future cash flows expected to bederived from them. These calculations require the use of estimates (Note V (16)).

If management revises the gross margin that is used in the calculation of the future cash flows of assetgroups 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.

If management revises the pre-tax discount rate applied to the discounted cash flows, and the revisedpre-tax discount rate is higher than the one currently applied, the Group would need to recognize furtherimpairment against goodwill and fixed assets.

If the actual gross margin/pre-tax discount rate is higher/lower than management’s estimates, the

impairment loss of goodwill previously provided for is not allowed to be reversed by the Group.

(ii) Accounting estimates on impairment of accounts receivable

In accordance with the Group’s accounting policy (Note III (10)), the Group’s management tests

annually whether receivables have suffered any impairment. Impairment of receivables has been

assessed by taking into account the customers’ credit history and financial position together with thecurrent market conditions. Even if the Group’s management has made bad debt provision for theexpected loss at its best estimate, there is a possibility that changes in customers’ financial position or

market conditions will alter the result.

(iii) Accounting estimates on impairment of inventories

In accordance with the Group’s accounting policy (Note III (11) (c)), the Group’s management estimates

the net realizable value of the inventory. Net realizable value is determined based on the estimatedselling 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 marketconditions will alter the result.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(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)

(iv) Sales return

A refund liability is measured at the amount of consideration received (or receivable) for which the entitydoes not expect to be entitled (ie amounts not included in the transaction price). The refund liability (andcorresponding change in the transaction price and, therefore, the contract liability) shall be updated at theend of each reporting period for changes in circumstances.

(v) Customer loyalty programme

The fair value of the consideration received or receivable in respect of the initial sale is allocatedbetween the award credits and the other components of the sale. Fair value of award points ismeasured on the basis of the value of the awards (that is, goods or services) for which they could beredeemed, the fair value of the award credits should take account of expected forfeitures as well as thediscounts or incentives that would otherwise be offered to customers who have not earned awardcredits from an initial sale.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

III Summary of significant accounting policies and accounting estimates (Continued)

(30) Critical accounting estimates (Continued)

(b) Changes in accounting policies

Accounting policies of revenue were altered in accordance with the requirement of Notice on Issuing

and Revising Accounting Standard No. 14 – Revenue by Ministry of Finance. And those of financial

instruments were also altered in accordance with the requirement of Notice on Issuing and Revising

Accounting Standard No. 22 – Recognization and Measurement of Financial Instruments, No. 23 –Transfer of Financial Instruments, No. 24 – Hedging Instruments, and No.37 – Disclosures of Financial

Instruments. The Group adopted these standards since January 1, 2018. The alteration of these

accounting policies had no effect on the net profit of the Group as well as the stockholders’ equity of the

Group.

The content and reasons of changes in accounting policiesProceduresRemarks
In 5th July 2017, Notice on Issuing and Revising Accounting Standard No. 14 – Revenue was announced by Ministry of Finance. The enterprises listed in Mainland and abroad simultaneously should adopt the standard since 1st January 2018, while others should adopt it since 1st January 2020.Agreed in the meeting of board of directors held in 22nd August 2018.The Group adopted this new standard since 1st January 2018. The adoption of this standard did not lead to the significant changes in revenue recognition. It had no effect on the net profit, total assets and total liabilities of the Group. 。

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

III Summary of significant accounting policies and accounting estimates (Continued)

(30) Critical accounting estimates (Continued)

(b) Changes in accounting policies (Continued)

The content and reasons of changes in accounting policiesProceduresRemarks
Notice on Issuing and Revising Accounting Standard No. 22 – Recognization and Measurement of Financial Instruments, No. 23 – Transfer of Financial Instruments, No. 24 – Hedging Instruments, and No.37 – Disclosures of Financial Instruments were announced by Ministry of Finance in 2017. The enterprises listed in Mainland and abroad simultaneously should adopt the standard since 1st January 2018, while others should adopt it since 1st January 2019.Agreed in the meeting of board of directors held in 22nd August 2018.(1) The percentages of voting interests held by the Group in Shanghai Guoda Shuguang Pharmacy Co., Ltd, Shanghai Guoren Pharmacy Co., Ltd., Sinopharm Holding Hubei Guoda Pharmacy Co., Ltd., Hunan Zhongbai pharmaceutical investment Co., Ltd. and Sinopharm Health Online Co., Ltd. are 25%, 10%, 10%, 6.31% and 8.06%, respectively. However, the Group neither appoint the directors and key management for those 5 companies, nor involve in or affect the financial or operating decision-making process or ordinary course of business of those companies. Therefore, the Group had no significant influence over the above companies and recognized its investments in those companies as available-for-sale equity instruments. The Group recorded these assets as available-for-sale financial assets. After adopting new standard, these assets were recorded in financial assets measured at fair value through other comprehensive income. The alteration had no effect on the retained earnings, other comprehensive income and other data in comparative period. (2) According to the new standard, the Group should assess the expected credit losses associated with its financial assets measured at amortized cost on a forward looking basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk. The management considered that although the Group adopted new standard, it could still assess the provision of bad debt on the grouping basis. And it had no significant effect on the financial statements of the Group.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

IVTaxation
1.Main categories and rates of taxes:
CategoriesTax baseTax rate
Corporate income tax (“CIT”)Taxable income15%,20% or 25%
Value added tax (“VAT”)Taxable value added amount (Tax payable is calculated using the taxable sales amount multiplied by the effective tax rate less deductible VAT input of the current period)0%,3%,5%,6%,10%,11%,16% or 17%
Business taxRevenue from rental income, interest income and etc. (from 1 January 2016 to 30 April 2016)5%
City maintenance and construction taxAmount of VAT5% or 7%
Educational surchargeAmount of VAT3%
Local educational surchargeAmount of VAT2%

2. Tax preferences

(a) In 2014, the Group’s subsidiary Sinopharm Holding Guangxi Logistics Co., Ltd. (“Sinopharm

Guangxi Logistics”) was approved by the Guangxi Local Tax Bureau to enjoy a tax discount

applicable to corporations in the region of Western Development to pay income tax at a tax rate of

15%. In 2016,due to the real estate relocation income, the operating revenue’s proportion is

below 70%, which does not meet the requirements of the preferential tax rate, so SinopharmGuangxi Logistics was subject to a corporate income tax rate of 25% during the year.

From May to December of 2015, eight subsidiaries in Guangxi Province of the Group, including

Sinopharm Guangxi, Sinopharm Holding Liuzhou Co., Ltd. (“Sinopharm Liuzhou”) , SinopharmHolding Beihai Co., Ltd (“Sinopharm Beihai”), Sinopharm Holding Guilin Co., Ltd. (“SinopharmGuilin”), Sinopharm Holding Guigang Co., Ltd. (“Sinopharm Guigang”), Sinopharm Holding YulinCo., Ltd. (“Sinopharm Yulin”), Sinopharm Holding Baise Co., Ltd (“Sinopharm Baise”)andSinopharm 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 of15%. The applicable period for Sinopharm Guangxi, Sinopharm Liuzhou and Sinopharm Beihai is1 January 2014 to 31 December 2020, and that for the other 5 subsidiaries is 1 January 2015 to 31December 2020.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

IV Taxation (Continued)

2. Tax preferences (Continued)

(b) The Urumqi Head Office, Changji Branch and Karamay Branch of Sinopharm Holding Xinjiang New

& Special Medicines Chain Store Co., Ltd. (“Xinjiang New & Special Medicines”), a subsidiary of

the Group, shall pay tax at a rate of 15% by jurisdictions

According to the Circular of the Ministry ofFinance, the State Administration of Taxation, the General Administration of Customs on IssuesConcerning 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 reducedCIT rate of 15% from 1 January 2011 to 31 December 2020. According to the reply to RegistrationForm for Items Enjoying Preferential Treatments in Corporate Income Tax by local tax authorities,in 2016 and 2017, the Urumqi Head Office, Changji Branch and Karamay Branch of Xinjiang New& Special Medicines were subject to a reduced CIT rate of 15%.

According to Ning cai (shui) fa [2012] No.957, Ningxia Guoda Pharmacy Chain Store Co., Ltd., asubsidiary of the Group, was qualified for the enterprise from encouraged industries of WesternDevelopment. Therefore, in 2016 and 2017, the company was exempt from the local retainedportion of the corporate income tax (40%), and therefore subject to a CIT rate of 15%.

According to Cai shui [2011] No.58 and Notices on Tax Reduction and Exemption (Hu shi hui guoshui 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 developmentof 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 TaxationBureau of the Autonomous Region on Printing and Distributing the Administration andImplementation 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 Decisionon Approval and Confirmation of Preferential Tax from local taxation bureau of Liuzhou city on 21May 2015, which approved that the company was subject to a CIT rate of 15% in 2016 and 2017.

(c) The Corporate Income Tax Law of the People's Republic of China stipulates in Article 28 that,

small low-profit enterprises are subject to corporate income tax at a rate of 20%. TheImplementation Rules for the Corporate Income Tax Law of the People's Republic of Chinastipulate in Article 92 that, small low-profit enterprises refer to enterprises operating in industriesnot restricted or prohibited by the State and satisfying following conditions: 1. For industrialenterprises, the annual taxable income does not exceed RMB300,000; the number of employeesdoes not exceed 100 and the total assets does not exceed RMB30 million; 2. for other industries,the annual taxable income does not exceed RMB300,000; the number of employees does notexceed 80 and the total assets does not exceed RMB10 million.

In addition, according to the Circular on Issues Concerning the Preferential Policies for CorporateIncome Tax for Small Low-profit Enterprises (Cai shui [2015] No. 34), Announcement of the StateAdministration of Taxation on Issues concerning the Implementation of the Further Expansion ofthe Scope of Small Low-profit Enterprises (Cai shui [2015] No.99), small low-profit enterprises withannual taxable income of RMB300,000 or less enjoy a tax reduction of 50% of the income andpays income tax at a rate of 20%. That is, the applicable corporate income tax rate is 10%.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements

1. Cash and bank balances

30 June 201831 December 2017
Cash on hand3,721,460.756,208,674.32
Cash at banks3,588,994,326.623,667,290,017.16
Other cash balances350,879,773.21518,156,747.03
3,943,595,560.584,191,655,438.51

At 30 June 2018, other cash balances were consisted of letter credit deposits amounting toRMB228,116.00 (31 December 2017: RMB258,800.00), bank acceptance notes deposits amounting toRMB350,651,657.21 (31 December 2017: RMB514,638,979.04). At the peiod end, there was no pledgeloans deposits (31 December 2017: RMB3,258,967.99).

2. Notes receivable

30 June 201831 December 2017
Trade acceptance notes750,395,988.43584,211,909.22
Bank acceptance notes271,301,381.78919,982,854.86
1,021,697,370.211,504,194,764.08

At 30 June 2018 and 31 December 2017, there were no notes receivable that were pledged

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

2.Notes receivable (Continued)

Notes receivable endorsed or discounted by the Group to other parties which were not yet due at 30 June 2018 and 31 December 2017 are as follows:
30 June 2018
DerecognizedNot derecognized
Trade acceptance notes-209,881,899.63
Bank acceptance notes706,198,208.44-
706,198,208.44209,881,899.63
As at 30 June 2018 and 31 December 2017, notes that were converted into accounts receivable due to the drawer’s inability to settle the note on maturity date are as follows:
30 June 2018
Bank acceptance notes868,060.00
Trade acceptance notes14,804,431.01
15,672,491.01

3. Accounts receivable

The accounts receivable by category are analyzed below:
30 June 201831 December 2017
Gross carrying amountProvision for bad debtGross carrying amountProvision for bad debt
AmountProportionAmountProportionAmountProportionAmountProportion
Individually significant items for which provision for bad debt is recognized separately575,496,544.286.07%11,858,368.752.06%497,346,019.416.52%11,968,509.212.41%
Items for which provision for bad debt is recognized by group8,860,337,753.9793.43%28,158,497.050.32%7,106,178,799.9393.09%26,069,970.290.37%
Not individually significant Items for which provision for bad debt is recognized separately47,417,171.540.50%1,692,236.803.57%29,813,325.950.39%5,886,985.9119.75%
9,483,251,469.79100.00%41,709,102.600.44%7,633,338,145.29100.00%43,925,465.410.58%

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

3. Accounts receivable (Continued)

At 30 June 2018, accounts receivable that are individually significant and individually assessed for provisions are as follows:
Accounts receivable(by company)Carrying amountBad debt provisionRateAssessment for impairment
Receivable of medical insurance425,708,736.16282,897.530.07%Part of the medical insurance receivable takes longer to collect, and has risk of default
Receivable of E-Business47,432,657.88-0.00%Receivable of E-Business with no risk of recoverability
Receivable of Franchises43,303,952.3016,292.930.04%Receivable of Franchises with no risk of recoverability
Sinopharm Group Co., Ltd.30,140,408.15-0.00%Receivable due from a related party with low risk of recoverability
Daton Xin Jian Kang Hospital17,351,611.50-0.00%Receivable due from a fixed cooperative hospital with no risk of recoverability
Receivable of medical insurance11,559,178.2911,559,178.29100.00%Part of the medical insurance receivable takes longer to collect, and has risk of default
Total575,496,544.2811,858,368.75--
The accounts receivable for which the Group recognized provision for bad debt using the aging analysis method are presented as follows
30 June 2018
Carrying amountBad debt provision
AmountAmountProportion
Within 1 year8,817,097,861.5124,372,754.710.28%
1 to 2 years33,418,766.481,918,465.805.74%
2 to 3 years5,871,978.85660,521.6411.25%
Over 3 years3,949,147.131,206,754.9030.56%
8,860,337,753.9728,158,497.050.32%

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

3. Accounts receivable (Continued)

The provision for bad debt was RMB7,628,609.34 in 30 June 2018, including RMB9,827,439.11 recovered or reversed. Important recovered or reversed bad debt items are listed below:
Recovered or reversed amountWay of recovery
Guangdong Tasly Yue Jian Pharmaceutical Co., Ltd.4,083,065.20Amount received due to the lawsuit
Tianjin Social Security Fund Management Centre200,000.00Amount reversed
Yunfu People’s Hospital172,831.60Amount received
People’s Hospital of Deqing County96,757.20Amount received
Zhaoqing Chinese Medical Hospital84,623.81Amount received
Health Centre of Heshan City Yayao Town54,698.00Amount received
Others140,430.23Amount received
4,832,406.04
Accounts receivable written off in 30 June 2018 are analysed below:
CompanyAmount
Shenzhen Bainian Out-patient Department28,571.84
CompanyNature of the receivableAmountReasonProcedure performedRelated party transaction or not
Shenzhen Bainian Out-patient DepartmentReceivables of goods sold28,571.84Non-recoverableWritten off according to company policyNo
As at 30 June 2018, the top five accounts receivable by customer are summarised below:
AmountBad debt provision amount% of the total accounts receivable
The top five accounts receivable total648,539,647.931,806,641.256.84%
In 30 June 2018, accounts receivable of RMB1,703,007,115.68 have been factored to a financial institute.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

4. Advances to suppliers

(a)The aging of advances to suppliers is analyzed below:
30 June 201831 December 2017
Amount% of total balanceAmount% of total balance
Within 1 year451,853,929.9998.95%507,613,407.1998.23%
1 to 2 years3,573,044.240.78%7,410,774.781.43%
2 to 3 years1,253,250.000.27%1,753,935.500.34%
Above 3 years-0.00%-0.00%
456,680,224.23-516,778,117.47-
The prepayment aged for more than a year is mainly the advance made by South Pharma & Trade to suppliers for equipment to be resold to the hospitals amounting to RMB4,826,294.24 (31 December 2017: RMB9,164,710.28) as the hospital equipment procurement is a large project and takes a long time to complete.
(b)As at 30 June 2018, the top five advances to suppliers by customer are summarized below:
AmountProportion of total balance
Total amount of top five advances to suppliers47,114,151.9510.32%

5. Interest receivable

30 June 201831 December 2017
Fixed deposits--
Entrusted Loans47,507.8061,441.11
47,507.8061,441.11

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

6. Other receivables

(a)Other receivables and related provision for bad debts by category are analyzed below:
30 June 201831 December 2017
Carrying amountBad debt provisionCarrying amountBad debt provision
Amount%Amount%Amount%Amount%
Individually significant and subject to separate impairment assessment217,091,197.8530.37%9,268,199.704.27%355,636,071.6252.84%8,980,000.002.53%
Receivable accounts with similar credit risk485,835,323.2967.95%4,122,008.680.85%282,169,420.6541.93%2,782,712.610.99%
Individually not significant but individually evaluated for impairment12,028,679.441.68%2,892,969.0224.05%35,176,616.145.23%3,348,337.269.52%
714,955,200.58100.00%16,283,177.402.28%672,982,108.41100.00%15,111,049.872.25%
(b)As at 30 June 2018, impairment provision for other receivables individually significant are analyzed as below:
AmountBad debt provisionRateAssessment for impairment
Shanghai Shyndec Pharmaceutical Co., Ltd. (“Morden Pharma”)101,166,758.92--Receivable due from a related party with low risk of recoverability
Deposit95,782,045.77288,199.700.30%Cash deposit, no risk of recoverable, no provision
Shanghai Roche Pharmaceutical Co., Ltd.11,162,393.16--Price reduction compensation for DTP medicine
Shenzhen YinghaiTechnology Investment Co., Ltd8,980,000.008,980,000.00100.00%The ageing is over 5 years
217,091,197.859,268,199.70-

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

6. Other receivables (Continued)

(c)Provisions for impairment of the receivables which are within a similar risk group are analyzed below:
30 June 2018
Carrying amountBad debt provision
amountAmountRate
Within 1 year456,116,259.072,147,110.500.47%
1 to 2 years10,122,384.98152,153.351.50%
2 to 3 years4,810,948.33436,170.539.07%
Above 3 years14,785,730.911,386,574.309.38%
485,835,323.294,122,008.680.85%
(d)
Nature30 June 201831 December 2017
Deposits271,993,381.60226,111,186.83
Receivable due from related parties114,539,922.50127,922,489.88
Petty cash advance to employees16,905,695.0313,392,873.34
Entrusted borrowings44,000,000.0044,000,000.00
Receivable of equity transactions8,980,000.008,980,000.00
Others258,536,201.45252,575,558.36
714,955,200.58672,982,108.41
(e)Bad debt provision of other receivables in 2018 was RMB2,284,955.11 (2017: RMB747,448.78), with the recovered or reversed amount of RMB1,112,827.58 (2017: 929,511.16 ).
(f)There were no other receivables written off in the current year.
(g)As at 30 June 2018,the top 5 parties that owed the largest amounts of other receivable balances are analyzed below:
NatureAmountAge% of total amountProvision of bad debt
Morden PharmaRecivables of merge101,166,758.92Within 2 year14.15%-
Guangdong Pharmaceutical electronic trading platformPharmaceutical trading platform repayment not yet cleared90,619,946.24Within 1 year12.67%-
Sinopharm Group Zhijun (Suzhou) Pharmaceutical Co., Ltd. (“Zhijun Suzhou”)Entrusted borrowings44,000,000.00Within 1 year6.15%-
TCM-Integrated Cancer Center of Southern Medical UniversityDeposit of logistics extension services project30,000,000.00Within 1 year4.20%-
Shenyang Social Security AdministrationMedical insurance deposi26,870,049.18Within 1 year3.76%-
292,656,754.3440.93%-

