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一致B:2019年年度报告(英文版) 下载公告
公告日期:2020-04-22

ChinaNationalAccordMedicinesCorporationLtd.

AnnualReport2019

April2020

SectionI.ImportantNotice,ContentsandInterpretation

BoardofDirectors,SupervisoryCommittee,alldirectors,supervisorsandseniorexecutivesofChinaNationalAccordMedicinesCorporationLtd.(hereinafterreferredtoastheCompany)herebyconfirmthattherearenoanyfictitiousstatements,misleadingstatements,orimportantomissionscarriedinthisreport,andshalltakeallresponsibilities,individualand/orjoint,forthereality,accuracyandcompletionofthewholecontents.LinZhaoxiong,PrincipaloftheCompany,WeiPingxiao,personinchargerofaccountingworksandWangYing,personinchargeofaccountingorgan(accountingprincipal)herebyconfirmthattheFinancialReportof2019AnnualReportisauthentic,accurateandcomplete.AlldirectorsareattendedtheBoardMeetingforreportdeliberation.Affectedbyvariousriskfactors,thecompany’sbusinessoperationsarefacingrisksintermsofchangesinindustrypoliciesandintensifiedmarketcompetition.Thecompanyhasmadeaspecificstatementonthe“FutureDevelopmentProspects”ofthefourthsection“DiscussionandAnalysisoftheOperation”inthisannualreport,andallinvestorsshouldpayattentiontoit.TheprofitdistributionplanthatdeliberatedandapprovedbytheBoardis:

basedontotalstockissued428,126,983shares,distributed6Yuan(taxincluded)bonusincashforevery10-shareholdbyallshareholders,0sharesbonusissued(taxincluded)andnocapitalizingofcommonreservescarriedout.

Contents

SectionI.ImportantNotice,ContentsandInterpretation.............................................................1

SectionIICompanyProfileandMainFinancialIndexes ...... 4

SectionIII.SummaryofCompanyBusiness...................................................................................8

SectionIV.DiscussionandAnalysisofBusiness...........................................................................11

SectionV.ImportantEvents...........................................................................................................37

SectionVI.ChangesinSharesandParticularsaboutShareholders...........................................65

SectionVII.PreferredStock...........................................................................................................73

SectionVIII.ConvertibleBonds.....................................................................................................74SectionIX.ParticularsaboutDirectors,Supervisors,SeniorExecutivesandEmployees........75SectionX.CorporateGovernance..................................................................................................87

SectionXI.CorporateBond............................................................................................................96

SectionXII.FinancialReport..........................................................................................................97

SectionXIII.DocumentsAvailableforReference......................................................................366

Interpretation

ItemsReferstoContents
ListedCompany,Company,theCompany,SinopharmAccord,theGroupReferstoChinaNationalAccordMedicinesCorporationLtd.
SINOPHARMReferstoChinaNationalPharmaceuticalGroupCorporation
SinopharmHoldingReferstoSinopharmGroupCo.,Ltd,ControllingshareholderoftheCompany
CompanyLawReferstoCompanyLawofthePeople’sRepublicofChina
SecuritiesLawReferstoSecuritiesLawofthePeople’sRepublicofChina
Yuan,10thousandYuan,100millionYuanReferstoRMB,RMB10thousand,RMB100million
Terminology:Refersto
4DbusinessReferstoSPDhospitallogisticssupplychainextensionbusiness,IVDdiagnosticreagentbusiness,CSSDdisinfectionservice,andMEDequipmentlifecyclemanagementbusiness
GPOReferstoGrouppurchasingorganizations
Abbreviation:Refersto
SinopharmHoldingGuangzhouReferstoSinopharmHoldingGuangzhouCo.,Ltd.
GuodaDrugstoreReferstoSinopharmHoldingGuodaDrugstoreCo.,Ltd.
SinopharmHoldingGuangxiReferstoSinopharmHoldingGuangxiCo.,Ltd.
FoshanNanhaiReferstoFoshanNanhaiPharmaceuticalGroupCo.,Ltd.
NanfangPharmaceuticalForeignTradeReferstoGuangdongNanfangPharmaceuticalForeignTradeCo.,Ltd.
ChinaNationalZhijun,ZhijunPharmaceuticalReferstoChinaNationalZhijun(Shenzhen)PharmaceuticalCo.,Ltd.
ZhijunPharmacyTradeReferstoShenzhenZhijunPharmacyTradeCo.,Ltd.
ZhijunPingshan,PingshanPharmaceuticalReferstoChinaNationalZhijun(Shenzhen)PingshanPharmaceuticalCo.,Ltd.
MainLuckPharmaceuticalsReferstoShenzhenMainLuckPharmaceuticalsInc.

SectionIICompanyProfileandMainFinancialIndexes

I.Companyprofile

ShortformofthestockSinopharmAccord,AccordBStockcode000028,200028
StockexchangeforlistingShenzhenStockExchange
NameoftheCompany(inChinese)国药集团一致药业股份有限公司
ShortformoftheCompany(inChinese)国药一致
ForeignnameoftheCompany(ifapplicable)ChinaNationalAccordMedicinesCorporationLtd.
ShortformofforeignnameoftheCompany(ifapplicable)SinopharmAccord
LegalrepresentativeLinZhaoxiong
Registrationsadd.AccordPharm.Bldg,No.15,BaGuaSiRoad,FutianDistrict,Shenzhen,GuangdongProvince
Codeforregistrationsadd518029
Officesadd.AccordPharm.Bldg,No.15,BaGuaSiRoad,FutianDistrict,Shenzhen,GuangdongProvince
Codesforofficeadd.518029
Company’sInternetWebSitehttp://www.szaccord.com.cn
E-mailgyyz0028@sinopharm.com

II.Person/Waytocontact

SecretaryoftheBoardSecuritiesaffairsrepresentative
NameChenChangbingWangZhaoyu
Contactadd.AccordPharm.Bldg.,No.15,BaGuaSiRoad,FutianDistrict,Shenzhen,GuangdongProvinceAccordPharm.Bldg.,No.15,BaGuaSiRoad,FutianDistrict,Shenzhen,GuangdongProvince
Tel.+(86)75525875195+(86)75525875222
Fax.+(86)75525195435+(86)75525195435
E-mailgyyzinvestor@sinopharm.comgyyz0028@sinopharm.com

III.Informationdisclosureandpreparationplace

NewspaperappointedforinformationdisclosureSecuritiesTimes;ChinaSecuritiesJournal;HongKongCommercialDaily
WebsiteforannualreportpublishappointedbyCSRChttp://www.szse.cn;http://www.cninfo.com.cn
PreparationplaceforannualreportSecretariatoftheBoardofDirectors

IV.RegistrationchangesoftheCompany

Organizationcode91440300192186267U
Changesofmainbusinesssincelisting(ifapplicable)Nochange.
Previouschangesforcontrollingshareholders(ifapplicable)Nochange.

V.Otherrelevantinformation

CPAengagedbytheCompany

NameofCPAErnst&YoungCPA(SpecialGeneralpartnership)
Officesadd.forCPA21/F,ChinaResourcesBuilding,No.5001,ShennanEastRoad,LuohuDistrict,Shenzhen
SigningaccountantLiJianguang,LiYuanfen

SponsorengagedbytheCompanyforperformingcontinuoussupervisiondutiesinreportingperiod

□Applicable√NotapplicableFinancialconsultantengagedbytheCompanyforperformingcontinuoussupervisiondutiesinreportingperiod

□Applicable√NotapplicableVI.Mainaccountingdataandfinancialindexes

Whetherithasretroactiveadjustmentorre-statementonpreviousaccountingdata

□Yes√No

20192018Changesoverlastyear2017
Operatingincome(RMB)52,045,764,143.2143,122,385,521.2320.69%41,263,393,427.41
Netprofitattributabletoshareholdersofthelistedcompany(RMB)1,271,289,183.011,210,742,435.785.00%1,057,791,930.67
Netprofitattributabletoshareholdersofthelistedcompanyafterdeductingnon-recurringgainsandlosses(RMB)1,226,765,271.971,175,971,967.394.32%1,035,461,581.00
Netcashflowarisingfromoperatingactivities(RMB)2,000,352,083.201,322,606,352.2751.24%1,285,291,911.82
Basicearningspershare(RMB/Share)2.972.834.95%2.47
Dilutedearningspershare(RMB/Share)2.972.834.95%2.47
WeightedaverageROE10.43%11.56%1.13percentagepointsdown11.91%
Endof2019Endof2018ChangesoverendoflastyearEndof2017
Totalassets(RMB)33,520,609,123.6728,930,300,519.9715.87%22,343,643,527.77
Netassetsattributabletoshareholderoflistedcompany(RMB)12,806,410,865.9211,618,432,603.2810.22%9,396,572,345.88

Note:WeightedaverageROEwasdownby1.13percentagepointsfromayearearlier,mainlyduetotheimpactoftheindustrypolicy,grossmargindeclineintheperiodandprofitmarginnarrowing.VII.DifferenceoftheaccountingdataunderaccountingrulesinandoutofChina

1.Differenceofthenetprofitandnetassetsdisclosedinfinancialreport,underbothIAS(InternationalAccountingStandards)andChineseGAAP(GenerallyAcceptedAccountingPrinciples)

□Applicable√NotapplicableTheCompanyhadnodifferenceofthenetprofitornetassetsdisclosedinfinancialreport,undereitherIAS(InternationalAccountingStandards)orChineseGAAP(GenerallyAcceptedAccountingPrinciples)intheperiod.

2.Differenceofthenetprofitandnetassetsdisclosedinfinancialreport,underbothforeignaccountingrulesandChineseGAAP(GenerallyAcceptedAccountingPrinciples)

□Applicable√NotapplicableTheCompanyhadnodifferenceofthenetprofitornetassetsdisclosedinfinancialreport,undereitherforeignaccountingrulesorChineseGAAP(GenerallyAcceptedAccountingPrinciples)intheperiod.VIII.Quarterlymainfinancialindex

InRMB

FirstquarterSecondquarterThirdquarterFourthquarter
Operatingincome11,879,309,078.8213,348,838,298.6113,647,793,431.6413,169,823,334.14
Netprofitattributabletoshareholdersofthelistedcompany300,149,012.08350,684,348.32311,310,706.52309,145,116.09
Netprofitattributabletoshareholdersofthelistedcompanyafterdeductingnon-recurringgainsandlosses297,420,355.99342,280,091.96303,365,280.52283,699,543.50
Netcashflowarisingfromoperatingactivities-759,367,352.291,923,124,933.64-90,795,420.13927,389,921.98

Whethertherearesignificantdifferencesbetweentheabove-mentionedfinancialindexoritstotalnumberandtherelevantfinancialindexdisclosedinthecompany’squarterlyreportandsemi-annualreport

□Yes√No

IX.Itemsandamountsofextraordinaryprofit(gains)/loss

√Applicable□Notapplicable

InRMB

Item201920182017Note
Gains/lossesfromthedisposalofnon-currentasset(includingthewrite-offthataccruedforimpairmentofassets)2,340,925.977,048,337.10-203,279.86Thegainsfromfixedassetsdisposal.
Governmentalsubsidyreckonedintocurrentgains/losses(notincludingthesubsidyenjoyedinquotaorrationaccordingtonationalstandards,whicharecloselyrelevanttoenterprise’sbusiness)49,299,242.4830,098,383.8626,854,027.03Mainlyforreceivingofallkindsofspecialsubsidiesandfiscalinterestdiscountintheperiod.
Investmentcostswhileacquiringsubsidiaries,jointventuresandassociatedenterprise,lessthanfairvalueoftheidentifiablenetassetsfrominvestedenterprisewhichshouldbeenjoined14.65729.2958,022.12Negativegoodwillfromsubsidiaryacquisition.
Currentnetgain/lossesofthesubsidiarymergerunderthesamecontrolfrombeginningoftheperiodtocombinationdate-1,096.00
Switchbackofprovisionfordepreciationofaccountreceivableandcontractassetsthatareindividuallytestedforimpairment1,310,345.385,301,091.661,642,360.26
Gainsandlossesfromexternalentrustedloans3,460,037.163,246,925.691,907,519.89ThegainsobtainedfromofferingentrustloanstoChinaNationalZhijun(Suzhou).
Consigningfeereceivedforconsignedoperation516,929.44
Othernon-operatingincomeandexpenditureexceptfortheaforementioneditems17,179,002.785,069,438.37377,281.07Thenon-operatingincomerecognizedforwrittenofftheunpaidpayments
Othergains/lossessatisfyadefinitionofextraordinarygains/losses508,168.931,445,926.01134,740.70
Less:Impactonincometax17,317,723.7012,137,071.116,690,220.38
Impactonminorityshareholders’equity(post-tax)12,256,102.615,820,221.921,749,005.16
Total44,523,911.0434,770,468.3922,330,349.67--

Concerningtheextraordinaryprofit(gain)/lossdefinedbyQ&AAnnouncementNo.1onInformationDisclosureforCompaniesOfferingTheirSecuritiestothePublic---ExtraordinaryProfit/loss,andtheitemsdefinedasrecurringprofit(gain)/lossaccordingtothelistsofextraordinaryprofit(gain)/lossinQ&AAnnouncementNo.1onInformationDisclosureforCompaniesOfferingTheirSecuritiestothePublic---ExtraordinaryProfit/loss,explainreasons

□Applicable√NotapplicableInreportingperiod,theCompanyhasnoparticularaboutitemsdefinedasrecurringprofit(gain)/lossaccordingtothelistsofextraordinaryprofit(gain)/lossinQ&AAnnouncementNo.1onInformationDisclosureforCompaniesOfferingTheirSecuritiestothePublic---ExtraordinaryProfit/loss

SectionIII.SummaryofCompanyBusinessI.Mainbusinessesofthecompanyinthereportingperiod

TheCompanycomplieswiththedisclosurerequirementofInformationDisclosureGuidelinesfortheShenzhenStockExchangeNo.8-ListingCompanyEngagedinRetailingIndustryInthereportingperiod,themainbusinessofSinopharmAccordincludespharmaceuticaldistributionandpharmaceuticalretail,specificallyasfollows:

(i)Inthepharmaceuticaldistributionfield,thecompanycontinuestointegratethedistributionandlogisticsbusiness,deeplypenetratesintotheendmarkets,improvesthesteppeddistributionnetwork,createsintelligentsupplychain,anddevotestobecomeaproviderforpharmaceuticalandhealthcareproductsandserviceswiththestrongestinfluence,thehighestshare,themostcompletevariety,thebestservice,andthefastestdeliveryinsouthdistrictofChina.

1.TheCompany’spharmaceuticaldistributionbusinessisestablishedinGuangdongandGuangxi,thecompanyhascompletedthenetworkconstructionofGuangdongandGuangxiin2013,andthebusinesshasextendedtothecounty-levelregions;in2014,weacceleratingtheintegrationofthree-tiercompaniesandtheCompanyachievedanoperationalloverthenetworkin2015.Thenetworkfurtherexpandedin2019andmaindevelopmentdirectionisretailterminalswhichincludes:Afteroptimizingandadjustingthetypesofcustomersin2019,thereare959second-andthird-tiermedicalinstitutions,6,807primary-levelmedicalcustomers,and4,479retailterminalcustomers(chainpharmacies,singlestores,andself-payingpharmaciesinhospitals).

2.TheCompany’spharmaceuticaldistributionbusinesshasachievedthefirstscaleinGuangdongandGuangxiandtheleadingpositioninmarketsegmentofGuangdongandGuangxi,andhasobtainedtherelativelyleadingpositioninvaccine,instrument,ande-commerceindustries.(ii)Inthepharmaceuticalretailfield,GuodaDrugstoreisapharmaceuticalretailenterprisethatranksthefirstinthesalesvolumethroughoutthecountry,andisoneofthefewenterprisesinChinawithnationaldirectsalesdrugretailnetwork.Bytheendof2019,GuodaDrugstorehasoperated5021stores,covering20provinces,autonomousregionsandmunicipalities,enteringnearly71largeandmediumsizedcities,whichhasformedadrugstorenetworkscoveringeasternandnorthernChina,southerncoastalcities,andgraduallyexpandedintonortheast,centralplainsandinlandcities,thesalesscaleofwhichhasexceeded10billions,rankingthefirstwithinindustry;Guodadrugstore,thebusinessofwhichweremainlyrelyingonmodernretaildrugstores,hasbeenputtinggreatattentiononthedevelopmentofprofessionalservicesystemwithmedicalresourcesascorecompetitiveness,buildingagroupofstoreswithprofessionalcommercialactivities,whichareabletoprovideretailsandtherapyservicesthatintegratingmedicalserviceandhealth-careproductssalesandcooperatewithhospitals;atthesametime,theCompanyhasbeenvigorouslydevelopingnewbusiness,exploringandexpandingnewsaleschannels,improving

professionalservices,beingdedicatedtotransitfromatraditionalmedicalretailintoaninnovativeserviceenterprise.Bymeansofconventionalproductsretailmanagement,improvingmajorbrandsandexploringbusinesscooperationwithsupplier,acceleratingtheestablishmentandimprovementofDTPbusinessandcontinuationofhealthcareservicesystem,Guodahasbuiltindustry-leadingprofessionalserviceability.

II.Majorchangesinmainassets

1.Majorchangesinmainassets

MajorassetsNoteofmajorchanges
EquityassetsIncreased327.0559millionYuanoverthatofperiod-beginwith17.27%rateofchange,mainlybecausetheinvestmentincomefromjointventuresincreasedandchangeofthefairvalueofotherequityinstrumentinvestment.
FixedassetsIncreased4.6661millionYuanoverthatofperiod-beginwith0.77%rateofchange,nomajorchangesinthereportingperiod.
IntangibleassetsIncreased739,600Yuanoverthatofperiod-beginwith0.23%rateofchange,nomajorchangesinthereportingperiod.
ConstructioninprogressDecreased4.83millionYuanoverthatofperiod-beginwith-13.26%rateofchange,mainlybecausetheERPsystemconstructionwastransferredtointangibleassetsforcompletionandthesupplychainextensionprojecttransferredtofixedassetsintheperiod.
Right-of-useassetsIncreased1955.4611millionYuanoverthatofperiod-beginwith100%rateofchange,mainlyduetotheimplementationofnewleasestandardsintheperiod.

2.Mainoverseasassets

□Applicable√Notapplicable

III.Corecompetitivenessanalysis

1.StrongnetworkcoverageandlayoutRelyingontheperfectdistributionnetworkandvarietyresources,SinopharmAccordhasunifiedthewholesaleandretailresources.ThecompanyhasacompletedrugdistributionnetworkintheGuangdongandGuangxiregions,comprehensivelycoveringthesecond-andthird-tiermedicalinstitutionsandretailchainterminalsofGuangdongandGuangxiprovinces,inrecentyears,ithasseizedtheopportunityofdevelopingretailcustomers,andvigorouslyexpandeddistribution-relatedretailpharmacies,small-scalesocialmedicalservicesandotherrelatedformats,ofwhichthebusinesssaleshaveachievedrapidgrowth.SinopharmAccordhasretailnetworkleadinginscaleandcoveringthewholecountry,GuodaDrugstorehasretailchainnetworkspreadingover20provinces,municipalitiesandautonomousregions,coveringnearly71citiesnationwide.

2.AbundantvarietyresourcesInthepharmaceuticaldistribution,thecompanyhasestablishedextensivecooperativerelationswiththousandsofdomesticmanufacturersandcommercialenterprisesandestablishedstablebusinessrelationshipswithhundredsofimportandjointventuremanufacturers,andhasrichvarietyresources.GuodaDrugstoreoperatesnearly120,000merchandises.Withitsrelativelycomprehensivepurchasingnetworkandyearsofexperienceincommoditymanagement,GuodaDrugStorehasestablishedamerchandisesystemwithwidecoverage,highprofessionalization,andrichvarieties.

3.CompletelogisticsanddistributionsystemSinopharmAccorddistributionadoptssupplychainmanagementandwarehousemanagementsolutionssystem,ithasbuiltlarge-scalefirst-gradelogisticscentersinGuangzhou,Nanning,ShenzhenandotherplacesandestablisheddistributioncentersinGuangdongandGuangxiwhichhasformedladderlogisticsanddistributionnetworks,itisthefirstenterpriseinGuangdongandGuangxithathasachievedthethird-partylogisticsqualificationandhastheprofessionalpharmaceuticallogisticscapabilitieswiththelargestscale,themostextensivenetwork,andthemostcompletemodesinsouthernChina.GuodaDrugstorehasanationwidemodernlogisticsanddistributionsystem,andthelogisticswarehousesarelocatedin17provinces,has27large-and-smalllogisticswarehouses,coveringanareaofabout100,000squaremetersintotal.

4.TheadvantagesofmedicalinsuranceresourcesRegardingmedicineretails,thesubsidiariesofGuodaDrugstorehavefeaturedgenerallyhighermedicalinsuranceacquiringability,withhighermedicalinsurancesalesratioandsteadyoperation.

5.TheadvantagesofComplianceTheCompanyhadabigleadunderanincreasinglystringentregulatoryenvironmentforthereasonthatithaskeptemphasizinglegalizationandcomplianceintheprocessofoperationandmanagement.

6.Unique-influenceSinopharmbrandBrandoftheCompanyanddistribution,industrychild-brandandcontrollingshareholderandactualcontroller’sbrandcomedowninonecontinuousline,dependingonpowerfulforceofcentralenterprises,theCompany’spopularityandinfluenceareprominentdaybydayintheindustry.

SectionIV.DiscussionandAnalysisofBusiness

1.IntroductionIn2019,thecountrycontinuedtodeepenmedicalreform,policieswereintensivelyintroduced,andthepaceofreforminthemedicalfieldwasaccelerated.Thethree-medicalreformlinkagemechanismisbecomingmoremature,withthecentralizedpurchaseanduseofmedicinesasthebreakthrough,thefeecontrolofmedicalinsurancehasachievedinitialresults,andthepurchaseamountpolicyisbecomingmorenormal,andtheindustrialstructureofdrivingsupplyendhasundergonein-depthreforms,theadjustmentoftheproductstructureatthepaymentendhasaccelerated,andtheconcentrationatthecirculationendhasacceleratedwhilebearingpressure,thebusinessmodel,transactionform,andindustrypatternhavecontinuedtochange.SinopharmAccordhasseizedopportunitiesinthechange,closelycenteredonSinopharmHolding’s“3+2”strategicguidance,andcontinuouslypromotedthestrategicmeasureswith“technologyempowerment,serviceupgrade,wholesale-retailintegration,andproduction-financingdualdrive”asthecore,andgraspedthethreethemesof“solidfoundation,transformationandinnovation,andensuringdevelopment”,focusedonmarketshareandsupplychainperformanceimprovement,andachievedstablegrowthinscaleandoveralloperatingefficiency.In2019,theoperatingincomeoftheCompanyaccumulatedto52.046billionyuanwithay-o-yof20.69%up;operationprofitamountedto1.836billionyuan,a9.85%growthfromayearearlier;thenetprofitattributabletoshareholdersoflistedcompanyamountedto1.271billionyuan,ay-o-ygrowthof5.00%.In2019,theoperatingincomefromdistributionbusinessoftheCompanyaccumulatedto40.014billionyuanwithay-o-ygrowthof22.15%,alltypesofthebusinesshaveachievedrapidgrowthbyfurtherexpandingandconsolidatingtheadvantagesofdirectsellingbusiness,enhancingthecoverageofgrassrootsmedicalinstitutionsinbreadthanddepth.Ofwhich:hospitaldirectsellinghasagrowthof21.84%onay-o-ybasis,directsellingfromothermedicalinstitutionshavegrowthof31.64%onay-o-ybasis,directsellingfromretailachieveda

32.94%upfromayearearlier,equipmentconsumablesbusinesshave47.65%growthonay-o-ybasis,retaildiagnosisandtreatmentbusinesshave63.05%growthonay-o-ybasisandthedistributionbusinessofSinopharmAccordachievedanetprofitof846millionyuanforyearof2019,ay-o-ygrowthof18.19%.TheoperatingincomefromGuodaDrugstoreaccumulatedto12.754billionyuanwithay-o-ygrowthof17.24%in2019.Allbusinesshavedevelopedsteadily,ofwhich,thedirectoperationhasay-o-ygrowthof12.97%,DTPgrowth32.10%onay-o-ybasis,OTOhasay-o-ygrowthof33.11%,wholesalebusinesshaveay-o-ygrowthof64%andthefranchisebusinessgrowthratewas6.00%.GuodaDrugstoreachievednetprofitof312millionyuanin2019,a3.37%upfromayearearlierandthecumulativenetprofitattributabletoparentcompanyamountedas246millionyuanwithay-o-ygrowthof5.95%.

In2019,theinvestmentincometoassociatedenterpriseaccumulatedas331millionyuan,ay-o-ygrowthof

3.52%.(i)Workoverviewforyearof2019

1.Continuedtopromotethecorestrategyofwholesale-retailintegration,andenhancedthesynergyofbusinessformatsDeeplyimplementedthedevelopmentstrategyofwholesale-retailintegration,andpromotedthewholesale-retailintegrationwithindistributioncompaniesandthewholesale-retailintegrationofdistributioncompaniesandGuoda.Onthebasisofnetworklinkage,coordinatedtheeffectiveallocationandcirculationofresourcesamongvariousformatsandregions,enhancedcoordinationandcomplementarity,formedsynergy,andexploredtheformationoforganizationalintegrationmodel,businessintegrationmodel,equityintegrationmodel,andmemberstoremodel,coordinatedlogistics,supplychain,informationandotherbackgroundsystems,gavefullplaytoscaleandsharingeffects,simplifiedtheoperationprocess,andrealizedtheinteroperabilityofsupplychainmanagementsystems.

2.Speededupmergersandacquisitions,continuedtooptimizenetworklayout,andconstantlyexpandedstrategiclayoutActivelypromotedinvestmentprojectsandachievedbreakthroughsinoutboundmergersandacquisitions.Duringthereportingperiod,thecompanyinitiatedtheacquisitionofShanghaiDingqunEnterpriseManagementConsultingCo.,Ltd.(indirectlypurchasedSinopharmHoldingTianheJilinPharmaceuticalCo.,Ltd.),PudongNewAreaofShanghaiPharmaceuticalMedicineLtd.,Pu’erSongmaoJi’antangPharmaceuticalCo.,Ltd.,andGuodaDrugstore(Chaoyang)RenaiPharmacyCo.,Ltd.,theretaillayoutstrategyhasadvancedintoJilinProvinceandYunnanProvince;completedinvestmentintheestablishmentofSinopharmAccordPharmaceuticalSupplyChain(Shenzhen)Co.,Ltd.,SinopharmHoldingGuozhiDrugStore(Heyuan)Co.,Ltd.,LiaoningGuodaPharmaceuticalCo.,Ltd.,SinopharmHoldingGuodaDrugstoreYongxingtangChain(Chaoyang)Co.,Ltd.,andSinopharmHoldingGuangyiHealthManagement(Zhanjiang)Co.,Ltd.Asoftheendof2019,thenumberofholdingsubsidiariesofSinopharmAccordhasincreasedto110,andthestoresofGuodaDrugstorereached5,021(excludingnewmergersandacquisitionsofJilinTianheandYanghetang,JilinTianheandPudongNewAreaofShanghaiPharmaceuticalMedicinecompletedtheindustryandcommercechangesinJanuary2020whicharenotincludedinthescopeofconsolidatedfinancialstatementfor2019),atotalof83retailstores.

3.Technologyenergized,promoteddigitaltransformation,andimprovedsupplychainefficiencyStarteddigitaltransformation,upgradedservicecapabilities,andbuiltdigitalmanagementandcontrolplatformssuchassupplychainservices,omni-channelmembershipservices,andnewbusinessservices.Externallyimprovedtheexternalsupplychaindockingsystem,expandedthewholemedicinenetwork,GPO,provincialplatform,medicalinsuranceinterfacefunctionsandtheupstreamanddownstreamcustomerinformationinterconnection,independentlydevelopedFYCMSsystemandAVG,intelligentconveyorlineandotherautomatedequipmentdockingsystem,andupgradedC-endusersexperience;internallyupgradedtheinternal

supplychainsystems,includingretailsystemupgrades,distributionsystemupgrades,logisticsvisualizationupgrades,andcollaborativesharingandexpansion.

4.Indistributionbusinesssegment,maintainedstrategicstrength,focusedonservicetransformationandupgrading,andcontinuedtoenhancebusinessadvantages

(1)Tooktheinitiativetoseizepolicyopportunitiessuchas“4+7”,GPO,nationaltalks,etc.,andeffectivelygainedmarketshareunderthegeneraltrendofdrugpricereduction.TheleadingpositioninGuangdongandGuangxiprovincescontinuedtobestable,GuangzhouandShenzhenhaveachievedagoodstartin4+7centralizedprocurementandexpansion,andobtained25varietiesofdistributionrights,including5exclusivevarieties,andthegrossprofitmarginofthewinningvarietyincreasedby1.75%overthepreviousyear.IntermsofGPO,manysubsidiariesovercamethedifficultiesanddrovethemarketshareincreasewhenfacingmulti-platformparallel;atthesametime,eachsubsidiaryrespondedquicklyandcarriedoutan“ice-breakingaction”againsttheoriginaltrusteehospitalstoincreasethehospitals’marketshares.

(2)ContinuedtopromotethefourmajorbusinessdirectionsandpushthetransformationandupgradingofbusinessstructureThetraditionalbusinesswasfurtherenlargedandstrengthened,themarketsharecontinuouslyincreased,andtheleadingadvantagewasconstantlyconsolidated.Thedirectsalesformatincreasedby23%onayear-on-yearbasis,andthefourmajorbusinessdirectionsofretaildirectsales,retaildiagnosisandtreatment,primarymedicalcare,andequipmentconsumableshavemaintaineddouble-digitgrowth.

1)Retaildiagnosisandtreatment:theretailnetworklayoutofGuangdongandGuangxihasbeenfurtherimproved,asoftheendofthereportingperiod,atotalof83retailpharmacieshavebeenopened.In2019,thecompanyopened15newpharmacies,completedthepositioningin20citiesinGuangdongandGuangdong,andcarriedoutthesecondstageofin-depthdeploymentinGuangdongProvince;integratedmedicalinsuranceandrealized20prescriptionhospitals;accelerateddevelopmentofkeyproducts,introduced27newDTPproducts;increased4newareaswithmedicalinsurancequalification;createdapatient-centeredprofessionalpharmacymanagementservicesystemtoachievebrandspecialization,managementandcontrolrefinement,andhigh-qualityservice.

2)Retaildirectsales:thesalesscaleofthetop100nationalchaincustomershasmaintainedrapidgrowth,andthechannelgatheringstrengthofwholesale-retailintegrationprojectshasbeencontinuouslyintensified;theterminalnetworkcoverageofGuangzhouandShenzhenhasexceeded35%,andcooperatedwiththesubsidiariesinvariousregionstomaximizeresources;upgradedandimprovedtheB2Bplatformoperationfunctionmodule,PConlinepayment,APPHengxingmemberarea,mobileterminalapplicationcapabilitieshavebeensignificantlyimproved;expanded320memberstores,empoweredterminals,andimprovedmemberstoremanagementandservicemodels.

3)Instrumentconsumables:SPDmedicalconsumablescomprehensiveserviceplatformversion2.0wasdevelopedandlaunchedtorealizetheupgradeofinformationsuchastheorthopedicsmanagementmoduleofthe

newconsignmentmodel;graduallyestablishedcomprehensiveservicesolutionproviderbrandswithindustryinfluencebycreatingmodelhospitalprojectsandcopyingandpromoting,amongwhich,8projectsincluding“multi-warehousingintegratedsmartsupplychain”,“FineManagementofMedicalConsumablesofGuangzhouWomenandChildren’sMedicalCenter”andsoonwereawardedthe“BestPracticeCaseofPharmaceuticalSupplyChainin2019”and“TopTenPharmaceuticalSupplyChainServiceInnovationCases”byChinaAssociationofPharmaceuticalCommerce.

4)4Dbusiness:thereagentbusinesshasestablishedthetopthreehospitalmodel,andsalesandgrossprofitmarginshavecontinuedtoincrease;equipmentmaintenancebusinesshascompletedthesigningofcontractfor24projects;disinfectionsupplybusinesshasachievedcooperationwith21medicalinstitutions.

(3)ContinuedtopromotetheadvantagesofintegratedoperationsandempowertheentirebusinesschainGavefullplaytothe“managementandguide”advantagesoftheintegratedmanagementplatform,energizedtheoperationintegrationofsubsidiariesinGuangdongProvince,andstimulatedthetransformationandinnovationofthesubsidiaries;promotedthedistributionintegrationplatformconstructionofGuangxi,launchedfullintegrationcomprehensiveintegrationfromtheaspectsoforganizationalstructureconstruction,procurement,logistics,functions,etc.;carriedoutintegrateddockingandcomprehensivebudgetsystemconstructionfornewmergingcompanies.

5.Inretailbusinesssegment,continuedtodeepenthenetworklayout,focusedonbrandbuilding,andexplorednewbusinessmodels

(1)ContinuedtopromotetherapidexpansionofstoresandimprovethequantityandqualityofstoreexpansionAttheendof2019,thetotalnumberofstoresofGuodaDrugstorewas5,021,ofwhich3,744weredirect-operatedstores;thenetincreaseinthenumberofstoreswas746,ofwhich608werenewlyopeneddirect-operatedstoresandfranchisedstores,andanetincreaseof138mergersandacquisitions(excludingJilinTianhe,Yanghetang);theexpansionofstoresaroundthehospitalscontinuedtogrow,withanetincreaseof74in2019.TheretaillayoutstrategyhasadvancedintoJilinandYunnan,newlydevelopedsevencitiesintheexistingprovinces,continuedtoexpandtheadvantageousregionssuchasShenyang,InnerMongolia,WanminandYiyuan,achievednewbreakthroughsintheexpansioninGuangdong,Shandong,Xinjiang,GuangxiandQuanzhou,andtheenterprisescaleandmarketsharehavefurtherincreased.

(2)WBAcooperationwasfurtherpromoted,andbrandandservicewerecontinuouslyoptimizedSinceWBAincreaseditscapitaltoenterGuodaDrugstorein2018,afternearlytwoyearsofrunning-in,thetwosideshaveformedagoodprojectteamcooperationmechanism.LearnedtheadvancedmethodologyofWBA,connectedandrepeatedlydiscussedwiththeWBAprofessionalteam,sortedoutandoptimizedtheexistingproducts,determinedthelocalizedbrandpromotionstrategyandspecificpath,vigorouslydevelopednewvarietiesandcultivatedpotentialvarieties.InJanuary2019,GuodaDrugstoreandWBAlaunchedthe“newconcept”pilot

pharmacyinShanghai,whichachievedgoodresultsandsummarizedtheexperiencetofacilitatethereplicationandpromotionofthemodel.

(3)Acceleratedthelayoutofinnovativebusiness,andcomprehensivelydevelopedmultipleformatsofe-commercebusinessE-commercebusinessincreasedby29.7%onayear-on-yearbasis,e-commerceO2Obusinesscoveredmorethan2,800stores,withanaveragedailyordervolumeof12,000orders.B2Cbusinessdevelopedyaofang.com,1Drugstore,pinduoduoandotherchannels.Withtheadvantagesofexistingnetworks,products,shopassistants,etc.,improvedself-operatedO2OplatformssuchasWeChatMallandAPP,realizedvalue-addedservices,realizedseamlessconnectionofmembercenter+mall+healthycommunitysystem;realizedhomedeliveryofdrugs,onlinedrugsearch,andonlineandofflineconsumptionrecords.

(4)OptimizedmembermanagementmechanismandbuiltaprofessionalpharmacysystemwithchronicdiseaseasthecoreContinuedtopromotethecustomerhealthmanagementsystem,increasedcustomerstickinessthroughmembermanagement,onlinehealthcommunityAPP,andpatienteducation.Developedmembermanagementappletstoachieveonlineandofflineintegrationofmembers,integratedmembercenter,micromall,healthycommunity,POSsystemconsumptiondatainterflow,andincreased2.26millionnewactivemembersduringtheyear.Inordertocontinuouslystrengthentheteamofpharmacistsandcontinuetooptimizepharmaceuticalservices,morethan1,000offlinepharmacyprofessionaltrainingsandmorethan3,600patienteducationswereconductedin2019,theinternallicensedpharmacisttraininghasachievedremarkableresults,andmorethan1,700diabetesspecialistsandmorethan1,500hypertensionspecialistshavebeentrainedtorealizethenormalizationofchronicdiseasetraining.

(5)Promotedtheconstructionofprovincial-levelplatformsandstrengthenedregionalnetworkcultivationEstablishedandimplementedprovincial-levelplatformareas,exploredprovincial-levelplatformconstructionschemesfromcorporategovernance,businessarchitecture,platformcharacteristics,etc.,determinedbusinessstructureandpositioning,combineddifferentregionalpolicies,andpromotedthedevelopmentofmultiplemodelsbasedonbusinesscharacteristics.TheInnerMongoliaGuodaprovincial-levelplatforms,theFujianGuodaprovincial-levelplatforms,andtheShenyangGuodaprovincial-levelplatformshavebeenestablished;theprovincial-levelplatformsofJiangsu,Beijing,Guangdong,andAnhuiareunderconstruction.

TheCompanycomplieswiththedisclosurerequirementof“InformationDisclosureGuidelinesfortheShenzhenStockExchangeNo.8-ListingCompanyEngagedinRetailingIndustry”(ii)Operationoftheretailstoresinreportingperiod:

1.Bytheendof2019,GuodaDrugstorehas3,744direct-salestores,salesrevenue(tax-free)amountedto9.956billionyuan;andhas1,277franchisedstores,thedistributionrevenue(tax-free)amountedas1.101billionyuan.

RegionDirect-salestoreFranchisedoutlet
NumbersSalesrevenue(in10thousandYuan)NumbersDistributionrevenue(in10thousandYuan)
North1,798526,177.5444943,460.03
EastChina858219,119.9958952,956.27
SouthChina543142,588.331238,307.84
CentralChina28551,799.481165,354.30
Northwest26055,898.78--
Total3,744995,584.121,277110,078.44

Note:North:Liaoning,Shanxi,InnerMongolia,Beijing,Tianjin,HebeiEastChina:Shanghai,Jiangsu,Anhui,Shandong,Fujian,ZhejiangSouthChina:Guangdong,GuangxiCentralChina:Henan,HunanNorthwest:NingxiaXinjiang

(1)Toptenstoresinsales:

SerialRegionStorenameOpeningyearOperatingmodeBusinessformatActualoperatingarea(M2)Propertyownership
1ShanxiZhongliBranch2002Direct-sale5+X821.80Propertyrental
2GuangdongShenzhenexhibitionhall2006Direct-saleModernPharmacy260.00Propertyrental
3ShaanxiEryuanBranch2011Direct-sale5+X629.90Propertyrental
4YangzhouJiangsuBaiyulan1991Direct-saleModernPharmacy970.00Propertyrental
5InnerMongolianHeadquarter2003Direct-sale5+Xstore1,689.26Propertyrental
6BeijingXidanJinxiang1997Direct-saleModernPharmacy773.16Propertyrental
7FujianXiamenNewSpecialMedicine2005Direct-saleModernPharmacy132.90Propertyrental
8BeijingYongdingmenstore2009Direct-saleModernPharmacy100.00Propertyrental
9HebeiLeRenTangHeadquarter2010Direct-saleTraditionalChineseMedicineoutpatientstore1,206.00Propertyrental
10GuangdongShenzhenLianhuaNorth2003Direct-saleModernPharmacy120.33Propertyrental

(2)In2019,theCompanyhas777newstoresandclosed169stores,withanetincreaseof608stores

RegionDirect-salestoreFranchisedoutlet
NumberofstoreincreasedTotalarea(squaremeters)NumberofstoresshutdownNumberofstoreincreasedNumberofstoresshutdown
North30733,361.38-59133-6
EastChina9814,767.67-3334-23
SouthChina484,493.89-1265-9
CentralChina252,734.38-714-4
Northwest535,290.50-16--
Total53160,647.81-127246-42

(3)MedicalinsurancequalificationofthestoresAsof31December2019,theCompanyhas3,744chainstoreswithdirectlyselling,and3,201pharmacystoresobtainedthequalificationof“Designatedretailpharmaciesofmedicalinsurance”,representing85%ofthetotalpharmaciesoftheCompany.

RegionNumberofstoresStoresobtainedthequalificationof“Designatedretailpharmaciesofmedicalinsurance”Ratiointotalpharmaciesinregions
North1798159989%
EastChina85864876%
SouthChina54347888%
CentralChina28524686%
Northwest26023088%
Total3744320185%

2.Changeofmainsellingindex

YearPercustomertransaction(RMB)ProportionofprescriptiondrugsProportionofmedicalinsurancesalesindirect-salestoresProportionofthedirectmembersalesProportionoftransactiontimesofdirectmembers
20187451%39%67%55%
20198653%38%67%57%

(1)Classifyaccordingtoregion

RegionAmountofsalesgrowth(tax-free,in10thousandyuan)GrossmarginNetprofitratio
North10883925%3%
EastChina3578024%3%
SouthChina2445725%2%
CentralChina692730%1%
Northwest1013731%3%

(2)Operatingefficiencyofdirect-salestoresinreportingperiod

RegionNumberofstoresOperatingareaofthestores(squaremeters)Dailyaverageefficiency(tax-included,Yuan/SquareMeters)Rentalefficiency(tax-included,annualsalesvolume/rental)
North17982316597216
EastChina8581090326215
SouthChina543600067215
CentralChina285340934712
Northwest260323715319

Note:Dailyaverageefficiency=Averagedailyoperatingincome/Operatingareaofthestores;Averagedailyoperatingrevenue=Operatingrevenue(tax-included)ofthestoreintheYear/OperatingdaysofstoreintheYear.Rentalefficiency=Annualsalesvolume/Rental

3.Structureofthecategoryatretailterminal

Category20192018
Healthfood5.54%6.62%
Conveniencefood0.82%1.01%
RxDrug53.00%50.71%
OTC25.97%26.56%
Personalcare1.07%1.25%
Homeconvenience0.21%0.24%
Householdhealthproducts4.37%4.35%
ChineseHerbalMedicine4.44%5.10%
Proportionofothercategories4.59%4.16%

4.Purchasingandsupplies:

GoodssuppliersofGuodaDrugstorearemainlyexternalsuppliersandassistaffiliatedenterpriseofSINOPHARMandprivatebrands.Topfivesuppliersforyearof2019:

SuppliersPurchaseamount(taxincluded)Procurementratio
No.1190,416,56813%
No.2156,099,81410%
No.3117,609,9868%
No.4111,068,4087%
No.594,709,1456%

5.Warehousinglogistics:

In2019,GuodaDrugstorehas27largeandsmallsizedlogisticwarehousesintotal,coveringmorethan100,000squaremeters,spreadingoutacross17provinces.

ProvinceRegionWarehousearea(M2)Managementownership
LiaoningShenyang18,821Self-management
GuangdongGuangzhou/Delegation
Shenzhen
Jiangmen/Delegation
ShanxiShanxiWanmin10,919Self-management
ShanxiYiyuan/Delegation
JiangsuDadesheng4,869Self-management
Nanjing2,200Self-management
Liyang1,920Self-management
FujianFujian5,688Self-management
Quanzhou1,096Self-management
HebeiHebei4,300Self-management
ShandongShandong4,800Self-management
NingxiaNingxia3,300Self-management
HunanHunan3,600Self-management
HenanHenan3,610Self-management
InnerMongoliaInnerMongolia5,236Self-management
GuangxiGuangxi1,950Self-management
BeijingBeijingGuoda/Delegation
BeijingJinxiang
TianjinTianjin/Delegation
AnhuiAnhui1,000Self-management
XinjiangXinjiang3,517Self-management
ShanghaiShanghaiFumei20,000Self-management
ShanghaiGuoda
Hangzhou974Self-management
GuodaHeadquarterHeadquarter/Delegation
Total97,799

II.Mainbusinessanalysis

1.OverviewFoundmoreinI.IntroductioninDiscussionandAnalysisofBusiness

2.Revenueandcost

(1)Constituteofoperationrevenue

InRMB

20192018Increase/decreasey-o-y
AmountRatioinoperationrevenueAmountRatioinoperationrevenue
Totalofoperationrevenue52,045,764,143.21100%43,122,385,521.23100%20.69%
Accordingtoindustries
Pharmaceuticaldistribution38,886,408,981.7974.72%31,866,749,848.5373.90%22.03%
Retailpharmacy13,000,514,605.2824.98%11,110,718,685.7525.77%17.01%
Others158,840,556.140.30%144,916,986.950.33%9.61%
Accordingtoproducts
Pharmaceuticals48,181,069,748.3692.57%40,634,670,075.3194.23%18.57%
Medicaldevicesanddisposables2,756,591,633.835.30%1,589,598,645.853.69%73.41%
Diagnosticreagents692,370,435.531.33%548,790,740.101.27%26.16%
Medicalequipments256,891,769.350.49%204,409,073.020.47%25.68%
Others158,840,556.140.31%144,916,986.950.34%9.61%
Accordingtoregion
Domesticrevenue52,045,764,143.21100.00%43,122,385,521.23100.00%20.69%

(2)Abouttheindustries,products,orregionsaccountingforover10%ofthecompany’soperatingincomeoroperatingprofit

√Applicable□Notapplicable

InRMB

OperatingrevenueOperatingcostGrossprofitratioIncrease/decreaseofoperatingrevenuey-o-yIncrease/decreaseofoperatingcosty-o-yIncrease/decreaseofgrossprofitratioy-o-y
Accordingtoindustries
Pharmaceuticaldistribution38,886,408,981.7936,461,461,480.136.24%22.03%22.67%-0.49%
Retailpharmacy13,000,514,605.289,783,657,583.2024.74%17.01%18.45%-0.92%
Accordingtoproducts
Pharmaceuticals48,181,069,748.3642,826,247,612.3411.11%18.57%19.65%-0.80%
Accordingtoregion
Domesticrevenue52,045,764,143.2146,292,408,840.5311.05%20.69%21.74%-0.77%

Undercircumstancesofadjustmentinreportingperiodforstatisticscopeofmainbusinessdata,adjustedmainbusinessbasedonlatestoneyear’sscopeofperiod-end

□Applicable√Notapplicable

(3)IncomefromphysicalsaleslargerthanincomefromlaborsYes

(4)Fulfillmentofthecompany’ssignedsignificantsalescontractsuptothisreportingperiod

□Applicable√Notapplicable

(5)Constituteofoperationcost

InRMB

IndustriesItem20192018Increase/decreasey-o-y
AmountRatioinoperationcostAmountRatioinoperationcost
PharmaceuticaldistributionSalescost36,461,461,480.1378.77%29,722,775,504.0578.17%22.67%
RetailpharmacySalescost9,783,657,583.2021.13%8,259,946,674.3421.72%18.45%
OthersOthercost47,289,777.200.10%41,386,452.760.11%14.26%

(6)WhetherthechangesinthescopeofconsolidationinReportingPeriod

√Yes□NoDetailsofthechangesinthescopeofconsolidationinreportingPeriodcanbeseeninNoteVIofFinancialReport.

(7)Majorchangesoradjustmentinbusiness,productorserviceoftheCompanyinReportingPeriod

□Applicable√Notapplicable

(8)MajorsalesandmainsuppliersMajorsalesclientoftheCompany

Totaltopfiveclientsinsales(RMB)2,343,009,103.83
Proportionintotalannualsalesvolumefortopfiveclients4.50%
Ratioofrelatedpartiesinannualtotalsalesamongthetopfiveclients0.00%

InformationoftopfiveclientsoftheCompany

SerialNameSalesamount(RMB)Proportionintotalannualsales
1No.1584,218,124.681.12%
2No.2542,230,388.311.04%
3No.3449,040,746.730.86%
4No.4395,485,398.090.76%
5No.5372,034,446.020.72%
Total--2,343,009,103.834.50%

Othersituationofmainclients

□Applicable√NotapplicableMainsuppliersoftheCompany

Totalpurchaseamountfromtopfivesuppliers(RMB)7,333,904,753.96
Proportionintotalannualpurchaseamountfortopfivesuppliers19.27%
Ratioofrelatedpartiesinannualtotalsalesamongthetopfivesuppliers2.79%

InformationoftopfivesuppliersoftheCompany

SerialSuppliersPurchaseamount(RMB)Proportionintotalannualpurchases
1No.13,759,825,072.029.88%
2No.21,072,847,935.862.82%
3No.31,061,854,652.992.79%
4No.4727,478,368.721.91%
5No.5711,898,724.371.87%
Total--7,333,904,753.9619.27%

OthernotesofmainsuppliersoftheCompany

□Applicable√Notapplicable

3.Expenses

InRMB

20192018Increase/decreasey-o-yNoteofmajorchanges
Salesexpense3,055,403,668.162,762,789,885.7710.59%Nomajorchangesoccurred
Managementexpense842,014,983.53783,338,308.197.49%Nomajorchangesoccurred
Financialexpense119,972,954.7951,490,020.59133.00%Mainlyduetotheimplementationofnewleasestandardsintheperiod,theinterestexpensesoftheleaseliabilityiscalculatedaccordingtothediscountrateduringeachperiodoftheleaseterm,whiletherewasnosuchmatteroccurredinsameperiodoflastyear

4.R&Dexpenses

□Applicable√Notapplicable

5.Cashflow

InRMB

Item20192018Y-o-ychanges
Subtotalofcashin-flowfromoperationactivity56,559,206,916.4147,475,381,467.6019.13%
Subtotalofcashout-flowfromoperationactivity54,558,854,833.2146,152,775,115.3318.21%
Netcashflowfromoperationactivity2,000,352,083.201,322,606,352.2751.24%
Subtotalofcashin-flowfrominvestmentactivity161,121,607.20238,641,593.44-32.48%
Subtotalofcashout-flowfrominvestmentactivity401,568,622.84461,099,860.32-12.91%
Netcashflowfrominvestmentactivity-240,447,015.64-222,458,266.88-8.09%
Subtotalofcashin-flowfromfinancingactivity379,185,917.923,363,461,854.03-88.73%
Subtotalofcashout-flowfromfinancingactivity1,348,355,547.51504,680,787.88167.17%
Netcashflowfromfinancingactivity-969,169,629.592,858,781,066.15-133.90%
Netincreasedamountofcashandcashequivalent790,559,744.713,958,618,329.29-80.03%

Mainreasonsfory-o-ymajorchangesinaspectofrelevantdata

√Applicable□Notapplicable

(1)Netcashflowfromoperationactivity:has51.24%upfromayearearlier,mainlybecausesalesofgrowthintheperiodwasbetterthanthatofthepreviousyear,thecashreceivedfromsalesofgoodsandserviceprovidingareincreasedaccordingly;andduetotheimplementationofnewleasestandards,thepaymentofrentalwasrecordedinitemofPaymentofOtherCashRelatedtoFinancingActivitieswhilenosuchmatteroccurredinthesameperiodlastyear;

(2)Subtotalofcashin-flowfrominvestmentactivity:has32.48%downfromayearearlier,mainlybecauseatsameperiodlastyear,receivedpaymentforplantandequipmentofmodernpharmaceuticalPingshanbaseandtherepaymentofentrustedloansfromassociatedenterpriseZhijunSuzhou,andnosuchmatteroccurredintheperiod;

(3)Subtotalofcashin-flowfromfinancingactivity:has88.73%downfromayearearlier,mainlybecauseatsameperiodlastyear,receivedacapitalincreaseforsubsidiaryGuodaDrugstorefromstrategicinvestorwhilenosuchmatteroccurredintheperiod;

(4)Subtotalofcashout-flowfromfinancingactivity:has167.17%upfromayearearlier,mainlyduetotheimplementationofnewleasestandardsinthePeriod,thepaymentofrentalwasrecordedinitemofPaymentofOtherCashRelatedtoFinancingActivitiesandincreaseofthedistributiondividend;

(5)Netcashflowfromfinancingactivity:has133.90%downfromayearearlier,mainlybecauseatsameperiodlastyear,receivedacapitalincreaseforsubsidiaryGuodaDrugstorefromstrategicinvestorwhilenosuchmatteroccurredintheperiod;

(6)Netincreasedamountofcashandcashequivalent:has80.03%downfromayearearlier,mainlybecauseatsameperiodlastyear,receivedacapitalincreaseforsubsidiaryGuodaDrugstorefromstrategicinvestorwhilenosuchmatteroccurredintheperiod.ReasonsofmajordifferencebetweenthecashflowofoperationactivityinreportperiodandnetprofitoftheCompany

□Applicable√Notapplicable

III.Analysisofthenon-mainbusiness

□Applicable√NotapplicableIV.Assetsandliability

1.MajorchangesofassetscompositionTheCompanyinitiallyimplementedthenewfinancialinstrumentstandard,newrevenuestandardornewleasestandardssince2019,andrelevantitemsofthefinancialstatementatyear-beginningoftheimplementationyearwereadjusted

√Applicable□Notapplicable

InRMB

Year-endof2019Year-beginof2019RatiochangesNotesofmajorchanges
AmountRatiointotalassetsAmountRatiointotalassets
Cashandbankbalances8,882,334,845.7926.50%8,096,158,013.2426.49%0.01%Nomajorchangesoccurred
Accountsreceivable10,617,981,893.5231.68%9,336,861,647.9230.55%1.13%Nomajorchangesoccurred
Inventories4,947,424,591.5314.76%4,389,335,942.1914.36%0.40%Nomajorchangesoccurred
Investmentproperties138,900,358.300.41%144,894,495.970.47%-0.06%Nomajorchangesoccurred
Long-termequityinvestment2,105,114,410.886.28%1,880,393,786.106.15%0.13%Nomajorchangesoccurred
Fixassets612,599,944.111.83%594,067,973.911.94%-0.11%Nomajorchangesoccurred
Constructioninprogress31,582,575.840.09%36,412,614.610.12%-0.03%MainlybecausetheERPsystemconstructionwastransferredtointangibleassetsforcompletionandthesupplychainextensionprojecttransferredtofixedassetsintheperiod.
Short-termborrowings1,453,018,300.014.33%2,608,626,099.828.53%-4.20%Mainlyduetothedecreaseofsupplychainfinancing.
Long-termborrowings31,638,984.250.10%-0.10%Mainlybecausethelong-termloansarere-classifiedasnon-recurrentliabilityduewithinoneyear

2.Assetsandliabilitymeasuredbyfairvalue

√Applicable□Notapplicable

1.Assetsandliabilitiesatfairvalue

2019

Inputappliedinthemeasurementoffairvalue
QuotedpricesinactivemarketsSignificantobservableinputsSignificantunobservableinputsTotal
Level1Level2Level3
Continuousmeasurementoffairvalue
Receivablefinancing-446,342,588.46-446,342,588.46
Otherinvestmentinequityinstruments-116,021,000.00-116,021,000.00
Othernon-currentfinancialassets--140,000,000.00140,000,000.00
-562,363,588.46140,000,000.00702,363,588.46

2018

Inputappliedinthemeasurementoffairvalue
QuotedpricesinactivemarketsSignificantobservableinputsSignificantunobservableinputsTotal
Level1Level2Level3
Continuousmeasurementoffairvalue
Receivablefinancing-567,775,275.40-567,775,275.40
Otherinvestmentinequityinstruments-13,685,760.00-13,685,760.00
Othernon-currentfinancialassets-140,000,000.00140,000,000.00
-581,461,035.40140,000,000.00721,461,035.40

2.Assetsandliabilitiesdisclosedatfairvalue

2018

Inputappliedinthemeasurementoffairvalue
QuotedpricesinactivemarketsSignificantobservableinputsSignificantunobservableinputsTotal
Level1Level2Level3
Long-termborrowings-31,638,984.25-31,638,984.25

OtherchangesWhetherthemeasurementattributeformainassetsoftheCompanyhavechangedsignificantlyinthereportingperiod

□Yes√No

3.AssetsrightrestrictiontillendofreportingperiodNil

V.Investment

1.Overallsituation

√Applicable□NotapplicableDuringthereportingperiod,theCompanyachievedtheenterprisescombinedunderthedifferentcontrolforthefollowthreeenterprisesbycashacquisitionofSinopharmAccord(Guangzhou)PharmaceuticalCo.,Ltd.(70%),GuodaDrugstore(Chaoyang)RenaiPharmacyCo.,Ltd.(51%)andGuodaDrugstore(Pu’er)SongMaoCo.,Ltd.(60%)ThenewsubsidiariesincludingLiaoningGuodaPharmaceuticalCo.,Ltd.(100%),SinopharmHoldingGuodaDrugstoreYongxingtangChain(Chaoyang)Co.,Ltd.(51%),SinopharmAccordMedicalSupplyChain(Shenzhen)Co.,Ltd.(60%),SinopharmHoldingGuozhiPharmacy(Heyuan)Co.,Ltd.(70%)andSinopharmHoldingGuangyiHealthManagement(Zhanjiang)Co.,Ltd.(60%)wereestablishedintheperiodincluding.Duringthereportingperiod,thefundcontributionwascompletedfortheSinopharmHoldingGuodaDrugstoreBayabbaoerCo.,Ltd.(80%)andInnerMongoliaGuodaMedicineCo.,Ltd.(100%)andcompletedthecapitalincreasedtoSinopharmHoldingGuangzhouMedicalSupplyChainServiceCo.,Ltd.(51%),aftercapitalincreased,theshareholdingratioremainsunchanged.TheCompanyhas30%equityparticipatedinShanghaiRenbeiPharmacyCo.,Ltdand10%equityparticipatedinGuangdongJianhuiConstructionInvestmentManagementCo.,Ltdinthereportingperiod;andcompletedthecapitalincreased(29%)toassociatedenterprise-SinopharmJienuoMedicalServiceGuangdongCo.,Ltd,aftercapitalincreased,theshareholdingratioremainsunchanged.Formoreinvestmentdetails,seetheNote(vi)andNote(vii)inFinancialReport

2.Themajorequityinvestmentobtainedinthereportingperiod

□Applicable√Notapplicable

3.Themajornon-equityinvestmentdoinginthereportingperiod

□Applicable√Notapplicable

4.Financialassetsinvestment

(1)Securitiesinvestment

□Applicable√NotapplicableThecompanyhadnosecuritiesinvestmentinthereportingperiod.

(2)Derivativeinvestment

□Applicable√Notapplicable

Thecompanyhadnoderivativeinvestmentinthereportingperiod.