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

7. Inventories

(a)Inventories by category are analyzed below:
30 June 201831 December 2017
Book valueProvisionNet book valueBook valueProvisionNet book value
Raw materials1,526,166.46-1,526,166.461,181,095.08-1,181,095.08
Work in progress1,252,296.05-1,252,296.05129,098.02-129,098.02
Finished goods4,243,417,987.756,667,841.424,236,750,146.333,785,146,957.426,840,110.553,778,306,846.87
Low cost consumables5,826,016.38-5,826,016.382,241,198.15-2,241,198.15
4,252,022,466.646,667,841.424,245,354,625.223,788,698,348.676,840,110.553,781,858,238.12
(b)Provision for declines in value of inventories is analysed below:
1 January 2018IncreasesDecreases30 June 2018
chargeOtherReversal or Written offOther
Finished goods6,840,110.552,390,647.062,562,916.19-6,667,841.42
6,840,110.552,390,647.062,562,916.19-6,667,841.42
(c)Provision of inventories is determined according to the gap between the net realizable value and the inventory book value.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

8. Other current assets

30 June 201831 December 2017
Input VAT to be credited91,576,950.5078,014,460.84
Corporate income tax to be deducted192,702.06933,183.78
Others--
91,769,652.5678,947,644.62

9. Financial assets available-for-sale

(1) Financial assets available-for-sale

30 June 201831 December 2017
Book valueProvisionNet book valueBook valueProvisionNet book value
Available-for-sale equity instruments13,685,760.00-13,685,760.0013,865,760.00180,000.0013,685,760.00
- Measured at cost---13,865,760.00180,000.0013,685,760.00
- Measured at fair value through other comprehensive income13,685,760.00-13,685,760.00---
13,685,760.00-13,685,760.0013,865,760.00180,000.0013,685,760.00

(2) Financial assets available-for-sale measured at fair value

ClassificantionEquity investments available for saleDebt instrument available for saleTotal
Fair value13,685,760.00-13,685,760.00

Notice:

According to “CSA No.22- Financial Instrument Measurement and Recognition” and “CSA No.37- Financial

Instrument Disclosure”, the boarder regonized the assets as financial assets measured at fair value

through other comprehensive income

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

9. Financial assets available-for-sale

(3) Financial assets available-for-sale measured at cost

InvesteeCarrying amountImpairment provisionShareholding (%)received for the year
OpeningIncreaseDecreaseClosingOpeningIncreaseDecreaseClosing
Sinopharm Health Online Co., Ltd.12,000,000.00-(12,000,000.00)-----8.06-
Sinopharm Holding Hubei Guoda Pharmacy Co., Ltd.1,000,000.00-(1,000,000.00)-----10.00-
Hunan Zhongbai pharmaceutical investment Co., Ltd.315,000.00-(315,000.00)---6.3131,500.00
Shanghai Guoda Shuguang Pharmacy Co., Ltd.270,760.00-(270,760.00)-----25.00-
Xinxiang Golden Elephant.180,000.00-(180,000.00)-(180,000.00)-180,000.00-18.00-
Shanghai Guoren Pharmacy Co., Ltd.100,000.00-(100,000.00)-----10.00-
13,865,760.00-13,865,760.00-(180,000.00)-180,000.00--31,500.00

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

10. Long-term equity investments

Associates in 2018

Investee1 January 2018Changes in the year30 June 2018Provision for impairment
Additional InvestmentProfit of loss under equity methodOther changes in equityCash dividend declared by investeeOther
Associates
Shenzhen Main Luck Pharmaceutical Inc. (“Main Luck Pharmaceutical”).239,046,738.14-29,983,887.32---269,030,625.46-
Zhijun Medicine291,042,921.20-61,373,560.78-(58,111,254.57)-294,305,227.41-
Zhijun Trade7,676,142.69-853,674.01-(664,795.03)-7,865,021.67-
Zhijun Suzhou46,199,728.91-(10,671,086.78)---35,528,642.13-
Pingshan Medicine68,686,804.33-15,453,485.62-(9,719,480.71)-74,420,809.24-
Morden Pharma979,174,050.62-65,661,682.41397,342.21(8,641,853.20)193,639.301,036,784,861.34-
Shanghai Beiyi Guoda Pharmaceutical Co. Ltd.9,518,694.65-659,783.20---10,178,477.85-
Shanghai Liyi Pharmacy Co., Ltd.771,408.05-----771,408.05-
Sinopharm Jienuo Medical Treatment Service Guangdong Co., Ltd. (“Guangdong Jie nuo”)8,502,884.50-(652,715.21)---7,850,169.29-
Shanghai Dingqun Management & Consulting Co. , Ltd-20,000,000.00----20,000,000.00-
Dongyuan Accord Pharmaceutical Chain Co., Ltd.396,638.32-----396,638.32396,638.32
1,651,016,011.4120,000,000.00162,662,271.35397,342.21(77,137,383.51)193,639.301,757,131,880.76396,638.32

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

11. Investment properties

Subsequent measurement under the cost model:

2018Buildings and constructionsLand use rightTotal
Original cost
Opening balance245,932,518.6423,370,084.72269,302,603.36
Purchase45,481.13-45,481.13
Transfer from fixed assets4,605,965.69-4,605,965.69
Transfer to fixed assets6,209,855.73-6,209,855.73
Transfer to intangible assets470,783.88-470,783.88
Closing balance243,903,325.8523,370,084.72267,273,410.57
Accumulated depreciation and amortization
Opening balance106,139,314.258,184,950.00114,324,264.25
Provision4,506,346.47249,314.664,755,661.13
Transfer from fixed assets1,192,262.29-1,192,262.29
Transfer to fixed assets3,420,626.15-3,420,626.15
Transfer to intangible assets287,874.74-287,874.74
Closing balance108,129,422.128,434,264.66116,563,686.78
Provision for impairment
Opening balance1,300,000.00-1,300,000.00
Closing balance1,300,000.00-1,300,000.00
Carrying amount
At end of year134,473,903.7314,935,820.06149,409,723.79
At beginning of the year138,493,204.3915,185,134.72153,678,339.11

(2)The fixed asset failing to accomplish certification of title

ItemsCarrying amountReason for outstanding property right certificates
Reconstruction of old town65,329,796.40Sinopharm Guangxi Logistics leased the property. As at 30 June 2018, the original cost is RMB70,085,820.00 and the Accumulated depreciation and amortization is RMB4,756,023.60. The certification of title is in progress.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

12. Fixed assets

2018
BuildingsMachineryVehiclesOther equipmentFixed asset improvementsTotal
Original cost
Opening balance456,161,611.21183,752,571.1487,999,790.56259,281,585.4130,111,198.471,017,306,756.79
Purchase11,609,004.987,511,943.052,537,492.468,854,897.186,106,795.5736,620,133.24
Transfer from construction in progress-2,066,324.80---2,066,324.80
Transfer from Investment properties6,209,855.73----6,209,855.73
Business combination not involving enterprises under common control------
Transfer to Investment properties4,605,965.69----4,605,965.69
Disposal of subsidiaries------
Disposal or retirement-1,176,437.953,672,293.821,263,162.391,110,799.647,222,693.80
Closing balance469,374,506.23192,154,401.0486,864,989.20266,873,320.2035,107,194.401,050,374,411.07
Accumulated depreciation
Opening balance149,119,755.2273,601,067.3359,221,772.87154,689,144.2328,964,583.12465,596,322.77
Provision6,394,173.5411,961,644.963,796,763.459,720,011.386,493,533.0938,366,126.42
Transfer from Investment properties3,420,626.15----3,420,626.15
Transfer to Investment properties1,192,262.29----1,192,262.29
Disposal of subsidiaries------
Disposal or retirement-1,037,763.793,142,894.82979,173.35759,134.315,918,966.27
Closing balance157,742,292.6284,524,948.5059,875,641.50163,429,982.2634,698,981.90500,271,846.78

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

12. Fixed assets (Continued)

2018(Continued)
BuildingsMachineryVehiclesOther equipmentFixed asset improvementsTotal
Provision for impairment
Opening balance------
Disposal of subsidiaries------
Closing balance------
Carrying amount
At end of year311,632,213.61107,629,452.5426,989,347.70103,443,337.94408,212.50550,102,564.29
At beginning of the year307,041,855.99110,151,503.8128,778,017.69104,592,441.181,146,615.35551,710,434.02

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

12. Fixed assets (Continued)

(a) Fixed assets held under finance leases are presented as follows:

2018
Original costAccumulated depreciationProvision for impairmentCarrying amount
Machinery25,065,579.838,994,037.20-16,071,542.63

(b) Fixed assets without official property right certificates

ItemsCarrying amountReason for outstanding property right certificates
Buildings27,867,743.48In the process

(c) As at 30 June 2018, there were no fixed assets that were leased under operating leases.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

13. Construction in progress

30 June 201831 December 2017
Carrying balanceProvision for impairmentCarrying amountCarrying balanceProvision for impairmentCarrying amount
Warehouse improvement project3,563,091.66-3,563,091.661,009,314.93-1,009,314.93
New office building project1,056,812.98-1,056,812.98765,882.63-765,882.63
Supply chain extension project8,234,723.40-8,234,723.408,193,935.70-8,193,935.70
Software project8,038,066.18-8,038,066.183,926,271.33-3,926,271.33
Other projects9,913,179.89-9,913,179.899,051,854.40-9,051,854.40
30,805,874.11-30,805,874.1122,947,258.99-22,947,258.99

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

13. Construction in progress (Continued)

(a)Changes of significant construction in progress

Changes of significant construction in progress in 2018 are presented as follows:

Project nameBudgetAt beginning of the yearIncreaseDecreaseAt end of yearSource of fundsProportion of investment to budget (%)
Transferred to fixed assetsTransferred to intangible assetsTransfer to long term prepaid expenseDisposal of subsidiariesOthers
Warehouse improvement project6,808,651.571,009,314.933,919,831.35----1,366,054.623,563,091.66Other70.65%
New office building Project1,410,920.18765,882.63290,930.35-----1,056,812.98Other86.80%
Supply chain extension project32,144,615.398,193,935.702,107,112.502,066,324.80----8,234,723.40Other87.41%
Software project10,880,000.003,926,271.334,111,794.85-----8,038,066.18Other30.00%
Other construction projects207,890,962.329,051,854.401,939,425.82----1,078,100.339,913,179.89Other5.21%
259,135,149.4622,947,258.9912,369,094.872,066,324.80---2,444,154.9530,805,874.11--

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

13. Construction in progress (Continued)

(a)Changes of significant construction in progress(Continued)
Project nameBudgetProgress(%)Accumulated amount of interest capitalizedIncl: interest capitalized in current yearCapitalization rate (%)
Warehouse improvement project6,808,651.5770.65%---
New office building project1,410,920.1886.80%---
Supply chain extension project32,144,615.3987.41%---
Software project10,880,000.0030.00%---
Other construction projects207,890,962.325.21%---
259,135,149.46----

For the six month ended 30 June 2018, the original cost of construction in progress transferred to fixed assets amounted to RMB2,066,324.80 (For the six monthended 30 June 2017: RMB1,687,272.11), the original cost of construction in progress transferred to long term prepaid expense amounted to RMB2,444,154.95(For the six month ended 30 June 2017: RMB14,725,268.66) and there is no construction in progress transferred to intangible assets (For the six month ended 30June 2017: RMB15,395,443.32).

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

14. Intangible assets

2018Land use rightSoftwareSales networkTrademarksFranchiseTotal
Original cost
Opening balance60,481,989.28126,128,809.36112,117,142.86159,219,850.00710,000.00458,657,791.50
Purchase-1,925,352.60---1,925,352.60
Transfer from construction in progress------
Transfer from investment properties470,783.88----470,783.88
Disposal of subsidiaries------
Transfer to investment properties------
Transfer to long term prepaid expense------
Disposal or retirement1,210,000.001,210,000.00
Closing balance59,742,773.16128,054,161.96112,117,142.86159,219,850.00710,000.00459,843,927.98
Accumulated amortization
Opening balance26,667,841.4755,408,075.3335,086,476.1815,033,967.64710,000.00132,906,360.62
Provision288,177.066,268,956.052,802,928.572,472,852.94-11,832,914.62
Transfer from investment properties287,874.74----287,874.74
Disposal of subsidiaries------
Transfer to investment properties------
Transfer to long term prepaid expense------
Disposal or retirement------
Closing balance27,243,893.2761,677,031.3837,889,404.7517,506,820.58710,000.00145,027,149.98

Notes to financial statements (Continued)

For the six months ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

14. Intangible assets (Continued)

2018 (Continued)Land use rightSoftwareSales networkTrademarksFranchiseTotal
Provision for impairment
Opening balance------
Disposal of subsidiaries------
Closing balance------
Carrying amount
At end of the year32,498,879.8966,377,130.5874,227,738.11141,713,029.42-314,816,778.00
At beginning of the year33,814,147.8170,720,734.0377,030,666.68144,185,882.36-325,751,430.88

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

14. Intangible assets (Continued)

As at 30 June 2018, there were no intangible assets arising from internal research anddevelopment (30 June 2017: none)

As at30 June 2018, intangible assets without the right certificates as below,

ItemsCarrying amountReason for outstanding property right certificates
Land use right4,000,000.00In the process

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

15. Goodwill

(1) Goodwill cost

30 June 2018Opening balanceIncreaseDecreaseClosing balance
Jiangmen Renren Medical Co., Ltd. (“Sinopharm Jiangmen”)27,392,317.73--27,392,317.73
Sinopharm Holding Shenzhen Yanfeng Co., Ltd. (“Sinopharm Yanfeng”)16,868,644.87--16,868,644.87
Sinopharm Holding Zhaoqing Co., Ltd. (“Sinopharm Zhaoqing”)2,594,341.53--2,594,341.53
Sinopharm Holding Shaoguan Co., Ltd. (“Sinopharm Shaoguan”)1,686,496.80--1,686,496.80
Sinopharm Holding Meizhou Co., Ltd. (“Sinopharm Meizhou”)1,610,819.66--1,610,819.66
Sinopharm Holding Huizhou Co., Ltd. (“Sinopharm Huizhou”)923,184.67--923,184.67
Sinopharm Holding Zhanjiang Co., Ltd. (“Sinopharm Zhanjiang”)282,135.55--282,135.55
Sinopharm Holding Dongguan Co., Ltd. (“Sinopharm Dongguan”)1,499.02--1,499.02
South Pharma & Trade2,755,680.62--2,755,680.62
Foshan Nanhai88,877,850.51--88,877,850.51
Sinopharm Holding Zhuhai Co.,Ltd.(Sinopharm Zhuhai)6,772,561.47--6,772,561.47
Sinopharm Holding Maoming Co., Ltd. (“Sinopharm Maoming”)66,417.07--66,417.07
Sinopharm Holding Guoda ForMe Medicines (Shanghai) Co., Ltd. ( “ForMe Medicines”)3,033,547.53--3,033,547.53
Sinopharm Holding Guoda ForMe Pharmacy Chain Store Co., Ltd. (“ForMe Pharmacy Chain Store”)19,405,450.23--19,405,450.23
Sinopharm Holding Guoda Shanxi Yiyuan Pharmacy Chain Store Co., Ltd.9,080,100.00--9,080,100.00
Sinopharm Holding Guoda Yangzhou Dadesheng Pharmacy Chain Store Co., Ltd.7,979,000.00--7,979,000.00
Zhejiang Guoda Pharmacy Co., Ltd.3,045,183.85--3,045,183.85
Guoda Shenyang Tianyitang Pharmacy Chain1,687,942.92--1,687,942.92
Sinopharm Holding Guoda Shenyang Pharmacy Chain Store Co., Ltd.39,360,015.16--39,360,015.16
Sinopharm Holding Guoda Nanjing Pharmacy Chain Store Co., Ltd.11,598,341.12--11,598,341.12
Sinopharm Holding Guoda Shandong Pharmacy Chain Store Co., Ltd.29,110,409.46--29,110,409.46
Quanzhou Guoda Pharmacy Chain Store Co., Ltd.41,298,622.59--41,298,622.59
Shanxi Guoda Wanmin Pharmacy Chain Store Co., Ltd.65,025,000.00--65,025,000.00
Sinopharm Holding Hunan Guoda Minshengtang Pharmacy Chain Co., Ltd.41,165,574.64--41,165,574.64
Liyang Guoda People Pharmacy Chain Store Co., Ltd.107,275,095.74--107,275,095.74

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

15. Goodwill (Continued)

(1)Goodwill cost (Continued)

30 June 2018 (Continued)Opening balanceIncreaseDecreaseClosing balance
Business combination not involving enterprises under common controlDisposal
Sinopharm Holding Guoda Henan Pharmacy Chain Store Co., Ltd.22,666,179.77--22,666,179.77
Sinopharm Holding Guoda Neimenggu Pharmacy Chain Store Co., Ltd.70,485,777.00--70,485,777.00
Sinopharm Guoda Pharmacy Jiangmen Chain Co., Ltd.77,350,000.00--77,350,000.00
Fujian Guoda Pharmacy Chain Store Co., Ltd.1,567,250.76--1,567,250.76
Sinopharm Holding Guoda Pharmacy Chain Store Shanghai Co., Ltd.5,028,638.00--5,028,638.00
Beijing Golden Elephant Pharmacy Medicine Chain Company Limited (“Beijing Golden Elephant”)63,546,507.81--63,546,507.81
Beijing Yangqiao Rongzhi Golden Elephant Pharmacy Company Limited593,616.55--593,616.55
Xiaoyi Guoda Wanmin Baicaotang Pharmacy Chain Store Co., Ltd. (“Xiaoyi Wanmin”)15,866,680.00--15,866,680.00
Shijiazhuang Lerentang Yikang Pharmacy Chain Store Co., Ltd. (“Hebei Yikang”)29,482,149.57--29,482,149.57
Shenzhen Guanganli Pharmacy Chain Store Co., Ltd. store acquisition13,420,000.00--13,420,000.00
Guoda Taishan26,826,120.55--26,826,120.55
855,729,152.75--855,729,152.75

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

15. Goodwill (Continued)

(2)Provision of impairment loss

Changes in provision for impairment of goodwill are presented as follows:

2018Opening balanceIncreaseDecreaseClosing balance
Quanzhou Guoda Pharmacy Chain Store Co., Ltd.25,000,000.00--25,000,000.00

The method of goodwill impairment testing process, parameter and recognition of impairment loss:

The recoverable amount of asset groups and groups of asset groups is calculated by using the

estimated cash flows according to the five-year budget approved by management. Managementdetermines budgeted gross margin based on historical experience and forecast on marketdevelopment. The discount rates determined by management are the pre-tax interest rates whichreflect the risks specific to the related asset groups and groups of asset groups. The aboveassumptions are used to assess the recoverable amount of each asset group and group of assetgroups within the corresponding operating segment.