5.Applicationofraisedproceeds

√Applicable□Notapplicable

(1)Overallapplicationofraisedproceeds

√Applicable□Notapplicable

In10thousandYuan

YearWayTotalraisedcapitalsTotalraisedcapitalusedinPeriodTotalaccumulativeraisedcapitalsusedTotalraisedcapitalhaspurposeofuseschangedinPeriodCumulativeraisedcapitalshaspurposeofuseschangedintotalRatioofcumulativeraisedcapitalshaspurposeofuseschangedTotalaccumulativeraisedcapitalsunusedUsageoftheretainedraisedcapitalsandwhatisexpectedtoinvestedwiththosecapitalsRaisedcapitalsidleformorethantwoyears
2016Non-publicofferingofshares27,361.49022,469.34000.00%4,892.15Depositbank0
Total--27,361.49022,469.34000.00%4,892.15--0
ExplanationonGeneralusageofraisedcapital
MoredetailsoftheuseofraisedcapitalscanbeseeninSpecialreportonthestorageandtheactualuseofraisedcapitalsofSinopharmAccordin2019disclosedon22April2020

(2)Situationofcommittedprojectofraisedproceeds

√Applicable□Notapplicable

In10thousandYuan

CommittedinvestmentprojectsandcapitalinvestedinareaswithfundraisingoutoftheplanProjectschangedornot(includingchangedpartially)TotalcommittedinvestmentofraisedcapitalsTotalinvestmentafteradjustment(1)AmountinvestedinreportperiodAmountofaccumulatedinvestmenttilltheperiod-end(2)Investmentprogramtilltheperiod-end(3)=(2)/(1)ThedatewhentheprojectreachesitsintendedavailabilityRealizedinterestsinPeriodReachthepredictedinterestornotProjectfeasibilitywaschangedhugelyornot
Committedinvestmentprojects
Cashconsiderationof49%equityofGuangdongNanfangPharmaceuticalForeignTradeCo.,Ltd.paidN26,781.6726,781.67021,889.5281.73%0NotapplicableN
PaymentofissuancecostN579.82579.820579.82100.00%0NotapplicableN
Subtotalofcommittedinvestmentprojects--27,361.4927,361.49022,469.34----0----
Capitalinvestedinareaswithfundraisingoutoftheplan
Notapplicable
Total--27,361.4927,361.49022,469.34----0----
Situationaboutnotcominguptoschemedprogressorexpectedrevenueandthereason(Inspecificproject)Notapplicable
ExplanationonmajorchangesonprojectfeasibilityNotapplicable
Amount,usageandprogressofusingforfundraisingoutoftheplanNotapplicable
ChangeofimplementationplaceofinvestmentprojectofraisedcapitalsNotapplicable
RegulationofimplementationwaysofinvestmentprojectofraisedcapitalsNotapplicable
PreliminaryinvestmentandreplacementofinvestmentprojectofraisedcapitalsNotapplicable
TemporarilysupplementforthecurrentcapitalswithidleraisedcapitalsNotapplicable
AmountandreasonforsurplusofraisedcapitalswhenimplementingprojectsNotapplicable
UsageoftheretainedraisedfundandwhatisexpectedtoinvestedwiththosefundDepositedinaspecialaccountforraisedfunds,purposeoftheraisedfundshavenotbeenchanged
IssuesorotherconditionsfoundinuseoffundraisedanddisclosureUseofthefundraisedarestrictlyexecuteinlinewiththetri-partysupervisionagreementforfundraised,andnorelatedissuesorotherconditionsbeenfound

(3)Thechangedprojectofraisedproceeds

□Applicable√NotapplicableTheCompanyhasnoprojectofraisedproceedschangedinthePeriod.VI.Salesofmajorassetsandequity

1.Salesofmajorassets

□Applicable√NotapplicableTheCompanyhasnosalesofmajorassetsinthePeriod.

2.Salesofmajorequity

□Applicable√Notapplicable

VII.Analysisofmainholdingcompanyandstock-jointlycompanies

√Applicable□NotapplicableSubsidiaryandjoint-stockenterprisewithanimpactofmorethan10%ontheCompany’snetprofit

InRMB

CompanynameTypeMainbusinessRegistercapitalTotalassetsNetAssetsOperatingrevenueOperatingprofitNetprofit
SinopharmHoldingGuangzhouCo.,Ltd.SubsidiarySalesofdrugs,medicalapparatusandinstruments,freighttransportation,storage,loadingandunloading,glasswares,cosmeticsanddailymerchandise;otherbusinessservices,otherprofessionalconsultation,variousgoodsagencyandforself-operation,import&exportoftechnology,housesleasing3,553,249,393.1713,903,583,691.994,533,117,185.3629,348,890,454.01746,082,755.81560,749,042.99
SinopharmHoldingGuodaDrugstoreCo.,Ltd.SubsidiaryChinesetraditionalpatentmedicine,chemicalpreparations,antibiotics,bio-chemicalmedicine,biologicalmedicine,diagnosismedicine,biologicalmedicinewithfeaturesoftreatmentanddiagnosis,shapedpackingfood,chemicalproducts,andvariouscommodityandtechniqueholdbyself-supportandagencyaswellasimport&exportoftechnology1,683,333,333.0011,173,757,597.944,993,009,760.2812,753,608,498.70422,228,850.74311,908,115.16
SinopharmHoldingGuangxiCo.,Ltd.SubsidiaryRetailanddistributioninrespectofpharmaceuticalproductsandmedicalapparatusandinstruments,wholesaleandretailsofhealthproducts521,407,965.794,006,269,159.151,108,937,908.736,170,121,266.85220,472,710.34193,137,920.08

Particularaboutsubsidiariesobtainedordisposedinreportperiod

√Applicable□Notapplicable

CompanyNameThemethodofobtainingandhandlingsubsidiariesduringthereportperiodTheinfluencetothewholeproductionandperformance
SinopharmAccord(Guangzhou)PharmaceuticalCo.,Ltd.AcquisitionFurtherconsolidatedthepharmaceuticaldistributionbusinessinGuangxi&GuangdongandwithoutmajorinfluenceonperformanceoftheCompany
GuodaDrugstore(Chaoyang)RenaiPharmacyCo.,Ltd.AcquisitionExpandlocalmedicineretailbusinesslayout,andwithoutmajorinfluenceonperformanceoftheCompany
GuodaDrugstore(Pu’er)SongMaoCo.,Ltd.AcquisitionExpandlocalmedicineretailbusinesslayout,andwithoutmajorinfluenceonperformanceoftheCompany
SinopharmHoldingGuodaDrugstoreYongxingtangChain(Chaoyang)Co.,Ltd.EstablishmentExpandlocalmedicineretailbusinesslayout,andwithoutmajorinfluenceonperformanceoftheCompany
SinopharmAccordMedicalSupplyChain(Shenzhen)Co.,Ltd.EstablishmentFurtherconsolidatedthepharmaceuticaldistributionbusinessinGuangxi&GuangdongandwithoutmajorinfluenceonperformanceoftheCompany
SinopharmHoldingGuozhiPharmacy(Heyuan)Co.,Ltd.EstablishmentExpandlocalmedicineretailbusinesslayout,andwithoutmajorinfluenceonperformanceoftheCompany
LiaoningGuodaPharmaceuticalCo.,Ltd.EstablishmentExpandlocalmedicineretailbusinesslayout,andwithoutmajorinfluenceonperformanceoftheCompany
SinopharmHoldingGuangyiHealthManagement(Zhanjiang)Co.,Ltd.EstablishmentFurtherconsolidatedthepharmaceuticaldistributionbusinessinGuangxi&GuangdongandwithoutmajorinfluenceonperformanceoftheCompany
QinghuangdaoGuodaDrugstoreChainCo.,Ltd.TransferNomajorinfluence.

VIII.StructuredvehiclecontrolledbytheCompany

□Applicable√NotapplicableIX.FutureDevelopmentProspects

(i)IndustryenvironmentanditsimpactonthecompanyUnderthegoalof“HealthyChina”,thelinkageofmedicine,medicalcare,andmedicalinsurancecontinuestoaccelerate,andalargenumberofinterlockingmajorpoliciesarechangingandwillchangetheentiremedicineandmedicalecosystem.Theoverallgrowthrateoftheindustryisshowingaslowingtrend,andtheprofitspaceisconstantlyreduced,andtheshufflingisintensified.Inaddition,thesuddennovelcoronaviruspneumoniaepidemicinearly2020hasagreatimpactonthedomesticandforeigneconomies,theslowdowninGDPgrowthmayhaveashort-termnegativeimpactonmedicalexpenditures,resultinginincreaseddownwardpressureondrugprices,andtheoperationandcapitalchainofvariousenterprisesfaceheavypressureandtest,theindustrialstructurehasacceleratedtorebuild.However,thelong-termdevelopmenttrendofthepharmaceuticalsindustry

hasnotchanged,policyandenvironmentalchangeshavealsodriventhecontinuousimprovementoftheconcentrationofthepharmaceuticalcirculationindustry,andthecorecompetitiveadvantagesofleadingenterpriseshavebeencontinuouslyenhanced.Theepidemicwillpromotenationalandsocialinvestmentindiseasepreventionandcontrol,acceleratetheconstructionofnationalemergencysupplysystemandcomprehensivesupervisionsystem,increaseinvestmentintechnologicalinnovation,andacceleratethepopularizationofLiveAppofdigitaltechnologyandmanagement.Facedwiththenewenvironmentathomeandabroad,changesinindustrialpoliciesandcompetitionpatternsofnewphaseandnewmodel,thecompanywillfullyexplorenewprofitgrowthpoints,upgradeservicecapabilities,improveoperatingquality,andactivelyrespondtochallengesandopportunitiesthroughcontinuoustechnologicalinnovationandexplorationofnewideas.(ii)Companybusinessplan

1.StrengthentheresponsibilityofcentralenterprisesandstrengthendevelopmentconfidenceFirstly,asthedesignatedmedicalequipmentreserveunitsofgovernmentsatalllevels,wecontinuetoundertaketheprocurement,storageanddistributionofepidemicemergencysupplies,activelyobtainthedistributionrightsofdrugsintheepidemicdiagnosisandtreatmentschemeandshortageofdrugs,andadoptvariousmethodstoassistintheadmissionofmedicines;summarizetheexperienceofepidemicpreventionandcontrol,andactivelyparticipateintheconstructionofgovernmentandcommunitypublichealthsystems;Secondly,payattentiontomarketchanges,quicklyadjustthestructure,promotenewbusinessmodels,achievewidercoverageanddeepersinkingofsalesandchannelresources,prepareforgradeddiagnosisandtreatment;acceleratethepromotionofonlinetoofflineintegratedpharmaceuticalnewretail,C-end,B-endmulti-channelservices.

2.Continuetopromotethestrategyofwholesale-retailintegration,improvetheefficiencyofsupplychainintegrationSummarizetheexperienceofthetypicalmodelofwholesale-retailintegration,establishanationwideworkmechanismforwholesale-retailintegration;comprehensivelypromotethe“memberstore”,andcoordinatethemanagementofthebrandofthememberstore;acceleratethetransformationofretaildirectsalescustomersofthedistributioncompaniesandthewholesale-retailjointlyexpandlocalsmallandmedium-sizedchainpharmacies.Collaborateprocurementresourcestoforma“unifiednegotiationandseparateprocurement”distributionmodelofupstreammanufacturers+distribution+retailtripartitelinkage,promotelogisticsplanningandinformationconstruction,andenhancethelocalmarketsharesandcompetitivenessofretailformats.Integratethenationallogisticsresources,planthenationallogisticsnetwork,andrealizethenationalmulti-warehouselinkage;establishanationallogisticscentersupplychainandlogisticsoperationmonitoringsystem,unifythestandardizedindexsystem,andimprovetheoveralloperationefficiencyandservicequality.

3.MakeeveryefforttoacceleratedigitaltransformationandempowernewbusinessmodelswithtechnologyBuildadigitalmanagementplatformtoempowermanagement,controlandservices,includingfinancialsharing

platform,remunerationevaluationdigitalplatform,propertyrentalmanagementdigitalplatform,riskmanagementandcontroldigitalplatform,andsecuritymanagementdigitalplatform,etc.Itisplannedtoestablishaninformationtechnologycentertosimulate“corporate”operationandmanagement,acceleratethedigitaltransformationofbusinessmanagementandcontrol,andusenewtechnologiestobuildahospitalsupplychainmanagementinformationplatformandaretailprofessionalsupplychainmanagementinformationplatformtosupportthedeepeningoftheonlinetoofflinesupplychainofthebusiness,andimprovetheresponsivenessofprovidingsolutionstodifferententitiesintheupstreamanddownstreamofthesupplychain.

4.Investinmergersandacquisitionstoseizeopportunitiesandacceleratethenationwidedeploymentandmulti-fieldlayoutDeepenthedistributionnetworklayout,acceleratethecompletionofthelayoutoftheblankareasinGuangdongandGuangxi,andcarryoutthesecondarylayoutofregionalandcountymarketsandkeyregions;expandtheinvestmentcooperationofinnovativebusinessesaroundtheupstreamanddownstreamofthesupplychainandtakevalue-addeddemandasthestartingpoint;acceleratetheexpansionofthenationalretailnetwork,makefulluseofthe“directsales+franchise+mergersandacquisitions”troikatoimprovetheefficiencyofstoreexpansion,andspeeduptheopeningofstores.

5.Indistributionbusinesssegment,promotethedeploymentof“onebodyandtwowings”business,andacceleratethedevelopmentofefficiencyOnebodyreferstothetraditionalbusiness,andtwowingsreferto“retaildirectsales+retaildiagnosisandtreatment”and“innovativeserviceproducts”.

(1)Focusonmarketshareandstrengthentraditionalbusiness:followthetrend,adjustproductstructure,layoutinadvance,andgoallouttograbnewproducts;onthebasisoflogisticsanddeliveryservices,customizeaccordingtocustomerneeds,andextendaseriesofservicestoformproductservicepackagesandsolutions.

(2)Retaildirectsales+retaildiagnosisandtreatment:acceleratethedevelopmentofdistributionandretailbusiness,andstrengthenterminalcontrol.Carryoutnetworkconstructionaroundthetopthreehospitals,prioritizethelayoutofmedicalinsuranceandprescriptioncirculationprojectintentioncities,buildthepatient-centricfull-chainservicesystem,developremotediagnosisandtreatmentcooperationplatforms,andimproveitsownremotereviewsystem;retaildirectsalescontinuetodevelopresourcesandcarryoutterminalnetworksconstruction,increasetheretailmarketshare,quicklycopyandpromotethemembershipstoremodel,andestablishanewprofitmodel.

(3)Innovativeserviceproducts:useintegratedplatformstoshareresourcesandenrichserviceproductsaroundtheupstreamanddownstreamofthesupplychain;promotetherapidexpansionofinnovativebusinessestosubsidiaries,makekeylayoutineachregion,comprehensiveoutput,promotescaledevelopmentandincomeincrease,andpromotetheprofitcontributionsofinnovativeserviceproducts.

6.GuodaDrugstore:continuetoacceleratenetworklayoutandaccelerateinnovationanddevelopment

(1)Continuetopromotenetworkexpansionandsinking,andacceleratethestorelayoutthrough“direct

sales+franchise”:strengthenresourceintegrationintheareasalreadyenteredandenhanceregionalmarketinfluence.Intermsoftheexpansionofdirectstores,itquicklyseizedtheadvantageousbusinessdistrictsaroundthehospitalandfurthersettledthedistributionpoints;encourageallsubsidiariestovigorouslydevelopfranchisebusiness;promotetheconstructionofprovincial-levelplatformsbyclassificationandgrading,integratenewM&Aenterprisesandcontrolrisks,andplaysynergyeffects.

(2)ActivelypromotethedigitaltransformationofretailformatsandpromotetheInternet+servicemodel:

landCRMsystems,upgrademembermanagementandassessmentmechanisms,andestablishaninnovativemembermodelbasedonbigdata;makefulluseofexistingnetwork,products,andstorestaffadvantages,andestablishitsowne-commerceplatform.

(3)ImproveOEMbrandplanningandpromotethedevelopmentofprivatebrandbusiness:improvebrandplanningandsystemconstruction,establishproductplanningandevaluationsystem,establishqualitymanagementsystem,improvemarketingstrategysystem,enhanceproductqualityandserviceawareness,andenhancebrandinfluence.

(4)ContinuetointegrateWBAresources:continuetostrengthencomprehensiveprojectcooperationininformationtechnology,retailterminaloperation,categoryoptimization,privatebrand,newstoremodel,etc.,optimizeretailservicesystemandbusinessmodel,andimprovemanagementlevel.(iii)Possiblerisks

1.RisksofchangesinindustrypolicyWiththecontinuousdeepeningofnewmedicalreform,thepharmaceuticalindustryfrequentlyreleasespolicies,andtheoperatingenvironmentoftheindustryhasmajorchanges,affectedbythe“4+7”centralizedprocurementlinkageandexpansion,theGPOinGuangdongandGuangxiprovinces,andthecontinuousexpansionofthenationaltalks,andotherpolicies,thedrugpricehascontinuedtodropsharply,andthecompany’sprofitmarginisfacingtheriskoffurthercompression.Thesupervisionhasbeencontinuouslyupgraded,theintroductionofthenewDrugAdministrationLawandtheimplementationofthe“fourstrictest”putforwardhigherrequirementsforthecomplianceoperationofpharmaceuticalenterprises,thepharmaceuticalcirculationindustryfacesincreasedrisksofuncertaincompliance.Thecompanywillrespondtotheimpactsofindustrypoliciesbytransformingandupgradingitsbusinessstructure,exploringnewprofitmodels,andimprovingitsriskmanagementandcontrolcapabilities.

2.ManagementrisksofthecontinuousexpansionofmarketingnetworkofGuodaDrugstoreThroughthecontinuousopeningofnewstoresandextendedM&A,themarketingnetworkofGuodaDrugstorehasmaintainedasteadygrowthtrendinrecentyears.Theexpansionsofthesalesareasandtheincreaseinthenumberofstoreshaveputpressureonthestorelocation,distribution,cashmanagement,marketingandhumanresourcemanagementofGuodaDrugstore.Thecompanywillstrengthenmanagementandconstructioninthecommodityprocurement,logisticsanddelivery,salesandotherlinks,andformulatecorrespondingmanagementmeasuresineachlinktoensureunifiedstandardsandmanagementqualityforstoreexpansion,andatthesametimestrengthenintegrationandcontrolofnewmergedstores.

3.Risksofintensifyingmarketcompetition

Asthecountrycontinuestointroducecorrespondingpoliciestoencouragetheintegrationofpharmaceuticalretailindustry,themajorpharmaceuticalretailenterprisesintheindustryhaveacceleratedthepaceofmergersandacquisitions,andcontinuedtoexpandthemarketingnetworks,improvethelogisticscenterconstructions,andinnovatethebusinessandprofitmodelssothatthesalesscaleandcomprehensivestrengthcontinuouslystrengthen.Atthesametime,withtheupgradingofconsumptionandthegradualopeningofmarket,theforeignpharmaceuticaldistributionenterpriseswithpowerfulstrengthareenteringthedomesticpharmaceuticaldistributionmarketsthroughavarietyofways,sotheindustrycompetitionisfurtherintensifying.Inaddition,thecross-bordercompetitorswithinternetgeneshavequicklypenetratedintothecompany’straditionalbusinessfields,whichbroughtcertainchallengestothecompany’sbusinessmodel.Thecompanywillcontinuetointegrateexistingresources,deepenthestrategicdevelopmentinitiativeswithwholesale-retailintegrationasthecore,anddeeplygiveplaytothesynergies,directlyfacetheterminalpatientsandconsumersthroughcomplementaryvarieties,capitalcollaboration,supplychaincollaboration,andinternationalpromotion,atthesametime,itwillrealizebrandglobalizationbycapitaloperation,andcontinuouslyincreaseinvestmentinscientificandtechnologicalinnovation,andactivelyrespondtocross-bordercompetition.

4.RisksoffacingthehorizontalcompetitionInthepharmaceuticalretailfield,SinopharmHolding’saffiliateddistributionsubsidiarieshavealsoopenedsomesocialretailpharmacies,whichconstituteacertaindegreeofhorizontalcompetitionwiththesubordinateGuodaDrugstore.SinopharmHoldingandSINOPHARMhavepledgedtotakeeffectivemeasurestoresolvethepossiblehorizontalcompetition.

5.TheriskofgoodwillimpairmentsOn31December2019,thebookvalueofgoodwillinconsolidatefinancialstatementlistedas944,079,884.56Yuan,anddistributedtotheassetsgroupofdistributionbusinessandretailbusiness.InaccordancewiththeAccountingStandardsforBusinessEnterprises,theCompanycarriedoutannualimpairmenttestforthegoodwill.ImpairmentofgoodwillwillreleasedontheNoteV.-17andNoteIII-17&34listedundertheFinancialStatement

X.Receptionofresearch,communicationandinterview

1.Inthereportperiod,receptionofresearch,communicationandinterview

√Applicable□Notapplicable

TimeWayTypeBasicsituationindexofinvestigation
17May2019FieldresearchInstituteResolutionofAnnualGeneralMeeting2018(NoticeNo.:2019-26)
13November2019FieldresearchInstituteResolutionofThirdExtraordinaryShareholders’GeneralMeetingof2019(NoticeNo.:2019-45)
Reception(times)2
Numberofhospitality65
Numberofindividualreception5
Numberofotherreception0
Disclosed,releasedorletoutmajorundisclosedinformationNodisclosed,releasedorletoutmajorundisclosedinformation

SectionV.ImportantEventsI.Profitdistributionplanofcommonstockandcapitalizingofcommonreservesplan

Formulation,ImplementationandAdjustmentofcommonstockProfitDistributionPolicyEspeciallyCashDividendpolicyduringtheReportingPeriod

√Applicable□Notapplicable

On17May2019,theprofitdistributionplanforyearof2018wasdeliberatedandapprovedbyannualgeneralmeetingof2018,thatistakingtotal428,126,983sharesasbase,distributed4.00yuan(taxincluded)foreach10sharesincash.Theannouncementof2018interestdistributionimplementationwasreleasedon11June2019bytheBoard(publishedinSecuritiesTimes,ChinaSecuritiesJournal,HongKongCommercialDailyandJuchaoWebsitehttp://www.cninfo.com.cn),theprofitdistributionplanforyearof2018wascompleted,anddividendforpublicshareswasdistributedtotheaccountofshareholdersdated19June2019(A-share)and21June2019(B-share)respectively.

Specialexplanationoncashdividendpolicy
SatisfyregulationsofGeneralMeetingorrequirementofArticleofAssociation(Y/N):Y
Well-definedandclearlydividendstandardsandproportion(Y/N):Y
Completedrelevantdecision-makingprocessandmechanism(Y/N):Y
Independentdirectorsperformdutiescompletelyandplayaproperrole(Y/N):Y
Minorityshareholdershaveopportunitytoexpressopinionsanddemandstotallyandtheirlegalrightsarefullyprotected(Y/N):Y
Conditionandproceduresarecomplianceandtransparentwhilethecashbonuspolicyadjustedorchanged(Y/N):Notapplicable

Profitdistributionplan(pre-plan)ofcommonstockandcapitalizingofcommonreservesplan(pre-plan)inlatestthreeyears(includingthereportingperiod)

(1)Profitdistributionplanforyearof2017Takingthetotal428,126,983sharesasbase,cashbonusof3.00yuan(beforetax)each10shareswillbedistributedtothewholeshareholders.Thisprofitdistributiondidnotconvertcapitalreserveintosharecapital.

(2)Profitdistributionplanforyearof2018Takingthetotal428,126,983sharesasbase,cashbonusof4.00yuan(beforetax)each10shareswillbedistributedtothewholeshareholders.Thisprofitdistributiondidnotconvertcapitalreserveintosharecapital.

(3)Profitdistributionplanforyearof2019Takingthetotal428,126,983sharesasbase,cashbonusof6.00yuan(beforetax)each10shareswillbedistributedtothewholeshareholders.Thisprofitdistributiondidnotconvertcapitalreserveintosharecapital.Cashdividendofcommonstockinlatestthreeyears(includingthereportingperiod)

InRMB

YearforbonussharesAmountforcashbonus(taxincluded)NetprofitattributabletocommonstockshareholdersoflistedcompanyinconsolidationstatementforbonusyearRatioofthecashbonusinnetprofitattributabletocommonstockshareholdersoflistedcompanycontainedinconsolidationstatementProportionforcashbonusbyotherways(i.e.sharebuy-backs)RatioofthecashbonusbyotherwaysinnetprofitattributabletocommonstockshareholdersoflistedcompanycontainedinconsolidationstatementTotalcashbonus(includingotherways)Ratioofthetotalcashbonus(otherwaysincluded)innetprofitattributabletocommonstockshareholdersoflistedcompanycontainedinconsolidationstatement
2019256,876,189.801,271,289,183.0120.21%0.000.00%256,876,189.8020.21%
2018171,250,793.201,210,742,435.7814.14%0.000.00%171,250,793.2014.14%
2017128,438,094.901,057,791,930.6712.14%0.000.00%128,438,094.9012.14%

TheCompanygainsprofitsinreportingperiodandtheretainedprofitofcommonstockshareholdersprovidedbyparentcompanyispositivebutnoplanofcashdividendproposedofcommonstock

□Applicable√Notapplicable

II.ProfitdistributionplanandcapitalizingofcommonreservesplanforthePeriod

√Applicable□Notapplicable

Bonussharesforevery10-share(Share)0
Dividendsforevery10-share(RMB)(Taxincluded)6
Incrementsper10shares(Share)0
Equitybaseofthedistributionplan(Share)428,126,983
Amountofcashdividend(RMB)(Taxincluded)256,876,189.80
Amountofcashdividendinotherways(i.e.sharerepurchase)(RMB)0.00
Totalcashdividend(includingotherway)(RMB)256,876,189.80
Profitavailablefordistribution(RMB)4,996,184,257.34
Proportionoftotalcashdividend(includingotherways)tototalprofitdistribution20.21%
Cashdividendsituation
Ifthecompany’sdevelopmentisatthegrowthstagewithsignificantcapitalexpenditures,theminimumproportionofcashdividendintheprofitdistributionshouldreach40%.

III.Implementationofcommitment

1.CommitmentscompletedinPeriodandthosewithoutcompletedtillendofthePeriodfromactualcontroller,shareholders,relatedparties,purchaserandcompanies

√Applicable□Notapplicable

CommitmentsPromiseTypeofcommitmentsContentofcommitmentsCommitmentdateCommitmenttermImplementation
Commitmentsforsharemergerreform
CommitmentsinreportofacquisitionorequitychangeSinopharmHoldingCommitmentofshareholders"Asalargepharmaceuticalcommercialenterprisewhosebusinessinvolvespharmaceuticalwholesaleandretail,SinopharmHoldingmayoverlapwiththeCompanyingeographicalsegmentationduringitsfuturebusinessdevelopment.Toavoidthepotentialpeercompetitionbroughtbysuchgeographicaloverlap,SinopharmHoldingundertakesthat,uponthetransferofsharesofSinopharmHoldingGuangzhouitheldtoSinopharmAccord,“1.itwillnotnewly-establishorbroadenwithinGuangdonganybusinessoperationthatactuallycompetewiththatofSinopharmAccord,orsetupanynewsubsidiariesorsubordinateenterpriseswhoengageinsuchbusiness.2.ItwillenterintobusinessdelineationwithSinopharmAccordandSinopharmHoldingGuangzhou,therebygivingthethreepartiescleargeographicalareastocarryoutpharmaceuticalwholesaleandretailbusinesses,soastoavoidpotentialpeercompetition.Apartfromabove,SinopharmHoldingwillnolongernewly-establishanyenterprisethatmaycompetewithSinopharmAccordintheproductionandR&Dofpharmaceuticalproducts.”21June2005Long-termeffectiveNormallyimplementing
CommitmentsinassetsreorganizationSinopharmGroupCo.,Ltd;ChinaNationalPharmaceuticalForeignTradeCorporationCommitmentonrestrictedshares“SinopharmHoldingandSinopharmForeignTrademadecommitmentsintheReportaboutChinaNationalAccordMedicinesCorporationLtd.PurchasingAssetsandRaisingSupportingFundsandRelatedTransactionsbyAssetSale,StockIssuanceandCashPaymentthatthenon-publicofferingofsharesofSinopharmAccordobtainedfromthistransactionshallnotbetransferredwithin36monthssincethefinishdateofissuanceandshallbeunlockedafter36monthssincethedateoflisting.Within6monthsafterthecompletionofthistransaction,iftheclosingpriceofthestockofSinopharmAccordislessthantheissuepriceincontinuous20tradingdays,ortheclosingpriceattheendof6monthsafterthecompletionofthistransactionislessthantheissueprice,thelockupperiodofthestockofSinopharmGroupandSinopharmForeignTradeobtainedfromSinopharmAccordbythistransactionwillautomaticallyprolongatleast6months.ThesharesderivedfromstockdividendsallocationandcapitalreserveincreasetransferringofSinopharmAccordbasedonthenon-publicofferingofsharesofSinopharmAccordobtainedbythistransactionshouldalsoabidebytheabovestockrestrictedarrangements.”31May201636monthsNormallyimplementing
Ping’anAssetsManagementCo.,Ltd.Commitmentonrestrictedshares"PingAnAssetManagementCo.,Ltd.madecommitmentsintheReportaboutChinaNationalAccordMedicinesCorporationLtd.PurchasingAssetsandRaisingSupportingFundsandRelatedTransactionsbyAssetSale,StockIssuanceandCashPaymentthatthenon-publicofferingofsharesofSinopharmAccordobtainedfromthistransactionshallnotbetransferredwithin36monthssincethefinishdateofissuanceandshallbeunlockedafter36monthssincethedateoflisting.Afterplacementcompleted,thesharesofthelistedcompanyincreasedduetobonussharesandturningtoincreasecapitalshouldpursuittotherestrictionarrangementtheabovementioned.31May201636monthsNormallyimplementing

SinopharmGroupCo.,Ltd

Commitmentsonhorizontalcompetition,relationtransactionandcapitaloccupation

“SinopharmHoldingmadecommitmentsintheReportaboutChinaNationalAccordMedicinesCorporationLtd.PurchasingAssetsandRaisingSupportingFundsandRelatedTransactionsbyAssetSale,StockIssuanceandCashPaymentthattheCompanyshallbethecontrollingshareholderofChinaNationalAccordMedicinesCorporationLtd.(hereinafterreferredtoasSinopharmAccord)uptotheissuedateofthiscommitmentletter,afterthecompletionofthismajorassetsreorganization(hereinafterreferredtoas“thisreorganization”),SinopharmAccordshallnolongerholdsharesoroperaterelevantbusinessesofpharmaceuticalindustry,themainbusinesswillbecomethenationalpharmaceuticalretailandpharmaceuticaldistributionbusinessinGuangdongandGuangxi.InordertosupportthebusinessdevelopmentofSinopharmAccordandavoidhorizontalcompetitionwithSinopharmAccordanditscontrollingenterprises,theCompanymadefollowingirrevocablecommitmentsandpromises:1,afterthecompletionofthisreorganization,asforthesocialretaildrugstoreassetsexceptforSinopharmHoldingGuodaDrugstoreCo.,Ltd.anditssubsidiariesandbranchesownedorcontrolledbytheCompany,theCompanypromisedtotakeappropriatemeasurestosolvethehorizontalcompetitionprobleminthepharmaceuticalretailbusinessbetweentheCompanyandSinopharmAccordwithin5yearssincethecompletiondateofthisreorganization.2.TheCompany'swayofresolvinghorizontalcompetitionproblemsincludesandisnotlimitedtopurchasingthesocialretaildrugstoreassetssubordinatedtotheCompanybySinopharmAccord,takingtheentrustedoperation,leasingorcontractingoperationbySinopharmAccordanditscontrollingenterprisesinaccordancewiththemethodspermittedtonationallawstoholdorcontrolthesocialretaildrugstoreassets,ortransferringthecontrollingstakeofthesocialretaildrugstoreassetsbytheCompany.3.Iftheshareholdersofthesocialretaildrugstoreassets(hereinafterreferredtoas"thethirdparty")oftheCompanyortheenterprisescontrolledbytheCompanyhaveoraregoingtoperformthepreemptiverightsunderthesameconditionsinaccordancewithrelevantlawsandcorrespondingArticlesofAssociation,thentheabovecommitmentwillnotbeapplicable,butinthiscase,theCompanyshouldtryitsutmosttourgethethirdpartytowaiveitspreemptiverights.IftheCompanyisunabletourgethethirdpartytogiveupthepreemptiverights,theCompanywillurgetheenterprisescontrolledbytheCompanytotransferthesocialretaildrugstoreassetstothethirdpartytosolvethehorizontalcompetitionproblem.4.ThepharmaceuticaldistributionassetscurrentlyownedorcontrolledbytheCompanyaredistributedoutsideGuangdongandGuangxiregions,thereisnohorizontalcompetitionwithSinopharmAccord,theCompanywillnotengageinthesameorsimilaroperationbusinessestoSinopharmAccordinGuangdongandGuangxiinthefuture,iftheCompanyanditsholdingenterprisesobtainthenewbusinessopportunitiesconstitutingsubstantialhorizontalcompetition(hereinafterreferredtoascompetitivenewbusiness)

28Dec.2016

Long-termeffective

Normallyimplementing

SINOPHARM

Commitmentsonhorizontalcompetition,relationtransactionandcapitaloccupation

“SINOPHARMmadecommitmentsintheReportaboutChinaNationalAccordMedicinesCorporationLtd.PurchasingAssetsandRaisingSupportingFundsandRelatedTransactionsbyAssetSale,StockIssuanceandCashPaymentthattheCompanyshallbetheactualcontrollerofChinaNationalAccordMedicinesCorporationLtd.(hereinafterreferredtoasSinopharmAccord)uptotheissuedateofthiscommitmentletter,afterthecompletionofthismajorassetsreorganization(hereinafterreferredtoas“thisreorganization”),SinopharmAccordshallnolongerholdsharesoroperaterelevantbusinessesofpharmaceuticalindustry,themainbusinesswillbecomethenationalpharmaceuticalretailandpharmaceuticaldistributionbusinessinGuangdongandGuangxi.InordertosupportthebusinessdevelopmentofSinopharmAccordandavoidhorizontalcompetitionwithSinopharmAccordanditscontrollingenterprises,theCompanymadefollowingirrevocablecommitmentsandpromises:1,afterthecompletionofthisreorganization,asforthesocialretaildrugstoreassetsexceptforSinopharmGroupGuodaDrugstoreCo.,Ltd.anditssubsidiariesandbranchesownedorcontrolledbytheCompany,theCompanypromisedtotakeappropriatemeasurestosolvethehorizontalcompetitionprobleminthepharmaceuticalretailbusinessbetweentheCompanyandSinopharmAccordwithin5yearssincethecompletiondateofthisreorganization.2.TheCompany'swayofresolvinghorizontalcompetitionproblemsincludesandisnotlimitedtopurchasingthesocialretaildrugstoreassetssubordinatedtotheCompanybySinopharmAccord,takingtheentrustedoperation,leasingorcontractingoperationbySinopharmAccordanditscontrollingenterprisesinaccordancewiththemethodspermittedtonationallawstoholdorcontrolthesocialretaildrugstoreassets,ortransferringthecontrollingstakeofthesocialretaildrugstoreassetsbytheCompany.3.Iftheshareholdersofthesocialretaildrugstoreassets(hereinafterreferredtoas"thethirdparty")oftheCompanyortheenterprisescontrolledbytheCompanyhaveoraregoingtoperformthepreemptiverightsunderthesameconditionsinaccordancewithrelevantlawsandcorrespondingArticlesofAssociation,thentheabovecommitmentwillnotbeapplicable,butinthiscase,theCompanyshouldtryitsutmosttourgethethirdpartytowaiveitspreemptiverights.IftheCompanyisunabletourgethethirdpartytogiveupthepreemptiverights,theCompanywillurgetheenterprisescontrolledbytheCompanytotransferthesocialretaildrugstoreassetstothethirdpartytosolvethehorizontalcompetitionproblem.4.ThepharmaceuticaldistributionassetscurrentlyownedorcontrolledbytheCompanyaredistributedoutsideGuangdongandGuangxiregions,thereisnohorizontalcompetitionwithSinopharmAccord,theCompanywillnotengageinthesameorsimilaroperationbusinessestoSinopharmAccordinGuangdongandGuangxiinthefuture,iftheCompanyanditsholdingenterprisesobtainthenewbusinessopportunitiesconstitutingsubstantialhorizontalcompetition(hereinafterreferredtoascompetitivenewbusiness)

28Dec.2016

Long-termeffective

Normallyimplementing

Commitmentsmakeininitialpublicofferingorre-financingSinopharmHoldingCommitmentofshareholdersSinopharmHoldingmadecommitmentsintheCommitmentLetterAboutSinopharmGroupCo.,Ltd.toAvoidHorizontalCompetition:“First,theCompanyandtheCompany’swholly-owned,controllingorotherenterpriseswithactualcontrol(inadditiontoSinopharmAccordanditscontrollingenterprises,hereinafterthesame)don’thavebusinessesandoperationsconstitutingthesubstantialhorizontalcompetitiontoSinopharmAccordanditscontrollingenterprises.Second,theCompanyandtheCompany’swholly-owned,controllingorotherenterpriseswithactualcontrolshallnotengage,participateinordobusinessesandactivitiesinGuangdongandGuangxiwhichconstitutesubstantialcompetitiontoSinopharmAccordandpharmaceuticalbusinessservices.Third,theCompanyandtheCompany’swholly-owned,controllingorotherenterpriseswithactualcontrolshallnotengage,participateinordobusinessesandactivitieswhichconstitutesubstantialcompetitiontoSinopharmAccordandpharmaceuticalindustrybusinesses.Fourth,theCompanyshallnottakeadvantageofthecontroltoSinopharmAccordtodamagethelegitimaterightsandinterestsofSinopharmAccordandothershareholders(especiallymediumandsmallshareholders).Thiscommitmentlettertakeseffectfromtheissuedate,andremainsineffectfortheentireperiodwhentheCompanyactsasthecontrollingshareholderoritsrelatedpartyofSinopharmAccord.Withintheeffectiveperiodofthecommitment,iftheCompanyviolatesthiscommitmentandcausesalosstoSinopharmAccord,theCompanywilltimelymakefullcompensationforSinopharmAccord.”5Sept.2013Long-termeffectiveControllingshareholderisimplementinrealearnest,SinopharmAccordwillactivelyurgedthecontrollingshareholderandactualcontrollertofulfillcommitments
SinopharmHoldingCommitmentofshareholdersSinopharmHoldingmadecommitmentsintheCommitmentLetterAboutSinopharmGroupCo.,Ltd.toRegulatetheRelatedTransactionswithChinaNationalAccordMedicinesCorporationLtd.:“First,whentheCompanyiscontrollingSinopharmAccord,theCompanyandthecompaniesandenterprisesdirectlyandindirectlycontrolledbytheCompany(“relatedparty”forshort)willstrictlyregulatetherelatedtransactionswithSinopharmAccordanditscontrollingenterprises.Second,fortherelatedtransactionsthatcannotbeavoidednorhavereasonablereasonstooccur,theCompanyandrelatedpartyshallsignnormativerelatedtransactionagreementinaccordancewithrelevantlawswithSinopharmAccord.SinopharmAccordimplementstheapprovalproceduresandfulfillstheinformationdisclosureobligationsoftherelatedtransactionsaccordingtorelevantlaws,regulations,rules,othernormativedocumentsandtheconstitutionsofSinopharmAccord.Third,fortherelatedtransactionsthatcannotbeavoidedorhavereasonablereasonstooccur,theCompanyandrelatedpartyshallabidebytheopen,fairandjustmarketprinciplesandconfirmthepriceofrelatedtransactionsinaccordancewiththepricethattheindependentthirdpartywithoutassociationsetsforthesameandsimilartransactions,andensurethefairnessofthepriceoftherelatedtransactions.Fourth,whentheboardofdirectorsandthegeneralmeetingofstockholdersofSinopharmAccordvoteontherelatedtransactionsinvolvingtheCompanyandotherenterprisescontrolledbytheCompany,theCompanyshallfulfillthenecessaryobligationsthattheassociateddirectorsandassociatedshareholdersabstainfromvotinginaccordancewiththerelevantprovisions,andabidebythelegalproceduresforapprovingrelatedtransactionsandtheinformationdisclosureobligations.Fifth,theCompanyguaranteestoparticipateintheshareholders'generalmeeting,equallyexercisethecorrespondingrightsandtakethecorrespondingobligationsinaccordancewiththeconstitutionsofSinopharmAccord,nottotakeadvantageofcontrollingshareholderstatustoseekimproperbenefitsorutilizerelatedtransactionstoillegallytransferthefundsandprofitsofSinopharmAccord,andnottodamagethelegitimaterightsandinterestsofothershareholders(especiallythemediumandsmallshareholders)ofSinopharmAccord.Sixth,thiscommitmentlettercomesintoforcefromtheissuedateandremainsineffectfortheentireperiodwhentheCompanyactsasthecontrollingshareholderoritsrelatedpartyofSinopharmAccord.Withintheeffectiveperiodofthecommitment,iftheCompanyviolatesthiscommitmentandcausesalosstoSinopharmAccord,theCompanywilltimelymakefullcompensationforSinopharmAccord.”5Sept.2013Long-termeffectiveControllingshareholderisimplementinrealearnest,SinopharmAccordwillactivelyurgedthecontrollingshareholderandactualcontrollertofulfillcommitments
SINOPHARMCommitmentofactualcontroller"SINOPHARMmadecommitmentsintheCommitmentLetterAboutChinaNationalPharmaceuticalGroupCorporationtoAvoidHorizontalCompetitionwithChinaNationalAccordMedicinesCorporationLtd.:“First,inthenextfiveyears,Sinopharmplanstotakeappropriatemeasures(includingassetsreplacementoracquisition,equityreorganization,etc.)toresolvethehorizontalcompetitionbetweenSinopharmWeiqidaandSinopharmAccord.Second,inadditiontothepastmattersandmattersdisclosedinthiscommitmentletter,theCompanyandtheCompany’swholly-owned,controllingorotherenterpriseswithactualcontrolrights(exceptforSinopharmAccordanditscontrollingenterprises,thesameasbelow)shallnotdirectlyengagedin,participateinordothebusinessesanactivitiesconstitutingactualcompetitiontotheproductionandoperationofSinopharmAccordinChina.TherelevantcommitmentsaboutavoidinghorizontalcompetitionthattheCompanymadeinthepaststillremainineffect.Third,theCompanyshallnottakeadvantageofthecontrolrelationshiptoSinopharmAccordtodamagethelegitimaterightsandinterestsofSinopharmAccordanditsshareholders(especiallythemediumandsmallshareholders).Fourth,thiscommitmentlettercomesintoforcefromtheissuedateandremainsineffectfortheentireperiodwhentheCompanyactsasthecontrollingshareholderoritsrelatedpartyofSinopharmAccord.”16Oct.2013Long-termeffectiveActualControllerisimplementinrealearnest,SinopharmAccordwillactivelyurgedthecontrollingshareholderandactualcontrollertofulfillcommitments
SINOPHARMCommitmentofactualcontroller"SINOPHARMmadecommitmentsintheCommitmentLetterAboutSinopharmGroupCo.,Ltd.toRegulatetheRelatedTransactionswithChinaNationalAccordMedicinesCorporationLtd.:“First,whentheCompanyiscontrollingSinopharmAccord,theCompanyandthecompaniesandenterprisesdirectlyandindirectlycontrolledbytheCompany(“relatedparty”forshort)willstrictlyregulatetherelatedtransactionswithSinopharmAccordanditscontrollingenterprises.Second,fortherelatedtransactionsthatcannotbeavoidedorhavereasonablereasonstooccur,theCompanyandrelatedpartyshallsignnormativerelatedtransactionagreementinaccordancewithrelevantlawswithSinopharmAccord.SinopharmAccordimplementstheapprovalproceduresandfulfillstheinformationdisclosureobligationsoftherelatedtransactionsaccordingtorelevantlaws,regulations,rules,othernormativedocumentsandtheconstitutionsofSinopharmAccord.Third,fortherelatedtransactionsthatcannotbeavoidedorhavereasonablereasonstooccur,theCompanyandrelatedpartyshallabidebytheopen,fairandjustmarketprinciplesandconfirmthepriceofrelatedtransactionsinaccordancewiththepricethattheindependentthirdpartywithoutassociationsetsforthesameandsimilartransactions,andensurethefairnessofthepriceoftherelatedtransactions.Fourth,whentheboardofdirectorsandthegeneralmeetingofstockholdersofSinopharmAccordvoteontherelatedtransactionsinvolvingtheCompanyandotherenterprisescontrolledbytheCompany,theCompanyshallfulfillthenecessaryobligationsthattheassociateddirectorsandassociatedshareholdersabstainfromvotinginaccordancewiththerelevantprovisions,andabidebythelegalproceduresforapprovingrelatedtransactionsandtheinformationdisclosureobligations.Fifth,theCompanyguaranteesnottotakeadvantageofactualcontrollerstatustoseekimproperbenefitsorutilizerelatedtransactionstoillegallytransferthefundsandprofitsofSinopharmAccord,andnottodamagethelegitimaterightsandinterestsofothershareholders(especiallythemediumandsmallshareholders)ofSinopharmAccord.Sixth,thiscommitmentlettercomesintoforcefromtheissuedateandremainsineffectfortheentireperiodwhentheCompanyactsastheactualcontrolleroritsrelatedpartyofSinopharmAccord.22Sept.2013Long-termeffectiveActualControllerisimplementinrealearnest,SinopharmAccordwillactivelyurgedthecontrollingshareholderandactualcontrollertofulfillcommitments
Completedontime(Y/N)Y

2.ConcerningassetsorprojectoftheCompany,whichhasprofitforecast,andreportingperiodstillinforecastingperiod,explainreasonsofreachingtheoriginalprofitforecast

□Applicable√Notapplicable

IV.Non-operationalfundoccupationfromcontrollingshareholdersanditsrelatedparty

□Applicable√NotapplicableNonon-operationalfundoccupationfromcontrollingshareholdersanditsrelatedpartyinperiod.

V.ExplanationfromBoardofDirectors,SupervisoryCommitteeandIndependentDirectors(ifapplicable)for“QualifiedOpinion”thatissuedbyCPA

□Applicable√NotapplicableVI.Particularsaboutthechangesinaspectofaccountingpolicy,estimatesandcalculationmethodcomparedwiththefinancialreportoflastyear

√Applicable□Notapplicable

(i)Newleasestandard:

In2018,theMinistryofFinanceissuedtherevisedAccountingStandardsforBusinessEnterprisesNo.21-Leases(referredtoas“newleasestandard”).Thenewleasestandardsadoptasinglemodelsimilartothecurrentaccountingtreatmentoffinancialleases,requiringthelesseetoaffirmtheright-of-useassetsandleaseliabilitiesofallleasesotherthanshort-termleasesandlow-valueassetleases,andrespectivelyaffirmthedepreciationandinterestexpenses.SinceJanuary1,2019,theGrouphascarriedoutaccountingtreatmentinaccordancewiththerevisednewleasestandards,forthecontractsexistingbeforethefirstexecutiondate,itchoosesnottore-evaluatewhethertheyareleasesorincludeleases,andaccordingtotheconnectionregulations,noadjustmentsaremadetotheinformationinthecomparableperiod,andthedifferencebetweenthenewleasestandardsonthefirstexecutiondateandthecurrentleasestandardsareadjustedretroactivelyforretainedearningsatthebeginningof2019.(ii)ChangesinthepresentationmodeoffinancialstatementsInaccordancewiththerequirementsofthe“NoticeontheRevisionandIssuanceoftheFormatofGeneralEnterpriseFinancialStatementsfor2019”(CK[2019]No.6)andthe“NoticeontheRevisionandIssuanceoftheFormatofConsolidatedFinancialStatements(2019Version)”(CK[2019]No.16),inthebalancesheet,the“billsreceivableandaccountsreceivable”itemsaresplitinto“billsreceivable”and“accountsreceivable”,andthe“billspayableandaccountspayable”itemsaresplitinto“billspayable”and“accountspayable”,billsandreceivablesthatwereoriginallyincludedin“othercurrentassets”itemandmeasuredatfairvalueandwhosechangesareincludedinothercomprehensiveincomeareseparatelylistedinthe“receivablesfinancing”item,the“interestreceivables”inthe“otherreceivables”itemischangedtoonlyreflecttheinterestsofrelevantfinancial

instrumentsthathavebeendueandshouldbereceivedbutnotyetreceivedonthebalancesheetdate(interestsoffinancialinstrumentsaccruedbasedontheeffectivelyinterestratemethodareincludedinthebookbalanceofthecorrespondingfinancialinstruments),the“interestpayable”inthe“otherpayables”itemischangedtoonlyreflecttheinterestsofrelevantfinancialinstrumentsthathavebeendueandshouldbepaidbutnotyetpaidonthebalancesheetdate(interestsoffinancialinstrumentsaccruedbasedontheeffectivelyinterestratemethodareincludedinthebookbalanceofthecorrespondingfinancialinstruments).The“derecognizedgainsoffinancialassetsmeasuredatamortizedcost”iteminthe“investmentincome”itemreflectsthegainsandlossesarisingfromderecognitionoffinancialassetsmeasuredatamortizedcostduetotransfersandothercircumstances.TheGrouphasretrospectivelyadjustedthecomparativedataaccordingly.Thisaccountingpolicychangehasnoimpactonthemergerandthecompany’snetprofitandowner’sequity.Foundmoreon35.ChangeofaccountingpolicyandaccountingestimatecarryinNoteIII.ImportantaccountingpolicyandestimateVII.Majoraccountingerrorswithinreportingperiodthatneedsretrospectiverestatement

□Applicable√NotapplicableNomajoraccountingerrorswithinreportingperiodthatneedsretrospectiverestatementfortheCompanyintheperiod.VIII.Comparewithlastyear’sfinancialreport;explainchangesinconsolidationstatement’sscope

√Applicable□NotapplicableDetailsofchangesinconsolidationstatement’sscopecanbeseeninNoteVIofFinancialReport.

IX.Appointmentandnon-reappointment(dismissal)ofCPA

Accountingfirmappointed

NameofdomesticaccountingfirmErnst&YoungCPA(SpecialGeneralpartnership)
Remunerationfordomesticaccountingfirm(in10thousandYuan)396.81
Continuouslifeofauditingservicefordomesticaccountingfirm4
NameofdomesticCPALiJianguang,LiYuanfen
ContinuouslifeofCPAfromthedomesticaccountingfirmforauditingservice4
Nameofforeignaccountingfirm(ifapplicable)N/A
Continuouslifeofauditingserviceforforeignaccountingfirm(ifapplicable)N/A
NameofforeignCPA(ifapplicable)N/A
ContinuouslifeofCPAfromtheforeignaccountingfirmforauditingservice(ifapplicable)N/A

Re-appointedaccountingfirmsinthisperiod

□Yes√NoAppointmentofinternalcontrolauditingaccountingfirm,financialconsultantorsponsor

√Applicable□NotapplicableInthePeriod,theCompanyengagedErnst&YoungCPA(SpecialGeneralpartnership)astheauditbodyforinternalcontrol,andauditingchargeforinternalcontrolamountingas871,900yuan.

X.Particularaboutsuspendedanddelistingafterannualreportdisclosed

□Applicable√Notapplicable

XI.Bankruptcyreorganization

□Applicable√NotapplicableNobankruptcyreorganizationfortheCompanyinreportingperiod.XII.SignificantlitigationsandarbitrationoftheCompany

□Applicable√NotapplicableNosignificantlitigationsandarbitrationoccurredinthereportingperiod.XIII.Penaltyandrectification

□Applicable√NotapplicableNopenaltyandrectificationfortheCompanyinreportingperiod.XIV.Integrityofthecompanyanditscontrollingshareholdersandactualcontrollers

√Applicable□NotapplicableInreportingperiod,controllingshareholderandactualcontrolleroftheCompanyhasasoundintegrity,andtherearenocasesoffailuretoimplementtheeffectivejudgementofthecourtandthelargeamountofdebtdueandunliquidated

XV.Implementationofthecompany’sstockincentiveplan,employeestockownershipplanorotheremployeeincentives

□Applicable√NotapplicableDuringthereportingperiod,thecompanyhasnostockincentiveplan,employeestockownershipplanorotheremployeeincentivesthathavenotbeenimplemented.

XVI.Majorrelatedtransaction

1.Relatedtransactionwithroutineoperationconcerned

√Applicable□Notapplicable

(1)Relatedtransactionwithroutineoperationconcernedcanbefoundin“X.Relatedpartyandrelatedtransaction”carriedinSectionXII.FinancialReport;

(2)Therelatedtransactionsaresettledincashandbynotes,accordingtotheProposalofExpectedRoutineRelatedTransactionswithSubordinateEnterpriseforYearof2019deliberatedandapprovedby10

th

sessionof8

th

BODheldon23April2019andAGMof2018heldon17May2019,aswellastheNoticeonExpectedRoutineRelatedTransactionforYearof2019(NoticeNo.:2019-18)releasedon25April2019,therelatedsalestakes68.47%intotalexpectedamountforthewholeyear,andrelatedprocurementtakes

82.33%intotalexpectedamountforthewholeyear.

2.Relatedtransactionsbyassetsacquisitionandsold

□Applicable√Notapplicable

3.Mainrelatedtransactionsofmutualinvestmentoutside

□Applicable√NotapplicableNomainrelatedtransactionsofmutualinvestmentoutsidefortheCompanyinreportingperiod.

4.Contactofrelatedcreditanddebt

√Applicable□NotapplicableWhethertheCompanyhadnon-operatingcontactofrelatedcreditanddebt

□Yes√NoTheCompanyhadnonon-operatingcontactofrelatedcreditanddebtinthereportingperiod.

5.Otherrelatedtransactions

√Applicable□NotapplicableInreportingperiod,theProposalon100%EquityofShanghaiDingqunEnterpriseManagementConsultingCo.,Ltd.AcquisitionbySinopharmHoldingGuodaDrugstoreCo.,LtdandProposalon75%EquityofPudongNewAreaofShanghaiPharmaceuticalMedicineLtd.AcquisitionbySinopharmHoldingGuodaDrugstoreCo.,Ltdweredeliberatedandapprovedby13

th

sessionof8

thBODandThirdExtraordinaryShareholders’GeneralMeetingof2019.TheabovementionedtargetenterprisescompletedthedeliveryinJanuary2020andhasnoimpactontheresultsoftheCompanyfor2019therefore.

Relevantqueriesonthewebsiteofinterimnoticesofmajorrelatedpartytransactiondisclosed

InterimNoticeDatefordisclosedWebsitefornoticereleased
SinopharmAccord:75%EquityofPudongNewAreaofShanghaiPharmaceuticalMedicineLtd.AcquisitionbySinopharmHoldingGuodaDrugstoreCo.,Ltd-controllingsubsidiaryoftheCompanyandRelatedPartyTransaction29October2019JuchaoWebsitehttp://www.cninfo.com.cn
SinopharmAccord:100%EquityofShanghaiDingqunEnterpriseManagementConsultingCo.,Ltd.AcquisitionbySinopharmHoldingGuodaDrugstoreCo.,Ltd-controllingsubsidiaryoftheCompanyandRelatedPartyTransactionofthe85%EquityAcquisitionofSinopharmHoldingTianheJilingMedicalCo.,Ltd.29October2019JuchaoWebsitehttp://www.cninfo.com.cn

XVII.Significantcontractandimplementations

1.Trusteeship,contractandleasing

(1)Trusteeship

□Applicable√NotapplicableTheCompanyhadnotrusteeshipinthereportingperiod.

(2)Contract

□Applicable√NotapplicableNocontractfortheCompanyinreportingperiod.

(3)Leasing

□Applicable√NotapplicableNoleasingfortheCompanyinreportingperiod.

2.Majorguarantees

√Applicable□Notapplicable

(1)Guarantees

In10thousandYuan

ParticularsabouttheexternalguaranteeoftheCompanyandthesubsidiaries(Barringtheguaranteeforsubsidiaries)
NameoftheCompanyguaranteedRelatedAnnouncementdisclosuredateGuaranteelimitActualdateofhappeningActualguaranteelimitGuaranteetypeGuaranteetermImplemented(Y/N)Guaranteeforrelatedparty(Y/N)
GuaranteebetweentheCompanyandthesubsidiaries
NameoftheCompanyguaranteedRelatedAnnouncementdisclosuredateGuaranteelimitActualdateofhappeningActualguaranteelimitGuaranteetypeGuaranteetermImplemented(Y/N)Guaranteeforrelatedparty(Y/N)
SinopharmHoldingGuangzhouCo.,Ltd.24Aug.201935,00024Sept.201918,642.78Jointliabilityassurance2019.9.24-2020.8.21NY
SinopharmHoldingGuangzhouCo.,Ltd.24Aug.201960,00025Dec.201954,390.28Jointliabilityassurance2019.12.25-2020.12.24NY
SinopharmHoldingGuangzhouCo.,Ltd.24Aug.201960,00029Nov.201951,367.85Jointliabilityassurance2019.11.29-2020.11.27NY
SinopharmHoldingGuangzhouCo.,Ltd.19Sept.201925,00018Jan.20194,910.64Jointliabilityassurance2019.1.18-2020.1.17NY
SinopharmHoldingGuangzhouCo.,Ltd.25Apr.201915,0007Aug.2019Jointliabilityassurance2019.8.7-2020.8.6NY
SinopharmHoldingGuangzhouCo.,Ltd.25Apr.201970,00020May201952,011.39Jointliabilityassurance2019.5.20-2020.5.19NY
SinopharmHoldingGuangzhouCo.,Ltd.19Sept.20195,00025Jan.2019Jointliabilityassurance2019.1.25-2020.1.24NY
SinopharmHoldingGuangzhouCo.,Ltd.24Aug.201935,00015Oct.2019Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingGuangzhouCo.,Ltd.25Apr.201952,00026Jul.201930,200.11Jointliabilityassurance2019.7.26-2020.7.25NY
SinopharmHoldingGuangzhouCo.,Ltd.25Apr.201910,00013Aug.20191,705.82Jointliabilityassurance2019.8.13-2020.8.12NY
SinopharmHoldingGuangzhouCo.,Ltd.25Apr.201960,0006Aug.2019Jointliabilityassurance2019.8.6-2020.8.5NY
SinopharmHoldingGuangdongYuexingCo.,Ltd.24Aug.20195,00024Sept.20191,723.37Jointliabilityassurance2019.9.24-2020.8.21NY
SinopharmHoldingGuangdongYuexingCo.,Ltd.24Aug.201915,00015Oct.20198,118.82Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingGuangdongYuexingCo.,Ltd.24Aug.201910,00025Dec.20194,320.53Jointliabilityassurance2019.12.25-2020.12.24NY
SinopharmHoldingGuangdongYuexingCo.,Ltd.25Apr.20195,0006Aug.2019Jointliabilityassurance2019.8.6-2020.8.5NY
SinopharmHoldingGuangdongYuexingCo.,Ltd.24Aug.20195,00026Sept.2019Jointliabilityassurance2019.9.26-2020.9.25NY
SinopharmHoldingGuangdongHengxingCo.,Ltd.24Aug.201910,00028Nov.20194,648.94Jointliabilityassurance2019.11.28-2020.10.18NY
SinopharmHoldingGuangdongHengxingCo.,Ltd.24Aug.20193,00026Nov.2019Jointliabilityassurance2019.11.26-2020.11.25NY
SinopharmHoldingFoshanCo.,Ltd.24Aug.20193,00015Oct.2019Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingFoshanCo.,Ltd.24Aug.20192,5007Nov.2019138.97Jointliabilityassurance2019.11.7-2020.11.6NY
SinopharmHoldingFoshanCo.,Ltd.25Apr.20193,00031May201968.49Jointliabilityassurance2019.5.31-2020.5.30NY
SinopharmHoldingZhaoqingCo.,Ltd.24Aug.20192,00015Oct.20191,943.64Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingZhaoqingCo.,Ltd.24Aug.20192,00023Dec.20191,998.98Jointliabilityassurance2019.12.23-2020.12.22NY
GuangdongNanfangPharmaceuticalForeignTradeCo.,Ltd.25Apr.201915,0001Jul.201911,123.22Jointliabilityassurance2019.7.1-2020.6.30NY
GuangdongNanfangPharmaceuticalForeignTradeCo.,Ltd.24Aug.201910,00024Sept.20196,331.19Jointliabilityassurance2019.9.24-2020.9.23NY
GuangdongNanfangPharmaceuticalForeignTradeCo.,Ltd.24Aug.201920,0008Nov.201920,000Jointliabilityassurance2019.11.8-2020.9.30NY
GuangdongNanfangPharmaceuticalForeignTradeCo.,Ltd.24Aug.201910,00030Aug.20191,597.25Jointliabilityassurance2019.8.30-2020.8.13NY
GuangdongNanfangPharmaceuticalForeignTradeCo.,Ltd.24Aug.20193,00015Oct.2019Jointliabilityassurance2019.10.15-2020.10.14NY
GuangdongNanfangPharmaceuticalForeignTradeCo.,Ltd.24Aug.201910,0008Nov.20191Jointliabilityassurance2019.11.8-2020.10.22NY
FoshanNanhaiMedicineCo.,Ltd.24Aug.20195,00015Oct.2019295.31Jointliabilityassurance2019.10.15-2020.10.14NY
FoshanNanhaiMedicineCo.,Ltd.25Apr.201910,00031May20191,843.58Jointliabilityassurance2019.5.31-2020.5.30NY
FoshanNanhaiMedicineCo.,Ltd.24Aug.20197,0007Nov.20191,913.94Jointliabilityassurance2019.11.7-2020.11.6NY
FoshanNanhaiUptodate&SpecialMedicinesCo.Ltd.24Aug.20196,00015Oct.2019Jointliabilityassurance2019.10.15-2020.10.14NY
FoshanNanhaiUptodate&SpecialMedicinesCo.Ltd.25Apr.201910,00031May20195,262.56Jointliabilityassurance2019.5.31-2020.5.30NY
FoshanNanhaiUptodate&SpecialMedicinesCo.Ltd.24Aug.20197,0007Nov.20191,789.35Jointliabilityassurance2019.11.7-2020.11.6NY
FoshanNanhaiUptodate&SpecialMedicinesCo.Ltd.24Aug.20193,00020Nov.2019847.95Jointliabilityassurance2019.11.20-2020.11.19NY
SinopharmHolding(Jiangmen)Co.,Ltd.24Aug.20191,00015Oct.2019492.66Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHolding(Jiangmen)Co.,Ltd.24Aug.20191,00013Dec.2019999.52Jointliabilityassurance2019.12.13-2020.12.12NY
SinopharmHoldingMeizhouCo.,Ltd.24Aug.20191,00015Oct.20191,000Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingMeizhouCo.,Ltd.25Apr.20192,00029Jul.20192,000Jointliabilityassurance2019.7.29-2020.7.28NY
SinopharmHoldingZhongshanCo.,Ltd.24Aug.20191,00015Oct.2019927Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingZhongshanCo.,Ltd.24Aug.20192,00024Sept.2019627.44Jointliabilityassurance2019.9.24-2020.9.23NY
SinopharmHoldingShantouCo.,Ltd.24Aug.201950015Oct.2019500Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingShantouCo.,Ltd.24Aug.20191,00023Dec.20191,000Jointliabilityassurance2019.12.23-2020.12.22NY
SinopharmHoldingHuizhouCo.,Ltd.24Aug.20191,00015Oct.2019501.51Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingHuizhouCo.,Ltd.24Aug.20191,00018Sept.2019Jointliabilityassurance2019.9.18-2020.9.17NY
SinopharmHoldingHuizhouCo.,Ltd.24Aug.20193,00010Dec.2019505.34Jointliabilityassurance2019.12.10-2020.12.9NY
SinopharmHoldingZhanjiangCo.,Ltd.24Aug.20191,00015Oct.20191,000Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingZhuhaiCo.,Ltd.24Aug.20191,00015Oct.2019993.92Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingZhuhaiCo.,Ltd.24Aug.20192,00024Sept.20191,830.16Jointliabilityassurance2019.9.24-2020.9.23NY
SinopharmHoldingDongguanCo.,Ltd.24Aug.20192,00015Oct.20192,000Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingDongguanCo.,Ltd.25Apr.20192,0006Aug.2019Jointliabilityassurance2019.8.6-2020.8.5NY
SinopharmHoldingDongguanCo.,Ltd.24Aug.20193,0006Sept.20192,000Jointliabilityassurance2019.9.6-2020.9.5NY
GuangdongDongfangNewSpecialMedicineCo.,Ltd19Sept.20195,00010Jan.20194,997.89Jointliabilityassurance2019.1.10-2020.1.9NY
GuangdongDongfangNewSpecialMedicineCo.,Ltd25Apr.20192,00014Jun.2019Jointliabilityassurance2019.6.14-2020.6.13NY
GuangdongDongfangNewSpecialMedicineCo.,Ltd25Apr.20195,00031May20192,705.64Jointliabilityassurance2019.5.31-2020.5.30NY
GuangdongDongfangNewSpecialMedicineCo.,Ltd25Apr.20193,00015Jul.20192,770.25Jointliabilityassurance2019.7.15-2020.1.14NY
GuangdongDongfangNewSpecialMedicineCo.,Ltd24Aug.20199,00017Oct.20192,273.51Jointliabilityassurance2019.10.17-2020.10.16NY
GuangdongDongfangNewSpecialMedicineCo.,Ltd24Aug.20194,00015Oct.20193,313.53Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingMaomingCo.,Ltd.25Apr.20192,00016Aug.20191,214.62Jointliabilityassurance2019.8.16-2020.8.15NY
SinopharmHoldingGuangzhouHuaduCo.,Ltd.25Apr.20191,00023Jul.2019713.88Jointliabilityassurance2019.5.17-2020.5.16NY
SinopharmHoldingGuangzhouHuaduCo.,Ltd.25Apr.20192,50023Jul.20192,243.87Jointliabilityassurance2019.7.23-2020.7.22NY
SinopharmHoldingGuangzhouHuaduCo.,Ltd.24Aug.20191,5009Dec.2019Jointliabilityassurance2019.12.9-2020.9.30NY
SinopharmHoldingHeyuanCo.,Ltd.24Aug.20192,00018Dec.20192,000Jointliabilityassurance2019.12.18-2020.12.17NY
SinopharmHoldingFoshanMedicalSuppliesSupplyChainCo.,Ltd.24Aug.20191,0007Nov.20194.49Jointliabilityassurance2019.11.7-2020.11.6NY
SinopharmHoldingGuangxiCo.,Ltd.24Aug.201930,0003Sept.201923,962.77Jointliabilityassurance2019.9.3-2020.9.2NY
SinopharmHoldingGuangxiCo.,Ltd.24Aug.201928,00015Oct.201915,765.44Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingGuangxiCo.,Ltd.19Sept.201925,00015Nov.20181,025.47Jointliabilityassurance2018.11.15-2019.11.7NY
SinopharmHoldingGuangxiCo.,Ltd.25Apr.201910,0009Aug.20198,079.53Jointliabilityassurance2019.8.9-2020.8.8NY
SinopharmHoldingGuangxiCo.,Ltd.19Sept.201915,00013Dec.20182,583.76Jointliabilityassurance2018.12.13-2019.11.27NY
SinopharmHoldingGuangxiCo.,Ltd.24Aug.201925,00025Dec.2019Jointliabilityassurance2019.12.25-2020.12.25NY
SinopharmHoldingGuangxiCo.,Ltd.25Apr.20195,00026Jul.20194,499.79Jointliabilityassurance2019.7.26-2020.7.25NY
SinopharmHoldingGuangxiCo.,Ltd.25Apr.201910,00018Jun.20199,933.32Jointliabilityassurance2019.6.18-2020.6.18NY
SinopharmHoldingGuangxiCo.,Ltd.25Apr.201920,0003Jul.2019337.07Jointliabilityassurance2019.7.3-2020.7.3NY
SinopharmHoldingLiuzhouCo.,Ltd24Aug.20199,00015Oct.20192,000Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingLiuzhouCo.,Ltd25Apr.201910,00021Jun.20196,472.69Jointliabilityassurance2019.6.21-2020.6.20NY
SinopharmHoldingLiuzhouCo.,Ltd19Sept.20196,00027Feb.20191,263.46Jointliabilityassurance2019.2.27-2020.2.26NY
SinopharmHoldingLiuzhouCo.,Ltd25Apr.20195,0009Jul.20193,696.72Jointliabilityassurance2019.7.9-2020.7.8NY
SinopharmHoldingLiuzhouCo.,Ltd24Aug.20199,00029Oct.20192,100Jointliabilityassurance2019.10.29-2020.10.28NY
SinopharmHoldingLiuzhouCo.,Ltd24Aug.201910,00020Dec.20197,958.78Jointliabilityassurance2019.12.20-2020.12.19NY
SinopharmHoldingMedicineSupplyChainService(Guangxi)Co.,Ltd.24Aug.20191,0598Oct.2019Jointliabilityassurance2019.10.8-2020.10.7NY
SinopharmHoldingWuzhouCo.,Ltd.24Aug.20193,00015Oct.2019Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingGuilinCo.,Ltd.24Aug.20192,00015Oct.2019Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingBeihaiCo.,Ltd.24Aug.20194,00015Oct.2019Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingBaiseCo.,Ltd.24Aug.20193,00015Oct.2019Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingGuigangCo.,Ltd.24Aug.20192,50015Oct.2019Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingGuigangCo.,Ltd.19Sept.20193,00019Feb.2019Jointliabilityassurance2019.2.19-2020.2.18NY
SinopharmHoldingYulinCo.,ltd.24Aug.20192,00015Oct.2019Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingShenzhenJianminCo.,ltd.19Sept.20191,00024Dec.2018915.61Jointliabilityassurance2018.12.24-2019.12.24NY
SinopharmHoldingShenzhenJianminCo.,ltd.24Aug.20192,00015Oct.20191,978.52Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingShenzhenMedicinalMaterialsCo.,Ltd.24Aug.20191,00015Oct.2019654.55Jointliabilityassurance2019.10.15-2020.10.14NY
ChinaNationalAccordMedicinesCorporationLtd.24Aug.201910,00028Nov.20197,634.04Jointliabilityassurance2019.11.28-2020.5.28NY
SinopharmHoldingShenzhenYanfengCo.,Ltd.24Aug.201912,00015Oct.20195,935.15Jointliabilityassurance2019.10.15-2020.10.14NY
SinopharmHoldingShenzhenYanfengCo.,Ltd.24Aug.20195,00028Nov.20193,380Jointliabilityassurance2019.11.28-2020.5.28NY
SinopharmHoldingShenzhenYanfengCo.,Ltd.25Apr.20197,0006Aug.2019Jointliabilityassurance2019.8.6-2020.8.6NY
SinopharmHoldingShenzhenYanfengCo.,Ltd.24Aug.20195,0003Sept.20194,199Jointliabilityassurance2019.9.3-2020.9.3NY
Totalamountofapprovingguaranteeforsubsidiariesinreportperiod(B1)911,559Totalamountofactualoccurredguaranteeforsubsidiariesinreportperiod(B2)1,482,452.67
Totalamountofapprovedguaranteeforsubsidiariesattheendofreportingperiod(B3)952,559Totalbalanceofactualguaranteeforsubsidiariesattheendofreportingperiod(B4)440,186.86
Guaranteebetweenthesubsidiariesandthesubsidiaries
NameoftheCompanyguaranteedRelatedAnnouncementdisclosuredateGuaranteelimitActualdateofhappeningActualguaranteelimitGuaranteetypeGuaranteetermImplemented(Y/N)Guaranteeforrelatedparty(Y/N)
SinopharmHoldingGuodaDrugstoreYangzhouDadeshengChainCo.,Ltd.24Aug.20192,00010Oct.20191,717.75Jointliabilityassurance2019.10.10-2020.10.09NY
FujianGuodaDrugstoreChainCo.,Ltd.25Apr.20195,00018May20192,562.47Jointliabilityassurance2019.05.18-2020.05.17NY
FujianGuodaDrugstoreChainCo.,Ltd.25Apr.20192,00010May2019251.58Jointliabilityassurance2019.05.10-2020.05.09NY
SinopharmHoldingGuodaDrugstoreGuangdongCo.,Ltd.24Aug.20198,00010Oct.20195,634.2Jointliabilityassurance2019.10.10-2020.10.09NY
SinopharmHoldingGuodaDrugstoreGuangdongCo.,Ltd.24Aug.20193,00018Dec.20192,375.33Jointliabilityassurance2019.12.18-2020.12.17NY
SinopharmHoldingGuodaDrugstoreGuangdongCo.,Ltd.19Sept.20193,00028Sept.2018385.8Jointliabilityassurance2018.09.28-2019.09.27NY
TaishanSinopharmHoldingDaqunKangdaDrugstoreChainCo.,Ltd.25Apr.20195002Jun.2019314.6Jointliabilityassurance2019.06.02-2020.06.01NY
SinopharmHoldingGuodaDrugstoreGuangxiChainCo.,Ltd.24Aug.20193,00010Oct.20191,919.38Jointliabilityassurance2019.10.10-2020.10.09NY
SinopharmHebeiLerentangMedicineChainCo.,ltd.24Aug.20193,00010Oct.20193,000Jointliabilityassurance2019.10.10-2020.10.09NY
SinopharmHoldingGuodaDrugstoreHenanChainCo.,Ltd.24Aug.20193,0006Dec.2019630.13Jointliabilityassurance2019.12.06-2020.12.05NY
HunanGuodaMinshengtangDrugstoreChainCo.,Ltd.24Aug.20193,00010Oct.20193,000Jointliabilityassurance2019.10.10-2020.10.09NY
SinopharmHoldingGuodaDrugstoreJiangmenChainCo.,Ltd.24Aug.20193,00010Oct.20192,624.19Jointliabilityassurance2019.10.10-2020.10.09NY
SinopharmHoldingGuodaDrugstoreJiangmenChainCo.,Ltd.19Sept.20192,0001Apr.20191,909.57Jointliabilityassurance2019.04.01-2020.04.01NY
SinopharmHoldingGuodaDrugstoreJiangmenChainCo.,Ltd.19Sept.20192,00028Sept.2018665.19Jointliabilityassurance2018.09.28-2019.09.27NY
BeijingJinxiangDrugstoreMedicineChainCo.,ltd.19Sept.20194,00028Sept.20182,780.46Jointliabilityassurance2018.09.28-2019.09.27NY
SinopharmHoldingGuodaDrugstoreNanjingChainCo.,Ltd.19Sept.20191,00028Sept.2018872.91Jointliabilityassurance2018.09.28-2019.09.27NY
SinopharmHoldingGuodaDrugstoreInnerMongoliaCo.,Ltd.24Aug.20193,00018Oct.20192,049.59Jointliabilityassurance2019.10.18-2020.10.17NY
SinopharmHoldingGuodaDrugstoreInnerMongoliaCo.,Ltd.25Apr.20193,00030Apr.20190Jointliabilityassurance2019.04.30-2020.04.29NY
SinopharmHoldingGuodaDrugstoreInnerMongoliaCo.,Ltd.24Aug.20199,50010Oct.20196,188.81Jointliabilityassurance2019.10.10-2020.10.09NY
NingxiaGuodaDrugstoreChainCo.,Ltd.24Aug.20194,00029Aug.20192,855Jointliabilityassurance2019.08.29-2020.08.28NY
SinopharmHoldingGuodaDrugstoreShandongCo.,ltd.24Aug.20194,00014Oct.20193,849.71Jointliabilityassurance2019.10.14-2020.10.13NY
ShanxiGuodaWanminDrugstoreChainCo.,Ltd24Aug.20195,0008Nov.20194,560Jointliabilityassurance2019.11.08-2020.11.07NY
ShanxiGuodaWanminDrugstoreChainCo.,Ltd25Apr.20196,00013Jun.20194,171.8Jointliabilityassurance2019.06.13-2020.06.12NY
ShanxSinopharmHoldingGuodaDrugstoreShanghaiChainCo.,Ltd.24Aug.20195,00010Dec.20191,487.98Jointliabilityassurance2019.12.10-2020.12.09NY
ShanxSinopharmHoldingGuodaDrugstoreShanghaiChainCo.,Ltd.24Aug.20194,00025Oct.2019779.28Jointliabilityassurance2019.10.25-2020.10.24NY
ShanxSinopharmHoldingGuodaDrugstoreShanghaiChainCo.,Ltd.24Aug.20194,00010Oct.20190Jointliabilityassurance2019.10.10-2020.10.09NY
SinopharmHoldingGuodaDrugstoreShenyangChainCo.,Ltd.19Sept.20195,00028Nov.20184,986.04Jointliabilityassurance2018.11.28-2019.11.27NY
SinopharmHoldingGuodaDrugstoreShenyangChainCo.,Ltd.24Aug.201910,00011Sept.20199,225.33Jointliabilityassurance2019.09.11-2020.09.10NY
SinopharmHoldingGuodaDrugstoreShenyangChainCo.,Ltd.24Aug.20194,00028Oct.2019614.61Jointliabilityassurance2019.10.28-2020.10.27NY
SinopharmHoldingGuodaDrugstoreShenyangChainCo.,Ltd.19Sept.20196,00017Nov.20182,457.33Jointliabilityassurance2018.11.17-2019.11.16NY
SinopharmHoldingGuodaDrugstoreShenyangChainCo.,Ltd.24Aug.201925,00010Oct.201914,776.62Jointliabilityassurance2019.10.10-2020.10.09NY
SinopharmHoldingGuodaDrugstoreXinjiangNewSpecialMedicineChainCo.,Ltd24Aug.20195,00029Oct.20192,693.6Jointliabilityassurance2019.10.29-2020.10.28NY
SinopharmHoldingGuodaDrugstoreShanxiYiyuanChainCo.,ltd25Apr.20196,00021Jun.20190Jointliabilityassurance2019.06.21-2020.06.20NY
SinopharmHoldingGuodaDrugstoreShanxiYiyuanChainCo.,ltd19Sept.20197,0002Apr.20194,828.27Jointliabilityassurance2019.04.02-2020.04.01NY
SinopharmHoldingGuodaDrugstoreShanxiYiyuanChainCo.,ltd25Apr.20195,60014Jun.20194,567.64Jointliabilityassurance2019.06.14-2020.06.13NY
SinopharmHoldingGuodaDrugstoreShanxiYiyuanChainCo.,ltd25Apr.20195,00028Jun.20192,426.81Jointliabilityassurance2019.06.28-2020.06.27NY
SinopharmHoldingGuodaDrugstoreShanxiYiyuanChainCo.,ltd25Apr.20193,00025Jun.20190Jointliabilityassurance2019.06.25-2020.06.24NY
SinopharmHoldingGuodaDrugstoreShanxiYiyuanChainCo.,ltd24Aug.201915,00010Oct.201914,994.91Jointliabilityassurance2019.10.10-2020.10.09NY
SinopharmHoldingGuodaDrugstoreShenyangChainCo.,Ltd.19Sept.201910,5009Jan.20192,167.31Jointliabilityassurance2019.01.09-2020.01.08NY
SinopharmHoldingGuodaDrugstoreXinjiangNewSpecialMedicineChainCo.,Ltd24Aug.20195,00030Oct.20191,752.74Jointliabilityassurance2019.10.30-2020.10.29NY
ShanxiGuodaWanminDrugstoreChainCo.,Ltd19Sept.20196,00018Jan.20190Jointliabilityassurance2019.01.18-2020.01.17NY
ShanxiGuodaWanminDrugstoreChainCo.,Ltd19Sept.20194,00019Feb.2019750Jointliabilityassurance2019.02.19-2020.02.19NY
SinopharmHoldingGuodaDrugstoreInnerMongoliaCo.,Ltd.19Sept.20198,0002Apr.20194,175.78Jointliabilityassurance2019.04.02-2020.04.01NY
ShanxSinopharmHoldingGuodaDrugstoreShanghaiChainCo.,Ltd.25Apr.20195,00024Jun.20194,326.2Jointliabilityassurance2019.06.24-2020.06.23NY
SinopharmHoldingGuodaDrugstoreShanxiYiyuanChainCo.,ltd25Apr.20195,00013Jun.20193,620.17Jointliabilityassurance2019.06.13-2020.06.12NY
SinopharmHoldingGuodaFumeiDrugstoreShanghaiChainCo.,Ltd.25Apr.20193,00024Jun.20191,085.58Jointliabilityassurance2019.06.24-2020.06.23NY
ShanxiGuodaWanminDrugstoreChainCo.,Ltd24Aug.20196,00010Oct.20196,000Jointliabilityassurance2019.10.10-2020.10.09NY
TaishanSinopharmHoldingDaqunKangdaDrugstoreChainCo.,Ltd.24Aug.201950010Oct.201914Jointliabilityassurance2019.10.10-2020.10.09NY
Totalamountofapprovingguaranteeforsubsidiariesinreportperiod(C1)223,600Totalamountofactualoccurredguaranteeforsubsidiariesinreportperiod(C2)378,052.26
Totalamountofapprovedguaranteeforsubsidiariesattheendofreportingperiod(C3)244,600Totalbalanceofactualguaranteeforsubsidiariesattheendofreportingperiod(C4)142,048.67
TotalamountofguaranteeoftheCompany(totalofthreeabovementionedguarantee)
Totalamountofapprovingguaranteeinreportperiod(A1+B1+C1)1,135,159Totalamountofactualoccurredguaranteeinreportperiod(A2+B2+C2)1,860,504.93
Totalamountofapprovedguaranteeattheendofreportperiod(A3+B3+C3)1,197,159Totalbalanceofactualguaranteeattheendofreportperiod(A4+B4+C4)582,235.53
TheproportionofthetotalamountofactuallyguaranteeinthenetassetsoftheCompany(thatisA4+B4+C4)45.46%

(2)Guaranteeoutsideagainsttheregulation

□Applicable√NotapplicableNoguaranteeoutsideagainsttheregulationinPeriod.

3.Entrustotherstocashassetmanagement

(1)Trustfinancing

□Applicable√NotapplicableTheCompanyhadnotrustfinancinginthereportingperiod.

(2)Entrustedloans

□Applicable√NotapplicableThecompanyhadnoentrustedloansinthereportingperiod.

4.Othermaterialcontracts

□Applicable√NotapplicableNoothermaterialcontractsfortheCompanyinreportingperiod.XVIII.Socialresponsibility

1.Executionofsocialresponsibility“SocialResponsibilityReportofSinopharmAccordin2019”canbeseeninJuchaowebsitereleasedonthesamedate(http://www.cninfo.com.cn)

2.Executionofsocialresponsibilityoftargetedpovertyalleviation

TheCompanyhasnotcarriedouttargetedpovertyalleviationinthereportingperiodandhasnofollow-upplanoftargetedpovertyalleviation

3.Environmentprotection

ThelistedCompanyanditssubsidiarywhetherbelongstothekeysewageunitsreleasedfromenvironmentalprotectiondepartment

Company/subsidiaryNameofMajorPollutantsandParticularPollutantsEmissionMethodQuantityofDischargeOutletDistributionofDischargeOutletEmissionConcentrationExecutedPollutantDischargeStandardsTotalEmissionsApprovedTotalEmissionsExcessiveDischarge
ChinaNationalZhijunCODNanotubesemissions1DischargeOutletofWasteWater17.87mg/LLandmarkA-levelof2ndTimePeriod1.248ton/year7.306ton/yearN/A
ChinaNationalZhijunAmmoniaNitrogenNanotubesemissions1DischargeOutletofWasteWater0.69mg/LLandmarkA-levelof2ndTimePeriod0.048ton/year0.812ton/yearN/A
ChinaNationalZhijunPhosphateNanotubesemissions1DischargeOutletofWasteWater0.034mg/LLandmarkA-levelof2ndTimePeriod0.002ton/year0.041ton/yearN/A
ZhijunPingshanCODNanotubesemissions1DischargeOutletofWasteWater16.64mg/LDischargeStandardsofWaterPollutantsforPharmaceuticalindustryMixing/CompoundingandFormulationCategory(GB21908-2008)1.1467ton/year2.16ton/yearN/A
ZhijunPingshanTotalphosphorusNanotubesemissions1DischargeOutletofWasteWater0.01mg/LDischargeStandardsofWaterPollutantsforPharmaceuticalindustryMixing/CompoundingandFormulationCategory(GB21908-2008)0.0069ton/year0.0216ton/yearN/A
ZhijunPingshanAmmoniaNitrogenNanotubesemissions1DischargeOutletofWasteWater0.768mg/LClassIVwater(AmmoniaNitrogenuptoClassV)standardinEnvironmentalQualityStandardforSurfaceWater(GB3838-2002)0.0529ton/year0.144ton/yearN/A
MainLuckPharmaceuticalsCODNanotubesemissions1DischargeOutletofWasteWater15mg/LDB44/26-2001-A-levelof2ndTimePeriod0.018ton/year0.108ton/yearN/A
MainLuckPharmaceuticalsAmmoniaNitrogenNanotubesemissions1DischargeOutletofWasteWater0.5mg/LDB44/26-2001-A-levelof2ndTimePeriod0.0006ton/year0.012ton/yearN/A
MainLuckPharmaceuticalsPhosphateNanotubesemissions1DischargeOutletofWasteWater0.05mg/lDB44/26-2001-A-levelof2ndTimePeriod0.00006ton/year0.0006ton/yearN/A
MainLuckPharmaceuticalsBODNanotubesemissions1DischargeOutletofWasteWater10mg/LDB44/26-2001-A-levelof2ndTimePeriod0.012ton/year0.024ton/yearN/A
MainLuckPharmaceuticalsSSNanotubesemissions1DischargeOutletofWasteWater2mg/LDB44/26-2001-A-levelof2ndTimePeriod0.0024ton/year0.072ton/yearN/A

ConstructionandoperationofpollutionpreventionandcontrolfacilitiesAtpresent,theabove-mentionedenvironmentalpollutionkeymonitoringunitsinwhichtheCompanyhasashareholdinghaveestablishedpollutionpreventionandcontrolfacilitiesforwastewater.Inthedailymanagementprocess,enterprisesestablishmanagementproceduresandoperatinginstructionsforenvironmentalprotectionfacilities,andensurethenormalandcompliant

operationofanti-pollutionfacilitiesthroughsystemimplementationandresponsibilityimplementation.Allenterprisesarecontinuouslyinvestingfundsandsteppingupthetransformationandimprovementofpollutionpreventionandcontrolfacilitiestoensurethestableoperationofpollutionpreventionfacilitiesandimprovethedisposalcapacityofenvironmentalprotectionfacilities.EnvironmentalimpactassessmentofconstructionprojectsandotherenvironmentalprotectionadministrativelicensesAtpresent,theprojectsofallkeymonitoringunitshavecarriedoutenvironmentalimpactassessmentsandobtainedapprovals.Theprojectstobebuiltalsocarryouttherelevantadministrativereviewproceduresaccordingtothe“threesimultaneous”requirementsoftheenvironmentalprotectionfacilitiesoftheconstructionproject.EmergencyplanforenvironmentalemergenciesAtpresent,theabove-mentionedenvironmentalpollutionkeymonitoringunitsinwhichtheCompanyhasashareholdinghaveformulatedtheEmergencyPlanforEnvironmentalEmergenciesandreportedthemaccordingtotheregulatoryrequirementsofthelocalregulatoryauthorities.Accordingtothemanagementrequirementsoftheemergencyplan,thekeyunitsregularlycarryoutemergencyplandrillstofurtherprovidetheenterprises’emergencyresponsecapability.Environmentalself-monitoringschemeAtpresent,theabove-mentionedenvironmentalpollutionkeymonitoringunitsinwhichtheCompanyhasashareholdinghaveestablishedenvironmentalself-detectionschemeandplan,andimplementedself-inspection,third-partydetectionandothermonitoringmethodsaccordingtothegovernmentrequirements.Relevantmonitoringdataandreportshavebeenarchivedandsaved.OtherenvironmentalinformationthatshouldbedisclosedTheabovetwocompaniesarejointstockcompaniesoftheCompany.TheCompanyanditsholdingsubsidiariesarenotlistedaskeypollutantdischargeunitsannouncedbytheenvironmentalprotectiondepartment.RelevantinformationonenvironmentprotectionNil

XIX.Explanationonothersignificantevents

□Applicable√NotapplicableNoothersignificanteventsneedtoexplaininthereportingperiod.XX.SignificanteventofsubsidiaryoftheCompany

□Applicable√Notapplicable

SectionVI.ChangesinSharesandParticularsaboutShareholdersI.ChangesinShareCapital

1.ChangesinShareCapital

InShare

BeforetheChangeIncrease/DecreaseintheChange(+,-)AftertheChange
AmountProportionNewsharesissuedBonussharesCapitalizationofpublicreserveOthersSubtotalAmountProportion
I.Restrictedshares65,498,15315.30%65,498,15315.30%
2.State-ownedlegalperson’sshares60,380,74314.10%60,380,74314.10%
3.Otherdomesticshareholding5,117,4101.20%5,117,4101.20%
Including:Domesticlegalperson’sshares5,114,2971.19%5,114,2971.19%
Domesticnaturepersonshares3,1130.00%3,1130.00%
II.Unrestrictedshares362,628,83084.70%362,628,83084.70%
1.RMBOrdinaryshares307,744,35571.88%307,744,35571.88%
2.Domesticallylistedforeignshares54,884,47512.82%54,884,47512.82%
III.Totalshares428,126,983100.00%428,126,983100.00%

Reasonsforsharechanged

□Applicable√NotapplicableApprovalofsharechanged

□Applicable√NotapplicableOwnershiptransferofsharechanged

□Applicable√NotapplicableProgressofsharesbuy-back

□Applicable√NotapplicableImplementationprogressofthereductionofrepurchasessharesbycentralizedbidding

□Applicable√NotapplicableInfluenceonthebasicEPSanddilutedEPSaswellasotherfinancialindexesofnetassetspershareattributabletocommonshareholdersofCompanyinlatestyearandperiod

□Applicable√NotapplicableOtherinformationnecessarytodisclosefortheCompanyorneedtodisclosedunderrequirementfromsecurityregulators

√Applicable□NotapplicableThemajorassetsreorganizationnon-publicofferingofsharesforyearof2016wereliftedon6Jan.2020,59,989,270sharesarereleasedfortrading,representing14.01%ofthetotalsharecapitaloftheCompany.

2.Changesofrestrictedshares

√Applicable□Notapplicable

InShare

ShareholdersOpeningsharesrestrictedRestrictedsharesincreasedinthePeriodSharesreleasedinPeriodEndingsharesrestrictedRestrictedreasonsDateforreleased
SinopharmGroupCo.,Ltd55,057,7000055,057,700Non-publicofferingshareOnJanuary6,2020,49,551,930shareswerereleasedforsale,and5,505,770lock-upshares.
ChinaNationalPharmaceuticalForeignTradeCorp.5,323,043005,323,043Non-publicofferingshareThe5,323,043shareshasbeenliftedonJanuary6,2020.
PingAnAsset-ICBM-PingAnAssetXinxiangNo.7InsuranceAssetManagementProduct2,557,148002,557,148Non-publicofferingshareThe2,557,148shareshasbeenliftedonJanuary6,2020.
PingAnAsset-ICBM-XinxiangNo.3AssetManagementProduct2,557,149002,557,149Non-publicofferingshareThe2,557,149shareshasbeenliftedonJanuary6,2020.
Total65,495,0400065,495,040----

II.Securitiesissuanceandlisting

1.Securityoffering(withoutpreferredstock)inReportingPeriod

□Applicable√Notapplicable

2.Changesoftotalsharesandshareholdersstructureaswellasexplanationonchangesofassetsandliabilitystructure

□Applicable√Notapplicable

3.Currentinternalstaffshares

□Applicable√NotapplicableIII.ParticularsaboutshareholderandactualcontrolleroftheCompany

1.AmountofshareholdersoftheCompanyandparticularsaboutsharesholding

InShare

Totalcommonstockshareholdersinreportingperiod-end20,191Totalcommonstockshareholdersatendoflastmonthbeforeannualreportdisclosed26,399Totalpreferenceshareholderswithvotingrightsrecoveredatendofreportingperiod(ifapplicable)(foundinnote8)0Totalpreferenceshareholderswithvotingrightsrecoveredatendoflastmonthbeforeannualreportdisclosed(ifapplicable)(foundinnote8)0
Particularsaboutsharesheldabove5%byshareholdersortoptenshareholders
FullnameofShareholdersNatureofshareholderProportionofsharesheldTotalshareholdersattheendofreportperiodChangesinreportperiodAmountoflock-upsharesheldAmountofun-restrictedsharesheldNumberofsharepledged/frozen
StateofshareAmount
SinopharmGroupCo.,LtdState-ownedCorporation56.06%239,999,99155,057,700184,942,291
HongKongSecuritiesClearingCompanyLtdForeignCorporation5.13%21,952,78721,952,787
HTHK/CMGFSGUFP-CMGFIRSTSTATECHINAGROWTHFDForeignCorporation2.68%11,469,64411,469,644
ChinaNationalPharmaceuticalForeignTradeCorp.State-ownedCorporation1.24%5,323,0435,323,0430
FidelityInvestmentManagement(HongKong)Limited-Client’sfundForeignCorporation1.13%4,825,9074,825,907
CentralHuijinInvestmentLtd.State-ownedCorporation0.89%3,804,4003,804,400
BBHBOSS/AFIDELITYFD-CHINAFOCUSFDForeignCorporation0.78%3,358,7613,358,761
BankofChina–HarvestMedicalCareSecuritiesInvestmentFundDomesticnonstate-ownedCorporation0.71%3,028,5253,028,525
Basicendowmentinsurancefund-portfolio1003Domesticnonstate-ownedCorporation0.69%2,933,0562,933,056
VALUEPARTNERSCLASSICFUNDForeignCorporation0.64%2,747,4182,747,418
ExplanationonassociatedrelationshipamongtheaforesaidshareholdersSinopharmGroupCo.,Ltd.andChinaNationalPharmaceuticalForeignTradeCorporationhavethesameactualcontroller,whichisChinaNationalPharmaceuticalGroupCorporation.ItisunknownthatthereexistsnoassociatedrelationshiporbelongstotheconsistentpersonactinginconcertamongtheothertradableshareholdersregulatedbytheManagementMeasureofInformationDisclosureonChangeofShareholdingforListedCompanies.
Particularabouttoptenshareholderswithun-restrictsharesheld
Shareholders’nameAmountofun-restrictsharesheldatPeriod-endTypeofshares
TypeAmount
SinopharmGroupCo.,Ltd239,999,991RMBordinaryshares239,999,991
HongKongSecuritiesClearingCompanyLtd21,952,787RMBordinaryshares21,952,787
HTHK/CMGFSGUFP-CMGFIRSTSTATECHINAGROWTHFD11,469,644Domesticlistedforeignshares11,469,644
FidelityInvestmentManagement(HongKong)Limited-Client’sfund4,825,907RMBordinaryshares4,825,907
CentralHuijinInvestmentLtd.3,804,400RMBordinaryshares3,804,400
BBHBOSS/AFIDELITYFD-CHINAFOCUSFD3,358,761Domesticlistedforeignshares3,358,761
BankofChina–HarvestMedicalCareSecuritiesInvestmentFund3,028,525RMBordinaryshares3,028,525
Basicendowmentinsurancefund-portfolio10032,933,056RMBordinaryshares2,933,056
VALUEPARTNERSCLASSICFUND2,747,418Domesticlistedforeignshares2,747,418
NationalSocialSecurityFund-portfolio4132,550,024RMBordinaryshares2,550,024
Expiationonassociatedrelationshiporconsistentactorswithinthetop10un-restrictshareholdersandbetweentop10un-restrictshareholdersandtop10shareholdersItisunknownthatthereexistsnoassociatedrelationshiporbelongstotheconsistentpersonactinginconcertamongtheothertradableshareholdersregulatedbytheManagementMeasureofInformationDisclosureonChangeofShareholdingforListedCompanies.

Whethertoptencommonstockshareholdersortoptencommonstockshareholderswithun-restrictsharesheldhaveabuy-backagreementdealinginreportingperiod

□Yes√NoThetoptencommonstockshareholdersortoptencommonstockshareholderswithun-restrictsharesheldoftheCompanyhavenobuy-backagreementdealinginreportingperiod.

2.ControllingshareholderoftheCompanyNatureofcontrollingshareholders:centralstate-ownedholdingTypeofcontrollingshareholders:legalperson

ControllingshareholdersLegalperson/personinchargeoftheunitDateoffoundationOrganizationcodeMainoperationbusiness
SinopharmGroupCo.,LtdLiZhiming2003-01-0874618434-4Industrialinvestmentholding;managementandassetsreorganizationentrustedbypharmaceuticalenterprise;Chinesemedicine,Chinesemedicinetablets,chemicalmedicinepreparations,chemicalrawmaterials,antibiotics,biochemicaldrugs,biologicalproducts,narcoticdrugs,psychotropicsubstances,toxicdrugsformedicaluse(compatiblewiththebusinessscope),medicineIVDReagents,vaccine,anabolicagents,peptidehormonemedicaldevicemanagement,foodsalesmanagement(non-physicalmethod),technologydevelopment,technologytransfer,technicalconsultation,technicalserviceinthefieldofmedicaltechnology,chemicalrawmaterialsandproducts(excepthazardouschemicals,monitoringchemicals,fireworksandfirecrackers,flammablesandexplosives,explosivesforcivilianuse),businessmanagementconsulting,businessconsulting,marketinformationconsultingandinvestigation(nosocialsurveys,socialinvestigation,opinionsurveys,oropinionpolls),dataprocessingservices,e-commerce(novalue-addedtelecommunicationsfinancialservices),sales,design,productionagency,publishingvariousdomesticandforeignadvertisementsofdisinfectionproducts,dailynecessities,textilesandknitwear,sportinggoods,householdappliances,electronicproducts,furniture,toys,edibleagriculturalproducts,cosmetics,andculturalandsportsgoods,domestictrade(exceptspeciallicense),logisticsandrelatedconsultingservices,operatingvarioustypesofgoodsandimportandexportoftechnology(notattacheddirectoryofimportandexportcommodities),butexcludedtheimportandexportofgoodsandtechnologytheStatelimitsorprohibitthecompany.Ifanenterprise’soperationinvolvesanadministrativelicense,itshallbeoperatedonthebasisofthelicense.
Equityofotherdomestic/oversealistedcompanycontrolbycontrollingshareholderaswellasstock-jointinreportperiodSinopharmGroupCo.,Ltd.hold54.72percentequityofChinaNationalMedicinesCorporationLtd(Stockcode:600511)uptotheendofPeriod.

Changesofcontrollingshareholdersinreportingperiod

□Applicable√NotapplicableTheCompanyhadnochangesofcontrollingshareholdersinreportingperiod.

3.ActualcontrolleroftheCompanyandpersonsactinginconcertNatureofactualcontroller:centralstate-ownedassetsmanagementTypeofactualcontroller:legalperson

ActualcontrollingshareholdersLegalperson/personinchargeoftheunitDateoffoundationOrganizationcodeMainoperationbusiness
ChinaNationalPharmaceuticalGroupCorporationLiuJingzhen1987-03-2610000588-8Chinesepatentdrug,traditionalChinesemedicinespreparedinready-to-useforms,traditionalChinesemedicinalmaterials,chemicalAPI,chemicalmedicinepreparation,antibiotics,biochemicaldrugandbiologicpharmacy(Licenseforpharmaceuticaltradingrunsuntil12May2020);mandatoryforpharmaceuticalenterprise,assetreorganization;consultingserviceofmedicineindustrialinvestment;exhibitionofmedicaldevices;consultingserviceswithmainbusinessconcerned.(theenterprisehasindependentchoicesonoperationitemsforbusiness;inrightofexequaturtorunifreferstopermissionoperation;operationactivitythatprohibitedorrestrictedbytheCityGovernmentarenotallowed)

Equityofdomestic/oversealistedcompanycontrolbyactualcontrollerinreportperiod

Name

NameNameoflistedcompanywithsharesheldTotalshareholdersheld(10thousandshares)Proportionofsharesheld
SINOPHARMJianminGroup132.350.86%
SINOPHARMSinopharmHolding20,728.956.64%
SinopharmHoldingIndustrialInvestmentCo.,Ltd.SinopharmHolding157,155.6050.36%
SinopharmHoldingSinopharmHolding41,284.1754.72%
SinopharmHoldingSinopharmAccord24,000.0056.06%
SinopharmHoldingLianhuanPharmaceutical375.211.30%
SIPSShyndecPharmaceutical23,951.2622.68%
ChinaNationalPharmaceuticalInvestmentCo.,Ltd.HengruiMedicine18,511.944.16%
ChinaNationalBiotecGroupCo.,Ltd.BTBP52,228.0449.96%
SINOPHARMH.K.Co.,Ltd.ChinaTCM163,468.5632.46%

Changesofactualcontrollerinreportingperiod

□Applicable√NotapplicableNochangesofactualcontrollersfortheCompanyinreportingperiod.PropertyrightandcontrollingrelationshipbetweentheactualcontrollerandtheCompanyisasfollow:

ActualcontrollercontrollingtheCompanybyentrustorotherassetsmanagement

□Applicable√Notapplicable

4.Particularsaboutotherlegalpersonshareholderswithover10%sharesheld

□Applicable√Notapplicable

5.Limitationandreducingtheholdingsofsharesofcontrollingshareholders,actualcontrollers,restructuringsideandothercommitmentsubjects

□Applicable√Notapplicable

SectionVII.PreferredStock

□Applicable√NotapplicableTheCompanyhadnopreferredstockinthePeriod.

SectionVIII.ConvertibleBonds

□Applicable√Notapplicable

TheCompanyhadnoconvertiblebondsinthePeriod

SectionIX.ParticularsaboutDirectors,Supervisors,Senior

ExecutivesandEmployeesI.Changesofsharesheldbydirectors,supervisorsandseniorexecutives

NameTitleWorkingstatusSexAgeStartdatedofofficetermEnddateofofficetermSharesheldatperiod-begin(Share)Amountofsharesincreasedinthisperiod(Share)Amountofsharesdecreasedinthisperiod(Share)Otherchanges(share)Sharesheldatperiod-end(Share)
ChenShengqunIndependentdirectorCurrentlyinofficeM572018-04-171,5000001,500
ChenChangbinDeputyGM,SecretaryoftheBoardCurrentlyinofficeM522015-01-132,6510002,651
Total------------4,1510004,151

II.Changesofdirectors,supervisorsandseniorexecutives

√Applicable□Notapplicable

NameTitleTypeDateReasons
LiuTianraoDeputyGMAppointmentandremoval2019-01-11NewDeputyGM
MaZhanjunDirectorAppointmentandremoval2019-01-24NewDirectorof8thBOD
MaZhanjunDeputyChairmanAppointmentandremoval2019-01-31NewDeputyChairmanof8thBOD
SuWeiweiIndependentDirectorAppointmentandremoval2019-01-24NewIndependentDirectorof8thBOD
WuYijianChairmanoftheboardofsupervisors,supervisorOfficeleaving2019-05-17Resignfromchairmanoftheboardofsupervisors,supervisorforjobarrangement
WenDeyongSupervisorAppointmentandremoval2019-05-17NewSupervisorof8thBoardofsupervisors
WenDeyongChairmanoftheboardofsupervisorsAppointmentandremoval2019-07-10NewChairmanoftheboardofsupervisorsof8thBoardofsupervisors

III.Post-holding

Professionalbackground,majorworkingexperienceandpresentmainresponsibilitiesinCompanyofdirectors,supervisorsandseniorexecutiveatthepresent

1.MembersofBOD

Mr.LiuYong,joinedSinopharmGroupCo.,LtdinJanuary2003andservesasexecutivedirectorandpresidentofSinopharmHoldingsinceNovember2017andactsasdeputypartysecretaryofSinopharmHoldingsinceJanuary2018;Mr.Liuownover26yearsofworkingexperience,amongwhich,over23yearsarerelatedtomanagementexperienceinmedicineandhealthcareproductsindustry.Heisapharmacist-in-chargeandlicensedpharmacist.DuringtheperiodfromJuly1992toJuly1999,Mr.LiuworkedintheShanghaiPharma,andsuccessivelyservedasdeputygeneralmanagerofthemarketingdepartmentofShanghaiBranchofChinaNationalPharmaceuticalGroupCorporationandShanghaiGuodaDrugstoreChainCompanyLimitedfromJuly1999toApril2003.Mr.LiuservedasGMandpartysecretaryoftheSinopharmHoldingShenyangCo.,LtdfromApril2003toNovember2009;adeputypresidentofSinopharmHoldingfromJanuary2009toNovember2017;theSecretaryoftheBoardofSinopharmHoldingfromOctober2016toNovember2017andGeneralCounselofSinopharmHoldingfromJanuary2014toDecember2017.Currently,healsoactsastheDirectorofSINOPHARM,SinopharmHoldingGuodaDrugstoreCo.,Ltd.,ChinaNationalScientificInstruments&MaterialsCo.,LtdandChinaNationalMedicalEquipmentCo.,Ltd.;andDirectorandGMofSinopharmHoldingH.K.Co.,Ltd.Mr.LiuservesasDirectorofthe7

th

BODoftheCompanysinceJanuary2017andChairmanofthe

thand8thBODoftheCompanysinceOctober2017.Mr.MaZhanjunservedaspresidentofWuhanRuipuPharmaceuticalCo.,Ltd.fromDecember2000toDecember2003,fromJanuary2004toApril2005,heservedasgeneralmanagerofSinopharmGroupPharmaceuticalHoldingWuhanCo.,Ltd.,fromApril2005toDecember2005,heservedasexecutivedeputygeneralmanagerofSinopharmHoldingHubeiCo.,Ltd.,andheservedasgeneralmanagerofSinopharmGroupHubeiCo.,Ltd.fromJanuary2006toDecember2014,fromJanuary2015toOctober2018,heservedaspresidentofSinopharmHoldingHubeiCo.,Ltd.,sinceNovember2018,hehasconcurrentlybeenservingasvicepresidentofSinopharmHoldingHubeiCo.,Ltd.SinceJanuary2019,hehasbeenservingasvicepresidentoftheeighthboardofdirectorsoftheCompany.Mr.LiZhiming,chairmanoftheboardandthedeputyPartySecretaryofSinopharmGroupCo.,Ltd,hejoinedtheSinopharmHoldinginMay2010asdeputypresident,servedasexecutivedirectorandpresidentofSinopharmHoldingfromNovember2013toMarch2017;HeservesaschairmanofSinopharmHoldingsinceNovember2017andheisthedeputypartysecretaryofSinopharmHoldingsinceNovember2018.Mr.LiheldthepositionofGeneralcounsel,SecretaryofCommitteeforDisciplineInspection,chairmanofthelaborunion,deputyPartySecretaryandpartysecretaryofSinopharmHoldingfromOctober2012toMarch2017.Heownsmorethan37yearsofworkingexperience,amongwhich,33yearsarerelatedtomanagementexperienceinmedicineandhealthcareproductsindustry.Heisasenioreconomistandpharmacist-in-charge.DuringtheperiodfromJuly1985toJuly1996,Mr.LisuccessivelyservedasdeputydirectorofthefinancingdepartmentofXinjiangXinteNationalityPharmacyCompanyLimited,deputygeneralmanagerandchiefaccountantofXinjiangPharmaceuticalIndustryandTradingCorporation,deputygeneralmanagerandchiefaccountantofXinjiangXinteNationalityPharmacyCorporation,anddeputydirectorofthepreparationofficeofXinjiangAutonomousRegionMedicineAdministrationBureau.FromJuly1996toFebruary2016,Mr.LiworkedinXinjiangXinteNationality

PharmacyCorporationasgeneralmanager,chairmanoftheboardandpartysecretary,andworkedinXinjiangPharmaceuticalGroupCorporation(currentlyknownasSinopharmGroup(Xinjiang)Co.,Ltd.)asitsgeneralmanager,DeputyChairmanoftheboard,chairmanoftheboardandpartysecretary.Currently,healsoservesasDirectorofChinaNationalXinjiangMedicineCo.,Ltd,SinpharmHoldingSenyiTech.(Shanghai)Co.,Ltd,ChinaNationalPharmaceuticalCo.,LtdandSinopharmHoldingGuodaDrugstoreCo.,Ltd.;thedeputychairmanofShanghaiShyndecPharmaceuticalCo.,LtdandChairmanofSinopharmHoldingH.K.Co.,Ltd,SinopharmHolding(China)FinanceLeasingCo.,Ltd,ChinaNationalZhongjin(Shanghai)MedicalHealthInvestmentManagementCo.,LtdandSinopharmHoldingMedicineInvestmentCo.,Ltd;HeservedasChairmanoftheCompanyfromFebruary2014toAugust2016andactsasDirectorofthe7

th

and8

thBODoftheCompanysinceAugust2016.Mr.JiangXiuchang,enteredintoSinopharmHoldingastheCFOinMay2010,andhehasalsoactedasvicepresidentofSinopharmHoldingsinceJuly2013.Mr.Jiangownsover31yearsofworkingexperiences,amongwhich,20yearsofmanagementexperiencesarerelatedtomedicineandhealth-careindustries.Heisasenioreconomistandsenioraccountant.Mr.Jianghasworkedasdeputydirectorofinformationdepartment,deputydirectorofrestructuringoffice,deputydirectoroffinancialdepartmentaswellasdeputydirectorofpharmaceuticaldepartmentinChinaNationalPharmaceuticalGroupCorporationfromJuly1986toMarch2002;hehasalsoservedasdeputydirector,directoroffinancialdepartmentandchieffinancialofficerofChinaNationalMedicinesCorporationLtd.insuccessionfromMarch2002toMay2010.Currently,Mr.JiangservesasChairmanofSinopharmHoldingJiangxiCo.,Ltd,SinopharmHoldingShanxiCo.,ltd,SinopharmHoldingTianjinCo.,ltd.andChinaNationalMedicinesCorporationLtd;DirectorofSinopharmHoldingH.K.Co.,ltdandChinaNationalFinanceCorporationLtd;andexecutiveDirectorofBeijingSinopharmTaiyuanPropertyManagementCo.,LtdandSINOPHARMShanghaiCo.,Ltd;heservesasDirectorofthe6

th

,7

th

and8thBODoftheCompanysinceMarch2011.Mr.LianWanyongisvicepresidentofSinopharmGroupCo.,Ltd.HejoinedChinaNationalPharmaceutical(Group)CorporationGuangzhouCompanyin1996andsuccessivelyservedasproductdirectorofYuexingPharmaceuticalCo.,Ltd.andseniorproductmanagerofHongKongTianjianInternationalCo.,Ltd.FromAugust2002toJanuary2004,heservedasdeputymanagerofthefinancialdepartmentofBarrlaboratories,Inc.,USA.FromJanuary2004toJune2005,hewasappointedasmanagerofoperationalauditdepartmentofChinaMedicinalMaterialsGroupCompany.FromJuly2005toJanuary2008,hewasappointedasdeputydirectoroffinancialassetmanagementdepartmentanddirectorofinvestmentmanagementdepartmentofChinaNationalPharmaceutical(Group)Corporation.FromDecember2010toFebruary2014,heservedasdeputygeneralmanagerofBeijingSinopharmAssetManagementCenter,fromApril2014toJanuary2018,heservedasdeputydirectorofthePolicyResearchOfficeofChinaNationalPharmaceuticalGroupCorporation.SinceJanuary2018,hehasbeenservingasvicepresidentofSinopharmGroupCo.,Ltd.,andMr.LianisconcurrentlyservingaschairmanofSinopharmHoldingAnhuiCo.,Ltd.,SinopharmHoldingHubeiCo.,Ltd.,andSinopharmHoldingChangshaCo.,Ltd.,anddirectorofChinaNationalMedicinesCorporationLtd.,director

ofChinaNationalZhongjin(Shanghai)MedicalHealthInvestmentManagementCo.,Ltd,anddirectorofWestChinaDentalCo.,Ltd.HeservesasDirectorof8

th

BODoftheCompanysinceApril2018.Mr.LiDongjiuisvicepresidentandgeneralcounselofSinopharmGroupCo.,Ltd.FromApril1997toJanuary2002,heservedasdeputygeneralmanagerofNorthChinaPharmaceuticalHuashengCo.,Ltd.,fromJanuary2002toDecember2009,heservedasdeputygeneralmanagerofNorthChinaPharmaceuticalCo.,Ltd.,andconcurrentlyservedasgeneralmanagerofNorthChinaPharmaceuticalGroupSalesCompany,andpropertyrepresentativeofNorthChinaPharmaceuticalGroupSouthernCompany(concurrently),fromDecember2009toJune2010,heservedasexecutivepresidentofShanghaiFosunPharmaceuticalIndustryDevelopmentCo.,Ltd.,andfromJune2010toSeptember2011,hewasappointedasvicepresidentofShanghaiFosunPharmaceutical(Group)LimitedanddirectorofthePharmaceuticalManagementCommittee,andpresidentofShanghaiFosunPharmaceuticalIndustryDevelopmentCo.,Ltd.,fromSeptember2011toJanuary2018,heservedasseniorvicepresidentofShanghaiFosunPharmaceutical(Group)Limited,andconcurrentlyservedasdirectorofpharmaceuticalbusinessandconsumergoodsmanagementcommitteeandchairman,presidentofShanghaiFosunPharmaceuticalIndustryDevelopmentCo.,Ltd.andconcurrentlyvice-presidentofpharmaceuticalindustrymanagementcommittee,responsibleforstrategy,investment,operationandmanagementofpharmaceuticalbusinessandconsumerproduct.SinceJanuary2018,hehasbeenservingasvicepresidentofSinopharmGroupCo.,Ltd.Mr.LiisconcurrentlydirectorofChinaNationalMedicinesCorporationLtd.,andchairmanofSinopharmHoldingFujianCo.,Ltd.,SinopharmHoldingFuzhouCo.,Ltd.,SinopharmHoldingGuizhouCo.,Ltd.,SinopharmHoldingYunnanCo.,Ltd.,SinopharmXingshaPharmaceuticals(Xiamen)Co.,Ltd.,SinopharmHoldingHainanCo.,Ltd.,ChinaNationalHealthOnlineCo.,Ltd.,SinopharmChemicalReagentCo.,Ltd.andSinopharmHoldingHutchisonWhampoaMedicineCo.,Ltd.,SinopharmHoldingShanxiCo.,Ltd.andSinopharmHoldingGansuCo.,Ltd.HeservesasDirectorof8

th

BODoftheCompanysinceApril2018.Mr.LinZhaoxiong:DirectorandGMofSinopharmAccord.Hasservedasdeputymanagerandmanagerofpharmaceuticaldepartment,managerofPharmaceuticalcorporationsanddirectorofoperationandmanagementdepartmentduringhisworkinChinaPharmaceutical(Group)GuangzhouCo.,LtdfromJanuary1999toDecember2003insuccession;HehasactedasthedeputygeneralmanagerofSinopharmHoldingGuangzhouCo.,Ltd;thegeneralmanagerofSinopharmHoldingGuangzhouCo.,LtdfromDecember2006toDecember2008;HehasservedasthedeputygeneralmanageroftheCompanyfromDecember2008toMarch2016;MrLinservesasthechairmanofSinopharmHoldingGuodaDrugstoreCo.,LtdsinceOctober2017;andGMoftheCompanysinceMarch2016,Directorofthe7

th

and8

th

BODoftheCompanysinceApril2016.Mr.ChenHonghui,professorofLingnan(University)CollegeofSunYat-SenUniversity,adoctoralsupervisorofmanagement.Heworkedinschoolofmanagement,WuhanUniversityofScience&TechnologyfromJuly1993toJune2003andsuccessivelyactedasatutorandinstructor;heworksinLingnan(University)CollegeofSunYat-SenUniversitysinceJuly2003andalsoservedasdeputyprofessorandprofessor;vicepresidentoftheLingnan(University)CollegeofSunYat-SenUniversityfrom2007to2012;thedirectorofdepartmentof

businessadministrationinLingnanCollegefrom2008to2019,thedirectorofCorporateSocialResponsibilityResearchCenterinLingnanCollegesince2018,currentlyMr.ChenservesasdeputychairmanoftheGDISR,independentdirectorofCabbeenFashionCo.,LtdandGuangzhouGrandbuyCo.,Ltd.Heservesasindependentdirectorofthe7

th

and8

th

BODoftheCompanysinceMarch2017.Mr.OuYongliangisaChinesepracticinglawyer,vicechairmanofAllChinaLawyersAssociation,vicechairmanofGuangdongProvinceLawSociety,presidentofthe9

th

and10

thSessionofGuangdongLawyersAssociation,directorofGuangdongHopesunLawFirm,memberofthe12

th

SessionofGuangdongProvincialCommitteeoftheCPPCC,expertadvisorofthe11

th

PartyCongressofGuangdongProvincialPartyCommitteeoftheCommunistPartyofChina,legislativeconsultantofthe12

thSessionofStandingCommitteeofGuangdongProvincialPeople’sCongress,speciallyinvitedmemberofthe11

th

SessionofGuangdongProvincialCommitteeoftheCPPCC,memberoftheGuangdongProvincialJudgeandProsecutorSelectionCommittee,representativeofthe9

th

CongressofGuangzhouMunicipalityoftheCommunistPartyofChina,arbitratorofChinaInternationalEconomicandTradeArbitrationCommission,arbitratorofShenzhenInternationalArbitrationCommission,arbitratorofShanghaiInternationalArbitrationCommission,andarbitratorofGuangzhouArbitrationCommission.Heservesasindependentdirectorofthe8

th

BODoftheCompanysinceApril2018.Mr.ChenShengqunisanassociateresearcherandsenioraccountant,hehasbeenteachingattheShanghaiNationalAccountingInstitutesince2013.Mr.ChencameoutofthepostdoctoralresearchstationofShanghaiUniversityofFinanceandEconomicsin1998asthefirstpostdoctoralfellowinmanagementaccounting.HewasemployedasaseniorresearcherattheCAFRCenteroftheHongKongPolytechnicUniversityandiscurrentlyavisitingprofessorofEDPcurriculumattheXiamenUniversity.Since1998,Mr.ChenhasservedasdirectorofthefinancedivisionofChinaPacificInsuranceCo.,Ltd.,in2002,hewastransferredtoserveasdeputygeneralmanagerofthefinancingplandepartmentofChinaPacificInsuranceCo.,Ltd.(presidingwork),attheendof2003,hejoinedChinaReinsuranceGroupandsuccessivelyservedasgeneralmanagerofthefundapplicationdepartmentofChinaContinentInsurance(concurrentlygeneralmanagerofthestrategicdevelopmentdepartment,andgeneralmanagerassistantofChinaReAssetManagementCompany.Heservesasindependentdirectorofthe

th

BODoftheCompanysinceApril2018.Ms.SuWeiwei:Doctorofpharmacy,professorofSchoolofLifeSciencesofSunYat-SenUniversityandadoctoralsupervisor.SheworkedinGuangdongpharmaceuticalUniversityfromJuly1987toApril2000,andsuccessivelyservedasateachingassistant,lecturers,associateprofessorandprofessor,sheservesasaprofessorinSunYat-SenUniversitysinceMay2000.Ms.SuWeiweihavedevotedherselftotheresearchanddevelopmentofinnovativedrugsformanyyears,andachievedtwochemicalclinicalpermissionforfirst-typenewdrugsandoneclinicalpermissionforthefifth-typenewdrugsofTCM(traditionalChinesemedicine)whichhaveindependentintellectualpropertyrights.