16. Long-term prepaid expenses

2018Opening balanceAdditionsAmortizationOther decreaseClosing balance
Fixed asset improvement expenditure199,209,837.8047,172,150.8237,044,188.471,059,643.27208,278,156.88
Acquisition expenditure to obtain the right to operate49,013,331.484,191,488.003,801,140.68-49,403,678.80
Others4,023,881.51161,478.68792,968.47-3,392,391.72
252,247,050.7951,525,117.5041,638,297.621,059,643.27261,074,227.40

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

17. Deferred tax assets/liabilities

(a)Deferred tax assets before offseting
30 June 201831 December 2017
Deductible temporary differencesDeferred tax assetsDeductible temporary differencesDeferred tax assets
Provision for impairment of assets65,649,831.7915,142,434.1366,273,264.1416,274,860.36
Deductible tax loss92,143,605.3722,824,595.10115,556,647.9328,705,915.53
Accrued payroll38,401,349.709,046,959.7160,250,524.8914,540,506.81
Accrued expenses83,904,219.0120,394,682.9347,994,796.5511,141,862.66
Deferred revenue29,041,585.517,198,990.9430,837,426.917,540,824.20
Others6,946,672.661,462,475.525,424,788.241,268,913.50
316,087,264.0476,070,138.33326,337,448.6679,472,883.06
(b)Deferred tax liabilities before offseting
30 June 201831 December 2017
Taxable temporary differencesDeferred tax liabilitiesTaxable temporary differencesDeferred tax liabilities
Fair value adjustment for business combination not involving enterprises under common control233,836,821.0858,459,205.27239,773,296.8459,943,324.20
Changes in fair value45,620,230.4511,405,057.6153,300,601.3111,939,928.82
279,457,051.5369,864,262.88293,073,898.1571,883,253.02
Deferred tax assets and liabilities are presented after being offset against each other:
30 June 201831 December 2017
Deferred tax assets/liabilities -NetTemporary differences after set-offDeferred tax assets/liabilities - NetTemporary differences after set-off
Deferred tax assets76,070,138.3379,472,883.06
Deferred tax liabilities69,864,262.8871,883,253.02

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

17. Deferred tax assets/liabilities (Continued)

(c)The deductible temporary differences and deductible losses that were not recognized as deferred tax assets are presented as follows:
30 June 201831 December 2017
Deductible temporary differences886,927.951,480,000.00
Deductible loss (i)21,759,547.4521,759,547.45
22,646,475.4023,239,547.45
(i) For those loss-making subsidiaries, as it is not considered probable that taxable profit will be available against which the tax losses can be utilized, the Group has not recognized deferred tax assets arising from accumulated losses amounting to RMB21,759,547.45 which are tax deductible under the tax law.
The aforesaid unrecognized deductible losses will due:
30 June 201831 December 2017
20182,970,715.212,970,715.21
20193,159,690.783,159,690.78
20204,835,260.234,835,260.23
20212,641,220.492,641,220.49
20228,152,660.748,152,660.74
21,759,547.4521,759,547.45

(note) As some subsidiaries are still making loss, and it’s uncertainty that the loss-making subsidiarie

can obtain enough taxable income to offset against the loss in the future. So the group do notrecognised deferred tax assets which came from the deductible loss of RMB 21,759,547.45 .

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

18. Other non-current assets

30 June 201831 December 2017
Prepayment for investment (Note 1)60,000,000.0060,000,000.00
Physical assets reserve specifically authorized43,002,651.7045,074,249.27
Prepayment for a rental fee (Note 2)13,728,510.3917,506,780.28
Prepayment for project and equipment13,495,723.1519,441,433.20
130,226,885.24142,022,462.75
Note 1 On March 2017, the Group subscribed to Sinopharm Zhongjin medical industry fund, as its limited partner. The total investment which amounted to RMB200 million, will be paid within 3 years gradually. The total amount paid unitl now was 30% of the total investment which was RMB60 million. The amount which should be paid in current year have not been settled. Note 2: The prepayment for a rental fee which is over one year is recognized at other non-current assets for the Group.

19. Short-term borrowings

30 June 201831 December 2017
Credit borrowings1,841,257,752.041,413,638,993.97
Discounted notes209,881,899.63147,715,527.67
2,051,139,651.671,561,354,521.64
As at 30 June 2018, the annual interest rate for the above borrowings was 4.65% (31 December 2017: 4.34%). As at 30 June 2018, credit borrowings of RMB1,423,611,601.11 were guaranteed by the Company and its subsidiaries (31 December 2017: credit borrowings of RMB1,156,302,581.02 were guaranteed by the Company and its subsidiaries.), guaranteed borrowings of RMB122,986,581.52 (31 December 2017: RMB147,715,527.67) were guaranteed by Sinopharm Group.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

20. Notes payable

30 June 201831 December 2017
Commercial acceptance notes40,893,576.6560,129,565.95
Bank acceptance notes2,332,734,564.212,672,308,262.47
2,373,628,140.862,732,437,828.42

At 30 June 2018,balance of notes payable at maturity was RMB0.00. (31 December 2017:RMB

19,900.00).

21. Accounts payable

30 June 201831 December 2017
Trade payables7,230,024,480.356,144,221,000.10

At 30 June 2018, the total amount of accounts payable aged over one year wasRMB391,213,598.73(31 December 2017: RMB269,295,585.18 ), and the payment has not yetbeen cleared.

22. Advances from customers

30 June 201831 December 2017
Sales received in advance178,425,087.30216,938,239.32

At 30 June 2018, the total amount of accounts payable aged over one year wasRMB3,598,442.48(31 December 2017: RMB16,618,324.72).

23. Employee benefits payable

2018At beginning of the yearIncreaseDecreaseAt end of the year
Short-term employee benefits (a)209,320,163.70828,379,586.12897,398,633.92140,301,115.90
Post-employment benefits (defined contribution plan)(b)5,596,277.1283,185,725.8878,979,669.669,802,333.34
Termination benefits (c)740,085.72587,663.14745,755.84581,993.02
215,656,526.54912,152,975.14977,124,059.42150,685,442.26

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

23. Employee benefits payable (Continued)

(a)Short-term employee benefits
2018At beginning of yearIncreaseDecreaseAt end of year
Salaries, bonuses, allowances and grants193,078,506.49721,571,753.11790,541,221.26124,109,038.34
Staff welfare2,602,805.9221,451,963.9922,876,399.301,178,370.61
Social security contribution1,363,649.3241,911,740.9140,873,381.072,402,009.16
Incl: Medical insurance1,130,984.4137,059,846.2436,185,027.552,005,803.10
Work injury insurance10,541.551,788,839.751,680,745.39118,635.91
Maternity insurance222,123.363,063,054.923,007,608.13277,570.15
Housing funds929,089.3328,300,167.2928,485,275.01743,981.61
Labor union funds and employee education funds10,178,562.8714,254,035.4213,705,147.3710,727,450.92
Other short-term benefits1,167,549.77889,925.40917,209.911,140,265.26
Total209,320,163.70828,379,586.12897,398,633.92140,301,115.90
(b)Defined contribution plan
2018At beginning of yearIncreaseDecreaseAt end of year
Basic pension insurance1,739,623.3479,178,966.6676,578,569.124,340,020.88
Unemployment insurance221,831.212,274,056.402,062,541.82433,345.79
Contribution to pension fund3,634,822.571,732,702.82338,558.725,028,966.67
5,596,277.1283,185,725.8878,979,669.669,802,333.34

Note:

For half year of 2018, the Group provided other termination benefits for severing labor relations ofRMB69,075.00 (2017: RMB117,149.03).

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

24. Tax payable

30 June 201831 December 2017
Value-added tax82,014,625.5185,843,903.33
Corporate Income taxes100,059,775.47102,947,883.38
Individual income tax payable11,467,041.743,921,305.41
City maintenance and construction surtax7,179,360.176,691,713.89
Educational surcharge payable5,219,506.774,862,588.43
Water conservancy fund payable5,216,011.645,356,119.89
Stamp duty3,350,847.104,166,596.91
Property tax811,622.69971,268.99
Land use tax payable187,073.98513,790.48
Others7,845,865.698,477,729.53
223,351,730.76223,752,900.24

25. Interest payable

30 June 201831 December 2017
Interest payable
- interest on long-term borrowings35,440.2438,984.28
- interest on short-term borrowings10,316,727.996,968,878.69
Factoring interest paybale10,856.93-
Interest payable to former shareholder15,188.75303,956.68
10,378,213.917,311,819.65

26. Dividend payable

30 June 201831 December 2017
Shanghai Fosun Pharmaceutical (Group) Co., Ltd.4,835,511.584,835,511.58
Luqi Zhong1,853,188.064,103,188.06
Lunan Zhong345,928.44765,928.44
Xiangjun Zhong271,800.92601,800.92
Meiluo Pharmaceutical Co., Ltd.164,170.07164,170.07
Ganyin Bai29,204.7329,204.73
Zhenfang Zhang1,389,639.311,389,639.31
8,889,443.1111,889,443.11

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

27. Other payables

30 June 201831 December 2017
Payables for factoring programs305,380,394.63388,729,758.59
Deposit231,443,810.46129,662,851.39
Payables arising from acquisition of subsidiaries80,432,813.17109,445,960.00
Payables for construction in progress and equipment50,543,206.1398,293,860.11
Accrued selling and distribution expenses128,398,461.8196,065,832.84
Payables to individuals49,879,370.0734,316,089.64
Payables for rentals13,320,632.6227,766,119.66
Payables for land transfer payments18,071,000.0018,071,000.00
Payables to related parties20,450,723.2415,817,669.33
Temparary loan15,800,000.0015,800,000.00
Collection of others18,182,500.618,430,347.08
Others92,273,791.3768,728,908.62
1,024,176,704.111,011,128,397.26

At 30 June 2018, other payables due within 1 year amounted to RMB 184,112,776.75(31 December2017: RMB 136,676,639.91 ). It is mainly consisted of construction cost payable, companyborrowings payable, deposits and etc.

28. Non-current liabilities due within 1 year

30 June 201831 December 2017
Finance lease payables5,651,227.565,434,770.70
5,651,227.565,434,770.70

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

29. Other current liabilities

30 June 201831 December 2017
Output VAT to be recognized114,239.45112,817.65

30. Long-term borrowings

30 June 201831 December 2017
Credit borrowings (a)31,600,000.0031,600,000.00
31,600,000.0031,600,000.00
(a) At 30 June 2018, the entrusted borrowings of RMB31,600,000.00 were provided by Sinopharm Group through Group Financial Co.
At 30 June 2018, the annual interest rate of above-mentioned borrowings was 4.04% (31 December 2017: 4.40%).

31. Long-term payables

30 June 201831 December 2017
Finance lease payables12,255,803.4014,767,307.84
Less: due within one year(5,651,227.56)(5,434,770.70)
6,604,575.849,332,537.14

32. Long-term employee benefits payable

30 June 201831 December 2017
Early retirement benefits payable1,636,000.001,777,000.00
Less: Retirement benefits payable – within 1 year (Note V (24)(c))--
1,636,000.001,777,000.00

33. Payable for specific projects

2018
At beginning of yearIncreaseDecreaseAt end of year
Special funds granted by government800,000.00--800,000.00

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

34. Deferred income

2018Opening balanceIncreaseDecreaseClosing balanceReasons of derred income
Government grants96,725,183.34-2,663,153.6094,062,029.74Government grants
Promotion Rewards Program28,357,189.191,189,038.591,612,877.4127,933,350.37The fair value of promotion rewards
125,082,372.531,189,038.594,276,031.01121,995,380.11
As at 30 June 2018, deferred income from government grants are as follow:
Government grants programOpening balanceAddition in the yearAmount included in non-operating income in the yearAmount included in other income in the yearClosing balanceAsset related/ income related
Resettlement Compensation (i)78,253,849.73-1,349,204.28-76,904,645.45Asset related
Guangxi Logistics Project6,949,832.98--248,203.206,701,629.78Asset related
Logistics standardization project3,361,259.39--273,123.423,088,135.97Asset related
A comprehensive experimental modern service industry subsidies1,800,000.00--150,000.001,650,000.00Asset related
Shared Logistics Center (completed)270,858.75--9,400.20261,458.55Asset related
Other projects6,089,382.49--633,222.505,456,159.99income related
96,725,183.34-1,349,204.281,313,949.3294,062,029.74

Due to the implementation of urban planning for old town reconstruction in Nanning, the operatingcenter of Guangxi Logistics which was located in Longteng Road District, Nanning City, was to bereconstructed in another place. According to the agreement signed between Guangxi Logistics and thereal estate developer, Guangxi Logistics would obtain a compensation of RMB120,250,000.00,including cash of RMB50,000,000.00 and property in constructing equaling a value ofRMB70,250,000.00. Cash compensation of RMB 50,000,000.00 was received in May 2012. In year2015, construction properties with a value of RMB70,250,000.00 were built and delivered, and hadbeen recognized as investment properties (Note V (18)).The compensation relating the capital expenditure in the reconstruction of the new logistic center inanother place, amounting to RMB93.32 million was recognized as deferred revenue, and would beamortized and recognized in the income statement within the expected useful lives using the straightline method (Note V(71)), and the other cash compensation, which amount approximates to RMB26.93million, was recognized in the income statement in 2012.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

35. Other non-current liabilities

30 June 201831 December 2017
Governmental medical reserve funds45,427,343.3145,427,343.31
Certain medical reserves funds were received by the Group from the PRC government and local government for purchasing medical products (including medicines) required to respond to serious disasters, epidemics and other emergencies.

36. Share capital

2018At beginning of yearAt end of year
Shares428,126,983.00428,126,983.00

37. Capital surplus

2018At beginning of yearIncreaseDecreaseAt end of year
Share premium2,118,174,787.27--2,118,174,787.27
Significant reorganization1,173,907,763.19--1,173,907,763.19
Transition reserves from investments in associates reclassified from capital surplus to other comprehensive income2,020,250.22--2,020,250.22
Transfer of capital surplus recognized under the previous accounting system2,650,322.00--2,650,322.00
Others(115,324,057.69)397,342.21-(114,926,715.48)
3,181,429,064.99397,342.21-3,181,826,407.20

Capital surplus-others increased by RMB397,342.21 when other changes in equity of ModernPharmaceutical resulted in adjustment of long-term equity investment and an increase of capitalsurplus by RMB397,342.21.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

38. Surplus reserve

At beginning of yearIncreaseDecreaseAt end of year
Surplus reserve214,063,491.50--214,063,491.50
214,063,491.50--214,063,491.50

39. Retained earnings

30 June 201831 December 2017
Retained earnings at the end of the prior year5,572,952,806.394,689,189,642.51
A business combination involving enterprises under common control-1,076,241.59
Retained earnings at beginning of year after retrospective adjustment and restatement5,572,952,806.394,690,265,884.10
Add: Net profit attributable to the parent641,727,034.931,057,791,930.67
Deduct: Withdrew surplus reserve-(32,747,520.00)
Ordinary share cash dividends payable(128,438,094.90)(141,281,904.39)
Others-(1,075,583.99)
Retained earnings at end of year6,086,241,746.425,572,952,806.39

40. Operating revenue and cost

For the six months ended 30 June 2018For the six months ended 30 June 2017
RevenueCostRevenueCost
main operations20,606,027,974.5718,355,002,752.4220,372,097,755.3518,352,591,276.82
Other operating173,138,725.1012,640,971.42152,709,914.2211,443,174.01
20,779,166,699.6718,367,643,723.8420,524,807,669.5718,364,034,450.83

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

41. Tax and surcharges

For the six month ended 30 June 2018For the six month ended 30 June 2017
City maintenance and construction tax22,352,680.7724,931,171.70
Educational surcharge16,112,625.9718,243,233.02
Property tax3,075,856.413,345,273.43
Land tax245,070.74172,937.56
Vehicle and vessel use tax98,966.2098,180.93
Stamp duty14,200,426.9614,569,034.12
Others534,900.201,825,790.10
56,620,527.2563,185,620.86

42. Selling expenses

For the six month ended 30 June 2018For the six month ended 30 June 2017
Employees payroll and welfare benefits659,176,548.69582,798,944.53
Rental expenses322,805,173.33285,053,247.11
Transportation charges33,086,676.7229,416,679.32
Depreciation expenses26,125,384.5921,860,957.80
Promotion and marketing expenses18,454,328.5416,881,877.36
Office allowances16,283,197.9815,153,489.34
Entertainment expenses11,357,532.1211,158,406.02
Storage expenses14,866,861.1423,155,581.32
Travel allowances3,415,890.363,425,411.69
Market development fees3,255,084.76250,938.26
Conference expenses1,654,991.622,800,521.29
Others163,107,086.22118,490,884.13
1,273,588,756.071,110,446,938.17

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

43. Administrative expenses

For the six month ended 30 June 2018For the six month ended 30 June 2017
Employees payroll and welfare benefits248,803,724.84237,320,475.09
Rental expenses18,347,245.8317,030,347.32
Depreciation expenses12,732,380.4514,130,107.15
Office allowances11,877,499.5613,498,455.92
Amortization of intangible assets8,272,613.857,873,617.35
Entertainment expenses6,428,775.385,878,571.05
Amortization of long-term deferred expenses4,518,905.104,478,646.05
Vehicle management expenses4,435,451.824,100,271.65
Travel allowances4,323,679.133,538,432.83
Utilities2,713,666.763,714,057.62
Taxations2,241,415.794,087,147.80
Conference expenses2,059,875.35718,993.59
Repairing fees1,624,550.731,665,071.14
Others23,440,279.1922,601,856.55
351,820,063.78340,636,051.11

44. Finance costs

For the six month ended 30 June 2018For the six month ended 30 June 2017
Interest expenses83,356,367.1859,569,071.77
Less: Interest income(23,082,233.56)(17,460,371.42)
Cash discount(21,542,580.44)(13,655,314.59)
Exchanges loss/(gain)329,665.40(283,622.22)
Others18,480,325.7416,329,015.22
57,541,544.3244,498,778.76

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

45. Impairment loss

For the six month ended 30 June 2018For the six month ended 30 June 2017
Inventories provision508,849.26(836,741.23)
Bad debt allowance(1,026,702.24)933,498.39
Impairment in fixed assets--
Impairment in goodwill--
(517,852.98)96,757.16

46. Investment income

For the six month ended 30 June 2018For the six month ended 30 June 2017
Investment income from long-term equity investments under the equity method162,662,271.35146,775,417.29
Investment income from disposal of subsidiaries--
Gain from remeasurement of fair value of remaining equity interest upon loss of control--
Investment income from available-for-sale financial assets31,500.0050,000.00
Remeasurement loss of fair value when achieved subsidary in stages-(99,377.39)
162,693,771.35146,726,039.90

47. Gain on disposal of assets

For the six month ended 30 June 2018For the six month ended 30 June 2017
Gain on disposal of fixed assets389,144.70554,192.50
Gain on disposal of intangible assets3,892,019.91-
Gain on disposal of other non-current assets-(69,106.84)
4,281,164.61485,085.66

48. Other income

For the six month ended 30 June 2018For the six month ended 30 June 2017
Government grants related to daily activities10,589,212.577,958,493.67

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

49. Non-operating income

For the six month ended 30 June 2018For the six month ended 30 June 2017Amount classified as non-recurring profit or loss
Government grants (Note a)1,349,204.281,349,204.281,349,204.28
Gain on disposal of non-current assets2,303.001,363.702,303.00
Incl: Gain on disposal of fixed assets---
Gain from writing off the unnecessary payment2,898,512.622,249,156.842,898,512.62
Gain arising from donation---
Others1,248,931.212,456,418.011,248,931.21
5,498,951.116,056,142.835,498,951.11

All non-operating income was wholly classified as non-recurring profit or loss for the six month ended

Note a:

Government grants which was recorded in profit or loss are as follow:
For the six month ended 30 June 2018For the six month ended 30 June 2017Related to asset/income
Resettlement Compensation of Guangxi Logistics1,349,204.281,349,204.28Asset related

50. Non-operating expenses

For the six month ended 30 June 2018For the six month ended 30 June 2017Amount classified as non-recurring profit or loss
Donation expenses60,000.0059,900.0060,000.00
Losses on disposal of non-current assets28,525.01284,142.9328,525.01
Incl: Losses on disposal of fixed assets8,300.35284,142.938,300.35
Penalty expenses1,194,388.281,925,449.661,194,388.28
Others514,379.511,290,495.50514,379.51
1,797,292.803,559,988.091,797,292.80
Non-operating cost was wholly classified as non-recurring profit or loss for the six month ended 30 June 2018.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

51. Income taxes

For the six month ended 30 June 2018For the six month ended 30 June 2017
Current income tax163,102,979.73162,853,639.57
Deferred income tax1,383,754.59(2,812,531.94)
164,486,734.32160,041,107.63
The reconciliation from income tax calculated based on applicable tax rates and total profit presented in the consolidated financial statements to the income taxes is listed below:
For the six month ended 30 June 2018
Total profit853,735,744.23
Income taxes calculated at applicable tax rates213,433,936.06
Lower tax rates enacted by local authorities(12,404,268.99)
Adjustment of income tax expense of previous year(799,186.91)
Income not subject to tax(40,673,442.84)
Expenses not deductible for tax4,061,292.94
Utilization of previously unrecognized tax losses16,701.91
Deductible loss on unconfirmed deferred tax assets at end of the year951,711.58
Impact of the temporary discrepancy on unconfirmed deductible deferred tax assets at end of the year(100,009.43)
Income tax164,486,734.32