2.MembersofBOS:

Mr.WenDeyong,joinedSinopharmGroupCo.,Ltd.inSeptember2017,andhasbeenservingasanon-executivedirectorofSinopharmGroupCo.,Ltd.tothisday.FromSeptember1995toMay2016,Mr.Wenservedasatechnicianinthehydro-acupunctureworkshopofChongqingNo.6PharmaceuticalFactory,fieldsalesmanofsalesdepartmentofChongqingYaoPharma,salesdirectorofChongqingYaoPharmaCo.,Ltd.,generalmanagerofsalesdepartment2ofChongqingYaoPharmaCo.,Ltd.,generalmanagerofNorthernCompanyofChongqingHaisimanPharmaceuticalCo.,Ltd.,vicepresidentofChongqingYaoPharma,presidentofChongqingYaoPharma,currentlyservesasvicepresidentofShanghaiFosunPharmaceutical(Group)Co.,Ltd.,directorofpharmaceuticalbusinessmanagementcommittee,generalmanagerofcentralizedprocurementandprocurementmanagementdepartment,andexecutivevicepresidentofShanghaiFosunPharmaceuticalIndustryDevelopmentCo.,Ltd.HehasbeenthechairmanoftheboardofsupervisorsoftheeighthboardofsupervisorsoftheCompanysinceJuly2019.Ms.LiuJingyun,postgraduatebackground.Currentlysheservesasthedirectoroffinancialandassetmanagementanddirectorofassetsandcreditmanagementdept.inSinopharmGroupCo.,Ltd.andhesuccessivelyholdateachingpostinNanjingRadioandTelevisionUniversity,worksinSinopharmGroupCo.,Ltd.sinceNovember2003andservesasdeputydirectorofassetsmanagementdepartment,directorofthefinancial&assetsmanagementdept.andDirectorofministryoffinanceandcreditmanagement.Sheservesassupervisorofthe7

th

and8

th

supervisorycommitteeoftheCompanysinceSeptember2016.Ms.ChenGuojing:sheworkedinShenzhenAccordMedicinalMaterialsCompanyinDecember1999,nowsheservesastheofficedirectoranddirectorofsecuritydepartmentintheCompany.Ms.ChenservedasthefinancialmanageranddeputychiefofFinanceandFundsDepartmentoftheCompanyfromJune2005toDecember2013,sheisthememberoftradeunionfederationsoftheCompanyandchairmanofthefirsttradeunionsinceMarch2009;sheservedaschief(part-time)oftheauditingdepartmentoftheCompanyfromJanuary2013toAugust2017,andchief(part-time)oftheriskandoperationmanagementoftheCompanyfromJanuary2014toMay2016.Sheservesasstaffsupervisorofthe8

th

supervisorycommitteeoftheCompanysinceAugust2018

3.SeniorexecutiveMr.LinZhaoxiong,foundinaforesaidpreviousworkexperienceMr.LinMin:DeputyGMoftheCompany.workedinChinaPharmaceutical(Group)GuangzhouCo.,Ltdwithsuccessivelytakingthepostsofassistanttomanager,deputygeneralmanagerofPharmacyDepartmentanddeputygeneralmanagerofpurchasinginPharmaceuticalCompanyfromJan.2001toNov.2003;thecitymedicalsalesdirectorofSinopharmHoldingGuangzhouCo.,Ltd.FromNovember2003toJanuary2005;tookdeputygeneralmanagerofSinopharmHoldingGuangzhouCo.,LtdfromJan.2005toDec.2008;healsoactingastheGMofdistributionbusinessdept.oftheSinopharmAccordandSinopharmHoldingGuangzhouCo.,Ltd.heservesasdeputyGMoftheCompanysinceDecember2008.

Mr.ZhaoXiaochuan:DeputyGMoftheCompany.HehasservedasthegeneralmanagerofLiaoningAccordChainCo.,LtdfromDecember2001toApril2008;servedasthegeneralmanagerofSinopharmHoldingGuodaTianYiTangDrugstoreChain(Shenyang)Co.,LtdandSinopharmHoldingGuodaShenyangChainCo.,LtdfromMay2008toJune2015;hehasactedasgeneralmanagerofSinopharmHoldingGuodaDrugstoreCo.,LtdsinceJune2015;HehasworkedasthedeputygeneralmangeoftheCompanysinceJuly2017.Mr.LiuTianyaoisdeputygeneralmanageroftheCompany.FromAugust2002toApril2009,heservedasseniordirectorofhumanresourcesdepartmentofChinaNationalPharmaceuticalGroupCorporation.FromApril2009toMay2017,hesuccessivelyservedasdeputydirectorofhumanresourcesdepartment,directoroftalentdevelopmentdepartment,directorofhumanresourcesdepartment,anddirectorofretailmedicalbusinessdevelopmentdepartmentofSinopharmGroupCo.,Ltd.,fromDecember2013toJuly2016,heconcurrentlyservedasgeneralmanagerofShanghaiManagementConsultingBranch,fromJuly2016toMay2017,heconcurrentlyservedasgeneralmanagerofSinopharmHoldingMedicalManagement(Shanghai)Co.,Ltd.,fromMay2017toJanuary2019,hehasbeenservingasdirectorofhumanresourcesanddirectorofhumanresourcesdepartmentofSinopharmGroupCo.,LtdandheservesasDeputyGMoftheCompanysinceJanuary2019.Mr.LinXinyang:DeputyGMoftheCompany.HetooktheturnsofdeputyGMofNanfangPharm.Co.,deputyGMofChinaPharmaceutical(Group)GuangzhouCompanyYuexingCompany,generalsupervisorofPDofSinopharmHoldingGuangzhouCompanysuccessivelysinceJanuary1996;tookthepostofdeputyGMofSinopharmHoldingGuangzhouCompanyfromJan.toDec.2004;servesasdeputyGMoftheCompanysinceJanuary2005.Mr.LangBaochunisdeputysecretaryofthepartycommittee,secretaryofthedisciplinarycommittee,chairmanofthelaborunionandgeneralcounseloftheCompany.FromSeptember2007toMarch2008,heservedasdeputydirectorofgeneralofficeofSinopharmGroupCo.,Ltd.,fromMarch2008toDecember2009,heservedasgeneralmanagerofShanghaiChuanghuiInvestmentCo.,Ltd.,fromJanuary2010toMay2010,heservedasdirectoroftheresearchofficeofShanghaiShibeiHi-Tech(Group)Co.,Ltd.,fromJune2010toSeptember2011,heservedasdeputydirectorofthepresident’sofficeofSinopharmGroupCo.,Ltd.,fromOctober2011toDecember2015,heservedasdirectorofthestrategicplanningdepartmentofSinopharmGroupCo.,Ltd.,fromJanuary2016toJune2017,heservedassecretaryofthepartycommitteeofSinopharmGuodaDrugstoreCo.,Ltd.,fromMarch2016toFebruary2018,heservedasdeputysecretaryofthepartycommitteeandsecretaryofthedisciplinarycommitteeoftheCompany.SinceMarch2018,hehasbeenservingasdeputysecretaryofthepartycommittee,secretaryofthedisciplinarycommittee,andchairmanofthelaborunionoftheCompany.HeservesasGeneralCounseloftheCompanysinceAugust2018Mr.WeiPingxiao:CFOoftheCompany.HetooktheturnsofdeputysectionchiefoffinancialdepartmentofChinaElectronicInformationIndustryGroup,financialdirectorofAMOI,sectionchiefofplanningfinancialdepartmentofChinaElectronicFinanceLeasingCompany,DeputyGMofAMOIBeijingbranch,financial

chargerofAMOIanddirectorofitssubsidiarysinceApril1993;andheholdthepostofCFOoftheCompanysinceDecember2004.Mr.ChenChangbin:DeputyGMoftheCompany,andSecretaryoftheBoard.HehasservedassecretaryofboardofdirectorsoftheCompanysinceDecember2000;hehasalsoworkedasthedirectorofplanninginvestmentmanagementdepartmentoftheCompanyaswellasassistantgeneralmanager,inchargeofstrategicplanning,investmentandmergersandacquisitions,capitaloperation,affairsrelatedtothreemajormeetingsandinternationalco-operation.HehasactedasthedeputygeneralmanageroftheCompanysinceApril2017.Post-holdinginshareholder’sunit

√Applicable□Notapplicable

NameNameofshareholder’sunitPositioninshareholder’sunitnStartdatedofofficeterm
LiuYongSinopharmGroupCo.,LtdExecutiveDirector,PresidentNovember2017
LiuYongSinopharmGroupCo.,LtdDeputypartysecretaryJanuary2018
LiZhimingSinopharmGroupCo.,LtdChairmanNovember2017
LiZhimingSinopharmGroupCo.,LtdDeputypartysecretaryNovember2018
JiangXiuchangSinopharmGroupCo.,LtdCFOMay2010
JiangXiuchangSinopharmGroupCo.,LtdDeputyPresidentJuly2013
LianWanyongSinopharmGroupCo.,LtdDeputyPresidentJanuary2018
LiDongjiuSinopharmGroupCo.,LtdDeputyPresidentJanuary2018
LiDongjiuSinopharmGroupCo.,LtdGeneralcounselJanuary2018
LiuJingyunSinopharmGroupCo.,LtdDirectorofministryoffinanceandcreditmanagement,directorofthefinancial&assetsmanagementdept.July2016

Post-holdinginotherunit

√Applicable□Notapplicable

NameNameofotherunitsPositioninotherunitnStartdatedofofficeterm
LiuYongChinaNationalMedicinesCorporationLtdDirectorNovember2017
LiuYongSinopharmHoldingGuodaDrugstoreCo.,Ltd.DirectorOctober2017
LiuYongChinaNationalScientificInstruments&MaterialsCo.,LtdDirectorDecember2018
LiuYongChinaNationalMedicalEquipmentCo.,Ltd.DirectorDecember2018
LiuYongSinopharmHoldingH.K.Co.,ltdDirector,GMMay2018
LiZhimingChinaNationalXinjiangMedicineCo.,LtdDirectorJune2017
LiZhimingChinaNationalMedicinesCorporationLtdDirectorMay2016
LiZhimingSinopharmHoldingGuodaDrugstoreCo.,Ltd.DirectorJuly2014
LiZhimingShanghaiShyndecPharmaceuticalCo.,LtdViceChairmanNovember2016
LiZhimingSinopharmHoldingH.K.Co.,ltdChairmanApril2017
LiZhimingSinopharmHolding(China)FinanceLeasingCo.,LtdChairmanNovember2014
LiZhimingChinaNationalZhongjin(Shanghai)MedicalHealthInvestmentManagementCo.,LtdChairmanSeptember2016
LiZhimingSinopharmHoldingMedicineInvestmentCo.,LtdChairmanOctober2017
JiangXiuchangSinopharmHoldingJiangxiCo.,LtdChairmanJune2013
JiangXiuchangSinopharmHoldingShanxiCo.,ltdChairmanDecember2013
JiangXiuchangSinopharmHoldingTianjinCo.,ltdChairmanDecember2013
JiangXiuchangChinaNationalMedicinesCorporationLtdChairmanNovember2017
JiangXiuchangSinopharmHoldingH.K.Co.,ltdDirectorNovember2011
JiangXiuchangChinaNationalFinanceCorporationLtdDirectorNovember2011
JiangXiuchangBeijingSinopharmTaiyuanPropertyManagementCo.,LtdExecutiveDirectorDecember2017
JiangXiuchangSINOPHARMShanghaiCo.,LtdExecutiveDirectorNovember2017
MaZhanjunSinopharmHoldingHubeiCo.,Ltd.ViceChairmanNovember2018
LianWanyongChinaNationalMedicinesCorporationLtdDirectorDecember2017
LianWanyongChinaNationalZhongjin(Shanghai)MedicalHealthInvestmentManagementCo.,LtdDirectorJuly2018
LianWanyongWestChinaDentalCo.,LtdDirectorJanuary2019
LianWanyongSinopharmHoldingAnhuiCo.,Ltd.ChairmanJanuary2019
LianWanyongSinopharmHoldingAnhuiMedicineCo.,Ltd.ChairmanJune2019
LianWanyongSinopharmHoldingChangshaCo.,Ltd.ChairmanJune2019
LianWanyongSinopharmHoldingHubeiCo.,Ltd.ChairmanJanuary2020
LiDongjiuChinaNationalMedicinesCorporationLtdDirectorDecember2016
LiDongjiuSinopharmHoldingFujianCo.,LtdChairmanFebruary2018
LiDongjiuSinopharmHoldingFuzhouCo.,LtdChairmanFebruary2018
LiDongjiuSinopharmHoldingGuizhouCo.,LtdChairmanFebruary2018
LiDongjiuSinopharmHoldingYuannanCo.,LtdChairmanFebruary2018
LiDongjiuSinopharmXingshaPharmaceuticals(Xiamen)Co.,Ltd.ChairmanFebruary2018
LiDongjiuSinopharmHoldingHainanCo.,Ltd.ChairmanFebruary2018
LiDongjiuChinaNationalHealthOnlineCo.,Ltd.ChairmanFebruary2018
LiDongjiuSINOPHARMChemicalReagentCo.,Ltd.ChairmanDecember2018
LiDongjiuSinopharmHoldingHutchisonWhampoaMedicineCo.,LtdChairmanDecember2018
LiDongjiuSinopharmHoldingShanxiCo.,Ltd.ChairmanJanuary2020
LiDongjiuSinopharmHoldingGansuCo.,Ltd.ChairmanJanuary2020

Punishmentofsecuritiesregulatoryauthorityinrecentthreeyearstothecompany’scurrentandoutgoingdirectors,supervisorsandseniormanagementduringthereportingperiod

□Applicable√Notapplicable

IV.Remunerationfordirectors,supervisorsandseniorexecutives

Decision-makingprocedures,recognitionbasisandpaymentfordirectors,supervisorsandseniorexecutives(i)Remunerationdecisionprocedureofdirectors,supervisors,seniormanagement:

TheCompanyimplementedtheannualsalarysystemforseniorexecutivesbasedonthe2019annualperformanceappraisal(scheme)onmanagementstaff,paidannualsalaryremunerationaccordingtotheappraisalresults.Remunerationandappraisalcommitteeofthecompany'sboardofdirectorsisresponsiblefortheformulationandexaminationofsalaryplanandprogramaswellasformulationandexaminationofsalaryplanandassessmentstandardsofdirectors(notincludingtheindependentdirectors),supervisorsandseniorexecutives.Theyalsoevaluatetheperformanceassessmentofdirectors,supervisorsandseniorofficersinaccordancewiththeassessmentcriteria,compensationscheme.(ii)RemunerationdeterminingbasisThemainprinciplesofmakingstandardofcompensationare:(1)thecompany'soverallbusinessandtheprofitlevel;(2)theoverallsalarylevelanddynamicindexoverpastyears;(3)differenceinpositionandduty;(4)relativeimportanceandrisksofposition;(5)relatedpostsalarylevelinthesameindustry;(6)individualprofessionalability.(iii)ActualpaymentExecutivesgetmonthlybasicsalaryandannualsalaryaftertheissuanceofannualexamination.

Remunerationfordirectors,supervisorsandseniorexecutivesinreportingperiod

In10thousandYuan

NameTitleSex(F/M)AgePost-holdingstatusTotalremunerationbeforetaxobtainedfromtheCompanyReceivedremunerationfromrelatedpartyoftheCompany(Y/N)
LiuYongChairmanM50CurrentlyinofficeY
MaZhanjunDeputyChairmanM59Currentlyinoffice250Y
LiZhimingDirectorM56CurrentlyinofficeY
JiangXiuchangDirectorM56CurrentlyinofficeY
LianWanyongDirectorM49CurrentlyinofficeY
LiDongjiuDirectorM54CurrentlyinofficeY
LinZhaoxiongDirector,GMM52Currentlyinoffice250N
ChenHonghuiIndependentDirectorM48Currentlyinoffice12N
OuYongliangIndependentDirectorM50Currentlyinoffice12N
ChenShengqunIndependentDirectorM57Currentlyinoffice12N
SuWeiweiIndependentDirectorF60Currentlyinoffice11.3N
WenDeyongChairmanofsupervisorycommitteeM47CurrentlyinofficeY
WuYijianChairmanofsupervisorycommitteeM49OfficeleavingY
LiuJingyunSupervisorF43CurrentlyinofficeY
ChenGuojingStaffsupervisorF49Currentlyinoffice72.02N
LinMinPartysecretary,DeputyGMM55Currentlyinoffice225N
ZhaoXiaochuanDeputyGMM56Currentlyinoffice200N
LiuTianraoDeputyGMM40Currentlyinoffice175N
LinXinyangDeputyGMM55Currentlyinoffice175N
LangBaochunDeputypartysecretary,SecretaryofCommitteeforDisciplineInspection,GeneralcounselM56Currentlyinoffice162.5N
WeiPingxiaoCFOM56Currentlyinoffice175N
ChenChangbinDeputyGM,SecretaryoftheBoardM52Currentlyinoffice150N
Total--------1,881.82--

Delegatedequityincentivefordirectorsandseniorexecutivesinreportingperiod

□Applicable√Notapplicable

V.Particularsofworkforce

1.Numberofstaff,professionalcompositionandeducationbackground

Thenumberofcurrentemployeesofparentcompany(people)119
Thenumberofcurrentemployeesofmainsubsidiaries(people)27,128
Totalnumberofcurrentemployees(people)27,247
Thetotalnumberofemployeesinpayroll(people)27,247
Thetotalnumberofretiredstaffandworkersthattheparentcompanyandmainsubsidiariesneedtobearthecosts(people)1,914
Professionalcomposition
CategoryofprofessionalcompositionNumberofprofessionalcomposition(people)
Productionstaff38
Salesman19,030
Technicalstaff201
Financialstaff635
Administrativestaff182
Other7,161
Total27,247
Educationbackground
CategoryofeducationNumber(people)
Post-graduatequalificationandabove163
Undergraduate4,109
Juniorcollege10,090
Juniorcollegebelow12,885
Total27,247

2.Remunerationpolicy

SinopharmAccordandthesubordinateenterprisesprovideperfectcompensationandbenefitsforthestaff,thecompensationleveliscloselycombinedwithorganization(totalamountoflabor,compensationstrategy,jobvalue),staff(capacitydevelopment,performanceresults),andmarket(marketlevel,talentcompetition).Thecompanyadjuststheremunerationforstaffhavingabilitiesandcontributionseveryyearbytheresponsibilitysorting,positionevaluation,targetremunerationrangepositioning,andthestaffannualworkperformanceandabilityassessment;atthesametime,performancebonusesandperformancecloselylinktogether,andrealizewin-winoftheinterestsofcompanyandtheinterestsofemployees.Payattentiontotheincomegrowthrequirementsoflow-incomegroups,developannualwagegrowthprogram,andimplementafterthedeliberationandapprovaloftheworkers'congress.

3.TrainingprogramsSinopharmAccordanditssubordinatecompaniesattachgreatimportancetobuildinglearningorganizations,investtrainingresourceseveryyeartotrainanddevelopemployeesatalllevels,andconstantlyimprovethecompany’strainingandcultivatingsystem.Firstly,optimizethetrainingmanagementsystem,revisethetrainingsystemmanagementsystem,theemployeetrainingmanagementsystem,theinternaltrainermanagementsystem,theemployeecontinuingeducationmanagementsystem,theinternmanagementsystem,theinternallecturermanagementsystem,andthetrainingintegralmanagementsystem,optimizeinternaltrainersmanagementprocess,annualtrainingneedsandplanmanagementprocess,andtrainingimplementationprocess.Secondly,theheadquarters,operationheadquarters,andkeysubsidiariesallsetupfull-timetrainingpoststoassistmanagersatalllevelstocarryoutemployeetraining.Thecompanyhaspromotedathree-leveltrainingmodelthroughoutthecompany,andconductedoutstandinglearningorganizations,learningprojects,excellentinternaltrainers,andexcellenttrainingmanagersonTeachers’Day.Thirdly,vigorouslypromoteonlinetraining,andusetheonlinelearningplatformtoorganizeonlinelearningandonlineassessmentforallemployees.Thepercapitalonlinelearninghoursforallemployeesexceed30hours,coveringmorethan3,000people.Fourthly,thetypesoftrainingincludetrainingfornewrecruits,vocationaltrainingforemployees,leadershiptrainingformanagers,andinternaltrainertraining.Coursesincludemanagementcourses,generalqualitycourses,andvocationalskillsclasses,thecoursesalsoincludegroupcoachingofactionlearningoutcomesconductedbymanagerstoemployees.Fifthly,asoftheendof2019,thetrainingexpensesoftheheadquartersanddistributionoperationheadquartersofSinopharmAccordandtheheadquartersofGuodaDrugstorewereabout1.85millionyuan,andthepercapitalperiodreachedmorethan50hours.In2019,itwontheExcellentLearningProjectAwardofthe“Training”magazineandtheExcellentLearningCaseAwardofSinopharm.

4.Laboroutsourcing

√Applicable□Notapplicable

Totalnumberofworkinghoursoflaboroutsourcing(Hour)799,704
Totalremunerationpaidoflaboroutsourcing(RMB)30,726,586.84

SectionX.CorporateGovernanceI.CorporategovernanceoftheCompanyDuringthereportingperiod,thecompanystrictlyfollowedtherequirementsoftheCompanyLaw,SecuritiesLaw,GovernmentGuidelinesforListedCompaniesandtherelevantlawsandregulationsoftheChinaSecuritiesRegulatoryCommissionandShenzhenStockExchange,continuouslyimprovedthecompany’scorporategovernancestructure,andestablishedandimprovedthecompany’sinternalcontrol.Thegeneralmeetingofshareholders,theboardofdirectorsandtheboardofsupervisorshavestandardizedoperations,independentdirectorsandspecialcommitteesoftheboardofdirectorshaveperformedtheirrespectiveduties,continuouslystrengthenedcompanymanagement,controlledandpreventedrisks,standardizedcompanyoperations,andimprovedoperationalefficiency.Thecompanygraduallyformedagovernancemechanismwithclearpowersandresponsibilities,standardizedoperations,mutualcoordination,andmutualchecksandbalancesamongpowerinstitutions,decision-makinginstitutions,supervisoryinstitutions,andmanagers.Duringthereportingperiod,thecompanystrengthenedinternalcoordinationandcommunication,revisedandimprovedinternalcontrolrelatedsystems,andsortedoutvariousworkprocesses,andfurtherimprovedthecompany’smanagementqualityandoperationalefficiency.Atthesametime,itcontinuouslystrengthenedthemanagementofinsideinformation,furtherimprovedtheprocesssystemsofinsideinformationmanagement,strengthenedthedisclosureofinformation,improvedthemanagementofinvestorrelations,strengthenedandimprovedthemanagementofaffiliatedcompanies,sothatthecompany’sstandardoperationlevelhasbeenfurtherimproved.Inthefuture,thecompanywillcontinuetostrictlyimplementthespecificrequirementsoftheregulatoryagencies,strengthentheimplementation,improvetheevaluationmechanism,andimprovethecorporategovernancestructure,atthesametime,strengthensupervision,andstrivetopromotegovernancetoahigherlevel.IsthereanydifferencebetweentheactualconditionofcorporategovernanceandrelevantregulationsaboutcorporategovernanceforlistedcompanyfromCSRC?

□Yes√NoTherearenodifferencesbetweentheactualconditionofcorporategovernanceandrelevantregulationsaboutcorporategovernanceforlistedcompanyfromCSRC.II.IndependenceoftheCompanyrelativetocontrollingshareholders’inaspectofbusinesses,personnel,assets,organizationandfinanceTheCompanytotallyseparatesfromthecontrollingshareholdersinbusiness,personnel,assets,institutions,financialandotheraspects,withindependentandcompleteself-managementability.

1.Thebusiness:theCompanywasindependentfromcontrollingshareholders,havingacompletebusinesssystemandself-managingability;thecompanyhasindependentprocurementandsalessystemthusallprocurementandsalesofdrugsandrawmaterialsisinchargeofthepurchasingdepartmentandsubordinatesubsidiary,branchandproductionenterprises;production,supply,marketingandR&Dseparatefromeachother;theCompanyisalegalmarketpersonwithindependentoperation.

2.Personnel:proceduresofthecontrollingshareholdernominatingdirectorsandgeneralanddeputygeneralmanagerarelegal;nointerveneontheappointmentandremovalofpersonnelmadebytheboardofdirectorsandshareholders’meetinghappened;theCompanysetupindependenthumanresourcedepartment,responsibleforassessment,trainingandsalaryreviewonstaff,makingrulesandregulationsandhandbooktheemployeesshouldabideby.Labor,personnel,wagesandpension,medicalinsuranceandotherinsuranceareindependentlymanaged.

3.Institution:productionandoperationmechanismandadministrativemanagementiscompletelyindependentfromthecontrollingshareholderoractualcontroller;officesandsitesofbusinessoperationseparatefromthecontrollingshareholder;theCompanyestablishedcorporategovernancestructurewheretheboardofdirectors,boardofsupervisorsandmanagerscarryouttheirdutiesandexercisetheirrespectivedutiesinaccordancewithrelevantprovisionsofthearticlesofassociation.

4.Asset:propertyandrightsrelationshipbetweentheCompanyandthecontrollingshareholderisclear,withindependentoperations;thecompanyhasindependentproductionsystem,auxiliaryproductionsystemandsupportingsystem;industrialpropertyrights,trademarks,non-patentedtechnologyandotherintangibleassetsownedbytheCompanyanditssubsidiary.

5.Financialaspects:theCompanyestablishedindependentfinancialdepartmentsandindependentfinancialaccountingsystem;theCompanyopenedabankaccountindependently;thefinancialstaffisindependentwithouttakingpart-timeandreceivingremunerationinthecontrollingshareholder;theCompanypaystaxindependently.

III.Horizontalcompetition

√Applicable□Notapplicable

TypeNameofcontrollingshareholderNatureofcontrollingshareholderReasonSolutionmeasureWorkscheduleandfollow-upplan
HorizontalcompetitionSinopharmHoldingState-ownedcontrolDistributionsubsidiaryofSinopharmHoldingestablishedsomesocialretailpharmacy,whichmighthavehorizontalcompetitionwiththeGuodaDrugstore,thesubordinateenterpriseofthelistedcompanyafterrestructuringInDecember2016,SinopharmHoldingissuedacommitmentletterofavoidinghorizontalcompetitionwithSinopharmAccord,andpromisetosolvethehorizontalcompetitioninrespectofpharmaceuticalretailbusinessinanappropriatewaywithinfiveyearssincethedatewhenreorganizationcompletedNormallyimplementing
HorizontalcompetitionSINOPHARMState-ownedcontrolDistributionsubsidiaryofSINOPHARMestablishedsomesocialretailpharmacy,whichmighthavehorizontalcompetitionwiththeGuodaDrugstore,thesubordinateenterpriseofthelistedcompanyafterrestructuringInDecember2016,SINOPHARMissuedacommitmentletterofavoidinghorizontalcompetitionwithSinopharmAccord,andpromisetosolvethehorizontalcompetitioninrespectofpharmaceuticalretailbusinessinanappropriatewaywithinfiveyearssincethedatewhenreorganizationcompletedNormallyimplementing

IV.AGM(AnnualGeneralMeeting)andextraordinaryshareholders’generalmeetingheldinthePeriod

1.AGM

SessionofmeetingTypeRatioofinvestorparticipationDateDateofdisclosureIndexofdisclosure
Firstextraordinarygeneralmeetingof2019Extraordinarygeneralmeeting62.79%2019-01-242019-01-25JuchaoWebsite—(http://www.cninfo.com.cn)“NoticeofResolutionofFirstextraordinarygeneralmeetingof2019”No.:2019-07
AnnualGeneralMeetingof2018AGM65.67%2019-05-172019-05-18JuchaoWebsite—(http://www.cninfo.com.cn)“NoticeofResolutionofAGMof2018”No.:2019-26
Secondextraordinarygeneralmeetingof2019Extraordinarygeneralmeeting66.21%2019-09-122019-09-13JuchaoWebsite—(http://www.cninfo.com.cn)“NoticeofResolutionofSecondextraordinarygeneralmeetingof2019”No.:2019-38
Thirdextraordinarygeneralmeetingof2019Extraordinarygeneralmeeting68.52%2019-11-132019-11-14JuchaoWebsite—(http://www.cninfo.com.cn)“NoticeofResolutionofThirdextraordinarygeneralmeetingof2019”No.:2019-45

2.Requestforextraordinarygeneralmeetingbypreferredstockholderswhosevotingrightsrestore

□Applicable√NotapplicableV.Responsibilityperformanceofindependentdirectors

1.TheattendingofindependentdirectorstoBoardmeetingsandshareholdersgeneralmeeting

NameofindependentdirectorTimesofBoardmeetingsupposedtoattendinthereportperiodTimesofPresenceTimesofattendingbycommunicationTimesofentrustedpresenceTimesofAbsenceAbsenttheMeetingforthesecondtimeinarow(Y/N)Timesattendingtheshareholdersgeneralmeeting
ChenHonghui81700N1
OuYongliang81700N1
SuWeiwei71600N1
ChenShengqun81700N1

ExplanationofabsenttheBoardMeetingforthesecondtimeinarow

2.ObjectionforrelevanteventsfromindependentdirectorsIndependentdirectorscomeupwithobjectionaboutCompany’srelevantmatters

□Yes√NoIndependentdirectorshavenoobjectionsforrelevanteventsinreportingperiod

3.OtherexplanationaboutresponsibilityperformanceofindependentdirectorsTheopinionsfromindependentdirectorshavebeenadopted

√Yes□NoExplanationonadvicethataccepted/notacceptedfromindependentdirectorsDuringthereportingperiod,theindependentdirectorsperformedtheirdutiesinacareful,diligent,dedicatedattitudeinaccordancewithrequirementsofthe"WorkingSystemofIndependentDirector",offeredsomeusefulsuggestionsandopinionsonbusinessdecision-making,legalaffairs,financialmanagementandotheraspects;carefullyexaminedimportantmattersthoseneededopinionsofindependentdirectors,madeindependentjudgmentsandissuedawrittenindependentopiniononmajorrelatedtransactions,dailyrelatedtransactions,accountancyhiringandothermatters,playingapositiveroleinsafeguardingthelegitimaterightsandinterestsofsmallshareholders.Besides,independentdirectorsplayedanimportantroleinoperationofspecialcommittee.Atthesametime,theCompanycanguaranteeindependentdirectorsandotherdirectorsofthesamerighttoknow.Duringthereportingperiod,theindependentdirectorshavenoobjectionontherelatedissuesoftheCompany.VI.Dutyperformanceofthespecialcommitteesundertheboardduringthereportingperiod(i)DutiesfulfillmentoftheboardofdirectorsandauditcommitteeoninternalcontroloverriskInternalcontrolonriskandAuditCommitteeoftheboardofdirectorsofthecompanycomprisesthreeindependentdirectorsandthreedirectors,includingtheconvener(professionalaccountant)isanindependentdirector.InaccordancewithrelevantprovisionsofChinaSecuritiesRegulatoryCommissionandShenzhenStock

Exchangeandworkingsystem,InternalcontrolonriskandAuditCommitteeoftheboardofdirectorsseriouslyperformeddutiesinadedicatedattitude.Intheannualfinancialreportaudit,theyactedassupervisors,maintainedindividualityofauditandissuedaseriesofnoticessuchastheWrittenOpiniononFinancialAccountingStatementsIssuedbytheCompanybeforeCPAofAnnualExaminationEntered,theWrittenOpiniononFinancialAccountingStatementsafterPreliminaryAuditIssuedbyCPAofAnnualExamination,theSummaryReportofInternalRiskControlandAuditCommitteeontheAnnualAuditWorkofCPAaswellastheResolutiononRehiretheAuditInstitution.Itsmaindutiescomprisethefollowing:

1.Riskinternalcontrolandauditcommitteeisresponsiblefordeterminingtheauditworkschedule,negotiatingwithCPAwhoengagesinaudit;

2.BeforeCPAenters,auditcommitteeshouldreviewthefinancialstatementspreparedbytheCompanyandissuewrittenopinions;

3.StrengthencommunicationwiththeCPA,andurgethemtosubmitauditreportwithinstipulatedtimewithurgencyletter;

4.ReviewagainthefinancialstatementsaftertheCPAissuespreliminaryopinion,andissuewrittenopinions;

5.TheCommitteeheldannualworkconference2019,approvedproposaloffinancialaccountingreport,summaryreportofannualauditworkofCPAandrehiringErnst&YoungCPA(SpecialGeneralPartnership)astheauditinstitution,andthenformedaresolutiontosubmittoboardofdirectorsforapproval.(ii)DutiesfulfillmentofRemunerationandAppraisalCommitteeAsspecialworkingmechanismoftheboardofdirectors,theremunerationandappraisalcommitteeareresponsibleforapprovingtheassessmentstandardofdirectorsandseniorexecutives,formulatingandreviewingcompensationpoliciesandprogramsofdirectorsandexecutive.Andtheytakechargeinexaminingaccordingtothestandardandpolicies.Theremunerationandappraisalcommitteeiscomposedofthreeindependentdirectors;convenerisChenHonghui,anindependentdirector.Duringthereportingperiod,remunerationandassessmentcommitteeactivelyperformedduty;clearlydefinedtheirresponsibilities;didseriousresearchandappraisalontheremunerationandappraisalsystem,especiallysalary,assessmentsystemandprogramoverdirectors,supervisorsandseniorexecutive.Accordingtoworkingrulesoftheremunerationandappraisalcommittee,theyhaverightstocheckregularreports,meetingsrecords,businessplanningandothermaterialsbytelephone,interviewsandothermethodstolearntheperformanceofdirectors,executives.Andthey’rerequiredtosubmitproblemsexistinginimplementationofsystemtotheBoardofDirectorsandraiseupsuggestiononthem.Theircontentsareasfollows:

1.In2019,theremunerationandappraisalcommitteecarriedouttheperformanceevaluationofexecutivesaccordingtothe2018Annualoperationstandardandperformance.

2.Itproposedthe"2020EvaluationSchemeofOperatingPerformance",andsubmittedittotheboardofdirectorsforapproval.

3.Theremunerationandappraisalcommitteeapprovedsalaryofdirectors,supervisorsandseniorexecutivesdisclosedin2019annualreport.Anditissuedthefollowingopinions:

Compensationdecisionproceduresofdirectors,supervisorsandseniormanagementpersonnelwasinaccordancewiththeprovisions;thestandardwasinaccordancewiththeremunerationsystem;thedisclosureof2019annualreportaboutpersonnelsalaryofthedirectors,supervisorsandseniormanagementisrealandaccurate.

VII.WorksfromSupervisoryCommittee

TheCompanyhasrisksinreportingperiodthatfoundinsupervisoryactivityfromsupervisorycommittee

□Yes√NoSupervisorycommitteehasnoobjectionaboutsupervisioneventsinreportingperiod

VIII.Examinationandincentivesofseniormanagement

SeniorexecutivesoftheCompanytookresponsibilityfortheboardofdirectors,inthereportingperiod,theboardofdirectorsimplementedtheperformancecheckingmechanismthattheremunerationofseniorexecutivesrelatedwiththeirperformancechecking,withachievementasdirection,andmaderelevantrewardandpunishmentaccordingtotargetcompletion.TheCompany’srelevantincentiveandrestrictionmechanismgraduallyinordertofurtherexerttheenthusiasmandcreativityofseniorexecutives,urgetheseniorexecutivestoperformtheobligationsofbeinghonestanddiligent.TheCompanyhadnoincentivemechanismforseniorexecutivessuchasstockoption,purchaseofmanagementteamandequityheldbyowner.

IX.InternalControl

1.DetailsofmajordefectsinICappraisalreportthatfoundinreportingperiod

□Yes√No

2.AppraisalReportofInternalControl

Disclosuredateoffullinternalcontrolevaluationreport22April2020
Disclosureindexoffullinternalcontrolevaluationreport”Self-evaluationreportofinternalcontrolfor2019”inJuchaowebsite(www.cninfo.com.cn)appointedbyShenzhenStockExchange
Theratioofthetotalassetsofunitsincludedinthescopeofevaluationaccountingforthetotalassetsonthecompany'sconsolidatedfinancialstatements98.90%
Theratiooftheoperatingincomeofunitsincludedinthescopeofevaluationaccountingfortheoperatingincomeonthecompany'sconsolidatedfinancialstatements99.75%
DefectsEvaluationStandards
CategoryFinancialReportsNon-financialReports
QualitativecriteriaFinancialreportdefectsaremainlyjudgedanddecidedbythedegreeofinfluenceandthelikelihoodofoccurrencetothemisstatementsoffinancialreportscausedbydefects.(1)Significantdefects:acombinationofoneormultipleinternalcontroldefectsthatexistsininternalcontrolandmaycausethematerialmisstatementsinfinancialstatementscannotbeprevented,foundorcorrectedintime;(2)Majordefects:acombinationofoneormultipleinternalcontroldefectsthatexistsininternalcontrolandhaslowerseveritylevelthansignificantdefectsbutstillshouldbeconcernedbythesuperintendentsofenterprisefinancialreports;(3)Commondefects:otherdefectsexceptforsignificantandmajordefects.Non-financialreportdefectsaremainlyjudgedanddecidedbythedegreeofinfluenceandthelikelihoodofoccurrenceofdefectstothevalidityofbusinessprocess.(1)Significantdefects:acombinationofoneormultipleinternalcontroldefectsthatmaycausetheenterprise’sseriousdeviationtointernalcontrolobjectives;(2)Majordefects:acombinationofoneormultipleinternalcontroldefectswhoseseveritylevelandeconomicconsequencesarelowerthansignificantdefectsbutstillmaycausetheenterprise’sdeviationtointernalcontrolobjectives;(3)Commondefects:otherdefectsexceptforsignificantandmajordefects.
QuantitativestandardAquantitativecriteriondeterminesthedegreeofimportanceofmisstatements(includingmissingreports)intheconsolidatedstatementsoflistedcompaniesbasedontheconsolidatedstatementdata.(1)Significantdefects:equaltoorgreaterthan5%ofprofitbeforetax;(2)Majordefects:Between1%and5%ofprofitbeforetax;(3)Commondefects:Lessthanorequalto1%ofprofitbeforetaxQuantitativestandard:Aquantitativecriteriondeterminesthedegreeofimportanceofthecompany’sdefectsbasedontheamountofdirectlossandthedegreeofsignificantinfluencetothecompany.(1)Significantdefects:theamountofdirectpropertylossisormorethan10millionYuan,orhasbeenofficiallydisclosedandcausednegativeeffectstoperiodicreportdisclosureofthejoint-stockcompanies;(2)Majordefects:theamountofdirectpropertylossisbetween5millionand10millionYuan,orhasbeenpunishedbythenationalgovernmentdepartmentsbuthasnotcausednegativeeffectstoperiodicreportdisclosureofthejoint-stockcompanies;(3)Commondefects:theamountofdirectpropertylossisbetween0.1millionand5millionYuan,orhasbeenpunishedbytheprovincialorsub-provincialgovernmentdepartmentsbuthasnotcausednegativeeffectstoperiodicreportdisclosureofthejoint-stockcompanies.
Amountofsignificantdefectsinfinancialreports0
Amountofsignificantdefectsinnon-financialreports0
Amountofimportantdefectsinfinancialreports0
Amountofimportantdefectsinnon-financialreports0

X.Auditingreportofinternalcontrol

√Applicable□Notapplicable

DeliberationsinInternalControlAuditReport
Accordingtorelevantregulationsand“BasicRulesofInternalControlforEnterprises”,ChinaNationalAccordMedicinesCorporationLtd.inallmajoraspects,keepsanefficiencyofinternalcontroloffinancialreportdated31December2019
DisclosuredetailsofauditreportofinternalcontrolDisclosed
Disclosuredateofauditreportofinternalcontrol(full-text)22April2020
Indexofauditreportofinternalcontrol(full-text)AuditReportofInternalControlunderthenameofChinaNationalAccordMedicinesCorporationLtd.releasedonJuchaoWebsite(http://www.cninfo.com.cn)
OpiniontypeofauditingreportofICStandardunqualified
Whetherthenon-financialreporthadmajordefectsNo

CarriedoutmodifiedopinionforinternalcontrolauditreportfromCPA

□Yes√NoTheinternalcontrolauditreport,issuedbyCPA,hasconcertedopinionwithself-evaluationreport,issuedfromtheBoard

√Yes□No

SectionXI.CorporateBond

WhethertheCompanyhasacorporationbondsthatissuancepubliclyandlistedonstockexchangeandwithoutdueonthedatewhenannualreportapprovedforreleasedorfailtocashinfullondueNo

SectionXII.FinancialReport

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AUDITOR’SREPORTErnst&YoungHuaMing(2020)ShenZiNo.61295118_H01

ChinaNationalAccordMedicinesCorporationLtd.

TotheshareholdersofChinaNationalAccordMedicinesCorporationLtd.

(I)Opinion

WehaveauditedthefinancialstatementsofChinaNationalAccordMedicinesCorporationLtd.(the“Company”),whichcomprisetheconsolidatedandtheCompany’sbalancesheetsasat31December2019,andtheconsolidatedandtheCompany’sincomestatements,theconsolidatedandtheCompany’sstatementsofchangesinequityandtheconsolidatedandtheCompany’sstatementsofcashflowsfortheyearthenended,andnotestothefinancialstatements.Inouropinion,theaccompanyingfinancialstatementspresentfairly,inallmaterialrespects,theconsolidatedandtheCompany’sfinancialpositionasat31December2019,andtheconsolidatedandtheCompany’sfinancialperformanceandcashflowsfortheyearthenendedinaccordancewithAccountingStandardsforBusinessEnterprises(“ASBEs”).

(II)Basisforopinion

WeconductedourauditinaccordancewithChinaStandardsonAuditing(“CSAs”).OurresponsibilitiesunderthosestandardsarefurtherdescribedintheAuditor’sresponsibilitiesfortheauditofthefinancialstatementssectionofourreport.WeareindependentoftheCompanyinaccordancewithChinaCodeofEthicsforCertifiedPublicAccountants(the“Code”),andwehavefulfilledourotherethicalresponsibilitiesinaccordancewiththeCode.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.

(III)Keyauditmatters

Keyauditmattersarethosemattersthat,inourprofessionaljudgement,wereofmostsignificanceinourauditofthefinancialstatementsofthecurrentperiod.Thesematterswereaddressedinthecontextofourauditofthefinancialstatementsasawhole,andinformingouropinionthereon,andwedonotprovideaseparateopiniononthesematters.Foreachmatterbelow,ourdescriptionofhowourauditaddressedthematterisprovidedinthatcontext.WehavefulfilledtheresponsibilitiesdescribedintheAuditor’sresponsibilitiesfortheauditofthefinancialstatementssectionofourreport,includinginrelationtothesematters.Accordingly,ourauditincludedtheperformanceofproceduresdesignedtorespondtoourassessmentoftherisksofmaterialmisstatementofthefinancialstatements.Theresultsofourauditprocedures,includingtheproceduresperformedtoaddressthemattersbelow,providethebasisforourauditopinionontheaccompanyingfinancialstatements.

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AUDITOR’SREPORT(Continued)

Ernst&YoungHuaMing(2020)ShenZiNo.61295118_H01

ChinaNationalAccordMedicinesCorporationLtd.

(III)Keyauditmatters(continued)

KeyauditmatterHowourauditaddressedthekeyauditmatter
Impairmentofgoodwill
ThecarryingvalueofgoodwillamountedtoRMB944,079,884.56asat31December2019andwasallocatedtotheCompany’scash-generatingunits(“CGUs”)ofpharmaceuticaldistributionandretailpharmacy.UnderASBEs,theCompanyisrequiredtoannuallyperformtheimpairmenttestforgoodwill.TheimpairmenttestisbasedontherecoverableamountoftherespectiveCGUstowhichthegoodwillisallocated.TherecoverableamountoftheCGUsisdeterminedbythehigherofthepresentvalueoftheforecastedfuturecashflowsandthefairvalueoftheassetnetofitsdisposalcost.Assumptionssuchastheforecastedfuturecashflowsanddiscountratearesetupbyapplyingestimatesandsignificantjudgementsbymanagement.Therefore,weconsideredthistobeakeyauditmatter.TheCompany’sdisclosuresaboutimpairmentofgoodwillareincludedinNoteIII(17,34)andNoteV(17)tothefinancialstatements.Theproceduresperformedinordertoaddressthismatterareasfollows:1)Weinvitedinternalevaluationexpertstoassistinevaluatingthegoodwillimpairmentmethodusedandforecastedfiguresusedintheimpairmenttest,especiallythediscountrateandperpetualgrowthrate.2)Weassessedtherationalityoftheforecastsusedwithrespecttofuturerevenuesandoperatingresults,alsocomparedtheforecastswiththehistoricalperformanceoftherespectiveCGUsandtheindustrytrends.Inparticular,were-examinedthefuturerevenuegrowthrate,projectedgrossrate,relatedexpensesandsoon.3)Wealsore-examinedthesufficiencyofdisclosureregardinggoodwill.

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AUDITOR’SREPORT(Continued)

Ernst&YoungHuaMing(2020)ShenZiNo.61295118_H01

ChinaNationalAccordMedicinesCorporationLtd.(III)Keyauditmatters(continued)

KeyauditmatterHowourauditaddressedthekeyauditmatter
Impairmentofaccountsreceivable
MajorclientsoftheCompanyaremedicalestablishments,pharmacychainstores,monomerdrugstores,communitymedicalservicecenters,downstreamdistributioncompanies,etc.Asat31December2019,theCompanyhadnetaccountsreceivableofRMB10,617,981,893.52,representing31.68%oftheGroup’stotalassets.AccordingtoASBE22–RecognitionandmeasurementofFinancialInstruments,managementutilizestheexpectedcreditlossmodeltomeasuretheimpairmentoffinancialassets.Management’sestimationoftheexpectedcreditlossmodelisbasedonthehistoricaldefaultrateoftheGroupandotherspecificfactorsincludingtypesofclient,agingoftheendingbalance,collectionhistory,write-offs,themigrationrateandestimatedweightedfinancingcost.Atthesametime,managementalsotakesintoconsiderationforward-lookinginformationincludingwhetherdisputesexist,theexpectedmacro-economicenvironment,etc.Duringtheyear,significantmanagementjudgementandestimateswereinvolvedduringtheclassificationofthecreditexposureportfolioandassessmentoftheexpectedcreditloss,andtherefore,weconsideredthistobeakeyauditmatter.TheCompany’sdisclosuresaboutimpairmentofaccountsreceivableareincludedinNoteIII(8,34)andNoteV(3)tothefinancialstatements.Theproceduresperformedinordertoaddressthismatterareasfollows:1)Were-examinedmanagement’sinternalcontrolthatrelatestoimpairmentofaccountsreceivable.2)Wediscussedthebaddebtpolicywithmanagementandevaluatedthesufficiencyofbaddebtprovisionincludingtheadequacyofthebaddebtprovisionassessmentmethod.3)Wediscussedwithmanagementregardingtherecoverabilityofindividuallysignificantaccountsreceivableforwhichprovisionforbaddebtsisrecognisedseparately.4)Wetestedtheagingofaccountsreceivable,includingatestofinformationsystemautomaticcontrolsrelatedtoinformationsystemautomatically-generatedaginganalysisandcarriedoutanalyticalreviewingproceduresfortheaginganalysisinordertoconfirmtheaccuracyofbasicdatausedbymanagementforbaddebtprovisionforaccountsreceivable.5)Wereviewedthecreditprofileandcarriedoutbackgroundcheckforsignificantclients.6)WereviewedandevaluatedthesufficiencyoftheGroup’sdisclosurerelatedtoaccountsreceivable.

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AUDITOR’SREPORT(Continued)

Ernst&YoungHuaMing(2020)ShenZiNo.61295118_H01

ChinaNationalAccordMedicinesCorporationLtd.

(IV)Otherinformation

ThemanagementoftheCompanyisresponsiblefortheotherinformation.Theotherinformationcomprisestheinformationincludedintheannualreport,otherthanthefinancialstatementsandourauditor’sreportthereon.Ouropiniononthefinancialstatementsdoesnotcovertheotherinformationandwedonotexpressanyformofassuranceconclusionthereon.Inconnectionwithourauditofthefinancialstatements,ourresponsibilityistoreadtheotherinformationand,indoingso,considerwhethertheotherinformationismateriallyinconsistentwiththefinancialstatementsorourknowledgeobtainedintheauditorotherwiseappearstobemateriallymisstated.If,basedontheworkwehaveperformed,weconcludethatthereisamaterialmisstatementofthisotherinformation,wearerequiredtoreportthatfact.Wehavenothingtoreportinthisregard.

(V)Responsibilitiesofthemanagementandthosechargedwithgovernanceforthefinancial

statements

ThemanagementoftheCompanyisresponsibleforthepreparationandfairpresentationofthefinancialstatementsinaccordancewithASBEs,andfordesigning,implementingandmaintainingsuchinternalcontrolasthemanagementdeterminesisnecessarytoenablethepreparationoffinancialstatementstobefreefrommaterialmisstatement,whetherduetofraudorerror.Inpreparingthefinancialstatements,managementisresponsibleforassessingtheCompany’sabilitytocontinueasagoingconcern,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofaccounting,unlessmanagementeitherintendstoliquidatetheCompanyortoceaseoperationsorhasnorealisticalternativebuttodoso.ThosechargedwithgovernanceareresponsibleforoverseeingtheCompany’sfinancialreportingprocess.

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AUDITOR’SREPORT(Continued)

Ernst&YoungHuaMing(2020)ShenZiNo.61295118_H01

ChinaNationalAccordMedicinesCorporationLtd.

(VI)Auditor’sresponsibilitiesfortheauditofthefinancialstatements

Ourobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefreefrommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditor’sreportthatincludesouropinion.Reasonableassuranceisahighlevelofassurance,butisnotaguaranteethatanauditconductedinaccordancewithCSAswillalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudorerrorandaregenerallyconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements.AspartofanauditinaccordancewithCSAs,weexerciseprofessionaljudgementandmaintainprofessionalscepticismthroughouttheaudit.Wealso:

(1)Identifyandassesstherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraud

orerror,designandperformauditproceduresresponsivetothoserisks,andobtainauditevidencethatissufficientandappropriatetoprovideabasisforouropinion.Theriskofnotdetectingamaterialmisstatementresultingfromfraudishigherthanforoneresultingfromerror,asfraudmayinvolvecollusion,forgery,intentionalomissions,misrepresentations,ortheoverrideofinternalcontrol.

(2)Obtainanunderstandingofinternalcontrolrelevanttotheauditinordertodesignauditprocedures

thatareappropriateinthecircumstances.

(3)Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccounting

estimatesandrelateddisclosuresmadebythemanagement.

(4)Concludeontheappropriatenessofmanagement’suseofthegoingconcernbasisofaccountingand,

basedontheauditevidenceobtained,whetheramaterialuncertaintyexistsrelatedtoeventsorconditionsthatmaycastsignificantdoubtontheCompany’sabilitytocontinueasagoingconcern.Ifweconcludethatamaterialuncertaintyexists,wearerequiredtodrawattentioninourauditor’sreporttotherelateddisclosuresinthefinancialstatementsor,ifsuchdisclosuresareinadequate,tomodifyouropinion.Ourconclusionsarebasedontheauditevidenceobtaineduptothedateofourauditor’sreport.However,futureeventsorconditionsmaycausetheCompanytoceasetocontinueasagoingconcern.

(5)Evaluatetheoverallpresentation,structureandcontentofthefinancialstatements,includingthe

disclosures,andwhetherthefinancialstatementsrepresenttheunderlyingtransactionsandeventsinamannerthatachievesfairpresentation.

(6)Obtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentitiesor

businessactivitieswithintheCompanytoexpressanopiniononthefinancialstatements.Weareresponsibleforthedirection,supervisionandperformanceofthegroupaudit.Weremainsolelyresponsibleforourauditopinion.

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AUDITOR’SREPORT(Continued)

Ernst&YoungHuaMing(2020)ShenZiNo.61295118_H01

ChinaNationalAccordMedicinesCorporationLtd.

(VI)Auditor’sresponsibilitiesfortheauditofthefinancialstatements(continued)

Wecommunicatewiththosechargedwithgovernanceregarding,amongothermatters,theplannedscopeandtimingoftheauditandsignificantauditfindings,includinganysignificantdeficienciesininternalcontrolthatweidentifyduringouraudit.Wealsoprovidethosechargedwithgovernancewithastatementthatwehavecompliedwithrelevantethicalrequirementsregardingindependenceandtocommunicatewiththemallrelationshipsandothermattersthatmayreasonablybethoughttobearonourindependence,andwhereapplicable,relatedsafeguards.Fromthematterscommunicatedwiththosechargedwithgovernance,wedeterminethosemattersthatwereofmostsignificanceintheauditofthefinancialstatementsofthecurrentperiodandarethereforethekeyauditmatters.Wedescribethesemattersinourauditor’sreportunlesslaworregulationprecludespublicdisclosureaboutthematterorwhen,inextremelyrarecircumstances,wedeterminethatamattershouldnotbecommunicatedinourreportbecausetheadverseconsequencesofdoingsowouldreasonablybeexpectedtooutweighthepublicinterestbenefitsofsuchcommunication.