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

52. Notes to items in the cash flow statement

(a)Cash receipts related to other operating activities
20182017
Government grants except tax return10,345,223.641,349,204.28
Rent income37,793,728.5028,140,527.98
Operational restricted bank deposits received88,156,799.794,067,748.35
Interest income22,642,258.3017,412,415.01
Others153,046,777.3747,052,933.05
311,984,787.6098,022,828.67
(b)Cash paid relating to other operating activities
20182017
Rental expenses341,152,419.16302,083,594.43
Entertainment expenses17,786,307.5017,036,977.07
Shipping expenses33,086,676.7229,416,679.32
Travel expenses7,739,569.496,963,844.52
Storage expenses14,866,861.1423,155,581.32
Office expenses28,160,697.5428,651,945.26
Advertising expenses18,454,328.5416,881,877.36
Others377,222,116.67222,065,660.72
838,468,976.76646,256,160.00
(c)Cash received relating to other investing activities
20182017
Received Entrusted loan payments from Zhijun Suzhou44,000,000.00-
Received funds of acquiring Sinopharm Guangzhou Huadu4,680,000.00-
Received deposits returned by Shyndec-75,259,200.00
Others86,145.1511,768,140.19
48,766,145.1587,027,340.19

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

52. Notes to items in cash flow statement (Continued)

(d)Cash paid relating to other investing activities
20182017
Entrusted loan payments to Zhijun Suzhou43,999,800.0044,000,000.00
Others-26,175,078.90
43,999,800.0070,175,078.90
(e)Cash received relating to other financing activities
20182017
Received bank factoring money-59,676,813.84
Received security deposit of pledged borrowings79,825,164.6031,255,582.91
Others3,920,000.00-
83,745,164.6090,932,396.75
(f)Cash payments relating to other financing activities
20182017
Repayment of bank factoring64,002,739.23-
Cash paid for acquisition of non-controlling interests54,722,980.00158,996,642.00
Repayment of entrusted borrowings provided by Sinopharm Group-13,415,363.07
Others-6,579,569.60
118,725,719.23178,991,574.67

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

53. Supplementary information of cash flow statement

(a)Reconciliation of net profit to cash flows from operating activities
For the six month ended 30 June 2018For the six month ended 30 June 2017
Net profit689,249,009.91599,533,739.02
Adjustments: Provision for asset impairment(506,814.18)422,321.11
Depreciation of fixed assets and investment properties38,366,126.4235,222,304.68
Amortization of intangible assets11,832,914.6212,273,709.34
Amortization of long-term prepaid expenses41,638,297.6231,374,523.14
Gains on disposal of fixed assets, and other non-current assets(4,254,942.60)(202,306.43)
Financial expenses82,449,854.3628,528,443.16
Investment income(162,693,771.35)(146,726,039.90)
Decrease/(increase) of deferred tax assets3,402,744.73(1,641,139.11)
Decrease of deferred tax liabilities(2,018,990.14)(2,666,680.74)
Decrease/(increase) of inventory(463,324,117.97)113,733,297.36
(Increase)/decrease in operating receivables items(1,298,602,834.11)(1,127,697,064.94)
Increase/(decrease) in operating payables items1,170,553,090.12596,195,867.27
Others119,267,141.7789,986,457.44
Net cash generated from operating activities225,357,709.20228,337,431.40

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

53. Supplementary information of cashflow statement (Continued)

(c)Movement of cash
For the six month ended 30 June 2018For the six month ended 30 June 2017
Cash at end of year3,592,715,787.373,024,190,631.97
Less: cash at beginning of year3,673,498,691.483,150,915,425.49
Net increase in cash(80,782,904.11)(126,724,793.52)
(d)Acquisition of subsidiaries and operating units
For the six month ended 30 June 2018
Cash and cash equivalents paid for acquisitions of subsidiaries and other business units16,380,000.00
Incl: Sinopharm Zhuhai-
Sinopharm Guangzhou Huadu16,380,000.00
Maoming Yongsheng Medicines Co., Ltd.(Maoming Yongsheng)-
Less: Cash held by subsidiaries at the acquisition date21,146,145.15
Incl: Sinopharm Zhuhai-
Sinopharm Guangzhou Huadu21,146,145.15-
Maoming Yongsheng-
Net cash outflow on acquisition of the subsidiaries and business units(4,766,145.15)
(e)Cash
30 June 201831 December 2017
Cash3,592,715,787.373,673,498,691.48
Incl: Cash on hand3,721,460.756,208,674.32
Bank deposits on demand3,588,994,326.623,667,290,017.16
Ending banlance cash and cash equivalent3,592,715,787.373,673,498,691.48

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

V Notes to the consolidated financial statements (Continued)

54. Notes to changes in shareholders’ equity

Capital surplus-others increased by RMB397,342.21 when other changes in equity of ModernPharmaceutical resulted in adjustment of long-term equity investment and an increase of capitalsurplus by RMB397,342.21.

55. Assets under restricted ownership or right to use

Book valueReasons
Cash and cash equivalents350,879,773.21Deposits of bank acceptance notes, depostis for letter of credit
Notes receivables209,881,899.63Notes receivable endorsed but not due, notes receivable discounted but not due.
560,761,672.84

56. Foreign monetary items

30 June 2018
Original currencyExchange rateEquivalent to RMB
Short-term borrowings10,000.006.397863,978.00
US dollar10,000.006.397863,978.00

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VI. Changes in the scope of consolidation

1. Business combination not involving enterprises under common control

(1) Business combination not involving enterprises under common control during the current

period

Name of the entity acquiredEquity acquisition dateEquity acquisition costEquity acquisition ratioEquity acquisition methodDate of acquisitionBasis for determining the acquisition dateRevenue of the entity acquired from the acquisition date to the end of periodNet income of the entity acquired from the acquisition date to the end of period
Sinopharm Holding Guangzhou Huadu Co., Ltd.Apr.26th 201816,380,000.0070.00%CashApr.30th 2018Acquisition of controlling interest0.00(415,654.72)

Other information:

In April 2018, the Group increased capital in Guangzhou Honoka red Pharmaceutical Co., Ltd.to 70% for RMB 16,380,000.00 to constitue a business combination involving enterprises notunder common control. After the increase of capital, Guangzhou Honoka red Pharmaceutical

Co., Ltd. changed it’s name to Sinopharm Holding Guangzhou Huadu Co., Ltd..The acquisition

was completed on April 30

th

2018 and included in the consolidation scope of the company.

(2) Cost of combination and Goodwill

Cost of combinationSinopharm Holding Guangzhou Huadu Co., Ltd.
Cash16,380,000.00
Total cost of combination16,380,000.00
Less: Fair value shares of identifiable net assets obtained16,380,729.29
The amount of Goodwill / Cost of combination less than fair value shares of identifiable net assets obtained(729.29)

Illustration for the method of determining fair value of the cost of combination and for contingentconsideration and its variation:

Fair value of the cost of combination is determined by the consideration actually paid.

(3) Identifiable assets and liabilities of the acquired entity on the acquisition date

Sinopharm Holding Guangzhou Huadu Co., Ltd.
Fair valueCarrying amount
Cash and bank balances16,466,145.1516,466,145.15
Accounts receivable8,111,461.428,111,461.42
Advances to suppliers2,140,000.002,140,000.00
Other receivables1,751,932.931,751,932.93
Accounts payable244,940.00244,940.00
Tax payables1,341,300.521,341,300.52
Other payables24,587,265.4524,587,265.45
Net assets2,296,033.532,296,033.53

Method of determining fair value of the identifiable assets and liabilities:

Determined by valuation price.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VI. Changes in scope of consolidation (Continued)

2. Changes in scope of consolidation for other reasons

Establishment of subsidiaries:

30 June 201830 June 2018
Net assetsNet profitsRemarks
Sinopharm Holding Guoda Haohai Pharmacy Co., Ltd. (a)--New establishment
Sinopharm Holding Foshan Medical Consumables Supply Chain Co., Ltd. (b)7,994,832.20(5,167.80)New establishment
Sinopharm Holding Medical Supply Chain Services (Guangxi) Co., Ltd. (c)19,583,025.78(416,974.22)New establishment
Sinopharm Holding Baiyi Pharmacy Guangxi Co., Ltd. (d)1,938,956.56(61,043.44)New establishment

a. On 18 January 2018, the Group and Shanghai Linhong Medical Equipment Co., Ltd. set up

Sinopharm Holding Guoda Haohai Pharmacy Co., Ltd. registered capital subscribed RMB408,000.00 and RMB 392,000.00 respctively. As of 30 June 2018, funding has not yet beencompleted.

b. On 30 January 2018, the Group and Shenzhen Qingniu Medical Investment Co., Ltd. set

upSinopharm Holding Foshan Medical Consumables Supply Chain Co., Ltd., subscription ofregistered capital of RMB 8,000,000.00 for which the Group has indirect holding of 70%.

c. On 4 January 2018, the Group, Guorun Medical Supply Chain Service (Shanghai) Co., Ltd. and

Guangxi Deyiyuan Medical Investment Center (Limited Partnership) set upSinopharm HoldingMedical Supply Chain Services (Guangxi) Co., Ltd., registered capital subscribedRMB6,120,000.00, RMB5,880,000.00 and RMB8,000,000.00 respectively. As of 30 June 2018,fundings of RMB3,060,000.00, RMB2,940,000.00 and RMB4,000,000.00 has been completedrespectively.

d. On 24 April 2018, the Group and Baise Jian’an Medical Chain Co., Ltd. set upSinopharm

Holding Baiyi Pharmacy Guangxi Co., Ltd., registered capital subscribed RMB1,020,000.00 andRMB980,000.00 respectively. As of 30 June 2018, funding has not yet been completed.

3. Cancellation of subsidiary

SubsidiariesPrincipal place of businessPlace of incorporationRegistered capital (RMB 0.000)Nature of businessShareholdingReason for no longer being a subsidiary
DirectIndirect
Tangshan Lerentang Pharmacy Chain Store Co., Ltd.eTangshanTangshan300Wholesale and sales of medicines and health products-100%Absorption merger

e. In March 2018, Tangshan Lerentang Pharmacy Chain Store Co., Ltd. completed industrial andcommercial cancellation procedures, and cancelled corporate body.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VII Interests in other entities

1.Interests in subsidiaries
(1)The composition of the Group:
SubsidiariesPrincipal place of businessPlace of incorporationNature of businessShareholdingWays of acquisition
DirectIndirect
Sinopharm GuilinGuilinGuilinCommercial-100.00%Establishment
Sinopharm BaiseBaiseBaiseCommercial-100.00%Establishment
Sinopharm Holding Zhongshan Co., Ltd. (“Sinopharm Zhongshan")ZhongshanZhongshanCommercial100.00%-Establishment
Sinopharm GuigangGuigangGuigangCommercial-100.00%Establishment
Sinopharm BeihaiBeihaiBeihaiCommercial-100.00%Establishment
Guangzhou Medical TreatmentGuangzhouGuangzhouCommercial-51.00%Establishment
Shenzhen Jianmin Pharmaceutical Co., Ltd. (“Sinopharm Jianmin")ShenzhenShenzhenCommercial100.00%-Business combinations involving entities under common control
Sinopharm Holding Shenzhen Traditional & Herbal Medicine Co., Ltd. (“Sinopharm Traditional & Herbal Medicine")ShenzhenShenzhenCommercial100.00%-Business combinations involving entities under common control
Sinopharm Holding Shenzhen Logistics Co., Ltd. (“Shenzhen Logistics")ShenzhenShenzhenServices100.00%-Business combinations involving entities under common control
Sinopharm Holding Guangzhou Co., Ltd. (“Sinopharm Guangzhou")GuangzhouGuangzhouCommercial100.00%-Business combinations involving entities under common control
Sinopharm Holding Guangdong Hengxing Co., Ltd. (“Sinopharm Hengxing")GuangzhouGuangzhouCommercial100.00%-Business combinations involving entities under common control
Sinopharm YulinYulinYulinCommercial-100.00%Business combinations involving entities under common control

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VIIInterests in other entities (Continued)
1.Interests in subsidiaries (Continued)
(1)The composition of the Group (Continued):
SubsidiariesPrincipal place of businessPlace of incorporationNature of businessShareholdingWays of acquisition
DirectIndirect
Sinopharm LiuzhouLiuzhouLiuzhouCommercial51.00%-Business combinations involving entities under common control
Guangdong Huixin Investment Co., Ltd. (“Huixin Investment”)GuangzhouGuangzhouService100.00%-Business combinations involving entities under common control
Sinopharm Holding Foshan Co., Ltd. (“Sinopharm Foshan")FoshanFoshanCommercial100.00%-Business combinations involving entities under common control
Sinopharm Holding Guangdong Yuexing Co., Ltd. (“Sinopharm Yuexing”)GuangzhouGuangzhouCommercial100.00%-Business combinations involving entities under common control
Sinopharm Holding Guangdong Logistics Co., Ltd. (“Guangdong Logistic”)GuangzhouGuangzhouService100.00%-Business combinations involving entities under common control
Sinopharm GuangxiNanningNanningCommercial100.00%-Business combinations involving entities under common control
Guangxi LogisticNanningNanningService-100.00%Business combinations involving entities under common control
Sinopharm WuzhouWuzhouWuzhouCommercial-99.90%Business combinations involving entities under common control
Sinopharm Holding Dongguan Co., Ltd. (“Sinopharm Dongguan")DongguanDongguanCommercial100.00%-Business combinations involving entities not under common control
Sinopharm Holding Zhanjiang Co., Ltd. (“Sinopharm Zhanjiang")ZhanjiangZhanjiangCommercial100.00%-Business combinations involving entities not under common control
Sinopharm Holding Yanfeng Co., Ltd. (“Sinopharm Yanfeng ")ShenzhenShenzhenCommercial51.00%-Business combinations involving entities not under common control
Sinopharm Holding Meizhou Co., Ltd. (“Sinopharm Meizhou")MeizhouMeizhouCommercial100.00%-Business combinations involving entities not under common control

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VIIInterests in other entities (Continued)
1.Interests in subsidiaries (Continued)
(1)The composition of the Group (Continued):
SubsidiariesPrincipal place of businessPlace of incorporationNature of businessShareholdingWays of acquisition
DirectIndirect
Sinopharm Holding Huizhou Co., Ltd.("Sinopharm Huizhou")HuizhouHuizhouCommercial100.00%-Business combinations involving entities not under common control
Sinopharm Holding Zhaoqing Co., Ltd.("Sinopharm Zhaoqing")ZhaoqingZhaoqingCommercial100.00%-Business combinations involving entities not under common control
Sinopharm Holding Jiangmeng Renren Medical Co., Ltd.(“Sinopharm Jiangmen”)JiangmenJiangmenCommercial100.00%-Business combinations involving entities not under common control
Sinopharm Holding Shaoguan Co., Ltd.("Sinopharm Shaoguan")ShaoguanShaoguanCommercial70.00%-Business combinations involving entities not under common control
Sinopharm ShantouShantouShantouCommercial100.00%-Business combinations involving entities not under common control
Foshan Nanhai Medicine Co., Ltd.FoshanFoshanCommercial100.00%-Business combinations involving entities under common control
Foshan Nanhai Uptodate & Special Medicines Co., Ltd.FoshanFoshanCommercial-100.00%Business combinations involving entities under common control
Foshan Nanhai Medicine Co., Ltd.FoshanFoshanCommercial-100.00%Business combinations involving entities under common control
Guangdong Uptodate & Special MedicinesGuangzhouGuangzhouCommercial100.00%-Business combinations involving entities under common control
Guangdong South Pharmaceutical Foreign Trade Co., Ltd.GuangzhouGuangzhouCommercial100.00%-Business combinations involving entities under common control
Sinopharm ZhuhaiZhuhaiZhuahaiCommercial100.00%-Business combination not involving enterprises under common control
Sinopharm MaomingMaomingMaomingCommercial100.00%-Business combination not involving enterprises under common control
Sinopharm Holding Guangzhou Medical Treatment Technology Co., Ltd.GuangzhouGuangzhouCommercial-51.00%Establishment
Sinopharm Holding Guangzhou Medical Supply Chain Co., Ltd.GuangzhouGuangzhouCommercial-51.00%Establishment
Sinopharm HeyuanHeyuanHeyuanCommercial-70.00%Business combination not involving enterprises under common control
Sinopharm Holding Foshan Medical Consumables Supply Chain Co., Ltd.FoshanFoshanCommercial-70.00%Establishment
Sinopharm Holding Medical Supply Chain Services (Guangxi) Co., Ltd.NanningNanningCommercial-30.60%Establishment
Sinopharm Holding Guoda Haohai Pharmacy Co., Ltd.ShanghaiShanghaiCommercial-51.00%Establishment
Sinopharm Holding Guangzhou Huadu Co., Ltd.GuangzhouGuangzhouCommercial-70.00%Business combination not involving enterprises under common control
Sinopharm Holding Baiyi Pharmacy Guangxi Co., Ltd.NanningNanningCommercial-51.00%Establishment
Sinopharm Holding Guoda Pharmacy Co., Ltd.ShanghaiShanghaiCommercial-100.00%Business combinations involving entities under common control
Sinopharm Holding Guoda Pharmacy Chain Store Shanghai Co., Ltd.ShanghaiShanghaiCommercial-100.00%Business combinations involving entities under common control

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VII.Interests in other entities (Continued)
1.Interests in subsidiaries (Continued)
(1)The composition of the Group (Continued)
SubsidiariesPrincipal place of businessPlace of incorporationNature of businessShareholdingWays of acquisition
DirectIndirect
Beijing Guoda Pharmacy Chain Store Co., Ltd.BeijingBeijingCommercial-100.00%Business combinations involving entities under common control
Tianjin Guoda Pharmacy Chain Store Co., Ltd.TianjinTianjinCommercial-80.00%Business combinations involving entities under common control
Guangxi Guoda Pharmacy Consulting Chain Store Co., Ltd.NanningNanningCommercial-100.00%Business combinations involving entities under common control
Sinopharm Holding Guoda Pharmacy Guangdong Co., Ltd.ShenzhenShenzhenCommercial-100.00%Business combinations involving entities under common control
Sinopharm Guoda Pharmacy Guangxi Chain Co., Ltd.LiuzhouLiuzhouCommercial-100.00%Business combinations involving entities under common control
Zhejiang Guoda Pharmacy Co., Ltd.HangzhouHangzhouCommercial-100.00%Business combinations involving entities under common control
Sinopharm Holding Guoda Yangzhou Dadesheng Pharmacy Chain Store Co., Ltd.YangzhouYangzhouCommercial-93.68%Business combinations involving entities under common control
Ningxia Guoda Pharmacy Chain Store Co., Ltd.YinchuanYinchuanCommercial-70.00%Business combinations involving entities under common control
Sinopharm Holding Guoda Nanjing Pharmacy Chain Store Co., Ltd.NanjingNanjingCommercial-60.00%Business combinations involving entities under common control
Sinopharm Holding Guoda Shandong Pharmacy Chain Store Co., Ltd.LinyiLinyiCommercial-55.00%Business combinations involving entities under common control
Sinopharm Holding Guoda Shenyang Pharmacy Chain Store Co., Ltd.ShenyangShenyangCommercial-51.00%Business combinations involving entities under common control
Fujian Guoda Pharmacy Chain Store Co., Ltd.XiamenXiamenCommercial-100.00%Business combinations involving entities under common control

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VII.Interests in other entities (Continued)
1.Interests in subsidiaries (Continued)
(1)The composition of the Group (Continued)
SubsidiariesPrincipal place of businessPlace of incorporationNature of businessShareholdingWays of acquisition
DirectIndirect
Anhui Guoda Pharmacy Chain Store Co., Ltd.HefeiHefeiCommercial-60.00%Business combinations involving entities under common control
Quanzhou Guoda Pharmacy Chain Store Co., Ltd.QuanzhouQuanzhouCommercial-51.00%Business combinations involving entities under common control
Shanxi Guoda Wanmin Pharmacy Chain Store Co., Ltd.TaiyuanTaiyuanCommercial-85.00%Business combinations involving entities under common control
Sinopharm Holding Hunan Guoda Minshengtang Pharmacy Chain Co., Ltd.HengyangHengyangCommercial-51.00%Business combinations involving entities under common control
Liyang Guoda People Pharmacy Chain Store Co., Ltd.LiyangLiyangCommercial-80.00%Business combinations involving entities under common control
Sinopharm Holding Guoda Henan Pharmacy Chain Store Co., Ltd.PingdingshanPingdingshanCommercial-60.00%Business combinations involving entities under common control
Sinopharm Holding Guoda Neimenggu Pharmacy Chain Store Co., Ltd.HohhotHohhotCommercial-96.70%Business combinations involving entities under common control
Sinopharm Hebei Lerentang Pharmacy Chain Store Co., Ltd.ShijiazhuangShijiazhuangCommercial-60.00%Business combinations involving entities under common control
Sinopharm Guoda Pharmacy Jiangmen Chain Co., Ltd.JiangmenJiangmenCommercial-65.00%Business combinations involving entities under common control
Sinopharm Holding Guoda Shanxi Yiyuan Pharmacy Chain Store Co., Ltd.TaiyuanTaiyuanCommercial-80.00%Business combinations involving entities under common control
Sinopharm Holding Xinjiang New & Special Medicines Chain Store Co., Ltd.UrumqiUrumqiCommercial-51.00%Business combinations involving entities under common control
Sinopharm Holding Guoda ForMe Medicines (Shanghai) Co., Ltd.ShanghaiShanghaiCommercial-97.00%Business combinations involving entities under common control
Sinopharm Holding Guoda ForMe Pharmacy Chain Store Co., Ltd. (Formerly “Shanghai ForMe YiXing Pharmacy Chain Store Co., Ltd.”)ShanghaiShanghaiCommercial-99.76%Business combinations involving entities under common control

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VII.Interests in other entities (Continued)
1.Interests in subsidiaries (Continued)
(1)The composition of the Group (Continued)
SubsidiariesPrincipal place of businessPlace of incorporationNature of businessShareholdingWays of acquisition
DirectIndirect
Beijing Golden Elephant Pharmacy Medicine Chain Company LimitedBeijingBeijingCommercial-53.13%Business combinations involving entities under common control
Shanxi Tongfeng Pharmacy Logistics Co., Ltd.TaiyuanTaiyuanCommercial-100.00%Business combinations involving entities under common control
Datong Guoda Wanmin Pharmacy Chain Store Co., Ltd.DatongDatongCommercial-100.00%Business combinations involving entities under common control
Changzhi Guoda Wanmin Pharmacy Chain Store Co., Ltd.ChangzhiChangzhiCommercial-51.00%Business combinations involving entities under common control
Shanxi Guoda Wanmin Clinic Management Chain Co., Ltd.TaiyuanTaiyuanMedical services-100.00%Business combinations involving entities under common control
Shanghai Guoda Shanghong Qibao Pharmacy Co., Ltd.ShanghaiShanghaiCommercial-51.00%Business combinations involving entities under common control
Zhejiang Intlmedicine Pharmacy Dongshan Co., Ltd.HangzhouHangzhouCommercial-51.00%Business combinations involving entities under common control
Shanghai Guoda Dongsheng Pharmacy Co., Ltd.ShanghaiShanghaiCommercial-100.00%Business combinations involving entities under common control
Sinopharm Guoda Drug Store (Shenzhen) Chain Co., Ltd.ShenzhenShenzhenCommercial-100.00%Business combinations involving entities under common control
Sinopharm Holding Guoda Pharmacy Guangzhou Chain Co., Ltd.GuangzhouGuangzhouCommercial-100.00%Business combinations involving entities under common control
Shanghai Guoda Changxin Pharmacy Co., Ltd.ShanghaiShanghaiCommercial-100.00%Business combinations involving entities under common control
Shanghai Guodong Chinese Traditional Medicine Clinic Co., Ltd.ShanghaiShanghaiMedical clinic-100.00%Business combinations involving entities under common control
Shanghai Guoda Dongxin Pharmacy Chain Store Co., Ltd.ShanghaiShanghaiCommercial-100.00%Business combinations involving entities under common control

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VII.Interests in other entities (Continued)
1.Interests in subsidiaries (Continued)
(1)The composition of the Group (Continued)
SubsidiariesPrincipal place of businessPlace of incorporationNature of businessShareholdingWays of acquisition
DirectIndirect
Shanghai Yutaitang Chinese Traditional Medicine Clinic Co., Ltd.ShanghaiShanghaiCommercial-100.00%Business combinations involving entities under common control
Beijing Yangqiao Rongzhi Golden Elephant Pharmacy Company LimitedBeijingBeijingCommercial-50.79%Business combinations involving entities under common control
Sanhe Liyang Golden Elephant Pharmacy Co., Ltd.LangfangLangfangCommercial-100.00%Business combinations involving entities under common control
Xiaoyi Guoda Wanmin Baicaotang Pharmacy Chain Store Co., Ltd.XiaoyiXiaoyiCommercial-70.00%Business combinations involving entities under common control
Sinopharm Holding Guoda Pharmacy Hulun Buir Co., Ltd.Hulun BuirHulun BuirCommercial-51.00%Business combinations involving entities under common control
Shijiazhuang Lerentang Yikang Pharmacy Chain Store Co., Ltd.ShijiazhuangShijiazhuangCommercial-100.00%Business combinations involving entities under common control
Shanghai ForMe Pharmacy Co., Ltd.ShanghaiShanghaiCommercial-100.00%Business combinations involving entities under common control
Sinopharm Holding Ulanqab Co., Ltd.UlanqabUlanqabCommercial-60.00%Establishment
Sinopharm Guoda Pharmacy Qinhuangdao Chain Co., Ltd.QinhuangdaoQinhuangdaoCommercial-51.00%Business combinations involving entities under common control
Taishan Sinopharm Holding Guoda Qunkang Pharmacy Chain Store Co., Ltd.TaishanTaishanCommercial-70.00%Business combinations involving entities under common control
Beijing Golden Elephant Fuxing Technology Co., Ltd.BeijingBeijingCommercial-80.00%Business combinations involving entities under common control
Sinopharm LerentangShijiazhuangShijiazhuangCommercia-100%mbinations involving entities under common control
GuoDa Drugstore Manzhouli Co., LtdManzhouliManzhouliCommercial-51.00%Establishment
Sinopharm Guoda Pharmacy Maanshan Chain Store Co., Ltd.AnshanAnshanCommercial-51.00%Establishment
Sinopharm Guoda Pharmacy Yongsheng (Shanghai) Co., Ltd.ShanghaiShanghaiCommercial-55.00%Establishment
Sanhe Lixin Golden Elephant Pharmacy Co., Ltd.LangfangLangfangCommercial-100.00%Establishment

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VII. Interests in other entities (Continued)

2. Interests in associates

Principal place of businessPlace of incorporationNature of businessShareholding(%)Accounting
DirectIndirect
Associates
Shenzhen Main Luck Pharmaceutical Co., Ltd. ("Main Luck Pharmaceutical ")ShenzhenShenzhenManufacturing35.19%-Equity
Sinopharm Group Zhijun(Suzhou) Pharmaceutical Co., Ltd.SuzhouSuzhouManufacturing33.00%-Equity
Sinopharm Group Zhijun(Shenzhen) Pharmaceutical Co., Ltd.ShenzhenShenzhenManufacturing49.00%-Equity
Shenzhen Zhijun Pharmaceutical Trade Co., Ltd.ShenzhenShenzhenCommercial49.00%-Equity
Sinopharm Group Zhijun(Shenzhen) Pingshan Pharmaceutical Co., Ltd.ShenzhenShenzhenManufacturing49.00%-Equity
Shanghai Shyndec Pharmaceutical Co., Ltd. (“Shyndec Pharmaceutical”)ShanghaiShanghaiManufacturing16.00%-Equity
上海鼎群企业管理咨询有限公司ShanghaiShanghai商务服务业2.53%Equity
Shanghai Beiyi Guoda pharmaceutical Co. Ltd.ShanghaiShanghaiCommercial-26.00%Equity
Shanghai Liyi Pharmacy Co., LtdShanghaiShanghaiCommercial-35.00%Equity
Sinopharm Jienuo Medical Treatment Service Guangdong Co., Ltd.GuangzhouGuangzhouCommercial-29.00%Equity
Dongyuan accord pharmaceutical chain Co., Ltd.HeyuanHeyuanCommercial-45.00%Equity

Accoding to the Articles of Association and investment aggrement, the board of directors of ShanghaiDingqun Enterprise Management Consulting consisted of three directors, in which one were appointed bythe Group, accounting for 33.33% of voting rights.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VII. Interests in other entities (Continued)

3. Summarised financial information of significant associate

30 June 201830 June 2017
Shanghai Shyndec Pharmaceutical Co., Ltd.Shanghai Shyndec Pharmaceutical Co., Ltd.
Current assets8,210,661,752.986,919,923,607.58
Non-current assets8,136,876,492.438,250,667,440.18
Total assets16,347,538,245.4115,170,591,047.76
Current liabilities6,124,167,753.555,390,426,266.96
Non-current liabilities2,190,226,473.722,132,391,027.26
Total liabilities8,314,394,227.277,522,817,294.22
Non-controlling interests1,502,385,107.441,474,395,375.11
Shareholders’ equity attributable to shareholders of the parent6,530,758,910.706,173,378,378.43
Portion of net assets calculated by shareholding ratio1,036,784,861.34979,174,050.63
Carrying value of equity investment in joint ventures1,036,784,861.34979,174,050.63
Operating revenue5,853,255,169.054,579,660,856.59
Net profit575,258,204.58524,753,028.55
Total comprehensive income575,258,204.58524,753,028.55
Dividends received from joint ventures this year8,641,853.2022,468,818.32

VIIl. Risks related to financial instruments

1. Classification of financial instruments

The fair values of each category of financial instruments that reasonably approximate to their

carrying amounts at the end of the reporting period are as follows:

30 June 2018

Financial assetsBorrowings and receivablesAvailable-for-sale financial assetsTotal
Cash and bank balances3,943,595,560.58-3,943,595,560.58
Notes receivable1,021,697,370.21-1,021,697,370.21
Accounts receivable9,441,542,367.19-9,441,542,367.19
Interest receivable47,507.80-47,507.80
Other receivables698,672,023.18-698,672,023.18
Available-for-sale financial assets-13,685,760.0013,685,760.00
15,105,554,828.9613,685,760.0015,119,240,588.96

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VIIl. Risks related to financial instruments (Continued)

1. Classification of financial instruments (Continued)

31 December 2017

Financial assetsBorrowings and receivablesAvailable-for-sale financial assetsTotal
Cash and bank balances4,191,655,438.51-4,191,655,438.51
Notes receivable1,504,194,764.08-1,504,194,764.08
Accounts receivable7,589,412,679.88-7,589,412,679.88
Interest receivable61,441.11-61,441.11
Other receivables657,871,058.54-657,871,058.54
Available-for-sale financial assets-13,685,760.0013,685,760.00
13,943,195,382.1213,685,760.0013,956,881,142.12
Financial liabilities30 June 201831 December 2017
Short-term borrowings2,051,139,651.671,561,354,521.64
Notes payable2,373,628,140.862,732,437,828.42
Accounts payable7,230,024,480.356,144,221,000.10
Dividends payable8,889,443.1111,889,443.11
Other payables1,024,176,704.111,011,128,397.26
Non-current liabilities due within one year5,651,227.565,434,770.70
Interest payable10,378,213.917,311,819.65
Long-term borrowings31,600,000.0031,600,000.00
Long-term payables6,604,575.849,332,537.14
12,742,092,437.4111,514,710,318.02

2. Transfer of financial assets

Transferred financial assets that are not derecognized in their entiretyAs at 30 June 2018, the Group had endorsed commercial bills receivable (the "Endorsed Bills")to certain of its suppliers in order to settle accounts payable due to such suppliers of RMB0 (31December 2017: RMB0 ). During the year, the Group operated a number of discounting businessthrough several banks in China. At 30 June 2018, the carrying value thereof wasRMB209,881,899.63 (31 December 2017: RMB147,715,527.67). In the opinion of the directors,the Group has retained the substantial risks and rewards, which include default risks relating tosuch Endorsed Bills, and accordingly, it continued to recognize the full carrying amounts of theEndorsed Bills and the associated accounts payable settled. Subsequent to the Endorsement,the Group did not retain any rights on the use of the Endorsed Bills, including the sales, transferor pledge of the Endorsed Bills to any other third parties. As at 30 June 2018, the carrying valueof accounts payable settled by the Group totalled RMB209,881,899.63 (31 December 2017:

RMB147,715,527.67).

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VIIl. Risks related to financial instruments (Continued)

2. Transfer of financial assets (Continued)

Transferred financial assets that are derecognized in their entirety in which continuinginvolvement existsAs at 30 June 2018, the Group had endorsed commercial bills receivable (the "Endorsed Bills")to certain of its suppliers in order to settle accounts payable due to such suppliers ofRMB706,198,208.44(31 December 2017: RMB667,900,939.97). During the year, the Groupoperated a number of discounting business through several banks in China. At 30 June 2018,the carrying value thereof was RMB361,130,021.33 (31 December 2016: RMB367,011,030.59).The Derecognized Bills had a maturity of 1 to 12 months at the end of the reporting period. Inaccordance with the Law of Negotiable Instruments, the holders of the Derecognized Bills have

a right of recourse against the Group if the accepting banks default (the “ContinuingInvolvement”). In the opinion of the directors, the Group has transferred substantially all risks

and rewards relating to the Derecognized Bills. Accordingly, it has derecognized the fullcarrying amounts of the Derecognized Bills and the associated accounts payable. Themaximum exposure to loss from the Group's Continuing Involvement in the Derecognized Billsand the undiscounted cash flows to repurchase these Derecognized Bills is equal to their

carrying amounts. In the opinion of the directors, the fair values of the Group’s Continuing

Involvement in the Derecognized Bills are not significant.

As part of its normal business, the Group entered into an accounts receivable factoring

arrangement (the “Arrangement”) without recourse and transferred certain accounts receivable

to a bank. In the opinion of the directors, the Group has transferred substantially all risks andrewards under the arrangement. Accordingly, it has derecognized the full carrying amounts ofthe associated accounts receivable. The original carrying value of the derecognized accountsreceivable transferred under the Arrangement that have not been settled as at 30 June 2018amounted to RMB761,574,518.74 (31 December 2017: RMB525,614,331.67).

As of 30 June 2018, the Group has not recognized any gain or loss on the date of transfer. Nogain or loss were recognized from derecognized financial assets in which ContinuingInvolvement exists, both during the year or cumulatively.

As of 30 June 2018, the Group has not recognized any gain or loss on the date of transfer ofthe Derecognized Bills. No gains or losses were recognized from the Continuing Involvement,both during the year or cumulatively.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VIIl. Risks related to financial instruments (Continued)

3. Risks of financial instruments

The main purpose and policies of financial risk managementThe Group's principal financial instruments comprise bank borrowings and cash and short termdeposits. The main purpose of these financial instruments is to raise finance for the Group'soperations. The Group has various other financial assets and liabilities such as accountsreceivable and accounts payable, which arise directly from its operations.

The main risks arising from the Group's financial instruments are interest rate risk, liquidity risk,foreign currency risk and credit risk.

Credit riskCredit risk is managed on the basis of the Group. Credit risk mainly arises from cash at banksand on hand, accounts receivable, other receivables and notes receivable, etc.

The Group expects that there is no significant credit risk associated with cash at banks since it isdeposited with state-owned banks and other medium or large sized listed banks. Managementdoes not expect that there will be any significant losses from non-performance by thesecounterparties.

In addition, the Group has policies to limit the credit exposure on accounts receivable, otherreceivables and notes receivable. The Group assesses the credit quality of and sets credit limitson its customers by taking into account their financial position, the availability of guarantees fromthird parties, their credit history and other factors such as current market conditions. The Groupwill confirm the balances with its clients regarding the accounts receivable semi-annually, andassess the recoverability of each account receivable, by using individual evaluation and similarcredit risk group methods. The credit history of the customers is regularly monitored by theGroup. In respect of customers with a poor credit history, the Group will use written paymentreminders, or shorten or cancel credit periods, to ensure the overall credit risk of the Group islimited to a controllable extent.

Liquidity riskCash flow forecasting is performed by each subsidiary of the Group and aggregated by the

Group’s finance department in its headquarter. The Group’s finance department at its

headquarter monitors rolling forecasts of the Group's short-term and long-term liquidityrequirements to ensure it has sufficient cash and securities that are readily convertible to cash tomeet operational needs. In the meanwhile, the Group continually monitors the terms of the debtcovenants in the loan agreements, ensuring that sufficient unutilized commitments from majorfinancial institutions, in order to meet the short-term and long-term liquidity requirements.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VIII Risks related to financial instruments (Continued)

3. Risks of financial instruments (Continued)

Liquidity risk (Continued)

The maturity analysis of the Group's financial liabilities as at the end of the reporting period, based on the contractual undiscounted cash flows, is as follows:

30 June 2018
Within 1 year1 to 2 years2 to 5 yearsAbove 5 yearsTotal
Short-term borrowings2,070,582,956.14---2,070,582,956.14
Notes payable2,373,628,140.86---2,373,628,140.86
Accounts payable7,230,024,480.35---7,230,024,480.35
Interest payables10,378,213.91---10,378,213.91
Dividend payables8,889,443.11---8,889,443.11
Other payables1,024,176,704.11---1,024,176,704.11
Current portion of non-current liabilities5,651,227.56---5,651,227.56
Long-term payables-3,716,803.492,887,772.35-6,604,575.84
Long-term borrowings1,293,570.1432,695,104.5833,988,674.72
12,724,624,736.1836,411,908.072,887,772.3512,763,924,416.60

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VIII Risks related to financial instruments (Continued)

3. Risks of financial instruments (Continued)

Liquidity risk (Continued)

31 December 2017
Within 1 year1 to 2 years2 to 5 yearsAbove 5 yearsTotal
Short-term borrowings1,574,233,015.06---1,574,233,015.06
Notes payable2,732,437,828.42---2,732,437,828.42
Accounts payable6,144,221,000.10---6,144,221,000.10
Interest payables7,311,819.65---7,311,819.65
Dividend payables11,889,443.11---11,889,443.11
Other payables1,011,128,397.26---1,011,128,397.26
Current portion of non-current liabilities7,304,197.88---7,304,197.88
Long-term payables-7,304,197.884,987,438.87-12,291,636.75
Long-term borrowings1,293,570.141,293,570.1432,043,003.47-34,630,143.75
11,489,819,271.628,597,768.0237,030,442.34-11,535,447,481.98

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VIII Risks related to financial instruments (Continued)

4. Market risk

Interest rate risk

The Group's interest rate risk arises from long-term borrowings from banks. Financial liabilitiesissued at floating rates expose the Group to cash flow interest rate risk. Financial liabilities issuedat fixed rates expose the Group to fair value interest rate risk. The Group determines the relativeproportions of its fixed rate and floating rate contracts depending on the prevailing marketconditions. As at 30 June 2018, if the floating interest rates of the long-term interest-bearingborrowings increases or decreases by 50 base points, while other factors does not change, the

Group’s net income will decrease or increase by RMB118,500 (31 December 2017: RMB118,500).

Increases in interest rates will increase the cost of new borrowings and the interest expenses with

respect to the Group’s outstanding floating rate borrowings, and therefore could have a materialadverse effect on the Group’s financial position. The Group’s finance department at its headquarter

continuously monitors the interest rate position of the Group and makes decisions with reference tothe latest market conditions. The Group may enter into interest rate swap agreements to mitigate itsexposure to interest rate risk. During first half of 2018 and 2017, the Group did not enter into anyinterest rate swap agreements.