Ernst&YoungHuaMingLLPChineseCertifiedPublicAccountant:LiJianGuang

(Engagementpartner)

ChineseCertifiedPublicAccountant:LiYuanFenBeijing,thePeople’sRepublicofChina20April2020

ImportantNoticeThisauditor’sreportisanEnglishtranslationoftheauditor’sreportfortheauditengagementswhichadoptCSAs.IncasetheEnglishversiondoesnotconformtotheChineseversion,theChineseversionprevails.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.CONSOLIDATEDBALANCESHEET31December2019ExpressedinRenminbiYuan

ASSETSNoteV31December201931December2018
Currentassets
Cashandbankbalances18,882,334,845.798,096,158,013.24
Notesreceivable2793,301,688.64789,536,654.23
Accountsreceivable310,617,981,893.529,336,861,647.92
Receivablesfinancing4446,342,588.46567,775,275.40
Advancestosuppliers5384,882,547.24583,484,515.95
Otherreceivables6477,988,244.98637,116,650.64
Inventories74,947,424,591.534,389,335,942.19
Othercurrentassets8102,198,564.3895,347,629.18
Totalcurrentassets26,652,454,964.5424,495,616,328.75
Non-currentassets
Long-termequityinvestments92,105,114,410.881,880,393,786.10
Otherequityinstrumentinvestment10116,021,000.0013,685,760.00
Othernon-currentfinancialassets11140,000,000.00140,000,000.00
Investmentproperties12138,900,358.30144,894,495.97
Fixedassets13612,599,944.11607,933,827.67
Constructioninprogress1431,582,575.8436,412,614.61
Right-of-useassets151,955,461,133.01-
Intangibleassets16319,946,727.04319,207,126.15
Goodwill17944,079,884.56833,547,800.60
Long-termprepaidexpenses18366,462,139.01311,328,706.46
Deferredtaxassets1960,631,015.9974,914,209.95
Othernon-currentassets2077,354,970.3972,365,863.71
Totalnon-currentassets6,868,154,159.134,434,684,191.22
Totalassets33,520,609,123.6728,930,300,519.97

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.CONSOLIDATEDBALANCESHEET(CONTINUED)31December2019ExpressedinRenminbiYuan

LIABILITIESANDSHAREHOLDERS’EQUITYNoteV31December201931December2018
Currentliabilities
Short-termborrowings221,453,018,300.012,608,626,099.82
Notespayable235,555,697,557.533,416,755,681.80
Accountspayable246,554,105,124.136,468,535,961.17
Contractliabilities25302,650,567.97255,590,612.37
Employeebenefitspayable26255,827,721.66231,866,407.40
Taxpayable27250,118,388.14241,980,412.72
Otherpayables281,756,858,461.021,528,424,590.29
Non-currentliabilitiesduewithinoneyear29601,427,093.625,861,324.37
Othercurrentliabilities30749,710.19292,465.75
Totalcurrentliabilities16,730,452,924.2714,757,933,555.69
Non-currentliabilities
Long-termborrowings31-31,638,984.25
Leaseliabilities321,182,407,085.08-
Long-termpayables33800,000.004,563,978.52
Long-termemployeebenefitspayable341,433,000.002,050,000.00
Deferredincome3588,704,272.8891,491,170.40
Deferredtaxliabilities1983,717,486.2867,605,161.88
Othernon-currentliabilities3673,256,514.9369,241,176.18
Totalnon-currentliabilities1,430,318,359.17266,590,471.23
Totalliabilities18,160,771,283.4415,024,524,026.92

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.CONSOLIDATEDBALANCESHEET(CONTINUED)31December2019ExpressedinRenminbiYuan

LIABILITIESANDSHAREHOLDERS’EQUITYNoteV31December201931December2018
Shareholders’equity
Sharecapital37428,126,983.00428,126,983.00
Capitalsurplus384,363,007,511.574,320,984,981.51
Othercomprehensiveincome3945,917,342.77-
Surplusreserves40214,063,491.50214,063,491.50
Retainedearnings417,755,295,537.086,655,257,147.27
Shareholders’equityattributabletoshareholdersoftheparent12,806,410,865.9211,618,432,603.28
Non-controllinginterests2,553,426,974.312,287,343,889.77
Totalshareholders’equity15,359,837,840.2313,905,776,493.05
Totalliabilitiesandshareholders’equity33,520,609,123.6728,930,300,519.97

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.Thefinancialstatementshavebeensignedby:

Legalrepresentative:Financialcontroller:HeadofAccountingDepartment:

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.CONSOLIDATEDINCOMESTATEMENTYearended31December2019ExpressedinRenminbiYuan

NoteV20192018
Operatingrevenue4252,045,764,143.2143,122,385,521.23
Less:Operatingcosts4246,292,408,840.5338,024,108,631.15
Taxesandsurcharges43136,293,695.54121,012,139.02
Sellingexpenses443,055,403,668.162,762,789,885.77
Administrativeexpenses45842,014,983.53783,338,308.19
Financecosts46119,972,954.7951,490,020.59
Including:Interestexpense271,718,934.85140,315,267.43
Interestincome139,842,489.1181,119,506.63
Add:Otherincome4743,413,430.4228,458,401.31
Investmentincome48246,185,242.97258,524,453.70
Including:Investmentincomefromassociates331,171,902.87319,903,890.47
Incomefromthederecognitionoffinancialassetsmeasuredatamortisedcost(86,377,492.55)(61,372,718.53)
Creditimpairmentlosses49(53,163,490.61)(298,479.55)
Impairmentlosses50(3,108,889.20)(2,744,605.36)
Gainondisposalofassets512,551,175.027,392,547.56
Operatingprofits1,835,547,469.261,670,978,854.17
Add:Non-operatingincome5225,586,916.1412,715,353.51
Less:Non-operatingexpenses534,476,248.904,764,850.15
Totalprofit1,856,658,136.501,678,929,357.53
Less:Incometaxexpenses56372,439,441.37330,498,245.68
Netprofit1,484,218,695.131,348,431,111.85
Netprofitclassifiedbycontinuingoperations
Profitorlossfromcontinuingoperations1,484,218,695.131,348,431,111.85
Netprofitclassifiedbyattributionofownership
Netprofitattributabletoownersoftheparent1,271,289,183.011,210,742,435.78
Non-controllinginterests212,929,512.12137,688,676.07
Othercomprehensiveincome,netoftax76,618,063.81-
Othercomprehensiveincome,netoftax,attributabletoownersoftheparent,3945,917,342.77-
Othercomprehensiveincomethatwillnotbereclassifiedtoprofitorloss
Changeinthefairvalueofotherequityinvestments46,050,708.96-
Othercomprehensiveincomethatmaybereclassifiedtoprofitorloss
Othercomprehensiveincomeusingtheequitymethodthatmaybereclassifiedtoprofitorloss(133,366.19)-
Othercomprehensiveincome,netoftax,attributabletonon-controllinginterests3930,700,721.04-
Totalcomprehensiveincome1,560,836,758.941,348,431,111.85

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.CONSOLIDATEDINCOMESTATEMENT(CONTINUED)Yearended31December2019ExpressedinRenminbiYuan

NoteV20192018
Totalcomprehensiveincome1,560,836,758.941,348,431,111.85
Including:
Totalcomprehensiveincomeattributabletoownersoftheparent1,317,206,525.781,210,742,435.78
Totalcomprehensiveincomeattributabletonon-controllinginterests243,630,233.16137,688,676.07
Earningspershare57
Basicearningspershare2.972.83
Dilutedearningspershare2.972.83

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.CONSOLIDATEDSTATEMENTOFCHANGESINSHAREHOLDERS’EQUITY

FortheYearended31December2018

(ExpressedinRenminbiYuan)

2019Attributabletoownersoftheparent
SharecapitalCapitalsurplusOthercomprehensiveincomeSurplusreservesRetainedearningsSubtotalNon-controllinginterestsTotalequity
Openingbalanceofthecurrentyear428,126,983.004,320,984,981.51-214,063,491.506,655,257,147.2711,618,432,603.282,287,343,889.7713,905,776,493.05
Movementsinthecurrentyear-42,022,530.0645,917,342.77-1,100,038,389.811,187,978,262.64266,083,084.541,454,061,347.18
(1)Totalcomprehensiveincome--45,917,342.77-1,271,289,183.011,317,206,525.78243,630,233.161,560,836,758.94
(2)Capitalpaidandreducedbyowners-42,022,530.06---42,022,530.0662,799,658.33104,822,188.39
1.Capitalinjectionbyowners------48,136,000.0048,136,000.00
2.Others-42,022,530.06---42,022,530.0614,663,658.3356,686,188.39
(3)Profitdistribution----(171,250,793.20)(171,250,793.20)(40,346,806.95)(211,597,600.15)
1.Distributiontoequityowners----(171,250,793.20)(171,250,793.20)(40,346,806.95)(211,597,600.15)
Closingbalanceofthecurrentyear428,126,983.004,363,007,511.5745,917,342.77214,063,491.507,755,295,537.0812,806,410,865.922,553,426,974.3115,359,837,840.23

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.CONSOLIDATEDSTATEMENTOFCHANGESINSHAREHOLDERS’EQUITY(Continued)

FortheYearended31December2018

(ExpressedinRenminbiYuan)

2018Attributabletoownersoftheparent
SharecapitalCapitalsurplusSurplusreservesRetainedearningsSubtotalNon-controllinginterestsTotalequity
Openingbalanceofthecurrentyear428,126,983.003,181,429,064.99214,063,491.505,572,952,806.399,396,572,345.88530,930,411.269,927,502,757.14
Movementsinthecurrentyear-1,139,555,916.52-1,082,304,340.882,221,860,257.401,756,413,478.513,978,273,735.91
(1)Totalcomprehensiveincome---1,210,742,435.781,210,742,435.78137,688,676.071,348,431,111.85
(2)Capitalpaidandreducedbyowners-1,139,555,916.52--1,139,555,916.521,679,926,889.172,819,482,805.69
1.Capitalinjectionbyowners-1,120,284,623.39--1,120,284,623.392,793,191,200.003,913,475,823.39
2.Others-19,271,293.13--19,271,293.13(1,113,264,310.83)(1,093,993,017.70)
(3)Profitdistribution---(128,438,094.90)(128,438,094.90)(61,202,086.73)(189,640,181.63)
1.Distributiontoequityowners---(128,438,094.90)(128,438,094.90)(61,202,086.73)(189,640,181.63)
Closingbalanceofthecurrentyear428,126,983.004,320,984,981.51214,063,491.506,655,257,147.2711,618,432,603.282,287,343,889.7713,905,776,493.05

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.CONSOLIDATEDSTATEMENTOFCASHFLOWSYearended31December2019ExpressedinRenminbiYuan

NoteV20192018

1.CASHFLOWSFROMOPERATINGACTIVITIESCashreceiptsfromthesaleofgoodsandthe

renderingofservices

Cashreceiptsfromthesaleofgoodsandtherenderingofservices55,803,880,635.8646,794,007,122.39
Receiptsoftaxesandsurchargesrefunds14,595,925.201,777,623.17
Othercashreceiptsrelatingtooperatingactivities58740,730,355.35679,596,722.04
Totalcashinflowsfromoperatingactivities56,559,206,916.4147,475,381,467.60
Cashpaymentsforgoodsandservices49,939,998,830.1941,436,895,750.53
Cashpaymentstoandonbehalfofemployees2,175,588,129.281,893,939,719.20
Paymentsofalltypesoftaxesandsurcharges1,270,243,180.501,096,228,714.78
Othercashpaymentsrelatingtooperatingactivities581,173,024,693.241,725,710,930.82
Totalcashoutflowsfromoperatingactivities54,558,854,833.2146,152,775,115.33
Netcashflowsfromoperatingactivities592,000,352,083.201,322,606,352.27

2.CASHFLOWSFROMINVESTINGACTIVITIESCashreceiptsfromreturnsofinvestments

Cashreceiptsfromreturnsofinvestments151,841,842.08131,401,264.72
Netcashreceivedfromdisposaloffixedassets,intangibleassetsandotherlong-termassets5,299,820.295,978,720.99
Netcashreceivedforacquisitionofsubsidiariesandotherbusinessunits59-2,468,522.33
Netcashreceiptsfromdisposalofsubsidiariesandotherbusinessunits59791,464.76-
Othercashreceiptsrelatingtoinvestingactivities583,188,480.0798,793,085.40
Totalcashinflowsfrominvestingactivities161,121,607.20238,641,593.44

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.CONSOLIDATEDSTATEMENTOFCASHFLOWSYearended31December2019ExpressedinRenminbiYuan

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.CONSOLIDATEDSTATEMENTOFCASHFLOWS(CONTINUED)Yearended31December2019ExpressedinRenminbiYuan

NoteV20192018

2.CASHFLOWSFROMINVESTINGACTIVITIES(Continued)

Cashpaymentstoacquirefixedassets,intangibleassets

andotherlong-termassets

Cashpaymentstoacquirefixedassets,intangibleassetsandotherlong-termassets245,167,920.77255,481,604.79
Cashpaymentsforinvestments56,001,023.17124,575,351.00
Netcashpaymentsforacquisitionofsubsidiariesandotherbusinessunits5997,801,928.16-
Othercashpaymentsrelatingtoinvestingactivities582,597,750.7481,042,904.53
Totalcashoutflowsfrominvestingactivities401,568,622.84461,099,860.32
Netcashflowsfrominvestingactivities(240,447,015.64)(222,458,266.88)

3.CASHFLOWSFROMFINANCINGACTIVITIESCashproceedsfrominvestmentsbyothers

Cashproceedsfrominvestmentsbyothers46,093,966.842,793,191,200.00
Including:Cashreceiptsfromcapitalcontributionsfromnon-controllinginterestsofsubsidiaries46,093,966.842,793,191,200.00
Cashreceiptsfromborrowings83,786,182.9686,231,834.83
Othercashreceiptsrelatingtofinancingactivities58249,305,768.12484,038,819.20
Totalcashinflowsfromfinancingactivities379,185,917.923,363,461,854.03
Cashrepaymentsfordebts99,846,808.4979,670,200.30
Cashpaymentsfordistributionofdividendsorprofitandinterestexpenses529,835,909.14340,534,805.52
Including:Dividendsorprofitpaidtonon-controllingshareholdersofsubsidiaries39,827,223.1066,702,208.88
Othercashpaymentsrelatingtofinancingactivities58718,672,829.8884,475,782.06
Totalcashoutflowsfromfinancingactivities1,348,355,547.51504,680,787.88
Netcashflowsfromfinancingactivities(969,169,629.59)2,858,781,066.15
4.EFFECTOFFOREIGNEXCHANGERATECHANGESONCASHANDCASHEQUIVALENTS(175,693.26)(310,822.25)
5.NETINCREASEINCASHANDCASHEQUIVALENTS790,559,744.713,958,618,329.29
Add:Cashandcashequivalentsatbeginningoftheyear7,632,117,020.773,673,498,691.48
6.CASHANDCASHEQUIVALENTSATENDOFYEAR598,422,676,765.487,632,117,020.77

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.COMPANYBALANCESHEET31December2019ExpressedinRenminbiYuan

ASSETSNoteXIV31December201931December2018
Currentassets
Cashandbankbalances2,909,417,289.711,821,351,681.34
Notesreceivable114,900,068.4234,154,774.75
Accountsreceivable2571,544,784.65631,236,593.94
Receivablesfinancing330,194,682.1129,716,205.64
Advancestosuppliers7,996,243.284,760,182.00
Otherreceivables41,928,941,595.381,538,283,800.17
Inventories169,422,075.78158,166,185.65
Othercurrentassets39,482.3839,482.38
Totalcurrentassets5,632,456,221.714,217,708,905.87
Non-currentassets
Long-termequityinvestments57,698,756,525.837,432,906,692.24
Othernon-currentfinancialassets140,000,000.00140,000,000.00
Investmentproperties1,484,198.561,955,854.46
Fixedassets14,763,656.6221,362,422.03
Right-of-useassets6,217,504.50-
Intangibleassets5,838,737.172,452,222.51
Long-termprepaidexpenses6,130,534.557,481,809.53
Deferredtaxassets9,327,850.53-
Othernon-currentassets9,000,000.007,000,000.00
Totalnon-currentassets7,891,519,007.767,613,159,000.77
Totalassets13,523,975,229.4711,830,867,906.64

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.COMPANYBALANCESHEET(CONTINUED)31December2019ExpressedinRenminbiYuan

LIABILITIESANDSHAREHOLDERS’EQUITY31December201931December2018
Currentliabilities
Short-termborrowings121,350,644.36539,000,000.00
Notespayable751,577,900.22252,317,800.78
Accountspayable322,436,681.01442,049,241.22
Contractliabilities7,293,184.464,182,083.40
Employeebenefitspayable30,469,777.8836,233,563.12
Taxpayables22,909,124.9013,426,601.90
Otherpayables2,120,794,765.051,481,778,872.31
Non-currentliabilitiesduewithinoneyear32,640,325.77-
Othercurrentliabilities338,196.81226,427.99
Totalcurrentliabilities3,409,810,600.462,769,214,590.72
Non-currentliabilities
Long-termborrowings-31,638,984.25
Leaseliabilities5,461,257.38-
Long-termpayables800,000.00800,000.00
Long-termemployeebenefitspayable-118,000.00
Deferredincome1,276,698.661,687,899.50
Deferredtaxliabilities-2,298,426.39
Totalnon-currentliabilities7,537,956.0436,543,310.14
Totalliabilities3,417,348,556.502,805,757,900.86

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.COMPANYBALANCESHEET(CONTINUED)31December2019ExpressedinRenminbiYuan

LIABILITIESANDSHAREHOLDERS’EQUITY31December201931December2018
Shareholders’equity
Sharecapital428,126,983.00428,126,983.00
Capitalsurplus4,468,385,307.324,426,362,777.26
Othercomprehensiveincome(133,366.19)-
Surplusreserves214,063,491.50214,063,491.50
Retainedearnings4,996,184,257.343,956,556,754.02
Totalshareholders’equity10,106,626,672.979,025,110,005.78
Totalliabilitiesandshareholders’equity13,523,975,229.4711,830,867,906.64

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.COMPANYINCOMESTATEMENTYearended31December2019ExpressedinRenminbiYuan

NoteXIV20192018
Operatingrevenue64,108,399,019.343,481,446,876.93
Less:Operatingcosts63,916,035,572.523,317,568,640.99
Taxesandsurcharges6,459,864.794,618,925.42
Sellingexpenses69,400,890.3261,120,258.01
Administrativeexpenses73,489,681.0977,784,120.97
Financecosts(64,025,013.54)(44,503,498.58)
Including:Interestexpense46,025,863.1641,179,105.37
Including:Interestincome111,805,557.7586,569,728.06
Add:Otherincome4,810,134.294,916,458.17
Investmentincome71,158,737,566.83702,555,982.30
Including:Investmentincomefromassociates353,856,432.16342,730,085.14
Incomefromthederecognitionoffinancialassetsmeasuredatamortisedcost(4,379,465.57)(1,688,557.15)
Creditimpairmentlosses(45,728,840.12)983,688.72
Impairmentlosses(371,833.95)(466,647.08)
Gainondisposalofassets155,014.0511,116.50
Operatingprofits1,224,640,065.26772,859,028.73
Add:Non-operatingincome741,954.1346,446.88
Less:Non-operatingexpenses280.00183,374.99
Totalprofit1,225,381,739.39772,722,100.62
Less:Incometaxexpenses14,503,442.8717,140,073.18
Netprofit1,210,878,296.52755,582,027.44
Including:Profitorlossfromcontinuingoperations1,210,878,296.52755,582,027.44
Othercomprehensiveincome,netoftax(133,366.19)-
Othercomprehensiveincomethatmaybereclassifiedtoprofitorloss
Othercomprehensiveincomeusingtheequitymethodthatmaybereclassifiedtoprofitorloss(133,366.19)-
Totalcomprehensiveincome1,210,744,930.33755,582,027.44

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.COMPANYSTATEMENTOFCHANGESINEQUITYYearended31December2019ExpressedinRenminbiYuan

2019SharecapitalCapitalsurplusOthercomprehensiveincomeSurplusreservesRetainedearningsTotalequity
Openingbalanceofthecurrentyear428,126,983.004,426,362,777.26-214,063,491.503,956,556,754.029,025,110,005.78
Movementsinthecurrentyear-42,022,530.06(133,366.19)-1,039,627,503.321,081,516,667.19
(1)Totalcomprehensiveincome--(133,366.19)-1,210,878,296.521,210,744,930.33
(2)Capitalpaidandreducedbyowners-42,022,530.06---42,022,530.06
1.Others-42,022,530.06---42,022,530.06
(3)Profitdistribution----(171,250,793.20)(171,250,793.20)
1.Distributiontoequityowners----(171,250,793.20)(171,250,793.20)
Closingbalanceofthecurrentyear428,126,983.004,468,385,307.32(133,366.19)214,063,491.504,996,184,257.3410,106,626,672.97

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.COMPANYSTATEMENTOFCHANGESINEQUITY(CONTINUED)Yearended31December2019ExpressedinRenminbiYuan

2018SharecapitalCapitalsurplusSurplusreservesRetainedearningsTotalequity
Openingbalanceofthecurrentyear428,126,983.004,407,091,484.13214,063,491.503,329,412,821.488,378,694,780.11
Movementsinthecurrentyear-19,271,293.13-627,143,932.54646,415,225.67
(1)Totalcomprehensiveincome---755,582,027.44755,582,027.44
(2)Capitalpaidandreducedbyowners-19,271,293.13--19,271,293.13
1.Others-19,271,293.13--19,271,293.13
(3)Profitdistribution---(128,438,094.90)(128,438,094.90)
1.Distributiontoequityowners---(128,438,094.90)(128,438,094.90)
Closingbalanceofthecurrentyear428,126,983.004,426,362,777.26214,063,491.503,956,556,754.029,025,110,005.78

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.COMPANYSTATEMENTOFCASHFLOWSYearended31December2019ExpressedinRenminbiYuan

20192018

1.CASHFLOWSFROMOPERATINGACTIVITIES

Cashreceiptsfromthesaleofgoodsandthe

renderingofservices

Cashreceiptsfromthesaleofgoodsandtherenderingofservices4,484,950,773.683,650,605,970.28
Othercashreceiptsrelatingtooperatingactivities55,105,150.55107,373,506.99
Totalcashinflowsfromoperatingactivities4,540,055,924.233,757,979,477.27
Cashpaymentsforgoodsandservices4,272,419,447.943,406,447,268.87
Cashpaymentstoandonbehalfofemployees90,592,261.0879,402,008.01
Paymentsofalltypesoftaxesandsurcharges56,746,556.8836,195,123.57
Othercashpaymentsrelatingtooperatingactivities36,680,891.3455,863,168.11
Totalcashoutflowsfromoperatingactivities4,456,439,157.243,577,907,568.56
Netcashflowsfromoperatingactivities83,616,766.99180,071,908.71

2.CASHFLOWSFROMINVESTINGACTIVITIESCashreceiptsfromreturnsofinvestments

Cashreceiptsfromreturnsofinvestments958,057,018.50525,074,396.36
Netcashreceiptsfromdisposaloffixedassets,intangibleassetsandotherlong-termassets3,961,383.0044,700.00
Othercashreceiptsrelatingtoinvestingactivities2,293,944,952.051,574,115,586.01
Totalcashinflowsfrominvestingactivities3,255,963,353.552,099,234,682.37
Cashpaidforacquisitionoffixedassets,intangibleassetsandotherlong-termassets11,264,989.9011,649,093.77
Cashpaymentsforinvestments19,998,000.0090,000,000.00
Othercashpaymentsrelatingtoinvestingactivities2,669,650,683.281,749,321,606.82
Totalcashoutflowsfrominvestingactivities2,700,913,673.181,850,970,700.59
Netcashflowsfrominvestingactivities555,049,680.37248,263,981.78

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.

CASHFLOWSTATEMENT(Continued)FortheYearended31December2016

(ExpressedinRenminbinYuan)

20192018

3.CASHFLOWSFROMFINANCINGACTIVITIESCashreceiptsfromborrowings

Cashreceiptsfromborrowings10,000,000.0010,000,000.00
Othercashreceiptsrelatingtofinancingactivities26,701,067,083.6117,388,748,779.90
Totalcashinflowsfromfinancingactivities26,711,067,083.6117,398,748,779.90
Cashrepaymentsfordebts10,000,000.0010,000,000.00
Cashpaymentsfordistributionofdividends,profitorinterestexpenses210,404,986.68161,361,930.89
Othercashpaymentsrelatingtofinancingactivities26,052,473,492.6617,614,453,662.11
Totalcashoutflowsfromfinancingactivities26,272,878,479.3417,785,815,593.00
Netcashflowsfromfinancingactivities438,188,604.27(387,066,813.10)
4.EFFECTOFFOREIGNEXCHANGERATECHANGESONCASHANDCASHEQUIVALENTS(175,693.26)(310,822.25)
5.NETINCREASEINCASHANDCASHEQUIVALENTS1,076,679,358.3740,958,255.14
Add:Cashandcashequivalentsatbeginningoftheyear1,817,654,598.011,776,696,342.87
6.CASHANDCASHEQUIVALENTSATENDOFYEAR2,894,333,956.381,817,654,598.01

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.

CASHFLOWSTATEMENT(Continued)FortheYearended31December2016(ExpressedinRenminbinYuan)

Theaccompanyingnotesformanintegralpartofthesefinancialstatements.

CHINANATIONALACCORDMEDICINESCORPORATIONLTD.NOTESTOFINANCIALSTATEMENTSYearended31December2019ExpressedinRenminbiYuan

IProfileoftheCompany

AsapprovedbythePeople’sGovernmentofShenzhen(SFBF(1993)No.356),ChinaNationalAccordMedicinesCorporationLtd.(hereinafterreferredtoasthe“theCompany”),formerlyknownasShenzhenHealthMineralWaterCorp.,Ltd.,wasregisteredasajointstockliabilitylimitedcompanyon1February1993throughstocktransformation.InMarch1993,withtheapprovalfromtheShenzhenBranchofthePeople’sBankofChina,theCompanyissued30millionAshares(including16.5millionpublicshares,3.5millionemployeesharesand10millioncorporationshares)and20millionBshares.Afterthisissuance,theCompany’ssharecapitalwasRMB105.00million.Throughconvertingcapitalsurplusintosharecapital,bonusissuesandissuanceofsharesforyears,thesharecapitaloftheCompanyincreasedto428.13millionasat31December2019.InNovember2000,theCompanyenteredintoanAssetExchangeAgreementwithShenzhenInvestmentManagementCompany,theoriginalmajorshareholderoftheCompany,toexchangealltheassetsandliabilitiesoftheCompanyasof31August2000forShenzhenInvestmentManagementCompany’s100%equityinterestsin11pharmaceuticalcompaniesandcertainpropertiesaswellas51%equityinterestsinShenzhenTefaModernComputerCo.,Ltd.TheaboveassetexchangeproposalwasapprovedbyshareholdersintheSecondExtraordinaryGeneralMeetingon29December2000.Thetransactionwascompletedon8January2001.On18February2004,theCompany’soriginalmajorshareholder,ShenzhenInvestmentManagementCompany,enteredintoastocktransferagreementwithSinopharmGroupCo.,Ltd.(hereinafterreferredtoas“SinopharmGroup”)totransferits43.33%sharesintheCompanytoSinopharmGroup.Thelegalproceduresoftheaboveequitytransferwerecompletedon9December2004.Atthesametime,asapprovedbytheState-ownedAssetsSupervisionandAdministrationCommissionoftheStateCouncil(GZCQ(2004)No.525)andtheChinaSecuritiesRegulatoryCommission(ZJGSZ(2004)No.94),thenatureoftheseshareschangedfromstate-ownedstocktostate-ownedlegalentitystockandSinopharmGroupbecamethelargestshareholderoftheCompany.On14April2006,theCompany’sproposalonreformationofsegregatedstockswasapproved.TogainliquidityfortherestrictedstocksoftheCompany,theholdersoftherestrictedstocksoftheCompanyagreedtopaythefollowingconsideration:basedonthestockregistrationasof27April2006,theCompanyissuedbonusshareson28April2006attheratioof3sharestoevery10AsharestoliquidatedA-shareholderswhichwentpubliconthesameday.Afterthisbonusissue,thetotalnumberofsharesoftheCompanyremainedunchangedwithcorrespondingchangesinthecompositionofshareholdings.On14March2014,theCompanyissued74,482,543ordinaryshares(Ashares)throughthenon-publicoffering.TheparvaluepershareisRMB1.00yuan.Thesharesshallnotbetransferredwithin36monthssincetheissuedate.ThetotalnumberofsharesoftheCompanywas362,631,943sincethedateofissue.

IProfileoftheCompany(Continued)

TheCompanyacquiredthecompaniesundercommoncontrol,includingSinopharmHoldingGuodaPharmacyCo.,Ltd.(“GuodaPharmacy”),FoshanNanhaiMedicineGroupCo.,Ltd.(“FoshanNanhai”),GuangdongSouthPharmaceuticalForeignTradeCo.,Ltd.(“SouthPharma&Trade”)andGuangdongDongFangUptodate&SpecialMedicinesCo.,Ltd.(“GuangdongUptodate&SpecialMedicines”)byissuingsharesandraisedsupportingfundsbyissuingsharestoPingAnAssetManagementCo.,Ltd.toacquirethenon-controllinginterestofSouthPharma&Trade.Therelevantsharesweresuccessfullyissuedandlistedon5January2017.Afterwards,thetotalnumberofsharesoftheCompanyincreasedto428,126,983.Asof31December2019,thetotalsharecapitalwas428,126,983.TheCompanyisregisteredwithShenzhenAdministrationforIndustry&Commerce.ItsUniformSocialCreditCodeis91440300192186267U.TheoperationperiodoftheCompanyisfrom2August1986tothelongterm.TheregisteredcapitaloftheCompanyisRMB428.13million.ThelegalrepresentativeoftheCompanyisLinZhaoxiong.TheapprovedscopeofbusinessoftheCompanyanditssubsidiaries(together“theGroup”)includes:thewholesaleofChineseherbalslices,traditionalChinesemedicinepreparations,bulkpharmaceuticaldrugs,chemicalpreparations,bulkantibioticdrugs,antibioticpreparations,biochemicaldrugs,biologicalproducts(includingvaccinesandinvitrodiagnosticreagentspsychotropicdrugsandpreparations,narcoticdrugs,toxicdrugsformedicaluse,proteinassimilationpreparationandpeptidehormones;tradingofdietarysupplements;industrialinvestmentholding;domestictrade;materialsupplyandthemarketingindustry(otherthanspeciallicensing);thesaleofambulances;tradingofsecond-classandthird-classmedicalequipment;projectinvestment;propertymanagementandleasingofself-ownedproperties;pharmacovigilanceandmedicalinformationconsulting;parkingoperation;logisticsandrelatedservices;thepackageagencybusiness;logisticdesign;importandexportservices(excludingprojectsthatareprohibitedbythecountry;andlimitedprojectshavetobeapprovedbeforeoperating).SubsidiariesconsolidatedinthefinancialstatementsforthecurrentyearandchangeintheconsolidationscopeareshowninNoteVI.TheGroup’sparentandultimateparentcompaniesareSinopharmGroupandChinaNationalPharmaceuticalGroupCorporation(“CNPGC”),respectively.ThesefinancialstatementswereauthorizedforissuebytheboardofdirectorsoftheCompanyon20April2020.

IIBasisofpreparation

ThefinancialstatementswerepreparedinaccordancewiththeBasicStandardandspecificstandardsofAccountingStandardsforBusinessEnterprisesissuedbytheMinistryofFinanceandthespecificaccountingstandards,applicationguidance,interpretationandotherrelevantregulationsissuedoramendedthereafter(hereaftercollectivelyreferredtoas“AccountingStandardsforBusinessEnterprises”or“CAS”).Thesefinancialstatementsarepreparedonagoingconcernbasis.Exceptforcertainfinancialinstruments,thefinancialstatementshavebeenpreparedusingthehistoricalcostastheprincipleofmeasurement.Whereassetsareimpaired,provisionsforassetimpairmentaremadeinaccordancewiththerelevantrequirements.IIISummaryofsignificantaccountingpoliciesandaccountingestimates

TheGroupdeterminesthespecificaccountingpoliciesandestimatesbasedonitsfeaturesofproductionandoperation,primarilycomprisingthemethodsofprovisionforexpectedcreditlossesonreceivables,valuationofinventories,depreciationoffixedassetsandamortisationofintangibleassets,themeasurementmodelofinvestmentproperties,recognitionandmeasurementofrevenue,etc.

1.StatementofcompliancewithAccountingStandardsforBusinessEnterprises

ThefinancialstatementspresenttrulyandcompletelythefinancialpositionsoftheGroupandtheCompanyasat31December2019,andthefinancialperformanceandthecashflowsfortheyearthenendedinaccordancewithAccountingStandardsforBusinessEnterprises.

2.Accountingyear

TheGroup’saccountingyearbeginson1Januaryandendson31December.

3.Functionalcurrency

ThefunctionalcurrencyisRenminbi.TheCompany’sfunctionalandpresentationcurrencyisRenminbi(RMB).ThecurrencyunitisRMBYuanunlessotherwisestated.

4.Businesscombinations

Businesscombinationsareclassifiedintobusinesscombinationsinvolvingentitiesundercommoncontrolandbusinesscombinationsnotinvolvingentitiesundercommoncontrol.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

4.Businesscombinations(Continued)(a)Businesscombinationsinvolvingentitiesundercommoncontrol

Abusinesscombinationinvolvingentitiesundercommoncontrolisabusinesscombinationinwhichallofthecombiningentitiesareultimatelycontrolledbythesamepartyorpartiesbothbeforeandafterthecombination,andthatcontrolisnottransitory.Inabusinesscombinationinvolvingentitiesundercommoncontrol,theentitythat,atthecombinationdate,obtainscontrolofanothercombiningentityistheabsorbingentity,whilethatothercombiningentityistheentitybeingabsorbed.Thecombinationdateisthedateonwhichtheabsorbingentityeffectivelyobtainscontrolontheentitybeingabsorbed.Assetsandliabilities(includinggoodwillarisingfromtheultimatecontrollingshareholder’sacquisitionofthepartybeingabsorbed)thatareobtainedbytheabsorbingpartyinabusinesscombinationshallbemeasuredattheircarryingamountsatthecombinationdateasrecordedbythepartybeingabsorbed.Thedifferencebetweenthecarryingamountofthenetassetsobtainedandthecarryingamountoftheconsiderationpaidforthecombination(ortheaggregatefacevalueofsharesissuedasconsideration)shallbeadjustedtosharepremiumundercapitalsurplus.Ifthecapitalsurplusisnotsufficienttoabsorbthedifference,anyexcessshallbeadjustedagainstretainedearnings.(b)Businesscombinationsinvolvingenterprisesnotundercommoncontrol

Abusinesscombinationnotinvolvingentitiesundercommoncontrolisabusinesscombinationinwhichallofthecombiningentitiesarenotultimatelycontrolledbythesamepartyorpartiesbothbeforeandafterthecombination.Inabusinesscombinationnotinvolvingentitiesundercommoncontrol,theentitythat,ontheacquisitiondate,obtainscontrolofanothercombiningentityistheacquirer,whilethatothercombiningentityistheacquiree.Theacquisitiondateisthedateonwhichtheacquirereffectivelyobtainscontroloftheacquiree.Thecostofcombinationandidentifiablenetassetsobtainedbytheacquirerinabusinesscombinationaremeasuredatfairvalueattheacquisitiondate.Goodwillisinitiallyrecognisedandmeasuredatcost,beingtheexcessoftheaggregateofthefairvalueoftheconsiderationtransferred(orthefairvalueoftheequitysecuritiesissued)andanyfairvalueoftheGroup’spreviouslyheldequityinterestintheacquireeovertheGroup’sinterestinthefairvalueoftheacquiree’snetidentifiableassets.Afterinitialrecognition,goodwillismeasuredatcostlessanyaccumulatedimpairmentlosses.Wheretheaggregateofthefairvalueoftheconsiderationtransferred(orthefairvalueoftheequitysecuritiesissued)andanyfairvalueoftheGroup’spreviouslyheldequityinterestintheacquireeislowerthantheGroup’sinterestinthefairvalueoftheacquiree’snetidentifiableassets,theGroupreassessesthemeasurementofthefairvalueoftheacquiree’sidentifiableassets,liabilitiesandcontingentliabilitiesandthefairvalueoftheconsiderationtransferred(orthefairvalueoftheequitysecuritiesissued),togetherwiththefairvalueoftheGroup’spreviouslyheldequityinterestintheacquiree.Ifafterthatreassessment,theaggregateofthefairvalueoftheconsiderationtransferred(orthefairvalueoftheequitysecuritiesissued)andtheGroup’spreviouslyheldequityinterestintheacquireeisstilllowerthantheGroup’sinterestinthefairvalueoftheacquiree’snetidentifiableassets,theGrouprecognisestheremainingdifferenceinprofitorloss.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

4.Businesscombinations(Continued)(b)Businesscombinationsinvolvingenterprisesnotundercommoncontrol(Continued)

Wherethebusinesscombinationnotinvolvingenterprisesundercommoncontrolisachievedinstages,theacquirer’spreviouslyheldequityinterestsintheacquireeareremeasuredatthefairvalueontheacquisitiondate,withthedifferencebetweenthefairvalueandcarryingamountrecognisedasinvestmentincomeforthecurrentperiod.Iftheacquirer’spreviouslyheldequityinterestsoftheacquireeinvolveothercomprehensiveincome(“OCI”)undertheequitymethod,theaccountingtreatmentisconductedonthesamebasisaswouldhavebeenrequirediftheinvesteehaddirectlydisposedoftherelatedassetsorliabilities,andthechangesinshareholders’equityotherthannetprofitorloss,OCIandprofitdistributionsarechargedtoprofitorlossforthecurrentperiodontheacquisitiondate.ForfinancialassetsatfairvaluethroughOCIheldbeforetheacquisitiondate,changesinfairvaluethatwereaccumulatedthroughOCIwilltransfertoretainedearnings.

5.Preparationofconsolidatedfinancialstatements

Thescopeoftheconsolidatedfinancialstatements,whichincludethefinancialstatementsoftheCompanyandallofitssubsidiaries,isdeterminedonthebasisofcontrol.AsubsidiaryisanentitythatiscontrolledbytheCompany(suchasanenterprise,adeemedseparateentity,orastructuredentitycontrolledbytheCompany).Inthepreparationoftheconsolidatedfinancialstatements,thefinancialstatementsofsubsidiariesarepreparedforthesameaccountingyearastheCompany,usingconsistentaccountingpolicies.Allintra-groupassetsandliabilities,equity,income,expensesandcashflowsrelatingtotransactionsbetweenmembersoftheGroupareeliminatedinfullonconsolidation.Wherethelossforthecurrentperiodattributabletonon-controllinginterestsofasubsidiaryexceedsthenon-controllinginterestsoftheopeningbalanceofequityofthesubsidiary,theexcessshallstillbeallocatedagainstthenon-controllinginterests.Forsubsidiariesacquiredthroughbusinesscombinationsnotinvolvingentitiesundercommoncontrol,thefinancialperformanceandcashflowsoftheacquireeshallbeconsolidatedfromthedateonwhichtheGroupobtainscontrol,andcontinuetobeconsolidateduntilthedatesuchcontrolceases.Whilepreparingtheconsolidatedfinancialstatements,theGroupshalladjustthesubsidiary’sfinancialstatements,onthebasisofthefairvaluesoftheidentifiableassets,liabilitiesandcontingentliabilitiesrecognisedontheacquisitiondate.Forsubsidiariesacquiredthroughbusinesscombinationsinvolvingentitiesundercommoncontrol,thefinancialperformanceandcashflowsoftheentitybeingabsorbedshallbeconsolidatedfromthebeginningoftheperiodinwhichthecombinationoccurs.Whilepreparingthecomparativefinancialstatements,adjustmentsaremadetorelateditemsinthefinancialstatementsforthepriorperiodasifthereportingentityafterthecombinationhasbeeninexistencesincethedatetheultimatecontrollingpartyfirstobtainedthecontrol.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

5.Preparationofconsolidatedfinancialstatements(Continued)

TheGroupreassesseswhetherornotitcontrolsaninvesteeifanychangeinfactsandcircumstancesindicatesthattherearechangestooneormoreofthethreeelementsofcontrol.WhentheGrouplosescontrolofasubsidiaryinmultipletransactionsinwhichitdisposesofitslong-termequityinvestmentinthesubsidiaryinstages,ifeachofthemultipletransactionsdoesnotformpartofabundledtransaction,thetransactionsconductedbeforethelossofcontrolofthesubsidiaryareaccountedforinaccordancewiththeaccountingpolicyforpartialdisposaloftheequityinvestmentinsubsidiarieswherecontrolisretained.Ifeachofthemultipletransactionsformspartofabundledtransactionwhicheventuallyresultsinthelossofcontrolinthesubsidiary,thesemultipletransactionsareaccountedforasasingletransaction.Intheconsolidatedfinancialstatements,thedifferencebetweentheconsiderationreceivedandthecorrespondingproportionofthesubsidiary’snetassets(calculatedcontinuouslyfromtheacquisitiondate)ineachtransactionpriortothelossofcontrolshallberecognisedinothercomprehensiveincomeandtransferredtoprofitorlosswhentheparenteventuallylosescontrolofthesubsidiary.

6.Cashandcashequivalents

CashcomprisestheGroup’scashonhandandbankdepositsthatcanbereadilywithdrawnondemand.Cashequivalentsareshort-term,highlyliquidinvestmentsthatarereadilyconvertibleintoknownamountsofcash,andaresubjecttoaninsignificantriskofchangesinvalue.

7.Foreigncurrencytranslation

ForeigncurrencytransactionsaretranslatedintoRMBusingtheexchangeratesprevailingatthedatesofthetransactions.Atthebalancesheetdate,monetaryitemsdenominatedinforeigncurrenciesaretranslatedintoRMBusingthespotexchangeratesonthebalancesheetdate.Exchangedifferencesarisingfromthesetranslationsarerecognisedinprofitorlossforthecurrentperiod,exceptforthoseattributabletoforeigncurrencyborrowingsthathavebeentakenoutspecificallyfortheacquisitionorconstructionofqualifyingassets,whicharecapitalizedaspartofthecostofthoseassets.Non-monetaryitemsdenominatedinforeigncurrenciesthataremeasuredathistoricalcostaretranslatedatthebalancesheetdateusingthespotexchangeratesatthedatesofthetransactions.Foreigncurrencycashflowsaretranslatedusingthespotexchangeratesprevailingonthedatesofcashflows.Theeffectofexchangeratechangesoncashispresentedseparatelyinthecashflowstatement.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

8.Financialinstruments

Financialinstrumentsarethecontractsthatformedthefinancialassetsofoneentity,andatthesametimeformedthefinancialliabilitiesorequityinstrumentsofotherentities.RecognitionandderecognitionoffinancialinstrumentsFinancialassetsandfinancialliabilitiesarerecognisedwhentheGroupbecomesapartytothecontractualprovisionsoftheinstrument.TheGroupderecognisesafinancialasset,partofafinancialassetorgroupoffinancialassets,i.e.,offsetfromtheaccountsandstatementoffinancialposition,ifeitherofthefollowingconditionsissatisfied:

(1)Thecontractualrightstothecashflowsfromthefinancialassetexpire;or

(2)Thecontractualrightstothecashflowsfromthefinancialassetaretransferredout,orobligated

totransferoutallgeneratedcashflowsonreceipt;and(a)substantiallyalltherisksandrewardsofownershipofthefinancialassetaretransferredtothetransferee;or(b)theGroupneithertransfersnorretainssubstantiallyalltherisksandrewardsofownershipofthefinancialasset,buthasnotretainedcontrolofthefinancialasset.Afinancialliabilityisderecognisedwhentheobligationundertheliabilityisdischargedorcancelled,orexpires.Whenanexistingfinancialliabilityisreplacedbyanotherfromthesamelenderonsubstantiallydifferentterms,orthetermsofanexistingliabilityaresubstantiallymodified,suchanexchangeormodificationistreatedasaderecognitionoftheoriginalliabilityandarecognitionofanewliability,andthedifferencebetweentherespectivecarryingamountsisrecognisedinprofitorloss.Regularwaypurchasesandsalesoffinancialassetsarerecognisedandderecognisedusingtradedateaccounting.Regularwaypurchasesorsalesarepurchasesorsalesoffinancialassetsthatrequiredeliverywithintheperiodgenerallyestablishedbyregulationorconventioninthemarketplace.ThetradedateisthedatethattheGroupcommittedtopurchaseorsellafinancialasset.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

8.Financialinstruments(Continued)

ClassificationandmeasurementoffinancialassetsTheclassificationoffinancialassetsatinitialrecognitiondependsonthefinancialasset’scontractualcashflowcharacteristicsandtheGroup’sbusinessmodelformanagingthem:

financialassetsatfairvaluethroughprofitorloss,financialassetsatamortisedcost,orfinancialassetsatfairvaluethroughothercomprehensiveincome,accordingtotheGroup’sbusinessmodelformanagingfinancialassetsandthecontractcashflowcharacteristicsofthefinancialassets.Financialassetsaremeasuredatfairvalueatinitialrecognition,providedthataccountsreceivableorbillsreceivablenotcontainingsignificantfinancingcomponentsorforwhichfinancingcomponentsofnotmorethan1yeararenottakenintoconsiderationshallbemeasuredattheirtransactionpricesatinitialrecognition.Forfinancialassetsatfairvaluethroughprofitorloss,therelevanttransactioncostsaredirectlyrecognisedinprofitorloss;whileforotherfinancialassets,therelevanttransactioncostsarerecognisedintheirinitialrecognitionamount.Thesubsequentmeasurementoffinancialassetsdependsontheirclassificationasfollows:

DebtinvestmentsmeasuredatamortisedcostTheGroupmeasuresfinancialassetsatamortizedcostifbothofthefollowingconditionsaremet:Thefinancialassetisheldwithinabusinessmodelwiththeobjectivetoholdfinancialassetsinordertocollectcontractualcashflows;Thecontractualtermsofthefinancialassetgiveriseonspecifieddatestocashflowsthataresolelypaymentsofprincipalandinterestontheprincipalamountoutstanding.Interestincomeofthiskindoffinancialassetsisrecognisedusingtheeffectiveinterestmethod.Gainsandlossesarerecognisedintheincomestatementwhentheassetisderecognised,modifiedorimpaired.DebtinvestmentsatfairvaluethroughothercomprehensiveincomeTheGroupmeasuresdebtinvestmentsatfairvaluethroughothercomprehensiveincomeifbothofthefollowingconditionsaremet:thefinancialassetisheldwithinabusinessmodelwiththeobjectiveofbothholdingtocollectcontractualcashflowsandselling;thecontractualtermsofthefinancialassetgiveriseonspecifieddatestocashflowsthataresolelypaymentsofprincipalandinterestontheprincipalamountoutstanding.Changesinfairvaluesarerecognisedinothercomprehensiveincomeexceptthatinterestincome,impairmentlossesandexchangedifferencesarerecognisedincurrentprofitorloss.Uponderecognition,thecumulativefairvaluechangerecognisedinothercomprehensiveincomeistransferredtoprofitorloss.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

8.Financialinstruments(Continued)

Classificationandmeasurementoffinancialassets(Continued)EquityinvestmentsatfairvaluethroughothercomprehensiveincomeTheGroupirrevocablychoosestodesignatesomenon-tradableequityinstrumentinvestmentsasfinancialassetsatfairvaluethroughothercomprehensiveincome.Onlytherelevantdividendincome(excludingdividendincomeexplicitlyrecoveredaspartofinvestmentcost)isrecognisedinprofitorloss,andsubsequentchangesinfairvalueareincludedinothercomprehensiveincomewithoutprovisionforimpairment.Whenfinancialassetsarederecognised,theaccumulatedgainsorlossespreviouslyrecognisedinothercomprehensivegainsaretransferredfromothercomprehensiveincomeandrecognisedinretainedearnings.FinancialassetsatfairvaluethroughprofitorlossThefinancialassetsotherthantheabovefinancialassetsmeasuredatamortisedcostandfinancialassetsatfairvaluethroughothercomprehensiveincomeareclassifiedasfinancialassetsatfairvaluethroughprofitorloss.Suchfinancialassetsaresubsequentlymeasuredatfairvaluewithnetchangesinfairvaluerecognisedinprofitorlossexceptforthederivativesdesignatedashedginginstrumentsinaneffectivehedge.Onlywhenanaccountingmismatchiseliminatedorsignificantlydecreased,financialassetsaredesignatedasfinancialassetsatfairvaluethroughprofitorlossatinitialrecognition.Whenanenterpriseinitiallydesignatesafinancialassetasafinancialassetatfairvaluethroughprofitorloss,itcannotbereclassifiedtootherfinancialassets;andotherfinancialassetscannotbere-designatedafterinitialrecognitionasfinancialassetsmeasuredatfairvaluethroughprofitorloss.ClassificationandmeasurementoffinancialliabilitiesTheGroup’sfinancialliabilitiesare,oninitialrecognition,classifiedintofinancialliabilitiesatfairvaluethroughprofitorloss,otherfinancialliabilitiesorderivativesdesignatedaseffectivehedginginstruments.Forfinancialliabilitiesatfairvaluethroughprofitorloss,therelevanttransactioncostsaredirectlyrecognisedinprofitorloss,andtherelatedtransactioncostsofotherfinancialliabilitiesarerecognisedintheirinitialamount.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

8.Financialinstruments(Continued)

Classificationandmeasurementoffinancialliabilities(Continued)Subsequentmeasurementoffinancialliabilitiesisdeterminedbyitsclassification:

FinancialliabilitiesatfairvaluethroughprofitorlossFinancialliabilitiesatfairvaluethroughprofitorlossincludefinancialliabilitiesheldfortrading(includingderivativeinstrumentsattributabletofinancialliabilities)andfinancialliabilitiesdesignateduponinitialrecognitionasatfairvaluethroughprofitorloss.Financialliabilitiesheldfortrading(includingderivativeinstrumentsattributabletofinancialliabilities)aresubsequentlymeasuredatfairvalue.Allchangesinfairvalueofsuchfinancialliabilitiesarerecognisedinprofitorloss.Financialliabilitiesdesignatedatfairvaluethroughprofitorlossaresubsequentlymeasuredatfairvalueandgainsorlossesarerecognisedinprofitorloss,exceptforthegainsorlossesarisingfromtheGroup’sowncreditriskwhicharepresentedinothercomprehensiveincome.IfgainsorlossesarisingfromtheGroup’sowncreditriskwhicharepresentedinothercomprehensiveincomewillleadtoorexpandaccountingmismatchinprofitorloss,theGroupwillincludeallthechangesinfairvalue(includingtheamountaffectedbychangesintheGroup’sowncreditrisk)ofsuchfinancialliabilitiesinprofitorloss.Onlyifoneofthefollowingconditionsismetcanfinancialliabilitiesbedesignatedasfinancialliabilitiesatfairvaluethroughprofitorlossoninitialrecognition:

(1)Itcaneliminateorsignificantlyreducetheaccountingmismatch.

(2)Theformalwrittendocumentoftheriskmanagementorinvestmentstrategyhasstatedthattheportfoliooffinancialinstrumentsismanaged,evaluatedandreportedtokeymanagersonthebasisoffairvalue.

(3)Thefinancialliabilityisahybridinstrumentthatcontainsoneormoreembeddedderivatives,

unlesstheembeddedderivativeshavenosignificantchangeinthecashflowsofthehybridinstrument,ortheembeddedderivativesshouldobviouslynotbeseparatedfromtherelatedhybridinstruments.

(4)Mixedinstrumentscontainembeddedderivativesthatneedtobesplitbutcannotbe

measuredseparatelyatthetimeofacquisitionoronsubsequentbalancesheetdays.Whenanenterprisedesignatesafinancialliabilityasafinancialliabilityatfairvaluethroughprofitorloss,itcannotbereclassifiedasotherfinancialliabilities;norcanotherfinancialliabilitiesbere-designatedasfinancialliabilitiesatfairvaluethroughprofitorlossafterinitialrecognition.OtherfinancialliabilitiesForsuchfinancialliabilities,subsequentmeasurementismadeatamortizedcostusingtheeffectiveinterestratemethod.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

8.Financialinstruments(Continued)

ImpairmentoffinancialassetsBasedontheexpectedcreditlosses(“ECLs”),theGrouprecognisesanallowanceforECLsforthefinancialassetsmeasuredatamortisedcost,debtinvestmentsatfairvaluethroughothercomprehensiveincomeandcontractassets.Foraccountsreceivableandcontractassetsthatdonotcontainsignificantfinancingcomponents,theGroupusesasimplifiedmeasurementmethodtomeasurelossprovisionsinaccordancewiththeamountofexpectedcreditlossesequivalenttotheentirelifecycle.Foraccountsreceivableandcontractassetswithsignificantfinancingcomponents,theGroupusesasimplifiedmeasurementmethodtomeasurelossprovisionsinaccordancewiththeamountoftheexpectedcreditlossequivalenttotheentirelifetime.Forfinancialassetsotherthanthosemeasuredwithsimplifiedvaluationmethods,theGroupevaluatesateachbalancesheetdatewhetheritscreditriskhassignificantlyincreasedsinceinitialrecognition.Theperiodduringwhichcreditriskhasnotsignificantlyincreasedsinceinitialrecognitionisconsideredthefirststage,atwhichtheGroupshallmeasurethelossprovisionbasedontheamountoftheexpectedcreditlossforthenext12monthsandshallcomputeinterestincomeaccordingtothebookbalanceandeffectiveinterestrate;theperiodduringwhichcreditriskhassignificantlyincreasedsinceinitialrecognitionalthoughnocreditimpairmenthasoccurredisconsideredthesecondstage,atwhichtheGroupshallmeasurethelossprovisionbasedontheamountoftheexpectedcreditlossfortheentirevalidperiodandshallcomputeinterestincomeaccordingtothebookbalanceandeffectiveinterestrate;andtheperiodduringwhichcreditimpairmenthasoccurredafterinitialrecognitionisconsideredthethirdstage,atwhichtheGroupshallmeasurethelossprovisionbasedontheamountoftheexpectedcreditlossfortheentireperiodandshallcomputeinterestincomeaccordingtotheamortisedcostandeffectiveinterestrate.Forfinancialinstrumentswithrelativelylowcreditriskatthebalancesheetdate,theGroupassumesthatitscreditriskhasnotsignificantlyincreasessinceinitialrecognition.TheGroupevaluatestheexpectedcreditlossesonfinancialinstrumentsonasingleandcombinedbasis.Takingintoaccountthecreditriskcharacteristicsofdifferentcustomers,theGroupevaluatestheexpectedcreditlossesonaccountsreceivablebasedontheagingportfolio.RefertoNoteVIII(3)forthedisclosureoftheGroup'scriteriaforjudgingthesignificantincreaseincreditrisk,thedefinitionofassetswithimpairedcreditlosses,andtheassumptionofmeasuringexpectedcreditlosses.WhentheGroupnolongerreasonablyexpectstobeabletorecoverallorpartofthecontractcashflowsofthefinancialassets,theGroupdirectlywritesdownthecarryingamountofthefinancialasset.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

8.Financialinstruments(Continued)

OffsettingoffinancialinstrumentsFinancialassetsandfinancialliabilitiesareoffsetandthenetamountisreportedinthebalancesheetifthereisacurrentlyenforceablelegalrighttooffsettherecognisedamountsandthereisanintentiontosettleonanetbasis,ortorealizethefinancialassetsandsettlethefinancialliabilitiessimultaneously.TransferoffinancialassetsAfinancialassetisderecognisedwhentheGrouphastransferredsubstantiallyalltherisksandrewardsoftheassettothetransferee.AfinancialassetisnotderecognisedwhentheGroupretainssubstantiallyalltherisksandrewardsofthefinancialasset.IftheGroupneithertransfersnorretainssubstantiallyalltherisksandrewardsofownershipoffinancialassets,therelatedaccountingtreatmentsofsuchfinancialassetsareasfollows:theGroupderecognisesfinancialassetswhenitretainsnocontrolonthem,andassociatedassetsandliabilitiesarerecognisedatthesametime.IftheGroupretainscontrolofthefinancialasset,itrecognizesthefinancialassettotheextentofitscontinuinginvolvementinthetransferredfinancialassetandrecognizesanassociatedliability.Continuinginvolvementthattakestheformofafinancialguaranteeoverthetransferredassetismeasuredattheloweroftheoriginalcarryingamountoftheassetandthefinancialguarantee.TheamountofthefinancialguaranteeisthemaximumamountofconsiderationthattheGroupcouldberequiredtorepay.

9.Inventories

Inventoriesincluderawmaterials,workinprogress,finishedgoods,delegateprocessingsuppliesandturnovermaterials,andaremeasuredatthelowerofcostandnetrealizablevalue.

Inventoriesareinitiallycarriedatcost.Costofinventoriescomprisesallcostsofpurchase,

costsofconversionandothercosts.Costisdeterminedontheweightedaveragebasis.

Turnovermaterialsincludelow-valueconsumablesandpackingmaterials,whichareonthe

immediatewrite-offbasis.

TheGroupadoptstheperpetualinventorysystem.Atthebalancesheetdate,inventoriesarestatedatthelowerofcostandnetrealisablevalue.Theinventoriesarewrittendownbelowcosttonetrealisablevalueandthewrite-downisrecognisedinprofitorlossifthecostishigherthanthenetrealisablevalue.Whenthecircumstancesthatpreviouslycausedtheinventoriestobewrittendownbelowcostnolongerexist,inwhichcasethenetrealisablevalueofinventoriesbecomeshigherthanthecarryingamount,theamountofthewrite-downisreversed.Thereversalislimitedtotheamountoftheoriginalwrite-down,andisrecognisedinprofitorloss.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

9.Inventories(Continued)

Netrealizablevalueisdeterminedbasedontheestimatedsellingpriceintheordinarycourseofbusiness,lesstheestimatedcoststocompletionandestimatedcostsnecessarytomakethesaleandrelatedtaxes.Finishedgoodsarewrittendowncategorybycategory.

10.Long-termequityinvestments

Long-termequityinvestmentsincludeequityinvestmentsinsubsidiaries,jointventuresandassociates.Along-termequityinvestmentisinitiallymeasuredatitsinitialinvestmentcostonacquisition.Forlong-termequityinvestmentsarisingfrombusinesscombinationinvolvingenterprisesundercommoncontrol,theinitialinvestmentcostshallbetheshareofthecarryingamountofequityoftheacquireeintheconsolidatedfinancialstatementsoftheultimatecontrollingpartyasatthecombinationdate.Thedifferencebetweentheinitialinvestmentcostandbookvalueofconsiderationofcombinationisadjustedtocapitalreserves,andtoretainedearningsifcapitalreservesisinsufficient.Othercomprehensiveincomerecognisedbeforethecombinationdateisaccountedforonthesamebasisaswouldhavebeenrequirediftheinvesteehaddirectlydisposedoftherelatedassetsorliabilities.Equitypreviouslyrecognisedresultingfromtheinvestee’sequitychangesotherthanprofitorloss,othercomprehensiveincomeandprofitdistributionisreclassifiedtoprofitorloss.Equitywhichstillinvolvesalong-terminvestmentafterdisposalisreclassifiedtoprofitorlossonapro-ratabasisandequitywhichswichestoafinancialinstrumentafterdisposalisfullyreclassifiedtoprofitorloss.Forlong-termequityinvestmentsarisingfrombusinesscombinationinvolvingenterprisesnotundercommoncontrol,theinvestmentcostshallbethecombinationcost.(Forabusinesscombinationachievedinstages,theinitialinvestmentcostisdeterminedasthesumofthecarryingamountofequityoftheacquireeandtheadditionalinvestmentcostsonthecombinationdate.)Thecombinationcostinvolvestheassetspaidbytheacquirer,liabilitiesincurredandthefairvalueofequitysecurities.Othercomprehensiveincomesrecognisedusingtheequitymethodbeforethecombinationdateisaccountedforonthesamebasisaswouldhavebeenrequirediftheinvesteehaddirectlydisposedoftherelatedassetsorliabilities.Equitypreviouslyrecognisedresultingfromtheinvestee’sequitychangesotherthanprofitorloss,othercomprehensiveincomeandprofitdistributionisreclassifiedtoprofitorloss.Equitywhichstillinvolvesalong-terminvestmentafterdisposalisreclassifiedtoprofitorlossonapro-ratabasisandequitywhichswichestoafinancialinstrumentafterdisposalisfullyreclassifiedtoprofitorloss.Theaccumulatedchangesinthefairvalueoffinancialassetsatfairvaluethroughothercomprehensiveincomeisreclassifiedtoretainedearningswhenadoptingthecostmethod.Dependingonthewayofacquisitionoflong-termequityinvestments,theinitialinvestmentcostisdeterminedasfollows:Forlong-termequityinvestmentsacquiredbywayofcashpayment,theinitialinvestmentcostincludesalldirectlyassociatedexpenses,applicabletaxesandfees,andothernecessaryexpenses.Forlong-termequityinvestmentsacquiredbywayofissuingequitysecurities,theinitialinvestmentcostincludesthefairvalueofequitysecurities.Forlong-termequityinvestmentsacquiredbywayoftheswapofnon-monetaryassets,theinitialinvestmentcostshallbedeterminedinaccordancewith“ASBENo.7—SwapofNon-monetaryAssets.”Forlong-termequityinvestmentsacquiredbywayofdebtrestructuring,theinitialinvestmentcostshallbedeterminedinaccordancewith“ASBENo.12—DebtRestructuring.”

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

10.Long-termequityinvestments(Continued)

TheCompany'sfinancialstatementsusingthecostmethodofaccountingforlong-termequitycanexercisecontrolovertheinvestee.Controlisthepowertogovernthefinancialandoperatingpoliciesoftheinvesteesoastoobtainbenefitsfromitsoperatingactivities.IndeterminingwhethertheCompanyisabletoexercisecontrolovertheinvestee,theeffectofpotentialvotingrightsovertheinvesteeisconsidered,suchasconvertibledebtsandwarrantscurrentlyexercisable.Forlong-termequityinvestmentsaccountedforusingthecostmethod,theyaremeasuredattheinitialInvestmentcosts.Thecostoflong-termequityinvestmentsisadjustedwithadditionalinvestmentordivestment.Cashdividendsorprofitdistributiondeclaredbytheinvesteesarerecognisedasinvestmentincomeinprofitorloss.TheequitymethodisadoptedwhentheGrouphasjointcontrol,orexercisessignificantinfluenceovertheinvestee.Jointcontrolisthecontractuallyagreedsharingofcontrolofanarrangement,whichexistsonlywhendecisionsabouttherelevantactivitiesrequiretheunanimousconsentofthepartiessharingcontrol.Significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsoftheinvestee,butisnotcontrolorjointcontrolwithotherpartiesoverthosepolicies.Undertheequitymethod,wheretheinitialinvestmentcostofalong-termequityinvestmentexceedstheGroup’sinterestinthefairvalueoftheinvestee’sidentifiablenetassetsattheacquisitiondate,noadjustmentismadetotheinitialinvestmentcost.WheretheinitialinvestmentcostislessthantheGroup’sinterestinthefairvaluesoftheinvestee’sidentifiablenetassetsattheacquisitiondate,thedifferenceischargedtoprofitorloss,andthecostofthelong-termequityinvestmentisadjustedaccordingly.Undertheequitymethod,aftertheGrouphasacquiredalong-termequityinvestment,theGrouprecognisesitsshareoftheinvestee’sprofitorloss,aswellasitsshareoftheinvestee’sothercomprehensiveincome,asinvestmentincomeorlossandothercomprehensiveincome,andadjuststhecarryingamountoftheinvestmentaccordingly.TheGrouprecognisesitsshareoftheinvestee’sprofitorlossaftermakingappropriateadjustmentstotheinvestee’sprofitorlossbasedonthefairvalueoftheinvestee’sidentifiableassetsattheacquisitiondate,usingtheGroup’saccountingpoliciesandperiods.UnrealisedprofitsandlossesfromtransactionswithitsjointventuresandassociatesareeliminatedtotheextentoftheGroup’sinvestmentsintheassociatesorjointventures(exceptforassetsthatconstituteabusiness).ThecarryingamountoftheinvestmentisreducedbasedontheGroup’sshareofanyprofitdistributionsorcashdividendsdeclaredbytheinvestee.TheGroup’sshareofnetlossesoftheinvesteeisrecognisedtotheextentthatthecarryingamountoftheinvestmenttogetherwithanylong-termintereststhatinsubstanceformpartofitsnetinvestmentintheinvesteeisreducedtozero,exceptthattheGrouphastheobligationstoassumefurtherlosses.TheGroup’sshareoftheinvestee’sequitychanges,otherthanthosearisingfromtheinvestee’sprofitorloss,othercomprehensiveincomeorprofitdistribution,isrecognisedintheGroup’sequity,andthecarryingamountofthelong-termequityinvestmentisadjustedaccordingly.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

10.Long-termequityinvestments(Continued)

Upondisposalofalong-termequityinvestment,thedifferencebetweentheproceedsactuallyreceivedandthecarryingamountisrecognisedinprofitorloss.Foralong-termequityinvestmentaccountedforusingtheequitymethod,whentheGroupdiscontinuesusingtheequitymethodduetodisposal,allamountspreviouslyrecognisedinothercomprehensiveincomeareaccountedforonthesamebasisaswouldhavebeenrequirediftheinvesteehaddirectlydisposedoftherelatedassetsorliabilities.Equitypreviouslyrecognisedresultingfromtheinvestee’sequitychangesotherthanprofitorloss,othercomprehensiveincomeandprofitdistributionisreclassifiedtoprofitorlossinitsentirety.WhentheGroupcontinuestousetheequitymethod,theamountspreviouslyrecognisedinothercomprehensiveincomeareaccountedforonthesamebasisaswouldhavebeenrequirediftheinvesteehaddirectlydisposedoftherelatedassetsorliabilitiesandreclassifiedtoprofitorlossonapro-ratabasis.Equitypreviouslyrecognisedresultingfromtheinvestee’sequitychangesotherthanprofitorloss,othercomprehensiveincomeandprofitdistributionisreclassifiedtoprofitorlossonapro-ratabasis.

11.Investmentproperties

Investmentpropertiesarepropertiesheldtoearnrentalincomeand/orforcapitalappreciation.

Investmentpropertiesincludelanduserightsleasedout,landuserightsheldfortransferupon

capitalappreciation,andbuildingsleasedout.

Investmentpropertiesaremeasuredinitiallyatcost.SubsequentexpendituresincurredinrelationtoinvestmentpropertiesareincludedinthecostofinvestmentpropertieswhenitisprobablethattheassociatedeconomicbenefitswillflowtotheGroupandtheircostscanbereliablymeasured;otherwise,theexpendituresarerecognisedinprofitorlossintheperiodinwhichtheyareincurred.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

11.Investmentproperties(Continued)

TheGroupadoptsthecostmodelforsubsequentmeasurementofinvestmentproperties.Buildingsandlanduserightsaredepreciatedoramortizedtotheirestimatednetresidualvaluesovertheirestimatedusefullives.Theestimatedusefullives,theestimatednetresidualvaluesthatareexpressedasapercentageofcostandtheannualdepreciation(amortization)ratesofinvestmentpropertiesareasfollows:

EstimatedusefullivesEstimatedresidualvalueAnnualdepreciation

(amortization)ratesBuildingsandconstructions12-35years0-5%2.71-7.92%Landuserights30-50years-2.00-3.33%Whenaninvestmentpropertyistransferredtoowner-occupiedproperty,itisreclassifiedasafixedassetorintangibleassetatthedateoftransfer.Whenanowner-occupiedpropertyistransferredoutforearningrentalsorforcapitalappreciation,thefixedassetorintangibleassetisreclassifiedasaninvestmentpropertyatitscarryingamountatthedateoftransfer.Theinvestmentproperties’usefullife,netresidualvalueanddepreciation(amortization)methodappliedarereviewedandadjustedasappropriateattheendofeachyear.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

12.Fixedassets

FixedassetsarerecognisedwhenitisprobablethattherelatedeconomicbenefitswillflowtotheGroupandthecostscanbereliablymeasured.SubsequentexpendituresincurredforafixedassetareincludedinthecostofthefixedassetwhenitisprobablethattheassociatedeconomicbenefitswillflowtotheGroupandtherelatedcostcanbereliablymeasured.Thecarryingamountofthereplacedpartisderecognised.Alltheothersubsequentexpendituresarerecognisedinprofitorlossintheperiodinwhichtheyareincurred.Fixedassetsareinitiallymeasuredatcostandtheeffectofanyexpectedcostsofabandoningtheassetattheendofitsuseisconsidered.Thecostofafixedassetistheaggregatecostofpurchaseprice,relatedtaxesandanydirectlyattributableexpenditureforbringingtheassettoitsworkingconditionforitsintendeduse.Fixedassetsaredepreciatedusingthestraight-linemethodtoallocatethecostoftheassetstotheirestimatedresidualvaluesovertheirestimatedusefullives.Forthefixedassetsthathavebeenprovidedforimpairmentloss,therelateddepreciationchargeisprospectivelydeterminedbasedupontheadjustedcarryingamountsovertheirremainingusefullives.

EstimatedusefullivesEstimatedresidualvaluesAnnualdepreciationratesBuildingsandconstructions20-35years0-5%2.71-5.00%Machinery5-14years3-6%6.79-19.40%Motorvehicles3-10years0-5%9.50-33.33%Officeequipment3-10years0-5%9.50-33.33%Electronicequipmentwithin5years0%20%andaboveTheGroupreviewstheusefullife,estimatednetresidualvalueofafixedassetandthedepreciationmethodappliedatleastonceateachfinancialyearend,andadjustsforanychangewhennecessary.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

13.Borrowingcosts

BorrowingcostsareinterestandothercostsincurredbytheGroupinconnectionwiththeborrowingofthefunds.Borrowingcostsincludeinterest,amortisationofdiscountsorpremiumsrelatedtoborrowings,ancillarycostsincurredinconnectionwiththearrangementofborrowings,andexchangedifferencesarisingfromforeigncurrencyborrowings.Theborrowingcoststhataredirectlyattributabletotheacquisition,constructionorproductionofaqualifyingassetarecapitalised.Theamountsofotherborrowingcostsincurredarerecognisedasanexpenseintheperiodinwhichtheyareincurred.Qualifyingassetsareassets(fixedassets,investmentproperties,inventories,etc.)thatnecessarilytakeasubstantialperiodoftimeofacquisition,constructionorproductiontogetreadyfortheirintendeduseorsale.Theborrowingcostsshallnotbecapitalizedunlesstheysimultaneouslymeetthefollowingrequirements:

(1)Theassetdisbursementshavealreadyincurred;

(2)Theborrowingcostshavealreadyincurred;and

(3)Theacquisitionandconstructionorproductionactivitieswhicharenecessarytopreparetheassetforitsintendeduseorsalehavealreadystarted.Whenthequalifiedassetunderacquisitionandconstructionorproductionisreadyfortheintendeduseorsale,thecapitalizationoftheborrowingcostsshallbeceased.Borrowingcostsincurredaftertheintendeduseorsaleshallberecordedinthecurrentprofitsandlosses.Duringtheperiodofcapitalization,thecapitalizedamountofinterestineachaccountingperiodshallbecalculatedanddeterminedinthewaysbelow:

(1)Theenterpriseshallcalculateanddeterminetheinterestofaspecificloanbydeducting

interestincomeoftheloancapitaldepositinthebankorinvestmentincomeobtainedfromatemporaryinvestment.

(2)Theenterpriseshallcalculateanddeterminetheto-be-capitalizedamountofinterestonthe

generalborrowingbymultiplyingtheweightedaverageassetdisbursementofthepartoftheaccumulativeassetdisbursementsminusthegeneralborrowingbythecapitalizationrateofthegeneralborrowingused.Capitalisationofborrowingcostsissuspendedduringperiodsinwhichtheacquisition,constructionorproductionofaqualifyingassetissuspendedabnormallybyactivitiesotherthanthosenecessarytogettheassetreadyforitsintendeduseorsale,whenthesuspensionisforacontinuousperiodofmorethan3months.Borrowingcostsincurredduringtheseperiodsarerecognisedasanexpenseinprofitorlossuntiltheacquisition,constructionorproductionisresumed.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

14.Right-of-useassets(applicablefrom1January2019)

Theright-of-useassetsoftheGroupmainlyincludebuildings,machinery,vehicles,officeequipmentandotherassetssuchaslanduserights.Atthecommencementdateofthelease,theGrouprecognisesaright-of-useasset.Thecostoftheright-of-useassetcomprises:(i)theamountoftheinitialmeasurementoftheleaseliability;(ii)anyleasepaymentsmadeatorbeforethecommencementdateoftheleaselessanyleaseincentivesreceived;(iii)anyinitialdirectcostincurred;and(iv)anestimateofcostsincurredbythelesseeindismantlingandremovingtheunderlyingasset,restoringthesiteonwhichitislocatedorrestoringtheunderlyingassettotheconditionrequiredbythetermsandconditionsofthelease.Theright-of-useassetsaredepreciatedonastraight-linebasissubsequentlybytheGroup.IftheGroupisreasonablycertainthattheownershipoftheunderlyingassetwillbetransferredtotheGroupattheendoftheleaseterm,theGroupdepreciatestheassetfromthecommencementdatetotheendoftheusefullifeoftheasset.Otherwise,theGroupdepreciatestheassetsfromthecommencementdatetotheearlieroftheendoftheusefullifeoftheassetortheendoftheleaseterm.TheGroupremeasurestheleaseliabilityatthepresentvalueofthechangedleasepaymentsandadjuststhecarryingamountoftheright-of-useassetsaccordingly,whenthecarryingamountoftheright-of-useassetisreducedtozero,andthereisafurtherreductioninthemeasurementoftheleaseliability,theGrouprecognisestheremainingamountoftheremeasurementinprofitorloss.

15.Constructioninprogress

Thecostofconstructioninprogressisdeterminedaccordingtotheactualexpendituresincurredfortheconstruction,includingallnecessaryconstructionexpendituresincurredduringtheconstructionperiod,borrowingcoststhatshallbecapitalisedbeforetheconstructionisreadyforitsintendeduse,andotherrelevantexpenditures.Anitemofconstructioninprogressistransferredtofixedassetswhentheassetisreadyforitsintendeduse.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

16.Intangibleassets

IntangibleassetsarerecognisedandmeasuredoninitialrecognitionatcostonlyiftherelatedeconomicbenefitswillprobablyflowintotheGroupandtheircostscanbemeasuredreliably.However,theintangibleassetsacquiredthroughabusinesscombinationnotinvolvingenterprisesundercommoncontrolshouldbemeasuredatfairvalueseparatelyasintangibleassetswhentheirfairvaluescanbereliablymeasured.TheusefullifeoftheintangibleassetsshallbeassessedaccordingtotheestimatedbeneficialperiodexpectedtogenerateeconomicbenefitsfortheGroup.AnintangibleassetshallberegardedashavinganindefiniteusefullifewhenthereisnoforeseeablelimittotheperiodoverwhichtheassetisexpectedtogenerateeconomicbenefitsfortheGroup.Theusefullivesoftheintangibleassetsareasfollows:

CategoriesUsefullives
LanduserightsBetweentheapprovedusefulperiodandtheCompany’soperatingperiod
Software3-5years
Trademarks5-10years
Technologypatents5years
Distributionnetwork20years
Franchis10years
Favorableleases17-20years

LanduserightsobtainedbytheGroupareusuallyaccountedforasintangibleassets.Asfortheconstructionofplants,factoriesandotherbuildingsoftheGroup,therelatedlanduserightsandotherbuildingswereaccountedforasintangibleassetsandfixedassets,respectively.Purchasecostsoflanduserightsandbuildingswereallocatedtointangibleassetsandfixedassetsseparately.Purchasecostswererecognisedascostoffixedassets,onlyiftheseparationwasimpracticable.Intangibleassetswithafiniteusefullifeareamortisedovertheirestimatedusefullivesusingthestraight-linemethod.Foranintangibleassetwithafiniteusefullife,theGroupreviewstheusefullifeandamortizationmethodatleastonceateachfinancialyearend,andmakesadjustmentswhennecessary.LanduserightsallocatedbytheStateareregardedasanintangibleassetwithanindefiniteusefullifeduetoanuncertainusefullife.Theimpairmenttestshouldbeconductedfortheintangibleassetswiththeindefiniteservicelifeeveryyeartodeterminewhethertheimpairmentexists.Theintangibleassetswiththeindefiniteservicelifeshallnotbeamortized,andtheCompanyshallmakethereviewoftheservicelifeoftheintangibleassetsduringeveryaccountingperiod.Ifevidenceprovethatusefullivesarefinite,theGroupaccountsfortheintangibleassetsinaccordancewithintangibleassetswithafiniteusefullife.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

16.Intangibleassets(Continued)

InternalresearchanddevelopmentprojectTheGroupclassifiestheexpensesforinternalresearchanddevelopmentasresearchcostsanddevelopmentcosts.Allresearchcostsarechargedtothecurrentprofitorlossasincurred.ExpenditureincurredonprojectstodevelopnewproductsiscapitalisedanddeferredonlywhentheGroupcandemonstratethetechnicalfeasibilityofcompletingtheintangibleassetsothatitwillbeavailableforuseorsale,itsintentiontocompleteanditsabilitytouseorselltheasset,howtheassetwillgeneratefutureeconomicbenefits(includingdemonstrationthattheproductderivedfromtheintangibleassetortheintangibleassetitselfwillbemarketableor,inthecaseofinternaluse,theusefulnessoftheintangibleassetassuch),theavailabilityoftechnicalandfinancialresourcestocompletetheprojectandprocuretheuseorsaleoftheintangibleasset,andtheabilitytomeasurereliablytheexpenditureduringthedevelopment.Productdevelopmentexpenditurewhichdoesnotmeetthesecriteriaisexpensedwhenincurred.Expenditureforinvestigation,evaluationandselectionofproductionprocessandnewdrugresearchesisrecognisedinprofitorlossintheperiodinwhichitisincurred.Expenditureonthedesignation,measurementofthefinalutilizationoftheproductionprocessandnewdrugsbeforemassproductioniscapitalizedonlyifallofthefollowingconditionsaresatisfied:

(1)developmentoftheproductionprocessandnewdrugshasbeenfullydemonstratedbythe

technicalteam;

(2)managementhasapprovedthebudgetofdrugproductiondevelopmentandnewdrugs;

(3)marketresearchanalysissuggeststhattheproductsproducedbythenewproduction

technologyareabletobepromoted;

(4)adequatetechnical,financialandotherresourcestocompletethedevelopmentandthe

abilitytouseorselltheintangibleasset;

(5)theexpenditureattributabletotheintangibleassetduringitsdevelopmentphasecanbe

reliablymeasured.Otherdevelopmentcoststhatdonotmeettheconditionsabovearerecognisedinprofitorlossintheperiodinwhichtheyareincurred.Developmentcostspreviouslyrecognisedasexpensesarenotrecognisedasanassetinasubsequentperiod.Capitalizedexpenditureonthedevelopmentphaseispresentedasdevelopmentcostsinthebalancesheetandtransferredtointangibleassetsatthedatethattheassetisreadyforitsintendeduse.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

17.Impairmentoflong-termassets

TheGroupdeterminestheimpairmentofassets,otherthantheimpairmentofinventories,investmentpropertiesmeasuredusingthefairvaluemodel,deferredtaxassets,financialassetsandassetsclassifiedasheldforsale,usingthefollowingmethods:

TheGroupassessesatthebalancesheetdatewhetherthereisanyindicationthatanasset

maybeimpaired.Ifanyindicationexiststhatanassetmaybeimpaired,theGroupestimates

therecoverableamountoftheassetandperformsimpairmenttesting.Goodwillarisingfroma

businesscombinationandanintangibleassetwithanindefiniteusefullifearetestedfor

impairmentatleastateachyearend,irrespectiveofwhetherthereisanyindicationthatthe

assetmaybeimpaired.Intangibleassetsthathavenotbeenreadyfortheirintendeduseare

testedforimpairmenteachyear.

Therecoverableamountofanassetisthehigherofitsfairvaluelesscoststosellandthepresentvalueofthefuturecashflowsexpectedtobederivedfromtheasset.TheGroupestimatestherecoverableamountonanindividualbasisunlessitisnotpossibletoestimatetherecoverableamountoftheindividualasset,inwhichcasetherecoverableamountisdeterminedfortheassetgrouptowhichtheassetbelongs.Identificationofanassetgroupisbasedonwhethermajorcashinflowsgeneratedbytheassetgrouparelargelyindependentofthecashinflowsfromotherassetsorassetgroups.

Whentherecoverableamountofanassetorassetgroupislessthanitscarryingamount,the

carryingamountisreducedtotherecoverableamountbytheGroup.Thereductioninthe

carryingamountistreatedasanimpairmentlossandrecognisedinprofitorloss.Aprovision

forimpairmentlossoftheassetisrecognisedaccordingly.

Forthepurposeofimpairmenttesting,thecarryingamountofgoodwillacquiredinabusinesscombinationisallocatedfromtheacquisitiondateonareasonablebasis,toeachoftherelatedassetgroupsunlessitisimpossibletoallocatetotherelatedassetgroups,inwhichcaseitisallocatedtoeachoftherelatedsetsofassetgroups.EachoftherelatedassetgroupsorsetsofassetgroupsisanassetgrouporasetofassetgroupsthatisexpectedtobenefitfromthesynergiesofthebusinesscombinationandshallnotbelargerthanareportablesegmentdeterminedbytheGroup.Whentestinganassetgroup(asetofassetgroups)towhichgoodwillhasbeenallocatedforimpairment,ifthereisanyindicationofimpairment,theGroupfirstlyteststheassetgroup(setofassetgroups),excludingtheamountofgoodwillallocated,forimpairment,i.e.,theGroupdeterminesandcomparestherecoverableamountwiththerelatedcarryingamountandrecognisesanyimpairmentloss.Afterthat,theGroupteststheassetgroup(setofassetgroups),includinggoodwill,forimpairment,thecarryingamountoftherelatedassetgroup(setofassetgroups)iscomparedtoitsrecoverableamount.Ifthecarryingamountoftheassetgroup(setofassetgroups)ishigherthanitsrecoverableamount,theamountoftheimpairmentlossisfirstlyusedtoreducethecarryingamountofthegoodwillallocatedtotheassetgroup(setofassetgroups),andthenusedtoreducethecarryingamountofotherassets(otherthanthegoodwill)withintheassetgroup(setofassetgroups),onapro-ratabasisofthecarryingamountofeachasset.Oncetheaboveimpairmentlossisrecognised,itwillnotbereversedforthevaluerecoveredinthesubsequentperiods.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

18.Long-termprepaidexpenses

Long-termprepaidexpensesincludetheexpenditureforimprovementstofixedassetsunderoperatingleases,andotherexpendituresthathavebeenmadebutshouldberecognisedasexpensesovermorethanoneyearinthecurrentandsubsequentperiods.Long-termprepaidexpensesareamortizedonthestraight-linebasisovertheexpectedbeneficialperiodandarepresentedatactualexpenditurenetofaccumulatedamortization.

19.Governmentalmedicalreservefundsandspeciallyapprovedreservingmaterials

AppointedbythePRCGovernment,CNPGCisresponsibleforpurchasing,allocatingandprovidingthegovernmentalmedicalreserves,whichincludethemedicalproducts,traditionalChinesemedicineandmedicalappliancesfornation-wideemergencyrescueanddisasterrelief.AppointedbytheGovernmentofGuangxiProvinceandGuangdongProvince,theCompany,SinopharmMedicineHoldingGuangxiCo.,Ltd.(“SinopharmGuangxi”)andSinopharmMedicineHoldingGuangzhouCo.,Ltd.(“SinopharmGuangzhou”)areresponsibleforpurchasing,allocatingandprovidingthemedicalreserves,whichincludethemedicalproductsneededforseriousdisasters,epidemicsandotheremergenciesaswellasendemicdiseasesinGuangxiProvinceandGuangdongProvince.InaccordancewiththeregulationofCNPGC,beingtheenterprisewhichbearstheobligationforspeciallyapprovedmedicalreservingmaterials,themedicalreservefundsreceivedfromthePRCGovernmentorlocalgovernmentarerecognisedasothernon-currentliabilities.TheGroupreservesthespeciallyapprovedmedicalreservingmaterialsaccordingtothereserveprogram(bycategoryandbyquantity),appliesdynamicmanagementandrecognizesthemasothernon-currentassets.

20.Employeebenefits

Employeebenefitsmainlyincludeshort-termemployeebenefits,post-employmentbenefits,terminationbenefitsandotherlong-termemployeebenefitsincurredinexchangeforservicerenderedbyemployeesorvariousformsofrewardsorcompensationduetoseveranceoflaborrelation.Short-termemployeebenefits

Theactualoccurredshort-termemployeebenefitsarerecognizedasliabilitiesduringtheaccountingperiodinwhichtheservicehasbeenrenderedbytheemployeesandascostsofassetsorexpensestowhichevertheemployeeserviceisattributable.Post-employmentbenefits(definedcontributionplans)

TheemployeesintheGroupparticipateinsocialinsuranceandunemploymentinsuranceschemesadministratedbythelocalgovernments,andtherelatedexpendituresarerecordedincostofrelatedassetsorprofitorlossintheperiodwhentheyincurred.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

20.Employeebenefits(Continued)Post-employmentbenefits(definedbenefitplans)

TheGroupoperatesadefinedbenefitpensionscheme.Nofundshavebeeninjectedintothescheme.Thecostofbenefitsprovidedunderthedefinedbenefitschemeiscalculatedusingtheexpectedbenefitaccrualunitapproach.Remeasurementarisingfromdefinedbenefitpensionschemes,includingactuarialgainsorlosses,changesintheassetcapeffect(deductingamountsincludedinnetinterest)andreturnsonschemeassets(deductingamountsincludedinnetinterest),isinstantlyrecognisedinthebalancesheetandchargedtoshareholders’equitythroughothercomprehensiveincomefortheperiodduringwhichitisincurred.Itwillnotbereversedtoprofitandlossinsubsequentperiods.Previousservicecostsarerecognisedascurrentexpenseswhen:thedefinedbenefitschemeisrevised,ortherelevantrestructuringcostsorterminationbenefitsarerecognisedbytheGroup,whicheverearlier.Netinterestisarrivedatbymultiplyingnetliabilitiesornetassetsofdefinedbenefitswithadiscountrate.Changesinnetobligationsofdefinedbenefitsarerecognisedasoperatingcostsandadministrationexpensesintheincomestatement.Servicecostsincludecurrentservicescosts,pastservicecostsandsettlementofprofitorloss.Netinterestincludeinterestincomefromschemeassets,interestexpensesforschemeobligationsandinterestoftheassetcapeffect.Terminationbenefits

TheGrouprecognizesaliabilityforterminationbenefitsandchargestoprofitorlossattheearlierofthefollowingdates:a)whentheGroupcannolongerwithdrawfromtheterminationplanortheredundancyoffer;andb)whentheGrouprecognizescostsorexpenseforarestructuringplanwhichinvolvesthepaymentofterminationbenefits.TheGroupoffersterminationbenefitstotheemployeeswhoacceptinternalretirementarrangements.Terminationbenefitsreferstosalariesandsocialsecuritiespaidtotheemployeeswhovoluntarilyretireandapprovedbythemanagementbeforethelegalretirementage.TheGrouppaysterminationbenefitsfromthedateofthestartingofinternalretirementarrangementstolegalretirementage.Whenmeetingtherecognitioncriteria,terminationbenefitsarerecognisedasliabilitiesfromthedateonwhichtheemployeesstopofferingservicestothelegalretirementdateandrecognisedinprofitorlossasincurred.Thechangeofterminationbenefits’actuarialassumptionsanddifferenceincurredbytheadjustmentofwelfarestandardsarerecognisedinprofitorlossasincurred.Theterminationbenefitsexpectedtobesettledwithinoneyearsincethebalancesheetdateareclassifiedascurrentliabilities.Otherlong-termemployeebenefitsOtherlong-termemployee’benefitsprovidedtoemployeesshallberecognisedandmeasuredasnetliabilitiesornetassetswhereprovisionsregardingpost-employmentbenefitsareapplicable,providedthatchangesshallbeincludedinthecurrentprofitandlossorrelatedassetcosts.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

21.Leaseliabilities(applicablefrom1January2019)

Atthecommencementdateofthelease,theGroupmeasurestheleaseliabilityatthepresentvalueoftheleasepaymentsthatarenotpaidatthatdate,exceptforshort-termleasesandleasesoflow-valueassets.Incalculatingthepresentvalueoftheleasepayments,theGroupusestheinterestrateimplicitintheleaseasthediscountrate.Ifthatratecannotbereadilydetermined,theGroupusesthelessee’sincrementalborrowingrate.TheGroupcalculatestheinterestexpensesoftheleaseliabilityineachperiodduringtheleasetermusingtheconstantperiodicrateofinterest,andrecognisessuchinterestexpensesinprofitorloss,exceptthoseinthecostsoftherelatedassetasrequired.Variableleasepaymentsthatarenotincludedinthemeasurementoftheleaseliabilitiesarerecognisedinprofitorlossasincurred,exceptthoseinthecostsoftherelatedassetasrequired.Afterthecommencementdateofthelease,theGroupremeasuresleaseliabilitieswithchangedpresentvalueoftheleasepaymentswhenfixedpayment,expectedunguaranteedresidualvaluepayable,theinterestrateimplicitintheleaseasthediscountrate,purchaseoptions,optionstoextendtheleaseordeterminationoftheleasetermchange.

22.Provisions

AnobligationrelatedtoacontingencyshallberecognisedbytheGroupasaprovisionwhenallofthefollowingconditionsaresatisfied,exceptforcontingentconsiderationsandcontingentliabilitiesassumedinabusinesscombinationnotinvolvingenterprisesundercommoncontrol:

(1)TheobligationisapresentobligationoftheGroup;

(2)ItisprobablethatanoutflowofeconomicbenefitsfromtheGroupwillberequiredtosettletheobligation;and

(3)Theamountoftheobligationcanbemeasuredreliably.

Theprovisionsareinitiallymeasuredatthebestestimateoftheexpenditurerequiredtosettletherelatedpresentobligation,takingintoaccountfactorspertainingtoacontingencysuchastherisks,uncertaintiesandtimevalueofmoneyasawhole.Thecarryingamountofprovisionsisreviewedatthebalancesheetdate.Wherethereisclearevidencethatthecarryingamountofaprovisiondoesnotreflectthecurrentbestestimate,thecarryingamountisadjustedtothecurrentbestestimate.Forbusinesscombinationsnotundercommoncontrol,contingentliabilitiesoftheacquireeobtainedinabusinesscombinationshallbemeasuredatfairvalueininitialrecognition.Afterinitialrecognition,subsequentmeasurementisconductedusingthehigheroftheamountrecognisedbyprovisionsandtheamountofinitialrecognitiondeductingtheaccumulatedamortizationamountdeterminedbytheprinciplesofrevenuerecognition.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

23.Share-basedpayments

Theshare-basedpaymentsshallconsistofequity-settledshare-basedpaymentsandcash-settledshare-basedpayments.Theterm"equity-settledshare-basedpayment"referstoatransactioninwhichthegroupgrantssharesorotherequityinstrumentsasaconsiderationinreturnforservices.Theequity-settledshare-basedpaymentinreturnforemployeeservicesshallbemeasuredatthefairvalueoftheequityinstrumentsgrantedtotheemployees.Astoanequity-settledshare-basedpaymentinreturnforservicesofemployees,iftherightmaybeexercisedimmediatelyafterthegrant,thefairvalueoftheequityinstrumentsshall,onthedateofthegrant,beincludedintherelevantcostorexpenseandthecapitalreservesshallbeincreasedaccordingly.Astoanequity-settledshare-basedpaymentinreturnforemployeeservices,iftherightcannotbeexerciseduntilthevestingperiodcomestoanendoruntiltheprescribedperformanceconditionsaremet,thenoneachbalancesheetdatewithinthevestingperiod,theGroupshallmakethebestestimateofthenumberofvestedequityinstrumentsbasedonthelatestmovementofthegrantedemployee,thecontentofprescribedperformanceandotherconditions.Basedonthebestestimate,theservicesobtainedinthecurrentperiodshallbeincludedintherelevantcostsorexpensesandthecapitalreservesatthefairvalueoftheequityinstrumentsonthedateofthegrant.Thefairvalueoftheequityinstrumentsisdeterminedusingthebinomialmodel.Thecostofequity-settledtransactionsisrecognised,togetherwithacorrespondingincreaseincapitalreserves,overtheperiodinwhichthespecifiedperformanceorserviceconditionsarefulfilled.Thecumulativeexpenserecognisedforequity-settledtransactionsateachbalancesheetdateuntilthevestingdatereflectstheextenttowhichthevestingperiodhasexpiredandtheGroup’sbestestimateofthenumberofequityinstrumentsthatwillultimatelyvest.Forawardsthatdonotultimatelyvestbecausenon-marketperformanceandserviceconditionshavenotbeenmet,noexpenseisrecognised.Whereawardsincludeamarketornon-vestingcondition,thetransactionsaretreatedasvestingirrespectiveofwhetherthemarketornon-vestingconditionissatisfied,providedthatallotherperformanceandserviceconditionsaresatisfied.Wherethetermsofanequity-settledawardaremodified,asaminimumanexpenseisrecognisedasifthetermshadnotbeenmodified,iftheoriginaltermsoftheawardaremet.Inaddition,anexpenseisrecognisedforanymodificationthatincreasesthetotalfairvalueoftheshare-basedpayments,orisotherwisebeneficialtotheemployeeasmeasuredatthedateofmodification.Whereanequity-settledawardiscancelled,itistreatedasifithadvestedonthedateofcancellation,andanyexpensenotyetrecognisedfortheawardisrecognisedimmediately.Thisincludesanyawardwherenon-vestingconditionswithinthecontrolofeithertheGrouportheemployeearenotmet.However,ifanewawardissubstitutedforthecancelledaward,andisdesignatedasareplacementawardonthedatethatitisgranted,thecancelledandnewawardsaretreatedasiftheywereamodificationoftheoriginalaward,asdescribedinthepreviousparagraph.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

23.Share-basedpayments(Continued)

Acash-settledshare-basedpaymentshallbemeasuredinaccordancewiththefairvalueoftheliabilitycalculatedandconfirmedbasedonthesharesorotherequityinstrumentsundertakenbyanenterprise.Astoacash-settledshare-basedpaymentinstruments,iftherightmaybeexercisedimmediatelyafterthegrant,thefairvalueoftheliabilityundertakenbytheenterpriseshall,onthedateofthegrant,beincludedintherelevantcostsorexpenses,andtheliabilitiesshallbeincreasedaccordingly.Astoacash-settledshare-basedpayment,iftherightmaynotbeexerciseduntilthevestingperiodcomestoanendoruntilthespecifiedperformanceconditionsaremet,oneachbalancesheetdatewithinthevestingperiod,theservicesobtainedinthecurrentperiodshall,basedonthebestestimateoftheinformationabouttheexercisableright,beincludedintherelevantcostsorexpensesandthecorrespondingliabilitiesatthefairvalueoftheliabilityundertakenbytheGroup.TheGroupshall,oneachbalancesheetdateandoneachaccountdatepriortothesettlementoftherelevantliabilities,re-measurethefairvaluesoftheliabilitiesandincludethechangesinthecurrentprofitsandlosses.

24.Revenuefromcontractswithcustomers

Thegrouprecognizesrevenuewhenithasfulfilleditsobligationsunderthecontract,i,e.whenthecustomeracquirescontrolrelevantgoodsorservices.Acquiringcontroloverthegoodsorservicesreferstotheabilitytodominatetheuseofthegoodsortheportionofservicesandtoderivealmostalltheeconomicbenefitstherefrom.ContractsforsaleofgoodsThecontractsforthesaleofgoodsbetweentheGroupanditscustomerusuallyonlycontaintheperformanceobligationsforthetransferofgoods.TheGroupgenerallyrecognizesrevenueatthepointoftransferringthecontrolofgoodsonthebasisofacombinationofthefollowingfactors:thecurrentrighttocollectthegoods,thetransferofmajorrisksandbenefitsintheownershipofthegoods,andthetransferofthelegalownershipofthegoods,thetransferofphysicalassetsofthegoodsandthatthecustomershaveacceptedthegoods.ServicecontractsTheservicecontractsbetweentheGroupanditscustomersusuallyconsistofperformanceobligationssuchasstorageandlogisticsandsoon.AstheGroup'sperformanceofcontractsisatthesametimewhenthecustomerobtainsandconsumestheeconomicbenefitsoftheperformanceoftheGroup,andtheGrouphastherighttocollectreceivablesfromtheperformanceofcontactsthathasbeencompletedtodate,theGroupregardsitasacontractobligationoveraperiodoftime,exceptthattheprogressofperformancecannotbereasonablydetermined.TheGroupdeterminestheprogressoftheperformanceofcontractsinaccordancewiththeinputmethod.IftheprogressofperformanceofcontractscannotbereasonablydeterminedandthecostincurredbytheGroupisexpectedtobecompensated,therevenueisrecognisedonthebasisoftheincurredcostsuntiltheprogressofperformanceofcontactscanbereasonablymeasured.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

24.Revenuefromcontractswithcustomers(Continued)

VariableconsiderationSomeoftheGroup'scontractswithcustomersincludingarrangementsofsalesrebates(listitemsinaccordancewiththecustomer’sactualconditions,suchasearlycompletionawardsorothers)resultinvariableconsideration.TheGroupdeterminesthebestestimateofvariableconsiderationbyusingtheexpectedvaluemethodorthemostlikelyamountmethod.However,thetransactionpriceincludingvariableconsiderationisonlytotheextentthatitishighlyprobablethatasignificantreversalintheamountofcumulativerevenuerecognisedwillnotoccurwhentheuncertaintyassociatedwiththevariableconsiderationissubsequentlyresolved.ConsiderationpayabletocustomersWhereconsiderationispayablebytheGrouptoacustomer,suchconsiderationpayableshallbedeductedagainstthetransactionprice,andagainstcurrentrevenueupontherecognitionofrevenueorthepaymentof(orthecommitmenttopay)theconsiderationtothecustomer(whicheverislater),saveforconsiderationpayabletothecustomerforthepurposeofacquiringfromthecustomerotherclearlyseparableproducts.ReturnclausesInconnectionwithsaleswithareturnclause,revenueisrecognisedaccordingtotheamountofconsiderationitexpectstobeentitledtoforthetransfertoacustomerwhenthecustomeracquirescontroloftherelevantproducts.Amountsexpectedtoberefundedforthereturnofsalesarerecognisedasliabilities.Atthesametime,thebalanceofthecarryingvalueoftheproductexpectedtobereturnedupontransferlessexpectedcostsfortherecallofsuchproduct(includinganimpairmentlossoftherecalledproduct)shallberecognisedasanasset(i.e.costofreturnreceivables),andthenetamountofthecarryingvalueofthetransferredproductuponthetransferlesstheaforesaidassetcostshallbetransferredtocost.Ateachbalancesheetdate,theGroupreassessesthefuturereturnofsalesandremeasurestheaboveassetsandliabilities.SignificantfinancingcomponentWhereacontractcontainsasignificantfinancingcomponent,theGroupdeterminestransactionpricesbasedonamountspayableassumedtobesettledincashbycustomersimmediatelyupontheacquisitionofcontrolovertheproducts.Thedifferencebetweensuchtransactionpriceandcontractconsiderationisamortisedoverthecontractperiodusingtheeffectiveinterestratemethodbasedonaratiothatdiscountsthenominalcontractualconsiderationtothecurrentsellingpriceoftheproducts.TheGroupshallnotgiveconsiderationtoanysignificantfinancingcomponentinacontractifthegapbetweenthecustomer’sacquisitionofcontrolovertheproductsandpaymentofconsiderationisexpectedtobelessthan1year.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

24.Revenuefromcontractswithcustomers(Continued)

WarrantyclausesTheGroupprovidesqualityassuranceforproductssoldandassetsbuiltinaccordancewithcontracttermsandlawsandregulations.TheaccountingtreatmentofqualityassuranceintheformofwarrantyassuringcustomersproductssoldareincompliancewithrequiredstandardsissetoutinNoteIII(22).WheretheGroupprovidesaservicewarrantyforastandaloneserviceinadditiontotheassuranceofcomplianceofproductswithrequiredstandards,suchwarrantyistreatedasastand-alonecontractualperformanceobligation,andaportionofthetransactionpriceshallbeallocatedtotheservicewarrantybasedonapercentageofthestand-alonepricefortheprovisionoftheproductandservicewarranty.Whenassessingwhetherawarrantyisrenderingastand-aloneserviceinadditiontoprovidingguaranteetocustomersthatallsoldgoodsareincompliancewithrequiredstandards,theGroupwillconsiderwhetherornotsuchwarrantyisastatutoryrequirement,thetermofthewarrantyandthenatureoftheGroup’sundertakingtoperformitsobligations.RewardpointsprogramTheGroupgrantsrewardpointstocustomerswhensellinggoods.CustomerscanuserewardpointstoredeemfreeordiscountedgoodsprovidedbytheGroup.Thisrewardpointsprogramprovidessignificantrightstocustomers,andtheGroupconsidersitasanindividualperformanceobligation,andapportionspartofthetransactionpricestorewardpointsbasedonpricingofgoodsorserviceswithwarrantyclauses.Revenueisrecognisedwhencustomersobtaingoodsredeemedorwhenrewardpointsexpire.Principalresponsibleperson/proxyForgoodsorotherassetsobtainedfromathirdpartywhichweretransferredlatertocustomers,theGrouphastherighttodecide,independently,thepricingofgoods.ThismeansthattheGrouphasobtainedcontroloverrelatedgoodsbeforetransferringtocustomers.Therefore,theGroupistheprincipalresponsibleperson,andrevenueisrecognisedbasedonthetotalamountofconsiderationreceivedorreceivable.Otherwise,theGroupisproxy,andrevenueisrecognisedbasedonexpectedcommission.Thisamountshouldbethetotalamountofconsiderationreceivedorreceivablenetoftheamountpayabletootherparties,orbasedonthefixedamountorpercentage.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

25.Contractassetsandcontractliabilities

TheGrouppresentscontractassetsorcontractliabilitiesonthebalancesheetaccordingtotherelationshipbetweencontractualperformanceobligationsandcustomerpayments.Contractassetsandcontractliabilitiesunderthesamecontractarepresentedonanetbasisafterset-off.ContractassetsTherighttoreceiveconsiderationfollowingthetransferofproductstocustomerswhichisdependentonfactorsotherthanthepassageoftimeispresentedascontractassets.FordetailsoftheGroup’sdeterminationandaccountingtreatmentofexpectedcreditlossesfromcontractassets,pleaserefertoNoteIII(8).ContractliabilitiesTheobligationtopassproductstocustomersinconnectionwithcustomerconsiderationreceivedorreceivableispresentedascontractliabilities,forexample,amountsreceivedpriortothetransferofthepromisedproducts.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

26.Assetsrelatingtocontractcost

TheGroup’sassetsrelatingtocontractcostsincludethecontractacquisitioncostsandcontractperformancecosts,presentedrespectivelyunderinventories,othercurrentassetsandothernon-currentassets.WheretheGroupexpectstheincrementalcostsforacquiringacontracttoberecoverable,suchcontractacquisitioncostsarerecognisedasanasset(unlesstheamortisationperiodoftheassetisnotmorethan1year).CostsincurredbytheGroupfortheperformanceofacontractarerecognisedasanassetascontractperformancecostsiftheydonotfallunderthescopeoftherelevantstandardsforinventories,fixedassetsorintangibleassetsbutmeetallthefollowingconditions:

(1)Theyaredirectlyrelatedtoacurrentoranticipatedcontract,includingdirectlabour,directmaterials,manufacturingexpenses(orsimilarexpenses),tobebornebycustomersasspecificallystipulated,andotherwiseincurredsolelyinconnectionwiththecontract;

(2)theywillincreasetheresourcestobeutilisedintheCompany’sfutureperformanceofits

contractualobligations;and

(3)theyareexpectedtoberecoverable.TheGroupamortisesassetsrelatingtocontractcostsonthesamebasisasthatfortherecognitionofrevenuerelatingtosuchassetsandrecognisestheamortisedassetsincurrentprofitorloss.Forassetsrelatingtocontractcostswhosecarryingvalueishigherthanthedifferencebetweenthefollowingtwoitems,theGroupmakesprovisionforimpairmentfortheexcesstoberecognisedasassetimpairmentlosses:

(1)Theremainingconsiderationexpectedtobeobtainedasaresultofthetransferofgoodsrelatingtosuchassets;

(2)EstimatedcoststobeincurredinconnectionwiththetransferofrelevantgoodsIntheeventthatthedifferencebetween(1)and(2)becomeshigherthanthecarryingvalueofsuchassetsasaresultofchangesinthefactorsofimpairmentforpreviousperiods,previousprovisionsforassetimpairmentlossesshouldbewrittenbackandincludedincurrentprofitorloss,providedthattheasset’scarryingvaluefollowingthewrite-backshallnotexceedthecarryingvaluethatsuchassetswouldhaveonthedateofwrite-backweretherenoprovisionforimpairment.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

27.Governmentgrants

Agovernmentgrantisrecognisedwhentheconditionsattachedtoitcanbecompliedwithandthegovernmentgrantcanbereceived.Foragovernmentgrantintheformoftransferofmonetaryassets,thegrantismeasuredattheamountreceivedorreceivable.Foragovernmentgrantintheformoftransferofnon-monetaryassets,itismeasuredatfairvalue;ifthefairvalueisnotreliablydeterminable,thegrantismeasuredatnominalamount.Governmentgrantsrelatedtoassetsrefertogovernmentassetswhicharegrantedtoenterprisesforthelong-termassetsformedbyacquisition,constructionorinothermanners.Governmentgrantsrelatedtoincomerefertogovernmentgrantsotherthanthoserelatedtoassets.Governmentgrantsrelatedtoincometobeusedascompensationforfutureexpensesorlossesshallberecognisedasdeferredincomeandshallbechargedtocurrentprofitorlossorbeusedtowritedowntherelevantloss,duringtherecognitionoftherelevantcostexpensesorlosses;orusedascompensationforrelevantexpensesorlossesalreadyincurredbyenterprisesshallbedirectlychargedtotheprofitorlossaccountinthecurrentperiodorusedtowritedowntherelevantcost.Thegovernmentgrantsrelatedtoassetsshallbeusedtowritedownthebookvalueoftherelevantassetsorberecognisedasdeferredincome.Thegovernmentgrantsrelatedtoassets,recognisedasdeferredincome,shallbechargedtoprofitandlossreasonablyandsystematicallyinstagesovertheusefullivesoftherelevantassets.Thegovernmentgrantsmeasuredatanominalamountshallbedirectlychargedtocurrentprofitorloss.Ifanyrelatedassetissold,transferred,writtenoffordestroyedbeforetheendofitsusefullife,thebalanceoftheundistributeddeferredincomeshallbetransferredtothecurrentgainorlossondisposaloftheasset.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

28.Incometax

Incometaxcomprisescurrentanddeferredtax.Incometaxisrecognisedasincomeorexpenseinprofitorloss,orrecogniseddirectlyinequityifitarisesfromabusinesscombinationorrelatestoatransactionoreventwhichisrecogniseddirectlyinequity.CurrenttaxliabilitiesorassetsarisingfromthecurrentandpriorperiodsattheamountexpectedtobepaidbytheGrouporreturnedbythetaxauthorityarecalculatedaccordingtorelatedtaxlaws.Deferredtaxisprovidedusingthebalancesheetliabilitymethod,onalltemporarydifferencesatthebalancesheetdatebetweenthetaxbasesofassetsandliabilitiesandtheircarryingamounts,andtemporarydifferencesbetweenthetaxbasesandthecarryingamountsoftheitems,whichhaveataxbaseaccordingtorelatedtaxlawsbutarenotrecognisedasassetsandliabilities.Deferredtaxliabilitiesarerecognisedforalltaxabletemporarydifferences,except:

(1)whenthetaxabletemporarydifferencearisesfromtheinitialrecognitionofgoodwill,oranassetorliabilityinatransactionthatisnotabusinesscombinationand,atthetimeoftransaction,affectsneitheraccountingprofitnortaxableprofitorloss;and

(2)inrespectoftaxabletemporarydifferencesassociatedwithinvestmentsinsubsidiaries,

associatesandjointventures,whenthetimingofthereversalofthetemporarydifferencescanbecontrolledanditisprobablethatthetemporarydifferenceswillnotbereversedintheforeseeablefuture.Deferredtaxassetsarerecognisedforalldeductibletemporarydifferences,andthecarryforwardofunusedtaxlossesandanyunusedtaxcredits.Deferredtaxassetsarerecognisedtotheextentthatitisprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporarydifferences,thecarryforwardofunusedtaxlossesandunusedtaxcreditscanbeutilised,except:

(1)whenthedeductibletemporarydifferencearisesfromtheinitialrecognitionofanassetorliabilityinatransactionthatisnotabusinesscombinationand,atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofitorloss;and

(2)inrespectofthedeductibletemporarydifferencesassociatedwithinvestmentsin

subsidiaries,associatesandjointventures,deferredtaxassetsareonlyrecognisedtotheextentthatitisprobablethatthetemporarydifferenceswillbereversedintheforeseeablefutureandtaxableprofitwillbeavailableagainstwhichthetemporarydifferencescanbeutilisedinthefuture.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

28.Incometax(Continued)

Atthebalancesheetdate,deferredtaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplytotheperiodwhentheassetisrealisedortheliabilityissettled,inaccordancewiththerequirementsoftaxlaws.ThemeasurementofdeferredtaxassetsanddeferredtaxliabilitiesreflectsthetaxconsequencesthatwouldfollowfromthemannerinwhichtheGroupexpects,atthebalancesheetdate,torecovertheassetsorsettletheliabilities.Thecarryingamountofdeferredtaxassetsisreviewedatthebalancesheetdateandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitwillbeavailableinfutureperiodstoallowthedeferredtaxassetstobeutilised.Unrecogniseddeferredtaxassetsarereassessedatthebalancesheetdateandarerecognisedtotheextentthatithasbecomeprobablethatsufficienttaxableprofitwillbeavailabletoallowallorpartofthedeferredtaxassettoberecovered.DeferredtaxassetsanddeferredtaxliabilitiesareoffsetifandonlyiftheGrouphasalegallyenforceablerighttosetoffcurrenttaxassetsandcurrenttaxliabilities,andthedeferredtaxassetsanddeferredtaxliabilitiesrelatetoincometaxesleviedbythesametaxationauthorityoneitherthesametaxableentityordifferenttaxableentitieswhichintendeithertosettlecurrenttaxliabilitiesandassetsonanetbasis,ortorealisetheassetsandsettletheliabilitiessimultaneously,ineachfutureperiodinwhichsignificantamountsofdeferredtaxliabilitiesorassetsareexpectedtobesettledorrecovered.

29.Leases(applicablefrom1January2019)

IdentificationofleasesAtinceptionofacontract,theGroupassesseswhetherthecontractis,orcontains,alease.Acontractis,orcontains,aleaseifthecontractconveystherighttocontroltheuseofanidentifiedassetforaperiodoftimeinexchangeforconsideration.Toassesswhetheracontractconveystherighttocontroltheuseofanidentifiedassetforaperiodoftime,theGroupassesseswhether,throughouttheperiodofuse,thecustomerhasbothoftherighttoobtainsubstantiallyalloftheeconomicbenefitsfromuseoftheidentifiedassetandtherighttodirecttheuseoftheidentifiedasset.IdentificationofseparateleasecomponentsForacontractthatcontainsmultipleseparateleasecomponents,theGroupseparatesthecomponentsofthecontractandaccountsforeachseparateleasecomponent.Therighttouseanunderlyingassetisaseparateleasecomponentifboth:

(1)thelesseecanbenefitfromuseoftheunderlyingasseteitheronitsownortogetherwithotherresourcesthatarereadilyavailabletothelessee;and

(2)theunderlyingassetisneitherhighlydependenton,norhighlyinterrelatedwith,theother

underlyingassetsinthecontract.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

29.Leases(applicablefrom1January2019)(Continued)

Separatingleasecomponentsandnon-leasecomponentsForacontractthatcontainsleasecomponentsandnon-leasecomponents,theGroupaccountsforleasecomponentsandnon-leasecomponentsseparatelyasalessororalessee.AssessmentoftheleasetermTheleasetermisthenon-cancellableperiodofaleaseforwhichtheGrouphastherighttouseanunderlyingasset.IftheGrouphasanoptiontoextendthelease,thatis,theGrouphastherighttoextendthelease,andisreasonablycertaintoexercisethatoption,theleasetermalsoincludesperiodscoveredbyanoptiontoextendthelease.IftheGrouphasanoptiontoterminatethelease,thatis,theGrouphastherighttoterminatethelease,butisreasonablycertainnottoexercisethatoption,theleasetermincludesperiodscoveredbyanoptiontoterminatethelease.TheGroupreassesseswhetheritisreasonablycertaintoexerciseanextensionoption,purchaseoption,ornottoexerciseaterminationoption,upontheoccurrenceofeitherasignificanteventorasignificantchangeinthecircumstancesthatiswithinthecontroloftheGroupandaffectswhethertheGroupisreasonablycertaintoexerciseanoptionnotpreviouslyincludedinitsdeterminationoftheleaseterm.AslesseeTheGroupaccountsasalesseeapplyingNoteIII(15)andNoteIII(21).LeasemodificationsLeasemodificationisachangeinthescopeofalease,ortheconsiderationforalease,thatwasnotpartoftheoriginaltermsandconditionsofthelease,forexample,addingorterminatingtherighttouseoneormoreunderlyingassets,orextendingorshorteningthecontractualleaseterm.TheGroupaccountsforaleasemodificationasaseparateleaseifboth:

(1)themodificationincreasesthescopeoftheleasebyaddingtherighttouseoneormore

underlyingassets;and

(2)theconsiderationfortheleaseincreasesbyanamountcommensuratewiththestand-

alonepricefortheincreaseinscopeandanyappropriateadjustmentstothatstand-alonepricetoreflectthecircumstancesoftheparticularcontract.Foraleasemodificationthatisnotaccountedforasaseparatelease,attheeffectivedateoftheleasemodificationtheGroupremeasurestheleaseliabilitybydiscountingtherevisedleasepaymentsusingareviseddiscountrate.Thereviseddiscountrateisdeterminedastheinterestrateimplicitintheleasefortheremainderoftheleaseterm,orthelessee’sincrementalborrowingrateattheeffectivedateofthemodification,iftheinterestrateimplicitintheleasecannotbereadilydetermined.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

29.Leases(applicablefrom1January2019)(Continued)

Aslessee(Continued)Leasemodifications(Continued)Foraleasemodificationthatisnotaccountedforasaseparatelease,theGroupaccountsfortheremeasurementoftheleaseliabilityby:

(1)decreasingthecarryingamountoftheright-of-useassettoreflectthepartialorfull

terminationoftheleaseforleasemodificationsthatdecreasethescopeofthelease,andrecognisingthegainorlossrelatingtothepartialorfullterminationoftheleaseinprofitorloss;or

(2)makingacorrespondingadjustmenttotheright-of-useassetforallotherlease

modifications.Short-termleasesandleasesoflow-valueassetsTheGroupconsidersaleasethat,atthecommencementdateofthelease,hasaleasetermof12monthsorless,anddoesnotcontainanypurchaseoptionasashort-termlease;andaleaseforwhichthevalueoftheindividualunderlyingassetisnotmorethanRMB40,000whenitisnewasaleaseoflow-valueassets.IftheGroupsubleasesanasset,orexpectstosubleaseanasset,theheadleasedoesnotqualifyasaleaseofalow-valueasset.TheGroupdoesnotrecognisetheright-of-useassetsandleaseliabilitiesforshort-termleasesandlow-valueassets.TheGrouprecognisesleasepaymentsonshort-termleasesandleasesoflow-valueassetsinthecostsoftherelatedassetorprofitorlossonastraight-linebasisovertheleaseterm.AslessorAleaseisclassifiedasafinanceleaseifittransferssubstantiallyalltherisksandrewardsincidentaltoownershipofanunderlyingasset,exceptthataleaseisclassifiedasanoperatingleaseattheinceptiondate.TheGroup,asanintermediatelessor,classifiesthesubleasebyreferencetotheright-of-useassetarisingfromtheheadlease.AslessorofanoperatingleaseRentincomeunderanoperatingleaseisrecognisedonastraight-linebasisovertheleaseterm,throughprofitorloss.Variableleasepaymentsthatarenotincludedinthemeasurementofleasereceivablesarechargedtoprofitorlossasincurred.TheGroupaccountsforamodificationtoanoperatingleaseasanewleasefromtheeffectivedateofthemodification,consideringanyprepaidoraccruedleasepaymentsrelatingtotheoriginalleaseaspartoftheleasepaymentsforthenewlease.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

30.Leases(applicablein2018)

Financeleasesareleaseswiththewholerisksandrewardsrelatedtotheassetsubstantiallytransferred.Theotherkindsofleasesarenominatedoperatingleases.AslesseeofoperatingleasesRentalexpensesunderoperatingleasesarerecognisedasrelevantassetcostsorincurrentprofitorlossonthestraight-linebasisovertheleaseterm.Contingentrentalischargedtocurrentprofitorlosswhenincurred.AslessorofoperatingleasesRentalincomeunderoperatingleasesarerecognisedasprofit/lossforthecurrentperiodonastraight-linebasisovertheleaseterm.Contingentrentalischargedtocurrentprofitorlosswhenincurred.AslesseeunderfinanceleasesAnassetheldunderfinanceleasesisinitiallyrecognisedattheloweroftheleasedassets’fairvalueandthepresentvalueofminimumleasepaymentsontheleasecommencementdate.Theamountoflong-termpayableswillberecognisedasminimumleasepaymentsaccordingly,andthedifferencesbetweentheleasedassets’fairvalueandthepresentvalueofminimumleasepaymentswillberecordedasunrecognisedfinancingcostswhichwillbeamortisedusingtheeffectiveinterestmethodoverthetermoftherelevantlease.Contingentrentalswillberecognisedinprofitorlossfortheperiodwhentheyareactuallyincurred.FixedassetsthatareheldunderfinanceleasesaredepreciatedbyapplyingthesamepolicyasthatforthefixedassetsownedbytheGroup.Ifitcanbereasonablydeterminedthattheownershipoftheleasedassetcanbeobtainedattheendoftheleaseterm,theleasedassetisdepreciatedoveritsusefullife;otherwise,theleasedassetisdepreciatedovertheshorteroftheleasetermanditsusefullife.

31.Dividenddistribution

Cashdividenddistributionisrecognisedasaliabilityintheperiodinwhichitisapprovedbyshareholdersattheannualshareholders’meeting.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

32.Fairvaluemeasurement

Ateachbalancesheetdate,theGroupmeasuresthefairvalueofequityinstrumentinvestments.Fairvaluemeansthepricereceivablefromthedisposalofanassetorrequiredtobepaidforthetransferofaliabilityinanorderlytransactionincurredbymarketparticipantsonthemeasurementdate.TheGroupmeasuresassetsorliabilitiesatfairvaluewiththeassumptionthattheorderlytransactionofassetdisposalorthetransferofliabilitiestakesplaceinthemajormarketfortherelevantassetsorliabilities.Wherethereisnomajormarket,theGroupassumesthatsuchtransactiontakesplaceinthemostfavourablemarketfortherelevantassetsorliabilities.Themajormarket(ormostfavourablemarket)isatradingmarketwhichtheGrouphasaccesstoonthemeasurementdate.TheGroupadoptsassumptionsusedbymarketparticipantswhentheypricetheassetorliabilitywiththeaimofmaximisingitseconomicbenefits.Themeasurementofnon-financialassetsmeasuredatfairvalueshouldtakeintoaccounttheabilityofmarketparticipantstoutilisetheassetinthebestwayforgeneratingeconomicbenefits,ortheabilitytodisposeofsuchassettoothermarketparticipantswhoareabletoutilisetheassetinthebestwayforgeneratingeconomicbenefits.TheGroupadoptsvaluationtechniquesthatareappropriateinthecurrentcircumstancesandsupportedbysufficientusabledataandotherinformation.Observableinputwillbeusedfirstandforemost.Unobservableinputwillonlybeusedwhenitisnotpossibleorpracticabletoobtainobservableinput.Thefairvaluehierarchyinwhichanassetorliabilityismeasuredordisclosedinthefinancialstatementsatfairvaluewillbedeterminedonthebasisofthelowestlevelofinputwhichissignificantforthefairvaluemeasurementasawhole.Inputatthefirstlevelrepresentsunadjustedquotedpricesinanactivemarketfortheacquisitionofthesameassetorliabilityonthemeasurementdate.Inputatthesecondlevelrepresentsdirectlyorindirectlyobservableassetsorliabilitiesapartfrominputatthefirstlevel.Inputatthethirdlevelrepresentsunobservableinputfortheassetorliability.Ateachbalancesheetdate,theGroupreassessesassetsandliabilitiesmeasuredatfairvalueonanongoingbasisrecognisedinthefinancialstatementstodeterminewhethertheleveloffairvaluemeasurementshouldbechanged.