For the year ended 30 June 2018, the Group has long-term interest-bearing borrowings withfloating interest rates amounted to RMB31,600,000.00 (31 December 2017: RMB31,600,000.00).

Currency risk

The Group’s major operational activities are carried out in Mainland China and a majority of the

transactions are denominated in RMB. The Group is exposed to foreign exchange risk arising fromthe recognized assets and liabilities, and future transactions denominated in foreign currencies,

primarily with respect to United States dollars and Hong Kong dollars. The Group’s finance

department at its headquarter is responsible for monitoring the amounts of assets and liabilities,and transactions denominated in foreign currencies. The Group may consider entering into forwardexchange contracts or currency swap contracts to mitigate the foreign exchange risk.

As at 30 June 2018, if the currency had weakened/strengthened by 5% against the United States

dollar while all other variables had been held constant, the Group’s net profit for the year would

increase/decrease by RMB0 (2017: RMB0).

As at 30 June 2018, if the currency had weakened/strengthened by 5% against the Hong Kong

Dollar while all other variables had been held constant, the Group’s net profit for the year would

increase/decrease by RMB0 (2017: RMB0 ).

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

VIII Risks related to financial instruments (Continued)

5. Capital management

The Company’s primary objective for managing capital is to ensure that it maintains a strong creditrating and healthy capital ratio in order to support its business, maximize shareholders’ value and

benefit related parties. Management also aims to maintain a capital structure that ensures thelowest cost of capital available to the entity.

Management adjusts the capital structure through adjusting dividend payments to shareholders,returning capital to shareholders, issuing new shares or selling assets to reduce debts.

The Group’s total capital is the total shareholders’ equity in the balance sheet. The Group does not

adopt an asset ratio as a compulsory factor to govern capital investment.

The gearing ratios of the Group as at the end of the reporting periods were as follows:

30 June 201831 December 2017
Gearing ratio56.36%55.57%

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

IX Disclosure of fair value

1. The fair value of financial assets and liabilities recorded in fair value

Fair value at period end
Level 1Level 2Level 3Total
Financial assets available-for-sale--13,685,760.0013,685,760.00
(1)Debt investment----
(2)Equity investment--13,685,760.0013,685,760.00
(3)Others----

The results of fair value measurement are categorized within the fair value hierarchy, described asfollows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair

value are observable, either directly or indirectly; and

Level 3: techniques which use inputs which have a significant effect on the recorded fair value thatare not based on observable market data.

(1) Assets that are measured at fair value on a recurring basis

The Group has no assets that are measured at fair value on a recurring basis.

(2) Assets that are measured at fair value on a non-recurring basis

The Group has no assets that are measured at fair value on a non-recurring basis.

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

X. Related party relationships and transactions (Continued)

1. Parent

Registered addressNature of businessShare capital (RMB’0,000)Proportion of ownership interest in the CompanyProportion of voting power in the Company
Sinopharm GroupShanghaiIndustrial investment holding, trustee of a pharmaceutical enterprise, assets reorganization, distribution and retail of medicines and pharmaceutical products, etc.276,709.5156.06%56.06%

The ultimate controlling party of the Company is CNPGC.

2. Subsidiaries

Refer to Note VII (1) for details of subsidiaries.

3. Associates

Refer to Note VII (2) for details of associates.

Company nameRelated party relationships
Shenzhen Main Luck Pharmaceutical Co., Ltd.Associate
Sinopharm Group Zhijun(Shenzhen) Pharmaceutical Co., Ltd.Associate
Shenzhen Zhijun Pharmaceutical Trade Co., Ltd.Associate
Sinopharm Group Zhijun(Shenzhen) Pingshan Pharmaceutical Co., Ltd.Associate
Shanghai Modern Pharmaceutical Co., Ltd. (Modern Pharmaceutical)Associate
Sinopharm Group Zhijun(Suzhou) Pharmaceutical Co., Ltd.Associate
Shanghai Dingqun Enterprise Management Consulting Co., Ltd.Associate
Sinopharm Jienuo Medical Treatment Sevice Guangdong Co., Ltd.Associate
Shanghai Beiyi Guoda pharmaceutical Co. Ltd.Associate
Shanghai Liyi Drug Store Co.,LtdAssociate
Dongyuan accord pharmaceutical chain Co., Ltd.Associate

4. Other related parties

Company nameRelated party relationships
China Otsuka Pharmaceutical Co., Ltd.Associate of CNPGC
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd.Associate of CNPGC
Changchun Changsheng Gene Pharmaceutical Co., Ltd.Associate of CNPGC
Shenzhen Wanwei Medicine trading Co., Ltd.Subsidiary of Main Luck Pharmaceutical
Sinopharm Holding Financing Lease Co., Ltd.Associate of Sinopharm Group

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

Company nameRelated party relationships
China Otsuka Pharmaceutical Co., Ltd.Associate of CNPGC
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd.Associate of CNPGC
Changchun Changsheng Gene Pharmaceutical Co., Ltd.Associate of CNPGC
Shenzhen Wanwei Medicine trading Co., Ltd.Subsidiary of Main Luck Pharmaceutical
Yichang Humanwell Pharmaceutical Co., Ltd.Associate of Sinopharm Group
Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Co., Ltd.Associate of Sinopharm Group
Sinopharm Health Online Co., Ltd..Associate of Sinopharm Group
Shanghai Guoda Lingyun Pharmacy Co., Ltd.Associate of Sinopharm Group
Sichuan Kang Daxin Pharmaceutical Co., LtdAssociate of Sinopharm Group
Hubei Medical Group Co., Ltd.Associate of Sinopharm Group
Shanghai Fosun Pharmaceutical (Group) Co., Ltd.("Fosun Pharm")Shareholder who has significant influence over Sinopharm Group
Chongqing Yaoyou Pharmaceutical Co., Ltd.Subsidiary of Fosun Pharm
Sichuan Hexin Pharmaceutical Co., Ltd.Subsidiary of Fosun Pharm
Shanghai Chaohui Pharmecurical Co., Ltd.Subsidiary of Fosun Pharm
Tibet Yaopharma Co., Ltd.Subsidiary of Fosun Pharm
Shenyang Hongqi Pharmaceutical Co., Ltd.Subsidiary of Fosun Pharm
Jiangsu Wanbang Pharmacy Marketing Co., Ltd.Subsidiary of Fosun Pharm
Chongqing Haisiman Pharmaceutical Co., Ltd.Subsidiary of Fosun Pharm
Jinzhou AoHong Pharmaceuticals Co., Ltd.Subsidiary of Fosun Pharm
Hunan Dongting Pharmaceutical Co., Ltd.Subsidiary of Fosun Pharm
Suzhou Erye Pharmaceutical Limited CompanySubsidiary of Fosun Pharm
Foshan Chancheng District Central HospitalSubsidiary of Fosun Pharm
Foshan Chanyixing Medicine Development Co Ltd.Subsidiary of Fosun Pharm
Foshan Chancheng Pharmaceutical Co., Ltd.Subsidiary of Fosun Pharm
Shenzhen Hengsheng HospitalSubsidiary of Fosun Pharm
Guilin South pharmaceutical Co., Ltd.Subsidiary of Fosun Pharm
Shanghai Transfusion Technology Co., Ltd.Subsidiary of Fosun Pharm
Jiangsu Huanghe Pharmaceutical Co., Ltd.Subsidiary of Fosun Pharm
Jiangsu Fuxing Pharmaceutical Trading Co., Ltd.Subsidiary of Fosun Pharm
Group Financial Co.Group Financial Co.Controlled by CNPGC
Sinopharm Group Guangdong Medicine Device Co., Ltd.Controlled by CNPGC
Huayi Pharmaceutical Co., Ltd.Controlled by CNPGC
Sichuan Jiangyouzhongbafuzi Technology Development Co., Ltd.Controlled by CNPGC
Guizhou Tongjitang Pharmaceutical Co., Ltd.Controlled by CNPGC
Anhui Jingfang Pharmaceutical Co., Ltd.Controlled by CNPGC
Guangdong Medi-World Pharmaceutical Co., Ltd.Controlled by CNPGC
Shandong Lu Ya Pharmaceutical Co., Ltd.Controlled by CNPGC
Foshan Fengliaoxing Pharmaceutical Co., Ltd.Controlled by CNPGC

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

Company nameRelated party relationships
China Otsuka Pharmaceutical Co., Ltd.Associate of CNPGC
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd.Associate of CNPGC
Changchun Changsheng Gene Pharmaceutical Co., Ltd.Associate of CNPGC
Shenzhen Wanwei Medicine trading Co., Ltd.Subsidiary of Main Luck Pharmaceutical
Winteam Pharmaceutical Group Ltd.Controlled by CNPGC
Chengdu Rongsheng Pharmacy Co., Ltd.Controlled by CNPGC
Lanzhou Institute of Biological Products Co., Ltd.Controlled by CNPGC
Shantou Jinshi Powder Injection Co., Ltd.Controlled by CNPGC
China National Pharmaceutical Industry Co., Ltd.Controlled by CNPGC
Sinopharm Group Weiqida Medicine Co., Ltd.Controlled by CNPGC
Shanghai Modern Hasen (Shangqiu) Pharmaceutical Co., Ltd.Controlled by CNPGC
Shanghai Shyndec Pharmaceutical Marketing Co., Ltd.Controlled by CNPGC
Sinopharm Group Rongsheng Pharmaceutical Co., Ltd.Controlled by CNPGC
Wuhan Zhonglian Pharmaceutical Group Co., Ltd.Controlled by CNPGC
The Fourth Pharmaceutical Co., Ltd. of Zhonglian GroupControlled by CNPGC
Sinopharm Chuan Kang Pharmaceutical Co., Ltd.Controlled by CNPGC
China National Pharmaceutical Foreign Trade CorporationControlled by CNPGC
Sinopharm Group Yibin Pharmaceuticals Co., Ltd.Controlled by CNPGC
Sinopharm Zhuhai Medical Instrument Co., Ltd.Controlled by CNPGC
Sinopharm Fujian Medical Examination Co., Ltd.Controlled by CNPGC
Beijing Huasheng Pharmaceutical Biotechnology Development Co., Ltd.Controlled by CNPGC
Beijing Huamiao Pharmaceutical Co., Ltd.Controlled by CNPGC
Sinopharm Xinjiang Pharmaceutical Co., Ltd.Controlled by CNPGC
Sinopharm Holding Sanyi Medicine (Wuhu) Co., Ltd.Controlled by CNPGC
Sinopharm Shantou Jinshi Pharmaceutical Co., Ltd.Controlled by CNPGC
Sinopharm Hebei Medical Instrument Co., Ltd.Controlled by CNPGC
Sinopharm Fengliaoxing (Foshan) Medicines Co., Ltd.Controlled by CNPGC
China National Scientific Instruments & Materials Imp/Exp Shenzhen Co., Ltd.Controlled by CNPGC
CMDC Guizhou Qiannan Co., Ltd.Controlled by CNPGC
Fujian CMDC Co., Ltd.Controlled by CNPGC
Sinopharm Fengliaoxing Medical Hospital Co., Ltd.Controlled by CNPGC
Beijing Tiantan Biological Products Co., Ltd.Controlled by CNPGC
Sinopharm Guangdong Medical Examination Co., Ltd.Controlled by CNPGC
Sinopharm Group Shanghai Medicine Device Co., Ltd.Controlled by CNPGC
Foshan Dezhong Pharmaceutical Co., Ltd.Controlled by CNPGC
Chengdu Institute of Biological Products Co., Ltd.Controlled by CNPGC
China National of Traditional&Herbal Medicine Co., Ltd.Controlled by CNPGC
Sinopharm Chongqing Pharmaceutical and Medical Industry Design InstituteControlled by CNPGC

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

Company nameRelated party relationships
China Otsuka Pharmaceutical Co., Ltd.Associate of CNPGC
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd.Associate of CNPGC
Changchun Changsheng Gene Pharmaceutical Co., Ltd.Associate of CNPGC
Shenzhen Wanwei Medicine trading Co., Ltd.Subsidiary of Main Luck Pharmaceutical
Sinopharm (Guangzhou) Medical Equipment Co., Ltd.Controlled by CNPGC
China Sinopharm International CorporationControlled by CNPGC
Shanghai Shangsheng Biological Products Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Tianjin Binhai Pharmaceutical Co., Ltd.Controlled by Sinopharm Group
Shanghai Tongyu Information Technology Co., Ltd.Controlled by Sinopharm Group
Guorun Medical Supply Chain Services (Shanghai) Co., Ltd.Controlled by Sinopharm Group
Sinopharm Group Southwest Medicine Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Tianjin Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Hunan Co., Ltd.Controlled by Sinopharm Group
China National Medicines Co., Ltd.Controlled by Sinopharm Group
Sinopharm Group Guorui Medicine Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Beijing Huahong Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Sub Marketing Center Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Henan Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Fuzhou Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Shandong Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Dezhou Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Hainan Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Fujian Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Guizhou Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Lianyungang Co., Ltd.Controlled by Sinopharm Group
Sinopharm Lingyun Biopharmaceutical (Shanghai) Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Lerentang Pharmaceutical Co., Ltd.Controlled by Sinopharm Group
Sinopharm Lerentang Shijiazhuang Medicine Co., Ltd.Controlled by Sinopharm Group
Sinopharm Xingsha Pharmaceuticals (Xiamen) Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Shanxi Co., Ltd.Controlled by Sinopharm Group
Sinopharm Le-Ren-Tang Medicine Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Shanxi Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Shenyang Co., Ltd.Controlled by Sinopharm Group
Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Yangzhou Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Lunan Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Beijing Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Hulun Buir Co., Ltd.Controlled by Sinopharm Group

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

Company nameRelated party relationships
China Otsuka Pharmaceutical Co., Ltd.Associate of CNPGC
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd.Associate of CNPGC
Changchun Changsheng Gene Pharmaceutical Co., Ltd.Associate of CNPGC
Shenzhen Wanwei Medicine trading Co., Ltd.Subsidiary of Main Luck Pharmaceutical
Sinopharm Holding Inner Mongolia Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Pingdingshan Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Jiangsu Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Xiamen Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Suzhou Co., Ltd.Controlled by Sinopharm Group
Shanghai Merro Pharmaceutical Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Changzhou Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Ningxia Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Xinjiang Special Drugs Western Pharmaceutical Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Shanxi Instrument Branch Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Beijing Kangchen Bio-Pharmaceutical Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Wuxi Co., Ltd.Controlled by Sinopharm Group
Sinopharm Lerentang Hebei Medical Instrument Trade Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Dalian Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Jinan Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Tianjin Distribution Center Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Donghong Medical (Shanghai) Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Yancheng Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Jinzhou Co., Ltd.Controlled by Sinopharm Group
Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Rizhao Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Putian Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Xinjiang Xinte Karamay Pharmaceutical Co., Ltd.Controlled by Sinopharm Group
Sinopharm Group Shanxi Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Chengdu Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Quanzhou Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Kashi New & Special Drugs Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Anhui Co., Ltd.Controlled by Sinopharm Group
Beijing Tongyu Information Technology Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Ulanqab Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Hubei Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Zhihui Minsheng (Tianjin) Medicine Co., Ltd.Controlled by Sinopharm Group

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

Company nameRelated party relationships
China Otsuka Pharmaceutical Co., Ltd.Associate of CNPGC
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd.Associate of CNPGC
Changchun Changsheng Gene Pharmaceutical Co., Ltd.Associate of CNPGC
Shenzhen Wanwei Medicine trading Co., Ltd.Subsidiary of Main Luck Pharmaceutical
Sinopharm Holding Shanxi Jincheng Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Zhejiang Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Changsha Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Nanping Newforce Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Yangzhou Biological Medicine Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Taizhou Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Wende Medicine Nanjing Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Dalian Hecheng Co., Ltd.Controlled by Sinopharm Group
Sinopharm Lerentang Qinhuangdao Medicine Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Tongliao Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Jiangxi Co., Ltd.Controlled by Sinopharm Group
Sinopharm Group Chemical Reagent Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Ordos Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Tianjin North Medicine Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Yongzhou Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Jinhua Co., Ltd.Controlled by Sinopharm Group
Sinopharm Lerentang Tangshan Medicine Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Chongqing Co., Ltd.Controlled by Sinopharm Group
Sinopharm Prospect Dentech (Beijing) Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Biopharmaceutical (Tianjin) Co., Ltd.Controlled by Sinopharm Group
Sinopharm Group Medicine Logistic Co., Ltd.Controlled by Sinopharm Group
China National Pharmaceutical Logistics Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Hubei Hongyuan Medicine Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Wuhu Co., Ltd..Controlled by Sinopharm Group
Sinopharm Holding Lu'an Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Suzhou Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Jiling Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Liaocheng Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Yunnan Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Honghe Co., Ltd.Controlled by Sinopharm Group
Yuxi Sinopharm Medicine Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Hainan Hongyi Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Gansu Co., Ltd.Controlled by Sinopharm Group

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

Company nameRelated party relationships
China Otsuka Pharmaceutical Co., Ltd.Associate of CNPGC
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd.Associate of CNPGC
Changchun Changsheng Gene Pharmaceutical Co., Ltd.Associate of CNPGC
Shenzhen Wanwei Medicine trading Co., Ltd.Subsidiary of Main Luck Pharmaceutical
Sinopharm Holding Longyan Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Ningde Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Nanchang Pharmacy Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Tongren Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Zunyi Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Guizhou Medical Equiment Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Jilin Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Jilin Pharmacy Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Siping Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Wenzhou Co., LtdControlled by Sinopharm Group
Sinopharm Holding Nantong Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Heilongjiang Co., Ltd.Controlled by Sinopharm Group
Sinopharm Lerentang Hengshui Medicine Co., Ltd.Controlled by Sinopharm Group
Sinopharm Lerentang Baoding Medicine Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Qinghai Co., Ltd.Controlled by Sinopharm Group
Sinopharm Sichuan Pharmaceutical Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Zhangzhou Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Huaian Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Xiangyang Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Xinxiang Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Hongrun Medical Business Service (Shanghai) Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Huangshi Co., Ltd.Controlled by Sinopharm Group
Sinopharm Xinxiang Chain Store Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Qianxinan Co., Ltd.Controlled by Sinopharm Group
Sinopharm Group Shanghai Co., Ltd.Controlled by Sinopharm Group
Beijing Sinopharm Tianyuan Real Estate & Property Management Co., Ltd.Controlled by Sinopharm Group
Xinjiang Baitong Property Service Co., Ltd.Controlled by Sinopharm Group
Sinopharm Group Shanghai Management Consulting Branch Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Huaideju Pharmaceutical (Xiamen) Co., Ltd.Controlled by Sinopharm Group
Pudong New Area of Shanghai Pharmaceutical Medicine Ltd.Controlled by Sinopharm Group
Sinopharm Holding Xinyu Co., Ltd.Controlled by Sinopharm Group
Sinopharm Holding Hunan Weian Pharmacy Medicine Chain Company Ltimited.Controlled by Sinopharm Group
Sinopharm Holding Jiaozuo Co., Ltd.Controlled by Sinopharm Group
Sinopharm Xinjiang Korla Pharmaceutical Co., Ltd. Sinopharm Xinjiang KorlaControlled by Sinopharm Group