33.Segmentinformation

TheGroupidentifiesoperatingsegmentsbasedontheinternalorganizationstructure,managementrequirementsandinternalreportingsystem,anddisclosessegmentinformationofreportablesegmentswhichisdeterminedonthebasisofoperatingsegments.AnoperatingsegmentisacomponentoftheGroupthatsatisfiesallofthefollowingconditions:

(1)thecomponentisabletoearnrevenuesandincurexpensesfromitsordinaryactivities;(2)thecomponent’soperatingresultsareregularlyreviewedbytheGroup’smanagementtomakedecisionsaboutresourcestobeallocatedtothesegmentandtoassessitsperformance,and(3)forwhichtheinformationonfinancialposition,operatingresultsandcashflowsisavailabletotheGroup.Iftwoormoreoperatingsegmentshavesimilareconomiccharacteristicsandsatisfycertainconditions,theyareaggregatedintoonesingleoperatingsegment.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

34.Significantaccountingjudgementsandestimates

Thepreparationofthefinancialstatementsrequiresmanagementtomakejudgements,estimatesandassumptionsthataffectthereportedamountsofrevenue,expenses,assetsandliabilities,andtheiraccompanyingdisclosures,andthedisclosureofcontingentliabilitiesatthebalancesheetdate.Uncertaintyabouttheseassumptionsandestimatescouldresultinoutcomesthatcouldrequireamaterialadjustmenttothecarryingamountsoftheassetsorliabilitiesaffectedinthefuture.JudgementsIntheprocessofapplyingtheGroup’saccountingpolicies,managementhasmadethefollowingjudgements,whichhavethemostsignificanteffectontheamountsrecognisedinthefinancialstatements:

Operatingleases–aslessorTheGroupsignedleasecontractsforinvestmentproperties.TheGroupconsiderstheseleasesasoperatingleasesbecauseaccordingtotheleasecontractterms,theGroupreservesallsignificantrisksandrewardsofownershipoftheproperties.BusinessmodelTheclassificationoffinancialassetsatinitialrecognitionisdependentontheGroup’sbusinessmodelformanagingtheassets.FactorsconsideredbytheGroupinjudgingthebusinessmodelincludeenterprisevaluation,themethodofreportingtheresultsoffinancialassetstokeymanagementmembers,risksaffectingtheresultsoffinancialassetsandthemethodformanagingsuchrisks,aswellastheformofremunerationreceivedbythemanagementpersonnelofthebusinessesconcerned.Inassessingwhetherthebusinessmodelisaimedatreceivingcontractcashflows,theGroupisrequiredtoanalyseandexercisejudgmentinrespectofthereasons,timing,frequencyandvaluesofanydisposalspriortomaturity.ContractualcashflowcharacteristicsTheclassificationoffinancialassetsatinitialrecognitiondependsonthefinancialasset’scontractualcashflowcharacteristics,andthejudgementsonwhetherthecontractualcashflowsaresolelypaymentsofprincipalandinterestontheprincipalamountoutstanding,includingwhenassessingthemodificationofthetimevalueofmoney,thejudgementonwhetherthereisanysignificantdifferencefromthebenchmarkcashflowandwhetherthefairvalueoftheprepaymentfeaturesisinsignificantforfinancialassetswithprepaymentfeatures,etc.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

34.Significantaccountingjudgementsandestimates(Continued)

EstimationuncertaintyThekeyassumptionsconcerningthefutureandotherkeysourcesofestimationuncertaintyattheendofthereportingperiodthatmaycausematerialadjustmenttothecarryingamountsofassetsandliabilitiesarediscussedbelow.ImpairmentoffinancialinstrumentsTheGroupusestheexpectedcreditlossmodeltoassesstheimpairmentoffinancialinstruments.TheGroupisrequiredtoperformsignificantjudgementandestimationandtakeintoaccountallreasonableandsupportableinformation,includingforward-lookinginformation.Whenmakingsuchjudgementsandestimates,theGroupinferstheexpectedchangesinthedebtor'screditriskbasedonhistoricalrepaymentdatacombinedwitheconomicpolicies,macroeconomicindicators,industryrisksandotherfactors.Thedifferentestimatesmayimpacttheimpairmentassessment,andtheprovisionforimpairmentmayalsonotberepresentativeoftheactualimpairmentlossinthefuture.Impairmentofnon-currentassetsotherthanfinancialassets(excludinggoodwill)TheGroupassesseswhetherthereareanyindicatorsofimpairmentfornon-currentassetsotherthanfinancialassetsatthedateofstatementoffinancialposition.Intangibleassetswithindefiniteusefullivesaretestedforimpairmentannuallyandatothertimeswhensuchanindicatorexists.Othernon-currentassetsotherthanfinancialassetsaretestedforimpairmentwhenthereareindicatorsthatthecarryingamountsmaynotberecoverable.Animpairmentexistswhenthecarryingvalueofanassetorassetgroupexceedsitsrecoverableamount,whichisthehigherofitsfairvaluelesscoststosellanditspresentvalueoffuturecashflows.Thecalculationofthefairvaluelesscoststosellisbasedonavailabledatafrombindingsalestransactionsinanarm’slengthtransactionofsimilarassetsorobservablemarketpriceslessincrementalcostsfordisposingoftheasset.Whenvalue-in-usecalculationsareundertaken,managementmustestimatetheexpectedfuturecashflowsfromtheassetorassetgroupandchooseasuitablediscountrateinordertocalculatethepresentvalueofthosecashflows.RefertoNoteV(12),(13),(14),(15),(16).ImpairmentofgoodwillGoodwillistestedforimpairmentatleastattheendofeachyear.Forthepurposeofimpairmenttesting,thepresentvalueoffuturecashflows,whicharegeneratedfromassetgroupsorsetsofassetgroupsconsideredtogetherwithallocatedgoodwill,isestimated.TheGroupestimatesthepresentvalueoffuturecashflowsfromassetgroupsorsetsofassetgroupsbyforecastingtherelatedcashflowsandselectingasuitablediscountrate.RefertoNoteV(17).DeferredtaxassetsTotheextentthatitisprobablethattherearesufficienttaxableprofitstooffsetthedeductiblelosses,deferredtaxassetsshallberecognisedforallunuseddeductiblelosses.Substantialmanagement’sjudgementsregardingthetimingandamountoffuturetaxableprofitareneededwhenestimatingtheamountofdeferredtaxassets.Fairvalueofnon-listedequityinvestmentsNon-listedequityinvestmentsarevaluedasexpectedfuturecashflowsbasedonthecurrentdiscountrateofotherfinancialinstrumentswithsimilarcontractualtermsandriskcharacteristics.ThisrequirestheGrouptoestimatefuturecashflows,creditrisks,fluctuationsanddiscountratesandisthereforeuncertain.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

34.Significantaccountingjudgementsandestimates(Continued)

Estimationuncertainty(Continued)RewardpointsTheGroupconsiderstheobservableseparatesellingpriceoftheredeemablefreeordiscountedgoods,theprobabilityofredeemingandalltherelatedinformation,afterwhichestimatesareasonablerewardpointsseparatesellingprice.Whenestimatingtheprobabilityofredeeming,theGroupbasesonhistoricaldata,currentdataandtakesintoconsiderationfuturechangeoftheclient,alsomarkettrendsandotherfactors.TheGroupre-evaluatestheseparatesellingpriceofrewardpointsatleastonceeverybalancesheetdate,andallocatesittotherewardpointstransactionpricebasedontheresult.ReturnclausesTheGroupreasonablyestimatesthereturnrateforcontractgroupswithsimilarcharacteristicsaccordingtothehistoricalreturnrate,currentconditionsofreturn,thechangeofcustomersandmarkets.TheGroupatleastreassessesthereturnrateateverybalancesheetdateanddeterminesreturnpayablesandcostofreturnreceivables.WarrantyTheGroupmakesreasonableestimatesonwarrantyfeeratesinrespectofcontractgroupswithsimilarcharacteristicsbasedonthehistoricaldataandcurrentconditionsofwarranty,takingintoconsiderationallrelevantinformationsuchasproductimprovementsandmarketchanges,amongothers.TheGroupreassessesthewarrantyfeeratesatleastannuallyateachbalancesheetdateanddeterminesitsestimatedliabilitiesbasedonthereassessedwarrantyfeerates.EvaluatinglimitationsofvariableconsiderationWhenestimatingvariableconsideration,theGroupconsidersallthereasonableinformationobtained,includinghistoricalinformation,currentinformationandforecastedinformation,andalsoestimatesallthepossibleconsiderationamountandpossibilitywithinareasonablerange.Forcontractsthatarelikelytohavemultipledifferentoutcomes,theGroupestimatestheconsiderationamountbasedontheexpectedvaluemethod.Forcontractswithonlytwopossibleoutcomes,theGroupestimatestheconsiderationamountbasedonthemostlikelyoutcome.Theestimatedamountofvariableconsiderationwillbeincludedinthetransactionpriceonlytotheextentthatitishighlyprobablethatasignificantreversalintheamountofcumulativerevenuerecognisedwillnotoccurwhentheuncertaintyassociatedwiththevariableconsiderationissubsequentlyresolved.TheGroupre-evaluatestheamountofvariableconsiderationoneverybalancesheetdate,includingre-evaluatingwhethertheestimationsusedarelimited,toreflectchangeswhichoccurredinthefinancialstatementperiod.Lessee’sincrementalborrowingrateIftheinterestrateimplicitintheleasecannotbereadilydetermined,theGroupmeasurestheleaseliabilityatthepresentvalueoftheleasepaymentsdiscountedusingthelessee’sincrementalborrowingrate.Accordingtotheeconomicenvironment,theGrouptakestheobservableinterestrateasthereferencebasisfordeterminingtheincrementalborrowingrate,thenadjuststheobservableinterestratebasedonitsowncircumstances,underlyingassets,leasetermsandamountsofleaseliabilitiestodeterminetheapplicableincrementalborrowingrate.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

35.Changesinaccountingpoliciesandestimates

ChangesinaccountingpoliciesTheNewLeasesStandardIn2018,theMOFissuedrevisedAccountingStandardforBusinessEnterprisesNo.21–Leases(the“NewLeasesStandard”).TheNewLeasesStandardintroducesasinglemodelsimilartothecurrentaccountingtreatmentoffinanceleases,requiringthelessortorecogniseright-of-useassetsandleaseliabilitiesforalltheleases,exceptforshort-termleasesandleasesoflow-valueassets,andrecognisedepreciationandinterestexpense,respectively.TheGrouphasaccountedforleasesundertherevisedleasesstandardsince1January2019.Asapracticalexpedient,theGroupdidnotreassesswhetheracontractis,orcontains,aleaseatthedateofinitialapplication.Accordingtothetransitionalrequirements,theGroupdidnotrestatecomparativeinformation.Instead,theGrouprecognisedthecumulativeeffectoftheinitialapplicationoftheNewLeasesStandardasanadjustmenttotheopeningbalanceofretainedearningsof2019atthedateofinitialapplication:

(1)theGrouprecognisedtheright-of-useassetandtheleaseliabilitiesattheamountofthe

carryingamountoftheleaseassetandleaseliabilityundertheoriginalstandards

applicableatthedateofinitialapplicationforleasespreviouslyclassifiedasfinance

leases;

(2)forleasespreviouslyclassifiedasoperatingleases,theGrouprecognisedleaseliabilities

basedonthepresentvalueoftheremainingleasepaymentsdiscountedattheincremental

borrowingrateatthedateofinitialapplication,andmeasuredright-of-useassetsbasedon

theamountequaltotheleaseliabilities,adjustedforanyrelatedprepaidandaccrued

leasepaymentspreviouslyrecognised;and

(3)theGroupappliedNoteIII(17)toperformitsimpairmenttestofright-of-useassetsand

accountfortheimpairment.

Foroperatingleasesoflow-valueassetsandoperatingleasesforwhichtheleasetermendswithin12monthsbeforeinitialapplication,theGroupappliedasimplifiedapproachanddidnotrecognisetheright-of-useassetsandleaseliabilities.Forleasespreviouslyclassifiedasoperatingleases,theGroupalsoappliedtheavailablepracticalexpedientswhereinit:

(1)appliedasinglediscountratetoaportfolioofleaseswithreasonablysimilar

characteristics;andexcludedtheinitialdirectcostsfromthemeasurementoftheright-of-

useassetatthedateofinitialapplication;

(2)usedhindsightindeterminingtheleasetermwherethecontractcontainedoptionsto

extendorterminatethelease;

(3)reliedonitsassessmentofwhetherleasesareonerousapplyingNoteIII(17)immediately

beforethedateofinitialapplicationasanalternativetoperforminganimpairmentreview,

andadjustedtheright-of-useassetsatthedateofinitialapplicationbytheamountofany

provisionforonerousleasesrecognisedinthebalancesheetimmediatelybeforethedate

ofinitialapplication;and

(4)accountedforthechangesinleasesbeforethedateofinitialapplicationbasedonthefinal

arrangementforsuchchanges.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

35.Changesinaccountingpoliciesandestimates(Continued)

Changesinaccountingpolicies(Continued)TheNewLeasesStandard(Continued)

Asanintermediatelessor,theGroupreassessedsubleasesthatwereclassifiedasoperating

leasesbeforeandareongoingatthedateofinitialapplication,todeterminewhethereach

subleaseshouldbeclassifiedasanoperatingleaseorafinanceleaseapplyingtheNew

LeasesStandard.Exceptforthese,theGroupdidnotadjusttheleasesforwhichitisan

intermediatelessor.

TheGroupreconciledtheoutstandingminimumleasepaymentsforoperatingleaseswithleaseliabilitiesincludedinthebalancesheetasat1January2019basedonthepresentvalueoftheminimumleasepaymentsdiscountedusingtheincrementalborrowingrateoftheGroupasthelesseeasat1January2019asfollows:

Minimumleasepaymentsforoperatingleasesasat31December20181,873,246,508.02
Less:Practicalexpedients81,858,324.15
Including:Short-termleases62,717,394.74
Leaseswithleasetermthatendswithin12months14,646,195.26
Leasesoflow-valueassetswithleasetermthatendsinmorethan12months4,494,734.15
Add:Paymentsforoptionalextensionperiodsnotrecognisedasat31December2018-
1,791,388,183.87
Weightedaverageincrementalborrowingrate4.39%
Discountedoperatingleasecommitmentsasat1January20191,636,342,934.06
Add:Financeleasepayablesasat31December20189,625,302.89
Add(orless):Otheradjustments-
Leaseliabilitiesasat1January20191,645,968,236.95

TheeffectofimplementationoftheNewLeasesStandardonthebalancesheetasat1January2019isasfollows:

Consolidatedbalancesheet

CarryingamountUndertheoriginalstandardEffect
Assets
Right-of-useassets1,833,958,765.93-1,833,958,765.93
Advancestosuppliers414,434,268.91583,484,515.95(169,050,247.04)
Othernon-currentassets58,168,919.1172,365,863.71(14,196,944.60)
Fixedassets594,067,973.91607,933,827.67(13,865,853.76)
Intangibleassets318,693,082.72319,207,126.15(514,043.43)
3,219,323,010.581,582,991,333.481,636,331,677.10

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

35.Changesinaccountingpoliciesandestimates(Continued)

Changesinaccountingpolicies(Continued)TheNewLeasesStandard(Continued)TheeffectofimplementationoftheNewLeasesStandardonthebalancesheetasat1January2019isasfollows:(Continued)Consolidatedbalancesheet(Continued)

CarryingamountUndertheoriginalstandardEffect
Liabilities
Leaseliabilities1,107,537,419.92-1,107,537,419.92
Non-currentliabilitiesduewithinoneyear538,430,817.035,861,324.37532,569,492.66
Otherpayables1,528,413,333.331,528,424,590.29(11,256.96)
Long-termpayables800,000.004,563,978.52(3,763,978.52)
3,175,181,570.281,538,849,893.181,636,331,677.10

TheCompany’sbalancesheet

CarryingamountUndertheoriginalstandardEffect
Assets
Right-of-useassets6,827,192.24-6,827,192.24
Advancestosuppliers4,757,318.654,760,182.00(2,863.35)
11,584,510.894,760,182.006,824,328.89
CarryingamountUndertheoriginalstandardEffect
Liabilities
Leaseliabilities6,038,239.60-6,038,239.60
Non-currentliabilitiesduewithinoneyear786,089.29-786,089.29
6,824,328.89-6,824,328.89

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

35.Changesinaccountingpoliciesandestimates(Continued)

Changesinaccountingpolicies(Continued)TheNewLeasesStandard(Continued)TheeffectofimplementationoftheNewLeasesStandardonthefinancialstatementsfortheyearended31December2019isasfollows:

Consolidatedbalancesheet

CarryingamountUndertheoriginalstandardEffect
Assets
Right-of-useassets1,955,461,133.01-1,955,461,133.01
Advancestosuppliers384,882,547.24615,222,683.69(230,340,136.45)
Othernon-currentassets77,354,970.39100,466,171.39(23,111,201.00)
Fixedassets612,599,944.11622,528,263.55(9,928,319.44)
Intangibleassets319,946,727.04320,329,827.67(383,100.63)
Deferredtaxassets60,631,015.9948,148,235.2912,482,780.70
3,410,876,337.781,706,695,181.591,704,181,156.19
Liabilities
Leaseliabilities1,182,407,085.08-1,182,407,085.08
Non-currentliabilitiesduewithinoneyear601,427,093.6235,174,327.51566,252,766.11
Otherpayables1,756,858,461.021,758,047,509.65(1,189,048.63)
Long-termpayables800,000.001,126,365.68(326,365.68)
3,541,492,639.721,794,348,202.841,747,144,436.88

Consolidatedincomestatement

CarryingamountUndertheoriginalstandardEffect
Operatingcosts46,292,408,840.5346,293,105,089.37(696,248.84)
Sellingexpenses3,055,403,668.163,072,829,651.71(17,425,983.55)
Administrativeexpenses842,014,983.53843,205,630.95(1,190,647.42)
Financecosts119,972,954.7943,351,250.4176,621,704.38
Gainondisposalofassets(lossexpressedwithpositivevalue)2,551,175.02688,411.841,862,763.18
Incometaxes372,439,441.37384,922,222.07(12,482,780.70)
50,679,688,713.3650,636,725,432.6742,963,280.69

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

35.Changesinaccountingpoliciesandestimates(Continued)

Changesinaccountingpolicies(Continued)TheNewLeasesStandard(Continued)TheeffectofimplementationoftheNewLeasesStandardonthefinancialstatementsfortheyearended31December2019isasfollows:(Continued)TheCompany’sbalancesheet

CarryingamountUndertheoriginalstandardEffect
Assets
Right-of-useassets6,217,504.50-6,217,504.50
Advancestosuppliers7,996,243.288,029,735.59(33,492.31)
Deferredtaxassets9,327,850.539,265,861.0761,989.46
23,541,598.3117,295,596.666,246,001.65
Liabilities
Leaseliabilities5,461,257.38-5,461,257.38
Non-currentliabilitiesduewithinoneyear32,640,325.7731,638,984.251,001,341.52
38,101,583.1531,638,984.256,462,598.90

TheCompany’sincomestatement

CarryingamountUndertheoriginalstandardEffect
Administrativeexpenses73,489,681.0973,493,681.60(4,000.51)
Financecosts(64,025,013.54)(64,307,600.76)282,587.22
Incometaxes14,503,442.8714,565,432.33(61,989.46)
23,968,110.4223,751,513.17216,597.25

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

35.Changesinaccountingpoliciesandestimates(Continued)

Changesinaccountingpolicies(Continued)TheNewLeasesStandard(Continued)Inaddition,thecashpaidbytheGroupforrepaymentoftheprincipalandinterestoftheleaseliabilityisincludedinthestatementofcashflowsascashoutflowsfromfinancingactivities,andthepaymentsforshort-termleasesandleasesoflow-valueassetsaccountedforusingthepracticalexpedientsandvariableleasepaymentsnotincludedinthemeasurementoftheleaseliabilityarestillincludedincashoutflowsfromoperatingactivities.ChangeinthereportingformatoffinancialstatementsTomeettherequirementsoftheNoticeonRevisingandIssuingFormatof2019FinancialStatementsforGeneralBusinessEnterprises(CaiKuai[2019]No.6)andtheNoticeonRevisingandIssuingFormatofConsolidatedFinancialStatements(2019edition)(CaiKuai[2019]No.16),inthebalancesheet,theamountpreviouslypresentedin“notesreceivableandaccountsreceivable”shallbepresentedseparatelyin“notesreceivable”and“accountsreceivable”;theamountpreviouslypresentedin“notespayableandaccountspayable”shallbepresentedseparatelyin“notespayable”and“accountspayable”;thenotesandreceivablesatfairvaluethroughothercomprehensiveincomepreviouslypresentedin“othercurrentassets”areseparatelypresentedin“receivablesfinancing”;the“interestreceivable”in“otherreceivables”ischangedtoreflectonlytheoutstandinginterestonfinancialinstrumentsthatexpiredandcanbecollectedatthebalancesheetdate(theinterestonthefinancialinstrumentaccruedusingtheeffectiveinterestmethodisincludedintheoutstandingamountofthecorrespondingfinancialinstrument);the“interestpayable”in“otherpayables”ischangedtoreflectonlytheoutstandinginterestonfinancialinstrumentsthatexpiredandshouldbepaidatthebalancesheetdate(theinterestonthefinancialinstrumentaccruedusingtheeffectiveinterestmethodareincludedintheoutstandingamountofthecorrespondingfinancialinstrument).Intheincomestatement,theamountpresentedin“incomefromthederecognitionoffinancialassetsmeasuredatamortisedcost”of“investmentincome”includeprofitorlossincurredwhenderecognisingfinancialassetsmeasuredatamortisedcost.TheGrouphasretrospectivelyadjustedthecomparativeamountscorrespondingly.Thechangesinaccountingpolicieshavehadnoimpactonthenetprofitandequityintheconsolidatedandcompanyfinancialstatements.

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

35.Changesinaccountingpoliciesandestimates(Continued)

Changesinaccountingpolicies(Continued)Thecumulativeeffectsoftheretrospectiveadjustmentscausedbytheabovechangesinaccountingpoliciesonthefinancialstatementsareasfollows:

TheGroup

2019

BeforechangesChangesinaccountingpoliciesAfterchanges
Closingbalancefor2018EffectoftheNewLeasesStandardOtherchangesinpresentationoffinancialstatementsOpeningbalancefor2019
Cashandbankbalances8,089,781,304.56-6,376,708.688,096,158,013.24
Notesreceivable--789,536,654.23789,536,654.23
Accountsreceivable--9,336,861,647.929,336,861,647.92
Receivablesfinancing--567,775,275.40567,775,275.40
Notesreceivableandaccountsreceivable10,694,173,577.55-(10,694,173,577.55)-
Advancestosuppliers583,484,515.95(169,050,247.04)-414,434,268.91
Otherreceivables643,493,359.32-(6,376,708.68)637,116,650.64
Fixedassets607,933,827.67(13,865,853.76)-594,067,973.91
Intangibleassets319,207,126.15(514,043.43)-318,693,082.72
Right-of-useassets-1,833,958,765.93-1,833,958,765.93
Othernon-currentfinancialassets72,365,863.71(14,196,944.60)-58,168,919.11
Short-termborrowings2,597,652,702.43-10,973,397.392,608,626,099.82
Notespayable--3,416,755,681.803,416,755,681.80
Accountspayable--6,468,535,961.176,468,535,961.17
Notespayableandaccountspayable9,885,291,642.97-(9,885,291,642.97)-
Otherpayables1,539,436,971.93(11,256.96)(11,012,381.64)1,528,413,333.33
Non-currentliabilitiesduewithinoneyear5,861,324.37532,569,492.66-538,430,817.03
Leaseliabilities-1,107,537,419.92-1,107,537,419.92
Long-termborrowings31,600,000.00-38,984.2531,638,984.25
Long-termpayables4,563,978.52(3,763,978.52)-800,000.00

2018

BeforechangesChangesinaccountingpoliciesAfterchanges
Closingbalancefor2018EffectoftheNewLeasesStandardOtherchangesinpresentationoffinancialstatementsOpeningbalancefor2019
Financecosts112,862,739.12-(61,372,718.53)51,490,020.59
Investmentincome319,897,172.23-(61,372,718.53)258,524,453.70

IIISummaryofsignificantaccountingpoliciesandaccountingestimates(Continued)

35.Changesinaccountingpoliciesandestimates(Continued)

Changesinaccountingpolicies(Continued)Thecumulativeeffectsoftheretrospectiveadjustmentscausedbytheabovechangesinaccountingpoliciesonthefinancialstatementsareasfollows:(Continued)TheCompany2019

BeforechangesChangesinaccountingpoliciesAfterchanges
Closingbalancefor2018EffectoftheNewLeasesStandardOtherchangesinpresentationoffinancialstatementsClosingbalancefor2018
Cashandbankbalances1,817,654,598.01-3,697,083.331,821,351,681.34
Notesreceivable--34,154,774.7534,154,774.75
Accountsreceivable--631,236,593.94631,236,593.94
Receivablesfinancing--29,716,205.6429,716,205.64
Notesreceivableandaccountsreceivable695,107,574.33-(695,107,574.33)-
Advancestosuppliers4,760,182.00(2,863.35)-4,757,318.65
Otherreceivables1,541,980,883.50-(3,697,083.33)1,538,283,800.17
Right-of-useassets-6,827,192.24-6,827,192.24
Notespayable--252,317,800.78252,317,800.78
Accountspayable--442,049,241.22442,049,241.22
Notespayableandaccountspayable694,367,042.00-(694,367,042.00)-
Otherpayables1,481,817,856.56-(38,984.25)1,481,778,872.31
Non-currentliabilitiesduewithinoneyear-786,089.29-786,089.29
Leaseliabilities-6,038,239.60-6,038,239.60
Long-termborrowings31,600,000.00-38,984.2531,638,984.25
BeforechangesChangesinaccountingpoliciesAfterchanges
Closingbalancefor2018EffectoftheNewLeasesStandardOtherchangesinpresentationoffinancialstatementsOpeningbalancefor2019
Financecosts(42,814,941.43)-(1,688,557.15)(44,503,498.58)
Investmentincome704,244,539.45-(1,688,557.15)702,555,982.30

IVTaxation

1.Maincategoriesandratesoftaxes:

CategoriesTaxbaseTaxrate
Corporateincometax(“CIT”)Taxableincome10%,15%,20%or25%
Value-addedtax(“VAT”)Taxablevalueaddedamount(TaxpayableiscalculatedusingthetaxablesalesamountmultipliedbytheeffectivetaxratelessdeductibleVATinputofthecurrentperiod)0%,3%,5%,6%,9%,10%,13%or16%
CitymaintenanceandconstructiontaxAmountofVATpaid5%or7%
EducationalsurchargeAmountofVATpaid3%
LocaleducationalsurchargeAmountofVATpaid2%
IVTaxation(Continued)
2.Taxpreferences(Continued)

VNotestotheconsolidatedfinancialstatements

1.Cashandbankbalances

31December201931December2018
Cashonhand5,077,406.655,587,191.18
Cashatbanks8,434,585,141.717,632,906,538.27
Cashandcashequivalents8,417,599,358.837,626,529,829.59
Undueinterestreceivable16,985,782.886,376,708.68
Othercashbalances442,672,297.43457,664,283.79
Depositsforlettersofcredit124,806.004,191,246.00
Depositsforbankacceptancebills442,547,491.43453,473,037.79
8,882,334,845.798,096,158,013.24

Currentdepositsearninterestattheratebasedoncurrentdepositinterestrates.Maturitiesofshort-termtimedepositsrangefrom1monthto6monthsdependingonthefundarrangementsoftheGroup,andthedepositsearninterestattherespectivedepositrates.Thematuritiesofbanknoticedepositsare7daysdependingonthefundarrangementoftheGroup,andthedepositsearninterestattherespectivedepositrates.

2.Notesreceivable

31December201931December2018
Commercialacceptancebills793,301,688.64789,536,654.23

At31December2019and2018,therewerenonotesreceivablethatwerepledged.

VNotestotheconsolidatedfinancialstatements(Continued)

2.Notesreceivable(Continued)

NotesreceivableendorsedordiscountedbytheGrouptootherpartieswhichwerenotyetdueat31December2019and31December2018areasfollows:

31December2019

31December201931December2018
DerecognisedNotderecognisedDerecognisedNotderecognised
Commercialacceptancebills-64,038,348.12-170,314,843.11

Asat31December2019and31December2018,notesreceivablethatwereconvertedintoaccountsreceivableduetothedrawer’sinabilitytosettlethenotesonthematuritydateareasfollows:

31December2019

31December201931December2018
Commercialacceptancebills1,174,861.29-

Thecreditperiodforaccountsreceivablenormallyrangesfrom0to90days.Accountsreceivableareinterest-free.Anaginganalysisofaccountsreceivableisasfollows:

31December201931December2018
Within1year10,622,827,598.959,339,491,654.21
1to2years19,945,711.6915,786,120.79
2to3years896,129.904,825,981.07
Over3years14,941,871.1016,279,326.59
Less:Baddebtprovisionforaccountsreceivable40,629,418.1239,521,434.74
10,617,981,893.529,336,861,647.92

VNotestotheconsolidatedfinancialstatements(Continued)

3.Accountsreceivable(Continued)

Changesinprovisionforbaddebtsarepresentedasfollows:

OpeningbalanceReversalofwrite-offinpreviousyearsIncreasesintheyearIncreasesinmergerReversalintheyearWrittenoffintheyearClosingbalance
201939,521,434.7422,080.0025,098,772.5056,980.49(20,246,309.59)(3,823,540.02)40,629,418.12
201843,925,465.41221,031.3512,467,357.34-(16,899,781.64)(192,637.72)39,521,434.74

Thecarryingamountofaccountsreceivablethataffectedthechangesinprovisionthisyearisas

follows:

31December2019

31December2019
CarryingamountBaddebtprovisions
AmountProportionAmountProportion
Itemsforwhichprovisionforbaddebtsisrecognisedseparately590,399,747.845.54%(18,329,609.15)3.10%
Itemsforwhichprovisionforbaddebtsisrecognisedbygroup(creditriskcharacteristics)10,068,211,563.8094.46%(22,299,808.97)0.22%
10,658,611,311.64100.00%(40,629,418.12)0.38%
31December2018
CarryingamountBaddebtprovisions
AmountProportionAmountProportion
Itemsforwhichprovisionforbaddebtsisrecognisedseparately595,919,487.296.36%(16,766,679.23)2.81%
Itemsforwhichprovisionforbaddebtsisrecognisedbygroup(creditriskcharacteristics)8,780,463,595.3793.64%(22,754,755.51)0.26%
9,376,383,082.66100.00%(39,521,434.74)0.42%

VNotestotheconsolidatedfinancialstatements(Continued)

3.Accountsreceivable(Continued)

At31December2019,accountsreceivablethatareindividuallysignificantandindividuallyassessedforprovisionsareasfollows:

Carryingamount

CarryingamountBaddebtprovisionExpectedCreditLossRateAssessmentforimpairment
Receivableofmedicalinsurance425,784,659.32-0.00%Thereceivableofmedicalinsurancehaslower-tierdefaultrisk.
ClientA11,559,178.29(11,559,178.29)100.00%Debtorhadirregularoperationsofsubjecttoseriousfinancialdifficultiesandrelatedtomultiplelawsuits,iswithlower-tierrecoverability.
ClientB2,447,976.74(2,447,976.74)100.00%Debtorhadirregularoperationsofsubjecttoseriousfinancialdifficulties,andhasbeenplacedonanationallistofdefaulters,withhighlyriskofgoingbankruptcyorfinancialrestructuring.
ClientC2,365,253.03(2,365,253.03)100.00%Debtorhadirregularoperationsofsubjecttoseriousfinancialdifficulties,andhasbeenplacedonanationallistofdefaulters,withhighlyriskofgoingbankruptcyorfinancialrestructuring.
Others148,242,680.46(1,957,201.09)1.32%Partofthereceivabletakeslongerthanusualtorecover,andhasriskofrecoverability
590,399,747.84(18,329,609.15)

At31December2018,accountsreceivablethatwereindividuallysignificantandindividuallyassessedforprovisionsareasfollows:

Carryingamount

CarryingamountBaddebtprovisionExpectedCreditLossRateAssessmentforimpairment
Receivableofmedicalinsurance380,933,117.06(605,476.95)0.16%Thereceivableofmedicalinsurancehaslower-tierdefaultrisk.
ClientA11,559,178.29(11,559,178.29)100.00%Debtorhadirregularoperationsofsubjecttoseriousfinancialdifficultiesandrelatedtomultiplelawsuits,iswithlower-tierrecoverability.
Others203,427,191.94(4,602,023.99)2.26%Partofthereceivabletakeslongerthanusualtorecover,andhasriskofrecoverability
595,919,487.29(16,766,679.23)

VNotestotheconsolidatedfinancialstatements(Continued)

3.Accountsreceivable(Continued)

TheaccountsreceivableforwhichtheGrouprecognisedprovisionforbaddebtsusingtheaginganalysismethodarepresentedasfollows:

31December2019

31December201931December2018
EstimateddefaultamountExpectedcreditlossrateExpectedcreditlossinentirelifetimeEstimateddefaultamountExpectedcreditlossrateExpectedcreditlossinentirelifetime
Within1year10,046,467,724.080.20%(19,806,004.64)8,763,673,896.900.25%(21,544,996.66)
1to2years18,859,269.1410.47%(1,974,732.42)10,195,222.354.83%(492,440.38)
2to3years896,129.9013.34%(119,533.01)3,462,472.018.53%(295,199.01)
Over3years1,988,440.6820.09%(399,538.90)3,132,004.1113.48%(422,119.46)
10,068,211,563.80(22,299,808.97)8,780,463,595.37(22,754,755.51)

TheprovisionforbaddebtsamountedtoRMB25,098,772.50in2019(2018:RMB12,467,357.34),includingRMB20,246,309.59whichwasrecoveredorreversed(2018:RMB16,899,781.64).Importantrecoveredorreverseditemsofprovisionforindividuallyassessedbaddebtsin2019arelistedbelow:

Reasonforrecoverabilityor

reversal

ReasonforrecoverabilityorreversalOriginalassessmentforimpairmentRecoveredorreversedamountMethodofrecovery
ClientAAmountreceivedUncertaintyinrecovery167,280.00Amountreceived
ClientBAmountreceivedUncertaintyinrecovery140,801.62Amountreceived
ClientCAmountreceivedUncertaintyinrecovery117,446.10Amountreceived
ClientDAmountreceivedUncertaintyinrecovery99,886.22Amountreceived

525,413.94Importantrecoveredorreverseditemsofprovisionforindividuallyassessedbaddebtsin2018arelistedbelow:

Importantrecoveredorreverseditemsofprovisionforindividuallyassessedbaddebtsin2018arelistedbelow:

Reasonforrecoverabilityor

reversal

ReasonforrecoverabilityorreversalOriginalassessmentforimpairmentRecoveredorreversedamountMethodofrecovery
ClientAAmountreceivedUncertaintyinrecovery4,083,065.20Amountreceived
ClientBAmountreceivedUncertaintyinrecovery93,140.50Amountreceived
ClientCAmountreceivedUncertaintyinrecovery54,698.00Amountreceived
ClientDAmountreceivedUncertaintyinrecovery54,437.96Amountreceived

VNotestotheconsolidatedfinancialstatements(Continued)

3.Accountsreceivable(Continued)

Accountsreceivablewrittenoffin2019areRMB3,823,540.02(2018:RMB192,637.72).Accountsreceivablewrittenoffin2019areanalysedbelow:

Accountsreceivablewrittenoffin2019areanalysedbelow:

Natureofthe

receivable

NatureofthereceivableAmountReasonFulfiledwrite-offproceduresRelatedpartytransactionornot
ClientAPaymentforgoods793,588.14Non-recoverableThewrite-offprocedureshavebeenfulfilledinaccordancewiththeinternalrulesandregulations.No
ClientBPaymentforgoods506,604.84Non-recoverableThewrite-offprocedureshavebeenfulfilledinaccordancewiththeinternalrulesandregulations.No
ClientCPaymentforgoods280,324.00Non-recoverableThewrite-offprocedureshavebeenfulfilledinaccordancewiththeinternalrulesandregulations.No
ClientDPaymentforgoods276,000.00Non-recoverableThewrite-offprocedureshavebeenfulfilledinaccordancewiththeinternalrulesandregulations.No
OthersPaymentforgoods1,967,023.04Non-recoverableThewrite-offprocedureshavebeenfulfilledinaccordancewiththeinternalrulesandregulations.No

3,823,540.02Accountsreceivablewrittenoffin2018areanalysedbelow:

Accountsreceivablewrittenoffin2018areanalysedbelow:

Natureofthe

receivable

NatureofthereceivableAmountReasonFulfiledwrite-offproceduresRelatedpartytransactionornot
ClientAPaymentforgoods120,418.94Non-recoverableThewrite-offprocedureshavebeenfulfilledinaccordancewiththeinternalrulesandregulations.No
ClientBPaymentforgoods43,646.94Non-recoverableThewrite-offprocedureshavebeenfulfilledinaccordancewiththeinternalrulesandregulations.No
ClientCPaymentforgoods28,571.84Non-recoverableThewrite-offprocedureshavebeenfulfilledinaccordancewiththeinternalrulesandregulations.No

In2019,theGroupfactoredasmallportionofaccountsreceivableatamortisedcosttofinancialinstitutions.TheamountofaccountsreceivablederecognisedwasRMB6,274,777,382.79(2018:RMB3,665,602,250.53),andtheamountoflossrecognisedthroughInvestmentincomewasRMB86,377,492.55(2018:RMB61,372,718.53).

VNotestotheconsolidatedfinancialstatements(Continued)

3.Accountsreceivable(Continued)

Asat31December2019,thetopfiveaccountsreceivablebycustomeraresummarisedbelow:

Asat31December2019,thetopfiveaccountsreceivablebycustomeraresummarisedbelow:

Amount

AmountBaddebtprovisionamount%ofthetotalaccountsreceivable
Top1Accountreceivable170,343,305.26(651,626.93)1.60%
Top2Accountreceivable168,729,902.27(1,268,752.66)1.58%
Top3Accountreceivable165,585,249.66(834,284.84)1.55%
Top4Accountreceivable149,692,676.64(497,239.72)1.40%
Top5Accountreceivable141,678,146.50(522,091.42)1.33%
796,029,280.33(3,773,995.57)7.46%

Asat31December2018,thetopfiveaccountsreceivablebycustomeraresummarisedbelow:

Amount

AmountBaddebtprovisionamount%ofthetotalaccountsreceivable
Top1Accountreceivable153,684,242.23(151,473.45)1.64%
Top2Accountreceivable150,595,649.56(1,204,596.60)1.61%
Top3Accountreceivable138,844,133.79(75,576.22)1.48%
Top4Accountreceivable136,286,804.49(265,259.53)1.45%
Top5Accountreceivable130,575,790.77(56,042.86)1.39%
709,986,620.84(1,752,948.66)7.57%

VNotestotheconsolidatedfinancialstatements(Continued)

4.Receivablesfinancing

31December201931December2018
Bankacceptancebills446,342,588.46567,775,275.40

At31December2019and2018,therewerenoreceivablesfinancingthatwerepledged.

ReceivablesfinancingendorsedordiscountedbytheGrouptootherpartieswhichwerenotyetdueat31December2019and31December2018areasfollows:

31December2019

31December201931December2018
DerecognisedNotDerecognisedDerecognisedNotDerecognised
Bankacceptancebills2,280,123,957.94-1,273,262,524.19-

Asat31December2019and31December2018,receivablesfinancingthatwasconvertedintoaccountsreceivableduetothedrawer’sinabilitytosettlethenotesonthematuritydateisasfollows:

31December2019

31December201931December2018
Bankacceptancebills-50,000.00

Theagingofadvancestosuppliersisanalyzedbelow:

31December2019

31December20191January201931December2018
Amount%oftotalbalanceAmount%oftotalbalanceAmount%oftotalbalance
Within1year383,626,398.6399.67%411,094,093.1699.19%580,144,340.2099.43%
1to2years244,213.070.06%873,351.850.21%873,351.850.15%
2to3years815,319.090.21%2,466,823.900.60%2,466,823.900.42%
Over3years196,616.450.06%-0.00%-0.00%
384,882,547.24100.00%414,434,268.91100.00%583,484,515.95100.00%

VNotestotheconsolidatedfinancialstatements(Continued)

5.Advancestosuppliers(Continued)

Asat31December2019,thetopfiveadvancestosuppliersbycustomeraresummarizedbelow:

Amount

AmountProportionoftotalbalance
Totalamountoftopfiveadvancestosuppliers56,871,461.8614.78%

Asat31December2018,thetopfiveadvancestosuppliersbycustomeraresummarizedbelow:

Amount

AmountProportionoftotalbalance
Totalamountoftopfiveadvancestosuppliers119,855,873.0920.54%
31December201931December2018
Dividendreceivable834,914.61-
Otherreceivables477,153,330.37637,116,650.64
477,988,244.98637,116,650.64

Dividendreceivable

31December201931December2018
ShanghaiDingqunEnterpriseManagementConsultingCo.,Ltd(“ShanghaiDingqun”)834,914.61-

VNotestotheconsolidatedfinancialstatements(Continued)

6.Otherreceivables(Continued)

OtherreceivablesTheagingofotherreceivablesisanalysedbelow:

Theagingofotherreceivablesisanalysedbelow:

31December2019

31December201931December2018
Within1year451,743,352.46609,703,501.56
1to2years61,631,709.6218,452,286.18
2to3years6,522,348.879,357,373.34
Over3years21,196,047.5619,525,443.28
Less:Baddebtprovisionforotherreceivables63,940,128.1419,921,953.72
477,153,330.37637,116,650.64

Categoriesofotherreceivablesbynatureareasfollows:

31December2019

31December201931December2018
Deposits273,189,294.54278,455,623.30
Receivableofpricereductioncompensationandpurchasingrebates67,585,688.4799,668,799.22
Receivableofthepharmaceuticalelectronictradingplatform49,597,763.5883,826,127.02
Entrustedborrowings45,360,333.3544,000,000.00
Pettycashadvancetoemployees11,591,921.7912,439,613.27
Receivableofequitytransactions8,980,000.008,980,000.00
Receivableduefromrelatedparties3,786,279.268,119,399.79
Others81,002,177.52121,549,041.76
Less:Baddebtprovisionforotherreceivables63,940,128.1419,921,953.72
477,153,330.37637,116,650.64

VNotestotheconsolidatedfinancialstatements(Continued)

6.Otherreceivables(Continued)

Changesinbaddebtprovisionforthe12-monthexpectedcreditlossesandlifetimeexpectedcreditlossesonotherreceivablesareasfollows:

2019

Stage112-monthexpectedcreditlossesStage2LifetimeexpectedcreditlossesStage3Credit-impairedfinancialassets(Lifetimeexpectedcreditlosses)Total
Balanceat1January2019-2,989,960.0316,931,993.6919,921,953.72
Balanceat1January2019duringtheperiod----
--TransfertotheStage2----
--TransfertotheStage3----
--ReversetotheStage2----
--ReversetotheStage1----
Provisionsduringtheperiod-4,735,357.6445,405,997.6350,141,355.27
Reversalduringtheperiod-(909,367.44)(920,960.13)(1,830,327.57)
Transferoutduringtheperiod----
Write-offduringtheperiod--(4,333,603.88)(4,333,603.88)
Additionduetocombination-200.00-200.00
Reversalofwrite-offinpreviousyears-40,550.60-40,550.60
Balanceat31December2019-6,856,700.8357,083,427.3163,940,128.14

VNotestotheconsolidatedfinancialstatements(Continued)

6.Otherreceivables(Continued)

2018

Stage112-monthexpectedcreditlossesStage2LifetimeexpectedcreditlossesStage3Credit-impairedfinancialassets(Lifetimeexpectedcreditlosses)Total
Balanceat1January2018-2,782,712.6112,328,337.2615,111,049.87
Balanceat1January2018duringtheperiod----
--TransfertotheStage2----
--TransfertotheStage3----
--ReversetotheStage2----
--ReversetotheStage1----
Provisionsduringtheperiod-1,601,047.865,539,406.437,140,454.29
Reversalduringtheperiod-(1,393,800.44)(1,015,750.00)(2,409,550.44)
Write-backduringtheperiod----
Write-offduringtheperiod----
Additionduetocombination--80,000.0080,000.00
Balanceat31December2018-2,989,960.0316,931,993.6919,921,953.72

Thebaddebtprovisionamountofotherreceivablesin2019wasRMB50,141,355.27(2018:RMB7,140,454.29),withtherecoveredorreversedamountofRMB1,830,327.57(2018:RMB2,409,550.44).Thewrite-offamountofotherreceivablesin2019wasRMB4,333,603.88(2018:nil).

VNotestotheconsolidatedfinancialstatements(Continued)

6.Otherreceivables(Continued)

Asat31December2019,thetop5partiesthatowedthelargestamountsofotherreceivablebalancesareanalysedbelow:

Nature

NatureAmountAge%oftotalamountProvisionofbaddebts
SinopharmGroupZhijun(Suzhou)PharmaceuticalCo.,Ltd.(“ZhijunSuzhou”)(Note)Entrustedborrowings45,360,333.35Within2years8.38%45,360,333.35
GuangdongPharmaceuticalelectronictradingplatformPharmaceuticaltradingplatformrepaymentnotyetcleared35,328,767.60Within1year6.53%-
TCM-IntegratedCancerCenterofSouthernMedicalUniversityDepositofalogisticsextensionserviceproject20,000,000.00Within3years3.70%-
ShenyangSocietyMedicalInsuranceManagementBureauMedicalinsurancedeposit19,676,531.29Within1year3.64%-
ChinaResourcesPharmaceuticalBusinessGroupCo.,LtdPricereductioncompensation15,649,769.94Within1year2.89%-
136,015,402.1825.14%45,360,333.35

Asat31December2018,thetop5partiesthatowedthelargestamountsofotherreceivablebalancesareanalysedbelow:

Nature

NatureAmountAge%oftotalamountProvisionofbaddebts
GuangdongPharmaceuticalelectronictradingplatformPharmaceuticaltradingplatformrepaymentnotyetcleared83,826,127.02Within1year12.76%-
ZhijunSuzhouEntrustedborrowings45,846,618.96Within1years6.98%-
TCM-IntegratedCancerCenterofSouthernMedicalUniversityDepositofalogisticsextensionserviceproject30,000,000.00Within2years4.57%-
AstraZeneca(Wuxi)TradingCo.,Ltd.Pricereductioncompensation22,811,275.77Within1year3.47%-
TaiyuanMedicalInsuranceManagementServiceCenterMedicalInsuranceGuaranteeDeposit19,681,824.13Within1year3.00%-
202,165,845.8830.78%-

VNotestotheconsolidatedfinancialstatements(Continued)

6.Otherreceivables(Continued)

Asat31December2019,theamountofgovernmentgrantsreceivableisanalysedbelow:

Grantsprogram

GrantsprogramAmountAgeingEstimatedcollectiontime,amountandbasis
KaramaySocialInsuranceAdministrationBureauKaramayEmploymentPromotionAward15,128.72Within1yearBasedon“MeasuresofKaramayCityforemploymentpromotion”(Kerenshefa[2017]No.184),expectedtobefullyrecoveredinJune2020.

Inventoriesbycategoryareanalysedbelow:

31December2019

31December201931December2018
BookvalueProvisionNetbookvalueBookvalueProvisionNetbookvalue
Rawmaterials645,627.66-645,627.661,410,012.28-1,410,012.28
Finishedgoods4,951,220,747.35(8,305,500.35)4,942,915,247.004,392,144,746.88(8,313,195.29)4,383,831,551.59
Workinprogress140,458.20-140,458.201,011,007.23-1,011,007.23
Lowcostconsumables3,723,258.67-3,723,258.673,083,371.09-3,083,371.09
4,955,730,091.88(8,305,500.35)4,947,424,591.534,397,649,137.48(8,313,195.29)4,389,335,942.19

Provisionforinventoriesisanalysedbelow:

Backtransferofpreviousyears’write-offIncreasesDecreases31December2019
1January2019CurrentAdditionduetocombinationReversalWrite-off
Finishedgoods8,313,195.295,356.034,362,375.48139,294.62(3,110,765.80)(1,403,955.27)8,305,500.35
1January2018IncreasesDecreases31December2018
ReversalWrite-off
Finishedgoods6,840,110.555,422,984.90(2,678,379.54)(1,271,520.62)8,313,195.29

In2019,duetothevaluerecoveryofpartialinventories,provisionforinventorieswasreversedbyRMB3,110,765.80(2018:RMB2,678,379.54);andduetothesalesofgoodsinstock,provisionforinventorieswaswrittenoffbyRMB1,403,955.27(2018:RMB1,271,520.62).

VNotestotheconsolidatedfinancialstatements(Continued)

8.Othercurrentassets

31December201931December2018
VATtaxcredit101,367,670.1094,312,573.34
CITtobededucted513,305.14723,000.46
Others317,589.14312,055.38
102,198,564.3895,347,629.18

VNotestotheconsolidatedfinancialstatements(Continued)

9.Long-termequityinvestments

2019

Investee1January2019Changesintheyear31December2019Amountofprovisionforimpairment
AdditionalInvestmentProfitorlossunderequitymethodChangesinothercomprehensiveincomeOtherchangesinequityCashdividenddeclaredbyinvesteeProvisionforimpairment
ShenzhenMainLuckPharmaceuticalInc.(“MainLuckPharmaceutical”).(a)265,316,653.68-87,216,213.59--(58,063,500.00)-294,469,367.27-
ShanghaiBeiyiGuodaPharmaceuticalCo.Ltd.(“ShanghaiBeiyi”)(b)11,029,918.10-987,426.88--(2,129,400.00)-9,887,944.98-
ShanghaiLiyiPharmacyCo.,Ltd.(“ShanghaiLiyi”)(c)955,428.2383,611.65----1,039,039.88-
ShanghaiRenbeiPharmacyCo.,Ltd.(“ShanghaiRenbei”)(d)-1,800,000.00----1,800,000.00-
DongyuanAccordPharmaceuticalChainCo.,Ltd.(“DongyuanAccord”)(e)396,638.32-------(396,638.32)
SinopharmJienuoMedicalTreatmentServiceGuangdongCo.,Ltd.(“GuangdongJienuo”)(f)6,802,156.191,740,000.00(2,088,476.23)----6,453,679.96-
GuangdongJianhuiConstructionInvestmentManagementCo.,Ltd.(“GuangdongJianhui”)(g)-2,000,000.00(145,352.19)----1,854,647.81-
ZhijunSuzhou(h)23,379,018.92-(21,521,739.40)--(1,857,279.52)-(1,857,279.52)
SinopharmGroupZhijun(Shenzhen)PharmaceuticalCo.,Ltd.(“ZhijunMedicine”)(i)355,353,196.15-106,436,143.29--(61,210,764.76)-400,578,574.68
ShenzhenZhijunPharmaceuticalTradeCo.,Ltd.(“ZhijunTrade”)(i)8,730,994.87-2,318,103.99--(773,841.25)-10,275,257.61-
SinopharmGroupZhijun(Shenzhen)PingShanPharmaceuticalCo.,Ltd.(“ZhijunPingshan”)(i)86,292,927.33-46,881,613.08--(12,296,521.67)-120,878,018.74-
ShanghaiShyndecPharmaceuticalCo.,Ltd,(“ShyndecPharma”)(i)1,098,566,852.51-111,498,302.56(133,366.19)42,022,530.06(16,714,220.15)-1,235,240,098.79-
ShanghaiDingqun(j)23,966,640.12-(493,944.35)--(834,914.61)-22,637,781.16-
1,880,790,424.425,540,000.00331,171,902.87(133,366.19)42,022,530.06(152,023,162.44)(1,857,279.52)2,105,114,410.88(2,253,917.84)

VNotestotheconsolidatedfinancialstatements(Continued)

9.Long-termequityinvestments(Continued)

2018

Investee1January2018Changesintheyear31December2018Amountofprovisionforimpairment
AdditionalInvestmentProfitorlossunderequitymethodOtherchangesinequityCashdividenddeclaredbyinvesteeOthers
MainLuckPharmaceutical.(a)239,046,738.14-79,054,915.54-(52,785,000.00)-265,316,653.68-
ShanghaiBeiyi(b)9,518,694.65-1,511,223.45---11,029,918.10-
ShanghaiLiyi(c)771,408.05-184,020.18---955,428.23-
DongyuanAccord(e)396,638.32------(396,638.32)
GuangdongJienuo(f)8,502,884.50-(1,700,728.31)---6,802,156.19-
ZhijunSuzhou(h)46,199,728.91-(22,820,709.99)---23,379,018.92-
ZhijunMedicine(i)291,042,921.20-122,421,529.52-(58,111,254.57)-355,353,196.15
ZhijunTrade(i)7,676,142.69-1,719,647.21-(664,795.03)-8,730,994.87-
ZhijunPingshan(i)68,686,804.33-27,325,603.71-(9,719,480.71)-86,292,927.33-
ShyndecPharma(i)979,174,050.62-108,241,749.0419,599,266.75(8,448,213.90)-1,098,566,852.51-
ShanghaiDingqun(j)-20,000,000.003,966,640.12---23,966,640.12-
1,651,016,011.4120,000,000.00319,903,890.4719,599,266.75(129,728,744.21)-1,880,393,786.10(396,638.32)

VNotestotheconsolidatedfinancialstatements(Continued)

9.Long-termequityinvestments(Continued)(a)On4July1990,theGroupjointlyestablishedMainLuckPharmaceuticalwithMercianKabushiki

KaishaandMainLifeCo.,Ltd.,subscribing35.19%,34.15%and30.66%ofshareholdings,respectively.AccordingtotheArticlesofAssociation,theboardofdirectorsofMainLuckPharmaceuticalconsistedofsixdirectors,inwhichtwowereappointedbytheGroup,accountingfor33.33%ofvotingrights.Therefore,theGrouphadsignificantinfluenceoverMainLuckPharmaceutical,andthus,itwasconsideredasanassociateoftheGroup.(b)On26July1994,theGroupjointlyestablishedShanghaiBeiyiwithShanghaiBeiyi(Group)Co.,

Ltd.andeightnaturalpersonsincludingFuchunZhu,withthesharepercentagesbeing26%,26%and48%,respectively.AccordingtotheArticlesofAssociation,theboardofdirectorsofShanghaiBeiyiconsistedofsevendirectors,inwhichtwowereappointedbytheGroup,accountingfor

28.57%ofvotingrights.Therefore,theGrouphadsignificantinfluenceoverShanghaiBeiyi,andthus,itwasconsideredasanassociateoftheGroup.(c)On25November2003,theGroupjointlyestablishedShanghaiLiyiwithShanghaiPudongDistrict

CentralHospitalandShanghaiLiyi,withthesharepercentagesbeing35%,35%and30%,respectively.AccordingtotheArticlesofAssociation,theboardofdirectorsofShanghaiLiyiconsistedoffivedirectors,inwhichtwowereappointedbytheGroup,accountingfor40.00%ofvotingrights.Therefore,theGrouphadsignificantinfluenceoverShanghaiLiyi,andthus,itwasconsideredasanassociateoftheGroup.(d)On3March2019,theGroupacquired30%sharesofShanghaiRenbei.AccordingtotheArticles

ofAssociation,theboardofdirectorsofShanghaiRenbeiwascomposedofthreedirectors,oneofwhomwasappointedbytheGroup,accountingfor33.33%ofvotingrights.Therefore,theGrouphassignificantinfluenceoverShanghaiRenbei,andthus,itisconsideredasanassociateoftheGroup.

(e)In2007,DongyuanAccord,anassociateoftheGroup,operatedinpoorconditionsanditsfuture

operationwouldbesignificantlyuncertain,sotheGroupmadeafullprovisionforimpairmentofthelong-termequityinvestmentonit.

(f)On23February2016,theGroupjointlyestablishedGuangdongJienuowithSinopharmJienuo

MedicalTreatmentServiceCo.,Ltd.andGuangzhouJinluoInvestmentDevelopmentCo.,Ltd.,withthesharepercentagesbeing29%,51%and20%,respectively.AccordingtotheArticlesofAssociation,theboardofdirectorsofGuangdongJienuowascomposedoffivedirectors,oneofwhomwasappointedbytheGroup,accountingfor20%ofvotingrights.Therefore,theGrouphassignificantinfluenceoverGuangdongJienuo,andthusit,isconsideredasanassociateoftheGroup.On25July2019,theGroup,togetherwithcurrentshareholdersSinopharmJienuoMedicalTreatmentServiceCo.,Ltd.andFoshanJiejianchengfengMedicalEquipmentCo.,Ltd.,increasedthecapitalofSinopharmJienuoMedicalTreatmentServiceCo.,Ltd.by29%,51%and20%accordingtotheshareholdingratiorespectirely,andthetotalamountofincreasedcapitalwasRMB6,000thousand.

VNotestotheconsolidatedfinancialstatements(Continued)

9.Long-termequityinvestments(Continued)

(g)On23November2018,theGroupjointlyestablishedGuangdongJianhuiwithGuangdong

ConstructionEngineeringGroupCo.,Ltd.,SuixiPeople'sHospitalandGuangdongJiankeArchitecturalDesignInstituteCo.,Ltd.,withthesharepercentagesbeing10%,79.90%,10%and

0.10%,respectively.TheregisteredcapitalofthecompanywasRMB20,000thousand.On22March2019,theGroupcompletedtheinvestmentofRMB2,000thousand.AccordingtotheArticlesofAssociation,theboardofdirectorsofGuangdongJianhuiwascomposedoffivedirectors,oneofwhomwasappointedbytheGroup,accountingfor20%ofvotingrights.Therefore,theGrouphassignificantinfluenceoverGuangdongJianhui,andthus,itisconsideredasanassociateoftheGroup.

(h)TheGroupdisposedofits67%equityinterestofZhijunSuzhouinApril2016.Afterthedisposal,the

Grouphelda33%equityinterestofZhijunSuzhou.AccordingtotheArticlesofAssociation,theboardofdirectorsofZhijunSuzhouwascomposedoffivedirectors,oneofwhomwasappointedbytheGroup,accountingfor20%ofvotingrights.Asaresult,theGrouphassignificantinfluenceoverZhijunSuzhou,andthus,itisconsideredasanassociateoftheGroup.In2019,onaccountofmismanagement,therewassignificantuncertaintyinthefutureoperationoftheGroup'saffiliatedenterpriseZhijunSuzhou.Thus,theGroupmadefullprovisionforimpairmentoflong-termequityinvestmentinZhijunSuzhou.

(i)TheGroupsubscribed15.56%ofnewissuedsharesofShyndecPharma,arelatedparty,bythe

transferringoftheproductiveassetsinPingshanbaseandits51%equityinterestofthreepharmaceuticalcompanies(ZhijunMedicines,ZhijunPharma&Trade,ZhijunPingshan)oftheGroupin2016,respectively.Afterthecompletionofthereorganization,ShyndecPharmaholdsa51%equityinterestofeachofthethreepharmaceuticalcompanies,andtheGroupholdsa49%equityinterestofeachofthethreepharmaceuticalcompanies,andtheyhavesignificantinfluenceoverthethreepharmaceuticalcompanies.Atthesametime,afterthecompletionofthereorganization,theGroupholdsa15.56%equityinterestofShyndecPharma.SinceShyndecPharmaacquiredthesharesofsubsidiarieswithshare-basedpaymentinpreviousyears,asat31December2019,theGrouphelda16.28%equityinterestofShyndecPharma.ShyndecPharmasetupaboardofdirectorsthatwasresponsiblefortheshareholders'meeting,withatotalofninemembers,amongwhich,onewasappointedbytheGroup.Eachdirectorshallrepresentonevoteforresolutionsoftheboard,accountingfor11.11%ofthevotingrights.TheGrouphassignificantinfluenceoverShyndecPharma.TheabovethreepharmaceuticalcompaniesandShyndecPharmaareconsideredasassociatesoftheGroup.

(j)OnMay2018,theGroupjointlyestablishedShanghaiDingqunwithNingboMeishanbondedport

areaQilingequityinvestmentcenterLP,subscribing2.53%and97.47%ofshareholdings,respectively.AccordingtotheArticlesofAssociation,theboardofdirectorsofShanghaiDingqunconsistedofthreedirectorsandoneofthemwasappointedbyourCompany.Eachdirectorshallrepresentonevoteontheboard’sdecisions,whichshallbeadoptediftheyarevotedforbyasimplemajorityofallthemembersoftheboard.Therefore,theGrouphassignificantinfluenceoverShanghaiDingqun,andthus,itisconsideredasanassociateoftheGroup.