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

Company nameRelated party relationships
China Otsuka Pharmaceutical Co., Ltd.Associate of CNPGC
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd.Associate of CNPGC
Changchun Changsheng Gene Pharmaceutical Co., Ltd.Associate of CNPGC
Shenzhen Wanwei Medicine trading Co., Ltd.Subsidiary of Main Luck Pharmaceutical
Pharmaceutical Co., Ltd.
Beijing Golden Elephant Fosun Pharmaceutical Co., LtdNon-controlling interest of a subsidiary
Hunan Minshengtang Investment Co., Ltd.Non-controlling interest of a subsidiary
Shenyang Pharmaceutical Co., LtdNon-controlling interest of a subsidiary
Lerentang Investment Group Co., Ltd.Non-controlling interest of a subsidiary
Pingdingshan Pusheng Pharmaceutical Co., Ltd.Non-controlling interest of a subsidiary
Linyi Medical Group Co., Ltd.Non-controlling interest of a subsidiary
Huang Lijin Huang LijinNon-controlling interest of a subsidiary
Guangdong Jiyuantang Development Co., Ltd.Non-controlling interest of a subsidiary
Shenzhen Jiufeng Investment Co., Ltd.Non-controlling interest of a subsidiary
Taishan Qunkang Pharmacy Co., Ltd.Non-controlling interest of a subsidiary
Zhang Zhenfang Zhang ZhenfangNon-controlling interest of a subsidiary
Hangzhou Xihu Business Group CorporationNon-controlling interest of a subsidiary
Guangxi Deyiyuan Medical Investment Center (Limited Partnership)Non-controlling interest of a subsidiary
Baise Jianan Medicine Chain Co., Ltd.Non-controlling interest of a subsidiary
Heyuan Mairui Trading Co., Ltd.Non-controlling interest of a subsidiary
Wang Yang Wang YangFamily member of the non-controlling shareholder of a subsidiary
Gu Jinfang Gu JinfangController of non-controlling interest of a subsidiary
Nanjing Yuanguang Trading Co., Ltd.Controlled by non-controlling interest of a subsidiary
Taishan Xiangranhui Trade Co., LtdControlled by non-controlling interest of a subsidiary
Shaoguan Wujiang District Muyang Medicine Information Consultant Co., Ltd.Controlled by non-controlling interest of a subsidiary

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

X. Related party relationships and transactions (Continued)

5. Major transactions between the Group and its related parties

(1) Related party transactions –goods and services

Purchase of goods and receiving of services from related parties

Related partyType of transaction20182017
Sinopharm Holding Sub Marketing Center Co., Ltd.Purchase of goods515,167,083.81503,647,182.73
China National Medicines Co., Ltd.Purchase of goods237,636,101.58192,328,445.40
Sinopharm Holding Shanxi Co., Ltd.Purchase of goods156,466,334.83105,080,688.10
Sinopharm Lingyun Biopharmaceutical (Shanghai) Co., Ltd.Purchase of goods127,271,627.94100,523,284.41
Sinopharm Group Co., Ltd.Purchase of goods95,150,353.69246,228,882.09
Fresenius Kabi Huarui Pharmaceuticals Co., Ltd.Purchase of goods90,145,795.3086,204,005.23
Sinopharm Holding Shanxi Co., Ltd.Purchase of goods83,517,976.1575,921,179.25
Sinopharm Le-Ren-Tang Medicine Co., Ltd.Purchase of goods79,259,083.0179,720,630.75
Sinopharm Holding Shenyang Co., Ltd.Purchase of goods63,689,297.7348,659,442.34
Lanzhou Institute of Biological Products Co., Ltd.Purchase of goods52,860,000.0030,600,000.00
Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd.Purchase of goods39,872,567.5531,547,957.86
Sinopharm Holding Lunan Co., Ltd.Purchase of goods39,298,409.8122,663,023.60
Jiangsu Wanbang Pharmacy Marketing Co., Ltd.Purchase of goods33,623,739.1834,629,877.72
Sinopharm Holding Beijing Co., Ltd.Purchase of goods23,822,442.4121,094,588.81
Jinzhou AoHong Pharmaceuticals Co., Ltd.Purchase of goods23,749,213.17-
Sinopharm Holding Yangzhou Co., Ltd.Purchase of goods23,005,232.9725,252,127.28
Sinopharm Holding Hunan Co., Ltd.Purchase of goods22,435,971.659,503,424.67
Chongqing Yaoyou Pharmaceutical Co., Ltd.Purchase of goods21,508,305.2316,356,695.13
Sinopharm Holding Inner Mongolia Co., Ltd.Purchase of goods18,984,953.2917,911,878.26
Sinopharm Holding Lerentang Pharmaceutical Co., Ltd.Purchase of goods16,967,826.0514,552,984.64
Winteam Pharmaceutical Group Ltd.Purchase of goods15,331,219.124,095,720.68
Sinopharm Holding Pingdingshan Co., Ltd.Purchase of goods14,446,097.5517,629,734.37
Shenzhen Main Luck Pharmaceutical Co., Ltd.Purchase of goods14,173,934.3518,163,682.64
China National Pharmaceutical Foreign Trade CorporationPurchase of goods13,645,110.092,074,302.37
Sinopharm Holding Jiangsu Co., Ltd.Purchase of goods12,276,533.1113,721,003.83

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

X. Related party relationships and transactions (Continued)

5. Major transactions between the Group and its related parties (Continued)

(1) Related party transactions –goods and services (Continued)

Purchase of goods and receiving of services from related parties (Continued)

Related partyType of transaction20182017
Sinopharm Lerentang Shijiazhuang Medicine Co., Ltd.Purchase of goods10,465,965.7014,140,996.60
Shenzhen Wanwei Medicine Trading Co., Ltd.Purchase of goods10,428,796.9312,411,303.09
Suzhou Erye Pharmaceutical Limited CompanyPurchase of goods9,554,764.03-
Sinopharm Holding Xiamen Co., Ltd.Purchase of goods9,246,131.919,257,962.72
Sinopharm Holding Fujian Co., Ltd.Purchase of goods9,171,420.3311,822,333.08
Chengdu Rongsheng Pharmacy Co., Ltd.Purchase of goods8,958,139.0010,163,100.00
Sinopharm Holding Shanxi Instrument Branch Co., Ltd.Purchase of goods7,410,730.233,895,843.72
Sinopharm Holding Henan Co., Ltd.Purchase of goods6,575,293.462,394,853.44
Sinopharm Holding Suzhou Co., Ltd.Purchase of goods6,247,553.798,828,494.63
Sinopharm Holding Ningxia Co., Ltd.Purchase of goods6,113,483.505,691,842.49
Sinopharm Chuan Kang Pharmaceutical Co., Ltd.Purchase of goods5,794,907.91-
Sinopharm Group Zhijun (Shenzhen) PingShan Pharmaceutical Co., Ltd.Purchase of goods5,519,530.034,251,111.59
Sinopharm Holding Fuzhou Co., Ltd.Purchase of goods4,703,935.113,003,163.81
Sinopharm Group Zhijun(Shenzhen) Pharmaceutical Co., Ltd.Purchase of goods4,670,243.132,222,406.63
Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd.Purchase of goods4,530,675.457,317,867.44
Yichang Humanwell Pharmaceutical Co., Ltd.Purchase of goods4,513,583.784,109,780.72
Sinopharm Xingsha Pharmaceuticals (Xiamen) Co., Ltd.Purchase of goods3,676,515.83933,727.04
Sinopharm Holding Jinan Co., Ltd.Purchase of goods3,621,583.691,832,235.96
Sinopharm Holding Xinjiang Special Drugs Western Pharmaceutical Co., Ltd.Purchase of goods3,614,733.644,544,410.21
Sinopharm Holding Beijing Huahong Co., Ltd.Purchase of goods3,550,261.183,843,243.29
Sinopharm Group Guorui Medicine Co., Ltd.Purchase of goods3,735,052.7265,812.60
Shandong Lu Ya Pharmaceutical Co., Ltd.Purchase of goods2,909,280.05-
Sinopharm Holding Changzhou Co., Ltd.Purchase of goods2,900,395.117,051,762.45
Tibet Yaopharma Co., Ltd.Purchase of goods2,761,512.07-
Sinopharm Holding Wuxi Co., Ltd.Purchase of goods2,453,393.362,736,138.04
Pudong New Area of Shanghai Pharmaceutical Medicine Ltd.Purchase of goods2,298,554.23-
Sinopharm Holding Jinzhou Co., Ltd.Purchase of goods2,249,516.981,199,028.41
Sinopharm Holding Beijing Kangchen Bio-Pharmaceutical Co., Ltd.Purchase of goods2,240,460.543,179,370.11

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

X. Related party relationships and transactions (Continued)

5. Major transactions between the Group and its related parties (Continued)

(1) Related party transactions –goods and services (Continued)

Purchase of goods and receiving of services from related parties (Continued)

Related partyType of transaction20182017
Shanghai Merro Pharmaceutical Co., Ltd.Purchase of goods2,016,321.478,681,736.93
Foshan Fengliaoxing Pharmaceutical Co., Ltd.Purchase of goods2,015,702.90320,789.59
Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd.Purchase of goods2,003,690.591,111,214.17
Sinopharm Lerentang Hebei Medical Instrument Trade Co., Ltd.Purchase of goods1,889,376.442,446,393.63
Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd.Purchase of goods1,799,439.152,203,729.99
Sinopharm Holding Tianjin Co., Ltd.Purchase of goods1,598,345.371,531,041.56
Sinopharm Group Rongsheng Pharmaceutical Co., Ltd.Purchase of goods1,574,958.10367,123.16
Guizhou Tongjitang Pharmaceutical Co., Ltd.Purchase of goods1,536,282.82783,375.17
Sinopharm Holding Xinjiang Xinte Karamay Pharmaceutical Co., Ltd.Purchase of goods1,451,522.48866,286.88
Sinopharm Holding Yancheng Co., Ltd.Purchase of goods1,402,672.481,321,450.59
Sichuan Hexin Pharmaceutical Co., Ltd.Purchase of goods1,094,458.11(288.55)
Shenyang Hongqi Pharmaceutical Co., Ltd.Purchase of goods1,058,670.33509,884.44
Shanghai Shyndec Pharmaceutical Marketing Co., Ltd.Purchase of goods995,510.641,019,792.18
Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd.Purchase of goods921,863.311,117,427.20
Sinopharm Holding Putian Co., Ltd.Purchase of goods895,532.891,060,202.09
Sinopharm Holding Dalian Co., Ltd.Purchase of goods769,041.461,933,096.74
Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Co., Ltd.Purchase of goods763,625.20321,124.91
Sinopharm Holding Shandong Co., Ltd.Purchase of goods718,163.95-
Sinopharm Holding Hulun Buir Co., Ltd.Purchase of goods713,341.4918,397,145.25
Huayi Pharmaceutical Co., Ltd.Purchase of goods695,732.52-
Sinopharm Holding Donghong Medical (Shanghai) Co., Ltd.Purchase of goods615,989.841,398,400.16
Sinopharm Holding Rizhao Co., Ltd.Purchase of goods586,905.031,070,541.55
Sinopharm Holding Tongliao Co., Ltd.Purchase of goods584,726.7074,569.23
Guangdong Medi-World Pharmaceutical Co., Ltd.Purchase of goods584,223.16-
Sinopharm Holding Anhui Co., Ltd.Purchase of goods539,726.50251,374.86
Sinopharm Holding Quanzhou Co., Ltd.Purchase of goods509,662.25693,843.09
Sinopharm Holding Yangzhou Biological Medicine Co., Ltd.Purchase of goods444,000.00-
Wuhan Zhonglian Pharmaceutical Group Co., Ltd.Purchase of goods435,887.39583,749.71

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

X. Related party relationships and transactions (Continued)

5. Major transactions between the Group and its related parties (Continued)

(1) Related party transactions –goods and services (Continued)

Purchase of goods and receiving of services from related parties (Continued)

Related partyType of transaction20182017
Sinopharm Holding Changsha Co., Ltd.Purchase of goods414,897.11-
Sinopharm Holding Kashi New & Special Drugs Co., Ltd.Purchase of goods400,421.76488,097.76
Hunan Dongting Pharmaceutical Co., Ltd.Purchase of goods340,441.92135,686.75
Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co., Ltd.Purchase of goods335,484.6272,490.93
Shanghai Chaohui Pharmaceutical Co., Ltd.Purchase of goods330,363.62-
Shantou Jinshi Powder Injection Co., Ltd.Purchase of goods330,119.93-
Sinopharm Holding Ulanqab Co., Ltd.Purchase of goods308,191.79142,060.09
Sinopharm Holding Zhejiang Co., Ltd.Purchase of goods289,516.54-
Sinopharm Holding Dalian Hecheng Co., Ltd.Purchase of goods262,027.99-
China Otsuka Pharmaceutical Co., Ltd.Purchase of goods241,236.292,811,496.30
Sinopharm Holding Dezhou Co., Ltd.Purchase of goods228,731.52228,117.43
Shanghai Modern Hasen (Shangqiu) Pharmaceutical Co., Ltd.Purchase of goods200,544.82-
Sinopharm Lerentang Qinhuangdao Medicine Co., Ltd.Purchase of goods193,277.45116,087.32
China National Pharmaceutical Industry Co., Ltd.Purchase of goods188,275.3980,821.92
Sinopharm Group Zhijun(Shenzhen) Pharmaceutical Co., Ltd.Purchase of goods173,484.94923.08
Sinopharm Group Southwest Medicine Co., Ltd.Purchase of goods153,389.66-
Sinopharm Holding Lianyungang Co., Ltd.Purchase of goods153,111.27-
Shanghai Modern Pharmaceutical Co., Ltd. (Modern Pharmaceutical)Purchase of goods142,521.39-
Sinopharm Group Yibin Pharmaceuticals Co., Ltd.Purchase of goods121,618.264,666.51
Sinopharm Shantou Jinshi Pharmaceutical Co., Ltd.Purchase of goods109,039.9655,299.53
Sinopharm Holding Hainan Co., Ltd.Purchase of goods97,450.60-
Sinopharm Group Shanxi Co., Ltd.Purchase of goods87,596.90862,803.50
Sinopharm Holding Zhihui Minsheng (Tianjin) Medicine Co., Ltd.Purchase of goods80,410.58-
Sinopharm Holding Guizhou Co., Ltd.Purchase of goods73,729.75-
Sinopharm Holding Taizhou Co., Ltd.Purchase of goods73,304.23-
Sinopharm Holding Biopharmaceutical (Tianjin) Co., Ltd.Purchase of goods63,648.72(1,108.71)
Sinopharm Holding Sanyi Medicine (Wuhu) Co., Ltd.Purchase of goods58,952.78102,930.09
Sichuan Jiangyouzhongbafuzi Technology Development Co., Ltd.Purchase of goods49,297.3022,300.88

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

X. Related party relationships and transactions (Continued)

5. Major transactions between the Group and its related parties (Continued)

(1) Related party transactions –goods and services (Continued)

Purchase of goods and receiving of services from related parties (Continued)

Related partyType of transaction20182017
Sinopharm Holding Yongzhou Co., Ltd.Purchase of goods38,141.6722,688.00
Chongqing Haisiman Pharmaceutical Co., Ltd.Purchase of goods33,895.3822,055,921.01
Sinopharm Group Weiqida Medicine Co., Ltd.Purchase of goods31,965.52-
Sinopharm Holding Wende Medicine Nanjing Co., Ltd.Purchase of goods27,310.34-
The Fourth Pharmaceutical Co., Ltd. of Zhonglian GroupPurchase of goods24,295.86112,080.00
Sinopharm Lerentang Tangshan Medicine Co., Ltd.Purchase of goods20,598.9414,862.40
Sinopharm Holding Nanping Newforce Co., Ltd.Purchase of goods15,315.32-
Sinopharm Holding Shanxi Jincheng Co., Ltd.Purchase of goods11,481.46-
Sinopharm Zhuhai Medical Instrument Co., Ltd.Purchase of goods9,564.95-
Sinopharm Hebei Medical Instrument Co., Ltd.Purchase of goods6,533.8429,467.36
Sinopharm Prospect Dentech (Beijing) Co., Ltd.Purchase of goods4,073.482,101.14
Beijing Huamiao Pharmaceutical Co., Ltd.Purchase of goods2,649.79-
Sinopharm Group Guangdong Medicine Device Co., Ltd.Purchase of goods1,770.86-
Sinopharm Holding Jinhua Co., Ltd.Purchase of goods38.8015,569.23
Sinopharm Xinjiang Pharmaceutical Co., Ltd.Purchase of goods12.82-
Sinopharm Holding Tianjin Distribution Center Co., Ltd.Purchase of goods-1,452,364.83
Sinopharm Holding Chengdu Co., Ltd.Purchase of goods-809,743.62
Sinopharm Fujian Medical Examination Co., Ltd.Purchase of goods-680,423.93
Beijing Huasheng Pharmaceutical Biotechnology Development Co., Ltd.Purchase of goods-219,374.28
Guizhou Longlife Pharmacertical Co., Ltd.Purchase of goods-188,738.84
Beijing Tongyu Information Technology Co., Ltd.Purchase of goods-175,351.00
Sinopharm Holding Hubei Co., Ltd.Purchase of goods-137,617.16
Sinopharm Holding Jiangxi Co., Ltd.Purchase of goods-69,941.45
Sinopharm Group Chemical Reagent Co., Ltd.Purchase of goods-46,153.84
Sinopharm Holding Tianjin North Medicine Co., Ltd.Purchase of goods-23,066.70
Sinopharm Holding Chongqing Co., Ltd.Purchase of goods-9,230.76
Sinopharm Fengliaoxing (Foshan) Medicines Co., Ltd.Purchase of goods-2,332.96

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

X. Related party relationships and transactions (Continued)

5. Major transactions between the Group and its related parties (Continued)

(1) Related party transactions –goods and services (Continued)

Purchase of goods and receiving of services from related parties (Continued)

Related partyType of transaction20182017
China National Scientific Instruments & Materials Imp/Exp Shenzhen Co., Ltd.Purchase of goods-(1,598,611.60)
Sinopharm Holding Ordos Co., Ltd.Purchase of goods(10,667.01)35,826.67
Anhui Jingfang Pharmaceutical Co., Ltd.Purchase of goods(13,269.30)460,506.20
Sinopharm Group Medicine Logistic Co., Ltd.Storage and transport cost6,666,668.717,395,406.16
Sinopharm Health Online Co., Ltd.Consulting service fee6,085,895.223,071,581.63
Shanghai Beiyi Guoda pharmaceutical Co. Ltd.Consulting service fee1,263,962.22589,442.86
Shanghai Tongyu Information Technology Co., Ltd.Information system access fee98,113.2198,113.21
China National Pharmaceutical Logistics Co., Ltd.Storage and transport cost44,030.6528,856.97
Sinopharm Holding Tianjin Binhai Pharmaceutical Co., Ltd.Information system access fee7,075.47-
Sinopharm Group Co., Ltd.Consulting service fee-5,982.51

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

X. Related party relationships and transactions (Continued)

5. Major transactions between the Group and its related parties (Continued)

(1) Related party transactions –goods and services (Continued)

Sale of goods and rendering of services

Related partyType of transaction20182017
Sinopharm Group Co., Ltd.Sale of goods54,514,170.655,593,686.39
Shanghai Beiyi Guoda pharmaceutical Co. Ltd.Sale of goods49,727,338.6351,483,490.91
Foshan Chancheng Pharmaceutical Co., Ltd.Sale of goods42,375,781.1433,011,056.01
Sinopharm Holding Hainan Co., Ltd.Sale of goods29,338,160.2536,385,390.99
Sinopharm Holding Hainan Hongyi Co., Ltd.Sale of goods24,127,524.5025,628,473.91
Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd.Sale of goods17,376,808.7113,060,212.97
Sinopharm Holding Wenzhou Co., Ltd.Sale of goods10,830,194.7916,144,827.68
Pudong New Area of Shanghai Pharmaceutical Medicine Ltd.Sale of goods10,524,551.98
Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd.Sale of goods9,738,902.579,566,003.52
Sinopharm Sichuan Pharmaceutical Co., Ltd.Sale of goods9,061,104.3837,145,400.72
Sinopharm Holding Sub Marketing Center Co., Ltd.Sale of goods8,970,804.7212,124,282.34
Sinopharm Holding Henan Co., Ltd.Sale of goods8,736,054.4515,920,365.63
Sinopharm Holding Nantong Co., Ltd.Sale of goods8,717,338.9510,668,342.56
Shenzhen Hengsheng HospitalSale of goods8,215,885.93
Sinopharm Le-Ren-Tang Medicine Co., Ltd.Sale of goods7,728,482.8429,700,260.69
Sinopharm Lingyun Biopharmaceutical (Shanghai) Co., Ltd.Sale of goods7,489,471.75137,615.38
Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd.Sale of goods6,837,559.0028,222,286.50
Sinopharm Holding Beijing Co., Ltd.Sale of goods5,770,691.4446,330,723.11
Sinopharm Holding Yunnan Co., Ltd.Sale of goods5,713,012.1813,882,513.85
Sinopharm Holding Yangzhou Co., Ltd.Sale of goods5,144,530.814,983,173.28
Sinopharm Holding Beijing Huahong Co., Ltd.Sale of goods4,816,641.9218,809,022.65
Sinopharm Holding Shandong Co., Ltd.Sale of goods4,577,546.0554,609,405.93
Foshan Chancheng District Central HospitalSale of goods4,504,644.964,152,584.46
Sinopharm Holding Xinjiang Special Drugs Western Pharmaceutical Co., Ltd.Sale of goods4,409,528.782,315,354.12
Sinopharm Holding Hubei Co., Ltd.Sale of goods3,772,162.2736,728,642.88
Sinopharm Holding Shanxi Co., Ltd.Sale of goods2,577,305.961,347,127.61

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

X. Related party relationships and transactions (Continued)

5. Major transactions between the Group and its related parties (Continued)

(1) Related party transactions –goods and services (Continued)

Sale of goods and rendering of services

Related partyType of transaction20182017
China National Medicines Co., Ltd.Sale of goods1,740,716.752,063,573.21
Foshan Chanyixing Medicine Development Co Ltd.Sale of goods1,450,198.021,405,871.30
Sinopharm Holding Gansu Co., Ltd.Sale of goods1,353,030.002,884,856.13
Sinopharm Holding Hunan Co., Ltd.Sale of goods1,308,950.825,020,059.72
Sinopharm Holding Dalian Co., Ltd.Sale of goods1,263,047.36486,071.84
Shanghai Merro Pharmaceutical Co., Ltd.Sale of goods1,223,626.193,234,923.55
Sinopharm Holding Jilin Co., Ltd.Sale of goods1,172,196.273,009,786.08
Sinopharm Holding Anhui Co., Ltd.Sale of goods1,168,187.29366,059.49
Sinopharm Holding Guizhou Co., Ltd.Sale of goods1,042,466.525,972,815.92
Sinopharm Holding Tianjin Co., Ltd.Sale of goods1,029,758.408,825,649.05
Sinopharm Group Southwest Medicine Co., Ltd.Sale of goods1,006,172.4315,591,867.75
Sinopharm Holding Fujian Co., Ltd.Sale of goods979,220.986,048,503.32
Sinopharm Holding Zhejiang Co., Ltd.Sale of goods921,282.056,829,401.70
Sinopharm Holding Shanxi Co., Ltd.Sale of goods917,123.696,299,521.58
Hubei Medical Group Co., Ltd.Sale of goods853,130.68-
Sinopharm Holding Shanghai Likang Pharmaceutical Co., Ltd.Sale of goods673,847.934,235.90
Yuxi Sinopharm Medicine Co., Ltd.Sale of goods625,927.21-
Shanghai Guoda Lingyun Pharmacy Co., Ltd.Sale of goods540,476.78713,931.05
Sinopharm Group Shanxi Co., Ltd.Sale of goods486,510.78844,560.30
Sinopharm Holding Donghong Medical (Shanghai) Co., Ltd.Sale of goods448,887.64201,902.45
Sinopharm Holding Changzhou Co., Ltd.Sale of goods435,840.01-
Sinopharm Holding Jiangxi Co., Ltd.Sale of goods371,671.87647,485.30
Sinopharm Holding Wuxi Co., Ltd.Sale of goods349,203.27215,010.22
Sinopharm Holding Heilongjiang Co., Ltd.Sale of goods324,789.982,720,546.27
Sinopharm Holding Dalian Hecheng Co., Ltd.Sale of goods301,982.46366,975.51
Sinopharm Holding Ningxia Co., Ltd.Sale of goods240,539.936,303,526.27
Sinopharm Holding Inner Mongolia Co., Ltd.Sale of goods239,130.68366,510.94
Sinopharm Holding Chengdu Co., Ltd.Sale of goods215,685.181,227,783.73
Sinopharm Holding Yongzhou Co., Ltd.Sale of goods203,544.77-

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

X. Related party relationships and transactions (Continued)

5. Major transactions between the Group and its related parties (Continued)

(1) Related party transactions –goods and services (Continued)

Sale of goods and rendering of services

Related partyType of transaction20182017
Sinopharm Holding Ulanqab Co., Ltd.Sale of goods175,775.1792,908.28
Sinopharm Holding Changzhou Medical Logistics Center Co., Ltd.Sale of goods175,352.41291,901.64
Sinopharm Holding Qinghai Co., Ltd.Sale of goods168,653.681,759,644.99
Sinopharm Holding Chongqing Co., Ltd.Sale of goods145,147.69125,938.47
Sinopharm Holding Guizhou Medical Equiment Co., Ltd.Sale of goods133,404.19-
Sinopharm Holding Huaian Co., Ltd.Sale of goods128,653.00440,133.12
Sinopharm Holding Wuhu Co., Ltd.Sale of goods127,195.59-
Sinopharm Holding Shenyang Co., Ltd.Sale of goods103,846.573,907,366.12
Sinopharm Holding Suzhou Co., Ltd.Sale of goods103,840.63-
Sinopharm Holding Hubei Hongyuan Co., Ltd.Sale of goods97,162.40-
Sinopharm Holding Jilin Pharmacy Co., Ltd.Sale of goods91,435.98-
Sinopharm Group Zhijun (Shenzhen) PingShan Pharmaceutical Co., Ltd.Sale of goods79,279.28-
Sinopharm Holding Lu'an Co., Ltd.Sale of goods66,987.18-
Sinopharm Holding Putian Co., Ltd.Sale of goods64,610.68637,366.11
Sinopharm Holding Tianjin North Medicine Co., Ltd.Sale of goods58,775.86-
Sinopharm Holding Longyan Co., Ltd.Sale of goods58,172.99114,780.52
Sinopharm Holding Nanchang Pharmacy Co., Ltd.Sale of goods54,017.59-
Dongyuan accord pharmaceutical chain Co., Ltd.Sale of goods39,393.65-
Sinopharm Holding Zunyi Co., Ltd.Sale of goods35,054.94-
Sinopharm Holding Xinxiang Co., Ltd.Sale of goods34,164.62-
Sinopharm Holding Huangshi Co., Ltd.Sale of goods34,025.7887,938.08
Sinopharm Holding Siping Co., Ltd.Sale of goods26,548.13-
Sinopharm Holding Ningde Co., Ltd.Sale of goods23,864.90603,115.39
Sinopharm Holding Tongren Co., Ltd.Sale of goods21,011.20-
Sinopharm Holding Hongrun Medical Business Service (Shanghai) Co., Ltd.Sale of goods19,240.32-
Sinopharm Holding Jiling Co., Ltd.Sale of goods19,035.54-
Sinopharm Fengliaoxing Medical Hospital Co., Ltd.Sale of goods16,804.602,175.11
Sinopharm Holding Liaocheng Co., Ltd.Sale of goods15,596.82-
Fujian CMDC Co., Ltd.Sale of goods13,988.00-

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

X. Related party relationships and transactions (Continued)

5. Major transactions between the Group and its related parties (Continued)

(1) Related party transactions –goods and services (Continued)

Sale of goods and rendering of services

Related partyType of transaction20182017
Sinopharm Lerentang Baoding Medicine Co., Ltd.Sale of goods12,991.45-
CMDC Guizhou Qiannan Co., Ltd.Sale of goods12,712.58-
Sinopharm Lerentang Hengshui Medicine Co., Ltd.Sale of goods12,108.38-
Sinopharm Holding Honghe Co., Ltd.Sale of goods9,595.25-
Sinopharm Zhuhai Medical Instrument Co., Ltd.Sale of goods9,119.70-
Sinopharm Group Zhijun(Shenzhen) Pharmaceutical Co., Ltd.Sale of goods7,617.49-
Sinopharm Holding Fuzhou Co., Ltd.Sale of goods6,927.146,073,301.78
Sinopharm Holding Hulun Buir Co., Ltd.Sale of goods4,570.005,955,618.61
Hunan Minshengtang Investment Co., Ltd.Sale of goods-4,378,542.02
Sinopharm Holding Quanzhou Co., Ltd.Sale of goods-2,300,292.62
Sinopharm Holding Lunan Co., Ltd.Sale of goods-1,004,572.65
Sinopharm Holding Zhangzhou Co., Ltd.Sale of goods-750,514.60
Sinopharm Holding Beijing Tianxing Puxin Biological Medical Co., Ltd.Sale of goods-598,153.85
Sinopharm Group Guangdong Medicine Device Co., Ltd.Sale of goods-557,307.70
Hutchison Whampoa Sinopharm Pharmaceuticals (Shanghai) Co., Ltd.Sale of goods-409,246.96
China Otsuka Pharmaceutical Co., Ltd.Sale of goods-153,846.15
China National Scientific Instruments & Materials Imp/Exp Shenzhen Co., Ltd.Sale of goods-121,846.14
Sinopharm Holding Xiangyang Co., Ltd.Sale of goods-109,542.99
Sinopharm Xinxiang Chain Store Co., Ltd.Sale of goods-66,445.13
Sichuan Kang Daxin Pharmaceutical Co., Ltd.Sale of goods-33,230.76
Beijing Tiantan Biological Products Co., Ltd.Sale of goods-7,692.31
Sinopharm Holding Qianxinan Co., Ltd.Sale of goods-7,478.63
Sinopharm Guangdong Medical Examination Co., Ltd.Sale of goods-802.05
China National Medicines Co., Ltd.Transport and storage income3,580,698.303,785,126.52
Sinopharm Group Medicine Logistic Co., Ltd.Transport and storage income294,804.621,133,089.80
Sinopharm Group Zhijun(Shenzhen) Pharmaceutical Co., Ltd.Meal fee294,180.00266,360.00
Sinopharm Group Zhijun (Shenzhen) PingShan Pharmaceutical Co., Ltd.Transport and storage income122,242.00110,434.27

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

X. Related party relationships and transactions (Continued)

5. Major transactions between the Group and its related parties (Continued)

(1) Related party transactions –goods and services (Continued)

Sale of goods and rendering of services

Related partyType of transaction20182017
Sinopharm Holding Shanxi Co., Ltd.Consulting service income9,433.9628,301.88
Guizhou Tongjitang Pharmaceutical Co., Ltd.Consulting service income8,285.71-
Winteam Pharmaceutical Group Ltd.Consulting service income2,023.586,580.11
Sinopharm Holding Shanxi Instrument Branch Co., Ltd.Other income1,132.0822,830.19
Sinopharm Holding Sub Marketing Center Co., Ltd.Consulting service income-51,379.25
Shenzhen Wanwei Medicine Trading Co., Ltd.Transport and storage income-38,808.71
Sinopharm Holding Shanxi Co., Ltd.Other income-19,433.96
Shenzhen Main Luck Pharmaceutical Co., Ltd.Transport and storage income-18,277.71
Shenzhen Zhijun Pharmaceutical Trade Co., Ltd.Meal fee-17,461.63
Sinopharm Group (Tianjin) Eastern Bokang Pharmaceutical Co., Ltd.Other income-13,650.94
Sinopharm Health Online Co., Ltd.Consulting service income-10,697.08

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

X. Related party relationships and transactions (Continued)

5. Major transactions between the Group and its related parties (Continued)

(2) Related party transactions - leases

(a) As the lessor
Type of assets under leasesIncome from leases in 2018Income from leases in 2017
Sinopharm Group Zhijun (Shenzhen) Pharmaceutical Co., Ltd.Building351,428.58637,142.88
Shenzhen Zhijun Pharmaceutical Trade Co., Ltd.Building285,714.30-
China National Medicines Co., Ltd.Building45,714.2945,714.29
Sinopharm Holding Sub Marketing Center Co., Ltd.Building-22,857.14
(b) As the lessee
Type of assets under leasesExpenses from leases in 2018Expenses from leases in 2017
Beijing Golden Elephant Fosun Pharmaceutical Co., Ltd.Building5,461,904.764,780,000.00
Sinopharm Group Xinjiang Special Drugs National Pharmaceutical Co., Ltd.Building3,914,124.764,239,560.37
Sinopharm Group Shanghai Co., Ltd.Building3,790,426.483,574,131.14
Beijing Sinopharm Tianyuan Real Estate & Property Management Co., Ltd.Equipment3,750,000.003,750,000.00
Shenyang Pharmaceutical Co., Ltd.Building3,548,219.753,263,809.62
Sinopharm Group Medicine Logistic Co., Ltd.Building3,539,999.983,539,999.98
Lerentang Investment Group Co., Ltd.Building2,277,892.992,700,000.00
Hunan Minshengtang Investment Co., Ltd.Building2,027,673.991,548,351.84
Sinopharm Holding Yangzhou Co., Ltd.Building1,862,857.141,862,857.14
Linyi Medical Group Co., Ltd.Building (Store)1,329,859.65-
Pingdingshan Pusheng Pharmaceutical Co., Ltd.Building1,277,732.572,402,965.82
Guangdong Jiyuantang Development Co., Ltd.Building1,192,864.11611,398.72
Nanjing Yuanguang Trading Co., Ltd.Building866,794.89-
Linyi Medical Group Co., Ltd.Building (Warehouse, Office)706,516.80-
Shaoguan Wujiang District Muyang Medicine Information Consultant Co., Ltd.Building470,161.86470,161.86
Taishan Xiangranhui Trade Co., LtdBuilding451,963.88-
Zhang ZhenfangBuilding402,499.98402,499.98
Wang YangBuilding262,857.12262,857.12
Sinopharm Group Co., Ltd.Building259,915.02259,915.04
Sinopharm Holding Kashi New & Special Drugs Co., Ltd.Building236,051.50212,179.81

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

X. Related party relationships and transactions (Continued)

5. Major transactions between the Group and its related parties (Continued)

(2) Related party transactions – leases (Continued)

(b) As the lessee (continued)
Type of assets under leasesExpenses from leases in 2018Expenses from leases in 2017
Sinopharm Holding Beijing Co., Ltd.Building235,714.29221,944.46
Sinopharm Holding Shanxi Co., Ltd.Building234,017.16297,653.30
Sinopharm Holding Xinjiang Xinte Karamay Pharmaceutical Co., Ltd.Building184,253.18184,253.33
Gu JinhuaBuilding178,800.00596,654.10
Beijing Sinopharm Tianyuan Real Estate & Property Management Co., Ltd.Building173,523.81254,544.44
China National Medicines Co., Ltd.Building153,750.00199,563.50
Hangzhou Xihu Business Group CorporationBuilding132,823.81126,500.00
Sinopharm Xinjiang Pharmaceutical Co., Ltd.Building130,208.30125,000.04
Shenzhen Jiufeng Investment Co., Ltd.Building89,260.15-
Taishan Qunkang Pharmacy Co., Ltd.Building74,170.32-
Xinjiang Baitong Property Service Co., Ltd.Building44,581.1634,551.74
Sinopharm Group Zhijun (Shenzhen) PingShan Pharmaceutical Co., Ltd.Park35,428.57-
Sinopharm Holding Fujian Co., Ltd.Building6,571.381,999.98
Huang LijinBuilding-819,144.15
Taishan Qunkang Pharmacy Co., Ltd.Building-81,271.80
Linyi Medical Group Co., Ltd.Building-2,010,483.23
Sinopharm Group Xinjiang Pharmaceutical Co., Ltd.Building-27,000.00

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

X. Related party relationships and transactions (Continued)

5. Major transactions between the Group and its related parties (Continued)

(3) Related party transactions – Financing

Related partyAmountInceptionMaturityNote
Borrowed from
Group Financial Co.28,864,324.336.February.201831.March.2018Discount on commercial acceptance notes
Group Financial Co.17,745,523.368.June.201831.July.2018Discount on commercial acceptance notes
Group Financial Co.16,989,310.728.June.20182.July.2018Discount on commercial acceptance notes
Group Financial Co.15,000,000.006.February.20189.May.2018Discount on commercial acceptance notes
Group Financial Co.15,000,000.008.June.20189.July.2018Discount on commercial acceptance notes
Group Financial Co.14,421,033.378.June.201831.July.2018Discount on commercial acceptance notes
Group Financial Co.13,299,616.906.February.20189.June.2018Discount on commercial acceptance notes
Group Financial Co.10,427,104.578.June.20189.August.2018Discount on commercial acceptance notes
Group Financial Co.10,000,000.008.June.201825.July.2018Discount on commercial acceptance notes
Group Financial Co.10,000,000.008.June.201825.August.2018Discount on commercial acceptance notes
Group Financial Co.9,154,974.696.February.201831.March.2018Discount on commercial acceptance notes
Group Financial Co.8,492,564.706.February.201831.March.2018Discount on commercial acceptance notes
Group Financial Co.6,533,003.8223.May.201827.June.2018Discount on commercial acceptance notes
Group Financial Co.5,824,599.688.June.201831.July.2018Discount on commercial acceptance notes
Group Financial Co.5,494,215.5729.January.201825.July.2018Discount on bank acceptance notes
Group Financial Co.5,397,269.578.June.201825.August.2018Discount on commercial acceptance notes
Group Financial Co.4,829,908.006.February.201825.April.2018Discount on commercial acceptance notes
Group Financial Co.3,500,231.1023.May.201828.September.2018Discount on bank acceptance notes
Group Financial Co.3,203,901.988.June.201825.July.2018Discount on commercial acceptance notes
Guorun Medical Supply Chain Services (Shanghai) Co., Ltd.3,200,000.0027.June.201826.June.2018Short-term borrowings
Group Financial Co.2,985,850.008.June.201825.July.2018Discount on commercial acceptance notes
Group Financial Co.2,586,003.256.February.20189.April.2018Discount on commercial acceptance notes
Group Financial Co.2,500,661.998.June.20189.July.2018Discount on commercial acceptance notes
Group Financial Co.2,000,000.0023.May.201828.June.2018Discount on bank acceptance notes
Group Financial Co.2,000,000.0023.May.201819.October.2018Discount on bank acceptance notes

Notes to financial statements (Continued)

For the Year ended 30 June 2018

(All amounts in Renminbi “RMB” unless otherwise stated)

<
Related partyAmountInceptionMaturityNote
Borrowed from
Group Financial Co.1,819,472.4329.January.201825.July.2018Discount on bank acceptance notes
Group Financial Co.1,782,632.396.February.201831.May.2018Discount on commercial acceptance notes
Group Financial Co.1,727,218.038.June.201831.August.2018Discount on commercial acceptance notes
Group Financial Co.1,721,826.4229.January.201826. August.2018Discount on bank acceptance notes
Group Financial Co.1,614,923.4029.January.201825.June.2018Discount on bank acceptance notes
Group Financial Co.1,567,611.668.June.201831.July.2018Discount on commercial acceptance notes
Group Financial Co.1,424,501.988.June.20183.November.2018Discount on commercial acceptance notes
Group Financial Co.1,350,000.0029.January.201827.June.2018Discount on bank acceptance notes
Group Financial Co.1,020,299.506.February.201826.April.2018Discount on commercial acceptance notes
Group Financial Co.1,009,120.498.June.201830.September.2018Discount on commercial acceptance notes
Group Financial Co.1,000,000.0023.May.201830.July.2018Discount on bank acceptance notes
Group Financial Co.1,000,000.0023.May.201817.October.2018Discount on bank acceptance notes
Group Financial Co.1,000,000.0029.January.201825.July.2018Discount on bank acceptance notes
Group Financial Co.1,000,000.0029.January.201825.July.2018Discount on bank acceptance notes