VNotestotheconsolidatedfinancialstatements(Continued)

10.Otherequityinstrumentinvestment

2019

AccumulatedchangesinfairvalueofothercomprehensiveincomeFairvalueDividendincomeforthecurrentyearReasonsdesignatedtobemeasuredatfairvaluewithchangesincludedinothercomprehensiveincome
EquityinstrumentsterminatedinthecurrentyearEquityinstrumentsheldinthecurrentyear
SinopharmHealthOnlineCo.,Ltd.84,748,000.0096,748,000.00--Non-tradingequityinstrument
SinopharmGuodaHubeiCo.,Ltd.3,751,000.004,751,000.00--Non-tradingequityinstrument
HunanZhongbaiPharmaceuticalInvestmentCo.,Ltd.138,000.00453,000.00--Non-tradingequityinstrument
ShanghaiGuodaShuguangPharmacyCo.,Ltd8,094,240.008,365,000.00-50,000.00Non-tradingequityinstrument
ShanghaiGuorenPharmacyCo.,Ltd.5,604,000.005,704,000.00-421,386.60Non-tradingequityinstrument
102,335,240.00116,021,000.00-471,386.60

VNotestotheconsolidatedfinancialstatements(Continued)

10.Otherequityinstrumentinvestment(Continued)

2018

AccumulatedchangesinfairvalueofothercomprehensiveincomeFairvalueDividendincomeforthecurrentyearReasonsdesignatedtobemeasuredatfairvaluewithchangesincludedinothercomprehensiveincome
EquityinstrumentsterminatedinthecurrentyearEquityinstrumentsheldinthecurrentyear
SinopharmHealthOnlineCo.,Ltd.-12,000,000.00--Non-tradingequityinstrument
SinopharmGuodaHubeiCo.,Ltd.-1,000,000.00--Non-tradingequityinstrument
HunanZhongbaiPharmaceuticalInvestmentCo.,Ltd.-315,000.00-31,500.00Non-tradingequityinstrument
ShanghaiGuodaShuguangPharmacyCo.,Ltd-270,760.00-50,000.00Non-tradingequityinstrument
ShanghaiGuorenPharmacyCo.,Ltd.-100,000.00-437,919.36Non-tradingequityinstrument
-13,685,760.00-519,419.36

VNotestotheconsolidatedfinancialstatements(Continued)

11.Othernon-currentfinancialassets

31December201931December2018
Financialassetsatfairvaluethroughprofitorloss140,000,000.00140,000,000.00

Asat31December2019,thebalanceofothernon-currentfinancialassetisthefairvaluefortheSinopharmZhongjinmedicalindustryfund(“Industryfund”)thattheCompanyhadsubscribed.Atthe21stMeetingofthe7thboardofdirectorswhichheldon6January2017,theCompanydeliberatedandpassedtheproposaloninvestmentsubscriptionoftheIndustryfundandrelatedpartytransactionofthecompany.ThetotalinvestmentwhichamountedtoRMB200million,willbepaidby3payments.In2017,theCompanymadethefirstpaymentintheamountofRMB60million.However,asof31December2017,thefundhadneitherobtainedalltherelatedlicensesandapprovaldocumentations,norstartedoperating,therefore,thefirstpaymentamountingtoRMB60millionwasdesignatedasothernon-currentasset.In2018,theCompanymadethesecondpaymentintheamountofRMB80million.Asat31December2019,theCompanyhasmadepaymentsaccumulatedtoRMB140million.Theindustryfundhasobtainedalltherelatedlicensesandapprovaldocumentationsin2018,andalsostartedoperating.SincethecashflowsobtainedbytheCompanyfromtheinvestmentofthefundincludesboththecontractualcashflowssgeneratedbythebasicassetsduringtheinvestmentperiodandthecashflowsgeneratedbythedisposalofbasicassets,whichdoesnotmeettherequirementthatthecontractualcashflowsgeneratedbythefinancialassetsonaspecificdateshouldonlyincludethepaymentoftheprincipalandtheinterestbasedontheoutstandingprincipalamount.TheCompanyclassifiedtheindustrialfundinvestmentassetsasfinancialassetsmeasuredatfairvaluethroughprofitorloss,whicharepresentedasothernon-currentfinancialassets.

VNotestotheconsolidatedfinancialstatements(Continued)

12.Investmentproperties

Subsequentmeasurementunderthecostmodel:

2019

BuildingsandconstructionsLanduserightsTotal
Originalcost
Openingbalance242,555,189.9122,719,102.03265,274,291.94
Purchase---
Transferfromfixedassets1,255,443.18-1,255,443.18
Transfertointangibleassets---
Transfertofixedassets(200,000.00)-(200,000.00)
Closingbalance243,610,633.0922,719,102.03266,329,735.12
Accumulateddepreciationandamortization
Openingbalance(111,131,166.21)(7,948,629.76)(119,079,795.97)
Provision(6,473,856.29)(239,943.63)(6,713,799.92)
Transferfromfixedassets(395,846.48)-(395,846.48)
Transfertointangibleassets---
Transfertofixedassets60,065.55-60,065.55
Closingbalance(117,940,803.43)(8,188,573.39)(126,129,376.82)
Provisionforimpairment
Openingbalance(1,300,000.00)-(1,300,000.00)
Closingbalance(1,300,000.00)-(1,300,000.00)
Carryingamount
Atendofyear124,369,829.6614,530,528.64138,900,358.30
Atbeginningofyear130,124,023.7014,770,472.27144,894,495.97

VNotestotheconsolidatedfinancialstatements(Continued)

12.Investmentproperties(Continued)

2018

BuildingsandconstructionsLanduserightsTotal
Originalcost
Openingbalance245,932,518.6423,370,084.72269,302,603.36
Purchase45,481.13-45,481.13
Transferfromfixedassets5,087,242.78-5,087,242.78
Transfertointangibleassets-(650,982.69)(650,982.69)
Transfertofixedassets(8,510,052.64)-(8,510,052.64)
Closingbalance242,555,189.9122,719,102.03265,274,291.94
Accumulateddepreciationandamortization
Openingbalance(106,139,314.25)(8,184,950.00)(114,324,264.25)
Provision(7,035,240.17)(75,098.69)(7,110,338.86)
Transferfromfixedassets(1,480,401.05)-(1,480,401.05)
Transfertointangibleassets-311,418.93311,418.93
Transfertofixedassets3,523,789.26-3,523,789.26
Closingbalance(111,131,166.21)(7,948,629.76)(119,079,795.97)
Provisionforimpairment
Openingbalance(1,300,000.00)-(1,300,000.00)
Closingbalance(1,300,000.00)-(1,300,000.00)
Carryingamount
Atendofyear130,124,023.7014,770,472.27144,894,495.97
Atbeginningofyear138,493,204.3915,185,134.72153,678,339.11

VNotestotheconsolidatedfinancialstatements(Continued)

12.Investmentproperties(Continued)

During2019,depreciationandamortizationofinvestmentpropertieswereRMB6,713,799.92(2018:

RMB7,110,338.86).During2019,propertieswithacarryingamountofRMB859,596.70(originalvalue:

RMB1,255,443.18,accumulateddepreciation:RMB395,846.48)wereleasedouttoathirdpartyintheformofoperatingleases.Sincethedateofchangeinpurpose,andtheyhavebeentransferredfromfixedassetstoinvestmentproperties.During2019,apropertywithacarryingamountofRMB139,934.45(originalvalue:RMB200,000.00,accumulateddepreciation:RMB60,065.55)wastransferredtoanowner-occupiedproperty.Fromthedateoftransfer,thepropertywasreclassifiedasfixedassets.Asat31December2019,therewerenoinvestmentpropertiesofwhichthecertificatesoftitlehavenotbeenobtained.

VNotestotheconsolidatedfinancialstatements(Continued)

13.Fixedassets

31December20191January201931December2018
Fixedassets612,599,944.11594,067,973.91607,933,827.67
Disposaloffixedassets---
612,599,944.11594,067,973.91607,933,827.67

VNotestotheconsolidatedfinancialstatements(Continued)

13.Fixedassets(Continued)

2019
BuildingsMachineryandequipmentMotorVehiclesOtherequipmentLeaseholdimprovementsTotal
Originalcost
Openingbalance489,661,268.82185,444,104.0989,613,300.13294,575,902.8954,661,564.431,113,956,140.36
Purchase285,469.5247,195,352.3212,429,062.4025,457,250.8533,499,629.02118,866,764.11
Transferfromconstructioninprogress-8,769,821.87-878,820.54-9,648,642.41
Transferfrominvestmentproperties200,000.00----200,000.00
Businesscombinationnotinvolvingenterprisesundercommoncontrol-196,365.43365,001.36322,978.10608,679.421,493,024.31
Transfertoinvestmentproperties(1,255,443.18)----(1,255,443.18)
Disposalofsubsidiaries--(305,010.00)(298,683.01)(124,535.84)(728,228.85)
Disposalorretirement(3,842,383.00)(2,628,608.89)(15,067,365.95)(6,001,398.49)(14,065,013.84)(41,604,770.17)
Closingbalance485,048,912.16238,977,034.8287,034,987.94314,934,870.8874,580,323.191,200,576,128.99
Accumulateddepreciation
Openingbalance(164,477,441.12)(85,085,743.31)(59,523,264.14)(173,741,971.45)(38,364,970.83)(519,888,166.45)
Provision(15,582,180.14)(30,506,506.49)(8,239,110.97)(23,191,050.44)(22,011,784.80)(99,530,632.84)
Transferfrominvestmentproperties(60,065.55)----(60,065.55)
Transfertoinvestmentproperties395,846.48----395,846.48
Recoveredfromdisposalofsubsidiaries--298,484.02136,696.6352,796.55487,977.20
Disposalorretirement182,520.722,154,833.5311,185,794.584,445,889.8512,649,817.6030,618,856.28
Closingbalance(179,541,319.61)(113,437,414.27)(56,278,096.51)(191,045,213.01)(47,674,141.48)(587,976,184.88)

VNotestotheconsolidatedfinancialstatements(Continued)

13.Fixedassets(Continued)

2019(Continued)
BuildingsMachineryandequipmentMotorVehiclesOtherequipmentLeaseholdimprovementsTotal
Provisionforimpairment
Openingbalance------
Closingbalance------
Carryingamount
Atendofyear305,507,592.55125,539,620.5530,756,891.43123,889,657.8726,906,181.71612,599,944.11
Atbeginningofyear325,183,827.70100,358,362.7830,090,035.99122,139,153.8416,296,593.60594,067,973.91

VNotestotheconsolidatedfinancialstatements(Continued)

13.Fixedassets(Continued)

2018
BuildingsMachineryandequipmentMotorVehiclesOtherequipmentLeaseholdimprovementsTotal
Originalcost
Openingbalance456,161,611.21183,752,571.1487,999,790.56259,281,585.4130,111,198.471,017,306,756.79
Purchase33,284,634.3023,347,438.6210,265,993.3341,281,602.4624,790,021.29132,969,690.00
Transferfromconstructioninprogress416,909.493,060,420.86-2,286,152.376,595,411.9712,358,894.69
Transferfrominvestmentproperties8,510,052.64----8,510,052.64
Businesscombinationnotinvolvingenterprisesundercommoncontrol--102,931.2999,584.931,250.05203,766.27
Transfertoinvestmentproperties(5,087,242.78)----(5,087,242.78)
Disposalofsubsidiaries--(151,443.00)-(244,344.76)(395,787.76)
Disposalorretirement(3,624,696.04)(2,705,694.05)(8,603,972.05)(5,656,536.47)(6,591,972.59)(27,182,871.20)
Closingbalance489,661,268.82207,454,736.5789,613,300.13297,292,388.7054,661,564.431,138,683,258.65
Accumulateddepreciation
Openingbalance(149,119,755.22)(73,601,067.33)(59,221,772.87)(154,689,144.23)(28,964,583.12)(465,596,322.77)
Provision(15,341,234.41)(22,747,402.07)(7,596,679.69)(23,835,198.48)(15,155,803.18)(84,676,317.83)
Transferfrominvestmentproperties(3,523,789.26)----(3,523,789.26)
Transfertoinvestmentproperties1,480,401.05----1,480,401.05
--151,443.003,826.90235,829.86391,099.76
Disposalorretirement2,026,936.721,706,685.967,143,745.424,778,544.365,519,585.6121,175,498.07
Closingbalance(164,477,441.12)(94,641,783.44)(59,523,264.14)(173,741,971.45)(38,364,970.83)(530,749,430.98)

VNotestotheconsolidatedfinancialstatements(Continued)

13.Fixedassets(Continued)

2018(Continued)
BuildingsMachineryandequipmentMotorVehiclesOtherequipmentLeaseholdimprovementsTotal
Provisionforimpairment
Openingbalance------
Closingbalance------
Carryingamount
Atendofyear325,183,827.70112,812,953.1330,090,035.99123,550,417.2516,296,593.60607,933,827.67
Atbeginningofyear307,041,855.99110,151,503.8128,778,017.69104,592,441.181,146,615.35551,710,434.02

VNotestotheconsolidatedfinancialstatements(Continued)

13.Fixedassets(Continued)

Fixedassetsheldunderfinanceleasesarepresentedasfollows:

2018
OriginalcostAccumulateddepreciationProvisionforimpairmentCarryingamount
Machinery22,010,632.48(9,556,042.13)-12,454,590.35
Otherequipment2,716,485.81(1,305,222.40)-1,411,263.41
24,727,118.29(10,861,264.53)-13,865,853.76

Asat31December2019and31December2018,theGrouphasnotownedanyfixedassetsforoperatingleases.Asat31December2019,thefixedassetsfallingtoaccomplishcertificationoftitlearepresentedasfollows:

BookvalueReasonfornotobtainingcertificationoftitle
Housesandbuildings28,356,440.00Asat31December2019,theCompanyhasnotyetobtainedthecertificationoftitleforNo.13JingxingNorthStreet,TiexiDistrict,Shenyang.Thetransferor,theState-ownedAssetsSupervisionandAdministrationCommission,wasstillprocessingthecaseandhadprovidedarelevantnotification.

Asat31December2019and31December2018,therewerenofixedassetsthatweretemporarilyidle.

VNotestotheconsolidatedfinancialstatements(Continued)

14.Constructioninprogress

31December201931December2018
Constructioninprogress31,582,575.8436,412,614.61
31December201931December2018
CarryingbalanceImpairmentCarryingamountCarryingbalanceImpairmentCarryingamount
Warehouseimprovementproject1,232,957.94-1,232,957.94806,272.40-806,272.40
Newofficebuildingproject110,090.53-110,090.53188,251.26-188,251.26
Supplychainextensionproject8,081,340.80-8,081,340.8012,617,953.89-12,617,953.89
Softwareproject13,197,683.52-13,197,683.5212,930,498.53-12,930,498.53
Otherprojects8,960,503.05-8,960,503.059,869,638.53-9,869,638.53
31,582,575.84-31,582,575.8436,412,614.61-36,412,614.61

VNotestotheconsolidatedfinancialstatements(Continued)

14.Constructioninprogress(Continued)

Changesofsignificantconstructioninprogressin2019arepresentedasfollows:

ProjectnameAtbeginningoftheyearIncreaseDecreaseAtendofyearSourceoffundsProportionofinvestmenttobudget(%)
TransferredtofixedassetsTransferredtointangibleassetsTransferredtolongtermprepaidexpenseOther
Warehouseimprovementproject806,272.403,859,186.68(1,143,477.76)-(2,289,023.38)-1,232,957.94Self-raisedfunds67.37
Newofficebuildingproject188,251.26110,090.53--(188,251.26)-110,090.53Self-raisedfunds43.33
Supplychainextensionproject12,617,953.898,728,170.28(8,459,732.15)(4,245,282.90)-(559,768.32)8,081,340.80Self-raisedfunds71.99
Softwareproject12,930,498.5313,216,765.17(45,432.50)(12,904,147.68)--13,197,683.52Self-raisedfunds99.98
Otherconstructionprojects9,869,638.53446,074.08--(1,355,209.56)-8,960,503.05Self-raisedfunds5.37
36,412,614.6126,360,286.74(9,648,642.41)(17,149,430.58)(3,832,484.20)(559,768.32)31,582,575.84

VNotestotheconsolidatedfinancialstatements(Continued)

14.Constructioninprogress(Continued)

Changesofsignificantconstructioninprogressin2019arepresentedasfollows:(Continued)Projectname

ProjectnameBudgetProgress(%)AccumulatedamountofinterestcapitalizedIncluding:interestcapitalizedincurrentyearCapitalizationrate(%)
Warehouseimprovementproject7,008,129.5367.37---
Newofficebuildingproject688,251.2643.33---
Supplychainextensionproject30,933,538.6971.99---
Softwareproject26,151,831.2099.98---
Otherconstructionprojects206,728,926.075.37---
--

VNotestotheconsolidatedfinancialstatements(Continued)

14.Constructioninprogress(Continued)

Changesofsignificantconstructioninprogressin2018arepresentedasfollows:

ProjectnameAtbeginningoftheyearIncreaseDecreaseAtendofyearSourceoffundsProportionofinvestmenttobudget(%)
TransferredtofixedassetsTransferredtointangibleassetsTransferredtolongtermprepaidexpense
Warehouseimprovementproject1,009,314.939,284,604.35--(9,487,646.88)806,272.40Self-raisedfunds65.94
Newofficebuildingproject765,882.63146,970.43(724,601.80)--188,251.26Self-raisedfunds100.00
Supplychainextensionproject8,193,935.7016,374,550.40(11,634,292.89)(316,239.32)-12,617,953.89Self-raisedfunds66.56
Softwareproject3,926,271.339,004,227.20---12,930,498.53Self-raisedfunds54.98
Otherconstructionprojects9,051,854.401,508,407.48--(690,623.35)9,869,638.53Self-raisedfunds5.23
22,947,258.9936,318,759.86(12,358,894.69)(316,239.32)(10,178,270.23)36,412,614.61

VNotestotheconsolidatedfinancialstatements(Continued)

14.Constructioninprogress(Continued)

Changesofsignificantconstructioninprogressin2018arepresentedasfollows:(Continued)Projectname

ProjectnameBudgetProgress(%)AccumulatedamountofinterestcapitalizedIncluding:interestcapitalizedincurrentyearCapitalizationrate(%)
Warehouseimprovementproject15,616,610.8565.94---
Newofficebuildingproject1,224,601.80100.00---
Supplychainextensionproject52,673,236.2665.56---
Softwareproject12,956,849.3854.98---
Otherconstructionprojects207,178,844.095.23---
--

VNotestotheconsolidatedfinancialstatements(Continued)

15.Right-of-useassets

2019Housesandbuildings

HousesandbuildingsMachinery,transportandofficeequipmentOthersTotal
Cost
Openingbalance1,817,160,059.3914,379,897.192,418,809.351,833,958,765.93
Increase814,925,685.7790,197.76-815,015,883.53
Disposal(49,556,361.06)--(49,556,361.06)
Closingbalance2,582,529,384.1014,470,094.952,418,809.352,599,418,288.40
Accumulatedamortization
Openingbalance----
Accrual(650,986,768.21)(4,075,450.60)(95,734.70)(655,157,953.51)
Disposal11,200,798.12--11,200,798.12
Closingbalance(639,785,970.09)(4,075,450.60)(95,734.70)(643,957,155.39)

VNotestotheconsolidatedfinancialstatements(Continued)

15.Right-of-useassets(Continued)

2019(Continued)

Housesandbuildings

HousesandbuildingsMachinery,transportandofficeequipmentOthersTotal
Provisionforimpairment
Openingbalance----
Closingbalance----
Bookvalue
Theendoftheyear1,942,743,414.0110,394,644.352,323,074.651,955,461,133.01
Thebeginningofyear1,817,160,059.3914,379,897.192,418,809.351,833,958,765.93

VNotestotheconsolidatedfinancialstatements(Continued)

16.Intangibleassets

31December20191January201931December2018
Disposaloffixedassets319,946,727.04318,693,082.72319,207,126.15
319,946,727.04318,693,082.72319,207,126.15
2019LanduserightsSoftwareTrademarksFavorableleasesDistributionnetworkFranchisTotal
Originalcost
Openingbalance62,083,143.97142,108,155.4265,977,850.0093,242,000.00112,117,142.86710,000.00476,238,292.25
Purchase-13,442,842.51----13,442,842.51
Businesscombinationnotinvolvingenterprisesundercommoncontrol-888,462.22----888,462.22
Transferfromconstructioninprogress-17,149,430.58----17,149,430.58
Closingbalance62,083,143.97173,588,890.7365,977,850.0093,242,000.00112,117,142.86710,000.00507,719,027.56
Accumulatedamortization
Openingbalance(27,889,638.96)(68,273,563.72)(196,850.16)(19,782,823.36)(40,692,333.33)(710,000.00)(157,545,209.53)
Provision(968,938.20)(18,706,589.77)-(4,945,705.88)(5,605,857.14)-(30,227,090.99)
Closingbalance(28,858,577.16)(86,980,153.49)(196,850.16)(24,728,529.24)(46,298,190.47)(710,000.00)(187,772,300.52)

VNotestotheconsolidatedfinancialstatements(Continued)

16.Intangibleassets(Continued)

2019(Continued)LanduserightsSoftwareTrademarksFavorableleasesDistributionnetworkFranchiseTotal
Provisionforimpairment
Openingbalance-------
Disposalofsubsidiaries-------
Closingbalance-------
Carryingamount
Atendoftheyear33,224,566.8186,608,737.2465,780,999.8468,513,470.7665,818,952.39-319,946,727.04
Atbeginningoftheyear34,193,505.0173,834,591.7065,780,999.8473,459,176.6471,424,809.53-318,693,082.72

VNotestotheconsolidatedfinancialstatements(Continued)

16.Intangibleassets(Continued)

2018LanduserightsSoftwareTrademarksFavorableleasesDistributionnetworkFranchiseTotal
Originalcost
Openingbalance60,481,989.28126,128,809.3665,977,850.0093,242,000.00112,117,142.86710,000.00458,657,791.50
Purchase2,160,172.0016,310,053.09----18,470,225.09
Businesscombinationnotinvolvingenterprisesundercommoncontrol-7,754.51----7,754.51
Transferfromconstructioninprogress-316,239.32----316,239.32
Transferfrominvestmentproperties650,982.69-----650,982.69
Disposal(1,210,000.00)-----(1,210,000.00)
Closingbalance62,083,143.97142,762,856.2865,977,850.0093,242,000.00112,117,142.86710,000.00476,892,993.11
Accumulatedamortization
Openingbalance(26,667,841.47)(55,408,075.33)(196,850.16)(14,837,117.48)(35,086,476.18)(710,000.00)(132,906,360.62)
Provision(910,378.56)(13,006,145.82)-(4,945,705.88)(5,605,857.15)-(24,468,087.41)
Transferfrominvestmentproperties(311,418.93)-----(311,418.93)
Disposal-------
Closingbalance(27,889,638.96)(68,414,221.15)(196,850.16)(19,782,823.36)(40,692,333.33)(710,000.00)(157,685,866.96)

VNotestotheconsolidatedfinancialstatements(Continued)

16.Intangibleassets(Continued)

2018(Continued)LanduserightsSoftwareTrademarksFavorableleasesDistributionnetworkFranchiseTotal
Provisionforimpairment
Openingbalance-------
Closingbalance-------
Carryingamount
Atendoftheyear34,193,505.0174,348,635.1365,780,999.8473,459,176.6471,424,809.53-319,207,126.15
Atbeginningoftheyear33,814,147.8170,720,734.0365,780,999.8478,404,882.5277,030,666.68-325,751,430.88

Asat31December2019and31December2018,nointangibleassetswereformedthroughinternalresearchanddevelopment.Asat31December2019and31December2018,therewerenointangibleassetsofwhichthecertificatesoftitlehavenotbeenobtained.

VNotestotheconsolidatedfinancialstatements(Continued)

17.Goodwill

31December2019OpeningbalanceIncreaseDecreaseduringtheyearClosingbalance
MergerofholdingsnotundercommoncontrolBusinesscombinationcombinationsnotundercommoncontrolr

PharmaceuticaldistributionJiangmenRenrenMedicalCo.,Ltd.(“SinopharmJiangmen”)

JiangmenRenrenMedicalCo.,Ltd.(“SinopharmJiangmen”)27,392,317.73---27,392,317.73
SinopharmHoldingShenzhenYanfengCo.,Ltd.(“SinopharmYanfeng”)16,868,644.87---16,868,644.87
SinopharmHoldingZhaoqingCo.,Ltd.(“SinopharmZhaoqing”)2,594,341.53---2,594,341.53
SinopharmHoldingShaoguanCo.,Ltd.(“SinopharmShaoguan”)1,686,496.80---1,686,496.80
SinopharmHoldingMeizhouCo.,Ltd.(“SinopharmMeizhou”)1,610,819.66---1,610,819.66
SinopharmHoldingHuizhouCo.,Ltd.(“SinopharmHuizhou”)923,184.67---923,184.67
SinopharmHoldingZhanjiangCo.,Ltd.(“SinopharmZhanjiang”)282,135.55---282,135.55
SinopharmHoldingDongguanCo.,Ltd.(“SinopharmDongguan”)1,499.02---1,499.02
SouthPharma&Trade2,755,680.62---2,755,680.62
FoshanNanhai88,877,850.51---88,877,850.51
SinopharmHoldingZhuhaiCo.,Ltd.(“SinopharmZhuhai”)6,772,561.476,772,561.47
SinopharmHoldingMaomingCo.,Ltd.(“SinopharmMaoming”)66,417.07---66,417.07
SinopharmHoldingGuodaForMeMedicines(Shanghai)Co.,Ltd.(“ForMeMedicines’’)3,033,547.53---3,033,547.53

VNotestotheconsolidatedfinancialstatements(Continued)

17.Goodwill(Continued)

31December2019(Continued)OpeningbalanceIncreaseDecreaseClosingbalance
MergerofholdingsnotundercommoncontrolBusinesscombinationcombinationsnotundercommoncontrol

PharmaceuticalretailSinopharmHebeiLerentangPharmacyChainStoreCo.,Ltd.(“HebeiLerentang”)

SinopharmHebeiLerentangPharmacyChainStoreCo.,Ltd.(“HebeiLerentang”)29,482,149.57---29,482,149.57
XiaoyiGuodaWanminBaicaotangPharmacyChainStoreCo.,Ltd.(“XiaoyiWanmin”)15,866,680.00---15,866,680.00
ShanxiGuodaWanminPharmacyChainStoreCo.,Ltd.(“ShanxiWanmin”)65,025,000.00---65,025,000.00
SinopharmHoldingGuodaForMePharmacyChainStoreCo.,Ltd.(“ForMePharmacyChainStore”)19,405,450.23---19,405,450.23
SinopharmHoldingGuodaPharmacyChainStoreShanghaiCo.,Ltd.5,028,638.00---5,028,638.00
SinopharmHoldingGuodaYangzhouDadeshengPharmacyChainStoreCo.,Ltd.7,979,000.00---7,979,000.00
ZhejiangGuodaPharmacyCo.,Ltd.3,045,183.85---3,045,183.85
GuodaShenyangTianyitangPharmacyChain1,687,942.92---1,687,942.92
SinopharmHoldingGuodaNanjingPharmacyChainStoreCo.,Ltd.11,598,341.12---11,598,341.12
FujianGuodaPharmacyChainStoreCo.,Ltd.1,567,250.76---1,567,250.76
SinopharmHoldingGuodaShandongPharmacyChainStoreCo.,Ltd.29,110,409.46---29,110,409.46
SinopharmHoldingGuodaShenyangPharmacyChainStoreCo.,Ltd.(“GuodaShenyang”)41,047,958.08---41,047,958.08
LiyangGuodaPeoplePharmacyChainStoreCo.,Ltd.107,275,095.74---107,275,095.74
SinopharmHoldingHunanGuodaMinshengtangPharmacyChainCo.,Ltd.41,165,574.64---41,165,574.64
QuanzhouGuodaPharmacyChainStoreCo.,Ltd.(“GuodaQuanzhou”)41,298,622.59---41,298,622.59
SinopharmHoldingGuodaHenanPharmacyChainStoreCo.,Ltd.22,666,179.77---22,666,179.77
GuodaNeimenggu70,485,777.00---70,485,777.00
SinopharmGuodaPharmacyJiangmenChainCo.,Ltd.77,350,000.00---77,350,000.00
SinopharmHoldingGuodaShanxiYiyuanPharmacyChainStoreCo.,Ltd.9,080,100.00---9,080,100.00
ShenzhenGuanganliPharmacyChainStoreCo.,Ltd.storeacquisition13,420,000.00---13,420,000.00
BeijingGoldenElephantPharmacyMedicineChainCompanyLimited64,140,124.36---64,140,124.36
GuodaTaishan26,826,120.55---26,826,120.55
SinopharmGuodaTaiyuanTongxinliPharmacyCo.,Ltd.(TaiyuanTongxinli)2,818,647.85---2,818,647.85
ChaoyangYongxingtangPharmacyChainStoreCo.,Ltd(“ChaoyangYongxingtang”)stores’acquisition--25,973,399.17-25,973,399.17
InnerMongoliaTongrenPharmacyChainStoreCo.,Ltd.(“InnerMongoliaTongren”)stores’acquisition--13,494,000.00-13,494,000.00
GuodaPu’er-71,064,684.79--71,064,684.79
858,547,800.6071,064,684.7939,467,399.17-969,079,884.56

VNotestotheconsolidatedfinancialstatements(Continued)

17.Goodwill(Continued)

31December2018OpeningbalanceIncreaseDecreaseClosingbalance
MergerofholdingsnotundercommoncontrolConsolidationbymergerundercommoncontrolConsolidationbymergerundercommoncontrol
Pharmaceuticaldistribution
SinopharmJiangmen27,392,317.73---27,392,317.73
SinopharmYanfeng16,868,644.87---16,868,644.87
SinopharmZhaoqing2,594,341.53---2,594,341.53
SinopharmShaoguan1,686,496.80---1,686,496.80
SinopharmMeizhou1,610,819.66---1,610,819.66
SinopharmHuizhou923,184.67---923,184.67
SinopharmZhanjiang282,135.55---282,135.55
SinopharmDongguan1,499.02---1,499.02
SouthPharma&Trade2,755,680.62---2,755,680.62
FoshanNanhai88,877,850.51---88,877,850.51
SinopharmZhuhai6,772,561.476,772,561.47
SinopharmMaoming66,417.07---66,417.07
ForMeMedicines3,033,547.53---3,033,547.53
Pharmaceuticalretail
ShijiazhuangLerentangYikangPharmacyChainStoreCo.,Ltd.29,482,149.57-(29,482,149.57)
HebeiLerentang--29,482,149.57-29,482,149.57
XiaoyiWanmin15,866,680.00---15,866,680.00
ShanxiWanmin65,025,000.00---65,025,000.00
ForMePharmacyChainStore19,405,450.23---19,405,450.23
SinopharmHoldingGuodaPharmacyChainStoreShanghaiCo.,Ltd.5,028,638.00---5,028,638.00
SinopharmHoldingGuodaYangzhouDadeshengPharmacyChainStoreCo.,Ltd.7,979,000.00---7,979,000.00
ZhejiangGuodaPharmacyCo.,Ltd.3,045,183.85---3,045,183.85
SinopharmHoldingGuodaNanjingPharmacyChainStoreCo.,Ltd.11,598,341.12---11,598,341.12
FujianGuodaPharmacyChainStoreCo.,Ltd.1,567,250.76---1,567,250.76
SinopharmHoldingGuodaShandongPharmacyChainStoreCo.,Ltd.29,110,409.46---29,110,409.46
GuodaShenyang41,047,958.08---41,047,958.08
LiyangGuodaPeoplePharmacyChainStoreCo.,Ltd.107,275,095.74---107,275,095.74
SinopharmHoldingHunanGuodaMinshengtangPharmacyChainCo.,Ltd.41,165,574.64---41,165,574.64
GuodaQuanzhou41,298,622.59---41,298,622.59
SinopharmHoldingGuodaHenanPharmacyChainStoreCo.,Ltd.22,666,179.77---22,666,179.77
GuodaNeimenggu70,485,777.00---70,485,777.00
SinopharmGuodaPharmacyJiangmenChainCo.,Ltd.77,350,000.00---77,350,000.00
SinopharmHoldingGuodaShanxiYiyuanPharmacyChainStoreCo.,Ltd.9,080,100.00---9,080,100.00
ShenzhenGuanganliPharmacyChainStoreCo.,Ltd.storeacquisition13,420,000.00---13,420,000.00
BeijingGoldenElephantPharmacyMedicineChainCompanyLimited(“BeijingGoldenElephant”)63,546,507.81-593,616.55-64,140,124.36
BeijingYangqiaoRongzhiGoldenElephantPharmacyCompanyLimited593,616.55--(593,616.55)-

VNotestotheconsolidatedfinancialstatements(Continued)

17.Goodwill(Continued)

31December2018(Continued)OpeningbalanceIncreaseDecreaseClosingbalance
MergerofholdingsnotundercommoncontrolConsolidationbymergerundercommoncontrolConsolidationbymergerundercommoncontrol
Pharmaceuticalretail(Continued)
GuodaTaishan26,826,120.55---26,826,120.55
TaiyuanTongxinli-2,818,647.85--2,818,647.85
855,729,152.752,818,647.8530,075,766.12(30,075,766.12)858,547,800.60

Changesinprovisionforimpairmentofgoodwillarepresentedasfollows:

2019OpeningbalanceIncreaseDecreaseClosingbalance
ProvisionDisposal
Pharmaceuticalretail
GuodaQuanzhou25,000,000.00--25,000,000.00
2018OpeningbalanceIncreaseDecreaseClosingbalance
ProvisionDisposal
Pharmaceuticalretail
GuodaQuanzhou25,000,000.00--25,000,000.00

ThecarryingvalueofgoodwillisapportionedaccordingtotheproportionofeachCGUorCGUgroupatfairvalueofthetotalamountofgoodwillatfairvalue.Itisshownasfollows:

31December201931December2018
Pharmaceuticaldistribution152,865,497.03152,865,497.03
Pharmaceuticalretail791,214,387.53680,682,303.57
944,079,884.56833,547,800.60

VNotestotheconsolidatedfinancialstatements(Continued)

17.Goodwill(Continued)

TheGrouphadacquiredthemanagementrightof12storesofInnerMongoliaTongreninMarch2019,whichformedgoodwillamountingtoRMB13,494,000.RefertoNoteVI(1.2)formoredetails.TheGrouphadacquiredthemanagementrightof31storesofChaoyangYongxingtanginMay2019,whichformedgoodwillamountingtoRMB25,973,399.17.RefertoNoteVI(1.3)formoredetails.TheGrouphadacquired60%sharesofPu'erSongmaoJiantangPharmaceuticalCo.,Ltd.inNovember2019,whichformedgoodwillamountingtoRMB71,064,684.79.RefertoNoteVI(1.4)formoredetails.Therecoverableamountofanassetgrouporagroupofassetgroupsisdeterminedbasedonafinancialbudgetapprovedbymanagementcoveringafive-yearperiod.Thecashflowsbeyondthefive-yearperiodareextrapolatedusingtheinflationrate.Keyassumptionswereusedforthecalculationofthepresentvaluesoffuturecashflowprojectionsoftheassetgroupconsistingofpharmaceuticaldistributionandpharmaceuticalretailasof31December2019.Keyassumptionsmadebymanagementonprojectionsofcashflowsusedinimpairmenttestingaredescribedasfollows:

PharmaceuticaldistributionPharmaceuticalretail
Revenuegrowthrateinthebudgetperiod2.00%-40.00%1.41%-35.00%
Sustainablegrowthrate3.00%3.00%
Grossmargin3.70%-6.94%20.36%-41.22%
Discountrate12.40%-15.00%13.00%-15.00%

Thebudgetedgrossmarginandtherevenuegrowthrateinthebudgetperiodaredeterminedbasedonthepastperformanceandexpectationformarketdevelopment.Thediscountratesusedarepre-taxdiscountratesafterreflectingspecificrisksoftherelevantassetgroups.Therecoverableamountoftheassetgroupconsistingofpharmaceuticaldistributionandpharmaceuticalretailwasdeterminedaccordingtothekeyassumptions.

VNotestotheconsolidatedfinancialstatements(Continued)

18.Long-termprepaidexpenses

2019OpeningbalanceAdditionsAmortizationOtherdecreaseClosingbalance
Fixedassetimprovementexpenditure249,458,261.87121,956,819.11(86,002,425.40)(2,970,454.66)282,442,200.92
Acquisitionexpendituretoobtaintherighttooperate57,617,166.6315,785,422.51(16,870,583.63)-56,532,005.51
Others4,253,277.9628,371,430.56(5,099,503.83)(37,272.11)27,487,932.58
311,328,706.46166,113,672.18(107,972,512.86)(3,007,726.77)366,462,139.01
2018OpeningbalanceIncreaseAmortizationOtherdecreaseClosingbalance
Fixedassetimprovementexpenditure199,209,837.80123,968,928.79(72,027,492.28)(1,693,012.44)249,458,261.87
Acquisitionexpendituretoobtaintherighttooperate49,013,331.4824,687,711.48(16,083,876.33)-57,617,166.63
Others4,023,881.511,973,696.15(1,744,299.70)-4,253,277.96
252,247,050.79150,630,336.42(89,855,668.31)(1,693,012.44)311,328,706.46

VNotestotheconsolidatedfinancialstatements(Continued)

19.Deferredtaxassets/liabilities

Deferredtaxassetsanddeferredtaxliabilitiesbeforeoffsettingareasfollows:

31December2019

31December201931December2018
DeductibletemporarydifferencesDeferredtaxassetsDeductibletemporarydifferencesDeferredtaxassets
Deferredtaxassets
Provisionforimpairmentofassets113,202,938.5126,745,819.5068,153,222.0715,676,020.10
Accruedexpenses101,057,882.4624,536,658.0594,108,769.3322,301,617.95
Effectofthenewleasestandard52,885,419.7312,482,780.70--
Deferredrevenue32,719,558.797,996,709.3530,188,142.137,547,758.26
Deductibletaxloss30,789,517.627,536,230.7677,791,621.2019,311,837.06
Accruedpayroll11,868,705.752,454,711.0464,598,625.7415,656,015.32
Others22,161,103.744,560,780.366,238,492.181,467,765.00
364,685,126.6086,313,689.76341,078,872.6581,961,013.69
31December201931December2018
TaxabletemporarydifferencesDeferredtaxliabilitiesTaxabletemporarydifferencesDeferredtaxliabilities
Deferredtaxliabilities
Fairvalueadjustmentforabusinesscombinationnotinvolvingenterprisesundercommoncontrol216,027,393.9254,006,848.47227,900,345.3956,975,086.34
Changesinfairvalueoffinancialassetsthroughothercomprehensiveincome102,335,240.0025,583,810.00--
FixedassetlessthanRMB5milliondeductedatonce77,440,115.9819,250,299.2126,766,360.086,691,590.04
Changesinassetvaluationduetochangeincompanypolicy20,286,498.645,071,624.6621,858,742.025,464,685.51
Others26,521,667.385,487,577.7126,741,840.895,520,603.73
442,610,915.92109,400,160.05303,267,288.3874,651,965.62

VNotestotheconsolidatedfinancialstatements(Continued)

19.Deferredtaxassets/liabilities(Continued)

Deferredtaxassetsandliabilitiesarepresentedafterbeingoffsetagainsteachotherareasfollows:

31December2019

31December201931December2018
TheamountofoffsetDeferredtaxassets/liabilities-netTheamountofoffsetDeferredtaxassets/liabilities-net
Deferredtaxassets25,682,673.7760,631,015.997,046,803.7474,914,209.95
Deferredtaxliabilities25,682,673.7783,717,486.287,046,803.7467,605,161.88

Thedeductibletemporarydifferencesanddeductiblelossesthatwerenotrecognisedasdeferredtaxassetsarepresentedasfollows:

31December2019

31December201931December2018
Deductibletemporarydifferences1,480,000.001,480,000.00
Deductiblelosses(Note)49,106,535.9229,391,422.33
50,586,535.9230,871,422.33

Note:Forthoseloss-makingsubsidiaries,asitisnotconsideredprobablethattaxableprofits

willbeavailableagainstwhichthetaxlossescanbeutilized,theGrouphasnotrecogniseddeferredtaxassetsarisingfromaccumulatedlossesamountingtoRMB49,106,535.92whicharetaxdeductiblesunderthetaxlaw.Theaforesaidunrecogniseddeductiblelosseswillbeduein:

Theaforesaidunrecogniseddeductiblelosseswillbeduein:

31December2019

31December201931December2018
2019-2,864,062.85
20204,725,707.874,725,707.87
20212,563,056.082,563,056.08
20227,261,117.977,261,117.97
202311,977,477.5611,977,477.56
202422,579,176.44-
49,106,535.9229,391,422.33

VNotestotheconsolidatedfinancialstatements(Continued)

20.Othernon-currentassets

31December20191January201931December2018
Speciallyapprovedreservingmaterials55,550,834.8947,576,273.7547,576,273.75
Prepaymentforprojectandequipment21,713,763.1010,592,645.3610,592,645.36
Prepaymentforarentalfee90,372.40-14,196,944.60
77,354,970.3958,168,919.1172,365,863.71

21.Provisionforimpairmentofassets

1January2019Reversalofwrite-offinpreviousyearsIncreasesDecreases31December2019
CurrentIncreaseduetoreorganizationReversalWrite-off
Provisionforbaddebts59,443,388.4662,630.6075,240,127.7757,180.49(22,076,637.16)(8,157,143.90)104,569,546.26
Provisionforbaddebtsofaccountsreceivable39,521,434.7422,080.0025,098,772.5056,980.49(20,246,309.59)(3,823,540.02)40,629,418.12
Provisionforbaddebtsofotherreceivables19,921,953.7240,550.6050,141,355.27200.00(1,830,327.57)(4,333,603.88)63,940,128.14
Provisionforinventories8,313,195.295,356.034,362,375.48139,294.62(3,110,765.80)(1,403,955.27)8,305,500.35
Impairmentofinvestmentproperties1,300,000.00-----1,300,000.00
Impairmentofgoodwill25,000,000.00-----25,000,000.00
Impairmentoflong-termequityinvestments396,638.32-1,857,279.52---2,253,917.84
94,453,222.0767,986.6381,459,782.77196,475.11(25,187,402.96)(9,561,099.17)141,428,964.45

VNotestotheconsolidatedfinancialstatements(Continued)

21.Provisionforimpairmentofassets(Continued)

1January2018Reversalofwrite-offinpreviousyearsIncreasesDecreases31December2018
CurrentIncreaseduetoreorganizationReversalWrite-off
Provisionforbaddebts59,036,515.28221,031.3519,607,811.6380,000.00(19,309,332.08)(192,637.72)59,443,388.46
Provisionforbaddebtsofaccountsreceivable43,925,465.41221,031.3512,467,357.34-(16,899,781.64)(192,637.72)39,521,434.74
Provisionforbaddebtsofotherreceivables15,111,049.87-7,140,454.2980,000.00(2,409,550.44)-19,921,953.72
Provisionforinventories6,840,110.55-5,422,984.90-(2,678,379.54)(1,271,520.62)8,313,195.29
Impairmentofinvestmentproperties1,300,000.00-----1,300,000.00
Impairmentofgoodwill25,000,000.00-----25,000,000.00
Impairmentoflong-termequityinvestments396,638.32-----396,638.32
92,573,264.15221,031.3525,030,796.5380,000.00(21,987,711.62)(1,464,158.34)94,453,222.07

22.Short-termborrowings

31December201931December2018
Creditborrowings1,388,979,951.892,438,612,672.71
Discountednotes64,038,348.12170,013,427.11
1,453,018,300.012,608,626,099.82

Asat31December2019,theannualinterestratefortheaboveborrowingswas4.44%(31December2018:4.65%).Asat31December2019and31December2018,therewerenoshort-termborrowingsoftheGroupthatwereoverduebutnotyetpaid.

VNotestotheconsolidatedfinancialstatements(Continued)

23.Notespayable

31December201931December2018
Commercialacceptancebills40,343,723.7813,843,479.73
Bankacceptancebills5,515,353,833.753,402,912,202.07
5,555,697,557.533,416,755,681.80

At31December2019,thetotalamountofnotespayablethatwereduebutnotyetpaidwasnil(31December2018:nil).

24.AccountspayableAccountspayableareinterest-freeandwillbepaidnormallybetween1and6months.

31December201931December2018
Paymentforgoods6,554,105,124.136,468,535,961.17

At31December2019,significantaccountspayableagedoveroneyearwasanalyzedbelow:

AmountReason
Paymentforgoods331,837,741.84Notyetsettled

25.Contractliabilities

31December201931December2018
Contractliabilities302,650,567.97255,590,612.37

Contractliabilitiesareadvancepaymentsreceived.Contractobligationsarenormallyperformed,andrevenueisrecognised,within6monthsofreceivingsuchadvancepaymentsbycustomers.

VNotestotheconsolidatedfinancialstatements(Continued)

26.Employeebenefitspayable

2019AtbeginningoftheyearIncreaseDecreaseAtendoftheyear
Short-termemployeebenefits226,152,409.272,005,462,891.39(1,980,782,154.51)250,833,146.15
Post-employmentbenefits(definedcontributionplan)5,248,146.99181,128,052.90(181,714,446.08)4,661,753.81
Terminationbenefits465,851.141,431,023.12(1,564,052.56)332,821.70
231,866,407.402,188,021,967.41(2,164,060,653.15)255,827,721.66
2018AtbeginningoftheyearIncreaseDecreaseAtendoftheyear
Short-termemployeebenefits209,320,163.701,759,137,844.89(1,742,305,599.32)226,152,409.27
Post-employmentbenefits(definedcontributionplan)5,596,277.12176,477,341.94(176,825,472.07)5,248,146.99
Terminationbenefits740,085.721,555,451.66(1,829,686.24)465,851.14
215,656,526.541,937,170,638.49(1,920,960,757.63)231,866,407.40

VNotestotheconsolidatedfinancialstatements(Continued)

26.Employeebenefitspayable(Continued)

Short-termemployeebenefits:

2019

2019AtbeginningofyearIncreaseDecreaseAtendofyear
Salaries,bonuses,allowancesandgrants210,723,820.211,745,458,052.03(1,719,091,854.24)237,090,018.00
Staffwelfare1,750,750.8962,496,131.37(62,856,557.73)1,390,324.53
Socialsecuritycontribution1,622,271.1295,074,567.23(95,194,678.92)1,502,159.43
Including:Medicalinsurance1,362,150.5985,088,807.47(85,202,240.35)1,248,717.71
Workinjuryinsurance30,755.692,904,043.69(2,906,528.63)28,270.75
Maternityinsurance229,364.847,081,716.07(7,085,909.94)225,170.97
Housingfunds1,063,993.0270,390,806.56(70,062,809.27)1,391,990.31
Laborunionfundsandemployeeeducationfunds9,956,772.1230,048,327.90(31,605,806.94)8,399,293.08
Othershort-termbenefits1,034,801.911,995,006.30(1,970,447.41)1,059,360.80
226,152,409.272,005,462,891.39(1,980,782,154.51)250,833,146.15
2018AtbeginningofyearIncreaseDecreaseAtendofyear
Salaries,bonuses,allowancesandgrants193,078,506.491,526,865,265.07(1,509,219,951.35)210,723,820.21
Staffwelfare2,602,805.9251,777,145.01(52,629,200.04)1,750,750.89
Socialsecuritycontribution1,363,649.3289,203,979.18(88,945,357.38)1,622,271.12
Including:Medicalinsurance1,130,984.4179,707,594.13(79,476,427.95)1,362,150.59
Workinjuryinsurance10,541.553,335,240.34(3,315,026.20)30,755.69
Maternityinsurance222,123.366,161,144.71(6,153,903.23)229,364.84
Housingfunds929,089.3359,408,331.39(59,273,427.70)1,063,993.02
Laborunionfundsandemployeeeducationfunds10,178,562.8728,172,099.55(28,393,890.30)9,956,772.12
Othershort-termbenefits1,167,549.773,711,024.69(3,843,772.55)1,034,801.91
209,320,163.701,759,137,844.89(1,742,305,599.32)226,152,409.27

VNotestotheconsolidatedfinancialstatements(Continued)

26.Employeebenefitspayable(Continued)

Definedcontributionplan:

2019

2019AtbeginningofyearIncreaseDecreaseAtendofyear
Basicpensioninsurance1,755,160.16169,936,884.74(170,089,263.47)1,602,781.43
Unemploymentinsurance122,350.655,168,661.43(5,210,052.28)80,959.80
Contributiontoapensionfund3,370,636.186,022,506.73(6,415,130.33)2,978,012.58
5,248,146.99181,128,052.90(181,714,446.08)4,661,753.81
2018AtbeginningofyearIncreaseDecreaseAtendofyear
Basicpensioninsurance1,739,623.34166,757,467.61(166,741,930.79)1,755,160.16
Unemploymentinsurance221,831.214,731,258.82(4,830,739.38)122,350.65
Contributiontoapensionfund3,634,822.574,988,615.51(5,252,801.90)3,370,636.18
5,596,277.12176,477,341.94(176,825,472.07)5,248,146.99

VNotestotheconsolidatedfinancialstatements(Continued)

26.Employeebenefitspayable(Continued)

Terminationbenefits:

2019

2019AtbeginningofyearIncreaseDecreaseAtendofyear
Retirementbenefitspayable–within1year(NoteV(34))408,057.61631,005.86(791,197.41)247,866.06
Otherterminationbenefits(i)57,793.53800,017.26(772,855.15)84,955.64
465,851.141,431,023.12(1,564,052.56)332,821.70
2018AtbeginningofyearIncreaseDecreaseAtendofyear
Retirementbenefitspayable–within1year(NoteV(34))559,065.67980,356.18(1,131,364.24)408,057.61
Otherterminationbenefits(i)181,020.05575,095.48(698,322.00)57,793.53
740,085.721,555,451.66(1,829,686.24)465,851.14

VNotestotheconsolidatedfinancialstatements(Continued)

27.Taxpayable

31December201931December2018
CorporateIncometaxes127,549,708.68115,226,820.39
Value-addedtax86,412,534.5190,356,534.09
Citymaintenanceandconstructionsurtax6,746,231.856,854,426.95
Stampduty6,071,030.955,854,355.91
Waterconservancyfund5,488,930.645,421,280.43
Educationalsurcharge4,898,828.264,937,147.17
Individualincometax4,203,699.483,954,139.24
Propertytax532,454.301,123,276.37
Landusetax11,137.20209,179.29
Others8,203,832.278,043,252.88
250,118,388.14241,980,412.72

28.Otherpayables

31December20191January201931December2018
Interestpayable23,632,632.9010,894,278.9910,894,278.99
Dividendpayable6,389,320.966,389,320.966,389,320.96
Otherpayables1,726,836,507.161,511,129,733.381,511,140,990.34
1,756,858,461.021,528,413,333.331,528,424,590.29

Interestpayable

31December201931December2018
Factoringinterestonaccountsreceivable23,632,632.9010,894,278.99

VNotestotheconsolidatedfinancialstatements(Continued)

28.Otherpayables(Continued)

Dividendpayable

31December201931December2018
ShanghaiFosunPharmaceutical(Group)Co.,Ltd.(“FosunPharm”)4,835,511.584,835,511.58
DividendpayabletoZhangZhenfang1,389,639.311,389,639.31
MeiluoPharmaceuticalCo.,Ltd.164,170.07164,170.07
6,389,320.966,389,320.96

Asat31December2019and31December2018,theGrouphadnosignificantdividendagedmorethanoneyearandnotyetpaid.Otherpayables

31December20191January201931December2018
Payablesforfactoringprograms849,490,467.87724,272,060.30724,272,060.30
Deposits422,017,144.86334,821,325.72334,821,325.72
Accruedexpenses129,552,787.78131,493,977.43131,493,977.43
Payablesarisingfromacquisitionofsubsidiaries72,193,635.6278,702,980.0078,702,980.00
Payablesforconstructioninprogressandequipment55,430,961.1479,380,923.9979,380,923.99
Equitysubscription46,023,136.0010,000,000.0010,000,000.00
Payablestoindividuals29,757,769.4722,730,210.2222,730,210.22
Payablesforrentals26,348,921.7629,287,578.5029,298,835.46
Temporaryloans15,800,000.0015,800,000.0015,800,000.00
Payablesforlandtransferpayments12,597,500.0018,071,000.0018,071,000.00
Collectionofothers11,844,558.247,525,379.597,525,379.59
Payablestorelatedparties9,028,812.085,436,532.765,436,532.76
Others46,750,812.3453,607,764.8753,607,764.87
1,726,836,507.161,511,129,733.381,511,140,990.34

VNotestotheconsolidatedfinancialstatements(Continued)

28.Otherpayables(Continued)

At31December2019,significantotherpayablesover1yearareasfollows:

AmountpayableReasonforoutstanding
Non-controllinginterestsinSouthPharma&TradeFuYuequnandother10naturalpersons54,722,980.00Paymentconditionsnotmet
TaishanQunkangDrugstoreCo.,Ltd.13,860,000.00Paymentconditionsnotmet
ShenyangTiexiDistrictState-ownedAssetsSupervisionandAdministrationBureau12,597,500.00Paymentconditionsnotmet
LiuzhouShengliDrugstore9,195,734.90Paymentconditionsnotmet
ShenzhenNo.1ConstructionEngineeringCo.,Ltd.8,605,625.20Paymentconditionsnotmet
GuangxiZhongdingMedicineConsultingCo.,Ltd.6,836,433.21Paymentconditionsnotmet

29.Non-currentliabilitiesduewithinoneyear

105,818,273.3131December2019

31December20191January201931December2018
Long-termborrowingsduewithin1year31,638,984.25--
Long-termpayablesduewithin1year(NoteV(33))--5,861,324.37
Leaseliabilitiesduewithin1year(NoteV(32))569,788,109.37538,430,817.03-
601,427,093.62538,430,817.035,861,324.37

30.Othercurrentliabilities

31December201931December2018
OutputVATtoberecognised749,710.19292,465.75

VNotestotheconsolidatedfinancialstatements(Continued)

31.Long-termborrowings

31December201931December2018
Entrustedloans-31,638,984.25

At31December2019,thetotalamountofremainingentrustedloansisRMB31,638,984.25(31December2018:RMB31,638,984.25).CNPGCentrustedSinopharmGroupFinanceCo.,Ltd.toprovidetheloan.Borrowingsduewithinoneyearhavebeenreclassifiedtonon-currentliabilitiesduewithinoneyear.At31December2019,theweightedaverageannualinterestrateoftheentrustedloanswas

4.04%(31December2018:4.04%).

32.Leaseliabilities

At31December2019,theweightedaverageannualinterestrateoftheentrustedloanswas

4.04%(31December2018:4.04%).31December2019

31December20191January2019
Leasepayment1,918,972,963.901,803,679,783.76
Unrecognisedfinancingexpenses(166,777,769.45)(157,711,546.81)
Less:Leaseliabilitiesduewithin1year(NoteV(29))569,788,109.37538,430,817.03
1,182,407,085.081,107,537,419.92

33.Long-termpayables

31December20191January201931December2018
Long-termpayables--3,763,978.52
Payablesforspecificprojects800,000.00800,000.00800,000.00
800,000.00800,000.004,563,978.52

Long-termpayables

31December20191January201931December2018
Financeleasepayables--9,625,302.89
Less:Amountduewithinoneyear(NoteV(29))--5,861,324.37
--3,763,978.52

VNotestotheconsolidatedfinancialstatements(Continued)

33.Long-termpayables(Continued)

Payablesforspecificprojects

2019
AtbeginningofyearIncreaseDecreaseAtendofyear
Specialfundsgrantedbythegovernment800,000.00--800,000.00
2018
AtbeginningofyearIncreaseDecreaseAtendofyear
Specialfundsgrantedbythegovernment800,000.00--800,000.00

Payablesforspecificprojectsareresearchfundingsgrantedbythegovernment,whicharedesignatedaspayablesforspecificprojectswhengranted.

34.Long-termemployeebenefitspayable

31December201931December2018
Earlyretirementbenefitspayable1,680,866.062,458,057.61
Less:Retirementbenefitspayablewithin1year(NoteV(26))247,866.06408,057.61
1,433,000.002,050,000.00
31December201931December2018
Discountrate3.25%3.50%
Growthrateofwages6.00%6.00%

Thetotalpost-employmentbenefitsrecognisedinprofitorlossofthecurrentyearareshownbelow:

2019

20192018
Includedinadministrativeexpenses(49,994.14)1,172,356.18
Includedinfinancecosts64,000.0081,000.00
14,005.861,253,356.18

VNotestotheconsolidatedfinancialstatements(Continued)

35.Deferredincome

2019OpeningbalanceIncreaseDecreaseClosingbalance
Governmentgrants91,491,170.403,477,445.94(6,264,343.46)88,704,272.88
2018OpeningbalanceIncreaseDecreaseClosingbalance
Governmentgrants96,725,183.34-(5,234,012.94)91,491,170.40

Asat31December2019,deferredincomefromgovernmentgrantsisasfollows:

Governmentgrantsprogram

GovernmentgrantsprogramOpeningbalanceAdditionintheyearAmountincludedinnon-operatingincomeintheyearAmountincludedinotherincomeintheyearClosingbalanceAssetrelated/incomerelated
Resettlementcompensation(Note)75,555,441.17-(2,698,408.56)-72,857,032.61Assetrelated
GuangxiLogisticsProject6,453,426.58--(408,073.08)6,045,353.50Assetrelated
GuangzhouLogisticsstandardizationproject2,815,012.55--(546,246.84)2,268,765.71Assetrelated
Comprehensiveexperimentalmodernserviceindustrysubsidies1,500,000.00--(300,000.00)1,200,000.00Assetrelated
Sharedlogisticscenter(completed)252,058.35--(18,800.40)233,257.95Assetrelated
Otherprojects4,915,231.753,477,445.94-(2,292,814.58)6,099,863.11Asset/incomerelated
91,491,170.403,477,445.94(2,698,408.56)(3,565,934.90)88,704,272.88

VNotestotheconsolidatedfinancialstatements(Continued)

35.Deferredincome(Continued)

Asat31December2018,deferredincomefromgovernmentgrantsisasfollows:

Governmentgrantsprogram

GovernmentgrantsprogramOpeningbalanceAdditionintheyearAmountincludedinnon-operatingincomeintheyearAmountincludedinotherincomesintheyearClosingbalanceAssetrelated/incomerelated
Resettlementcompensation(Note)78,253,849.73-(2,698,408.56)-75,555,441.17Assetrelated
GuangxiLogisticsProject6,949,832.98--(496,406.40)6,453,426.58Assetrelated
Guangzhoulogisticsstandardizationproject3,361,259.39--(546,246.84)2,815,012.55Assetrelated
Comprehensiveexperimentalmodernserviceindustrysubsidies1,800,000.00--(300,000.00)1,500,000.00Assetrelated
Sharedlogisticscenter(completed)270,858.75--(18,800.40)252,058.35Assetrelated
Otherprojects6,089,382.49--(1,174,150.74)4,915,231.75Asset/incomerelated
96,725,183.34-(2,698,408.56)(2,535,604.38)91,491,170.40

VNotestotheconsolidatedfinancialstatements(Continued)

36.Othernon-currentliabilities

31December201931December2018
Governmentalmedicalreservefunds46,723,743.3145,427,343.31
Productpromotionaccumulativepointsprogramme26,478,986.4923,813,832.87
Others53,785.13-
73,256,514.9369,241,176.18

37.Sharecapital

GovernmentalmedicalreservefundswerereceivedbytheGroupfromthenationalandlocalgovernmentsforpurchasingmedicalproducts(includingmedicines)requiredtorespondtoseriousdisasters,epidemicsandotheremergencies.TheProductpromotionaccumulativepointsprogrammereferstothoseproduct-originatedaccumulativepointsthatremainmorethanoneyearsurplusbeforetheexpirationdate.2019

2019AtbeginningoftheyearIncreaseduringthecurrentyearAtendoftheyear
IssueofnewshareOthersSubtotal
Listedshareswithoutrestrictionoftrading:
-Ashares,listed307,744,355.00---307,744,355.00
-Bshares,listed54,884,475.00---54,884,475.00
Listedshareswithrestrictionoftrading:
-State-ownedlegalpersonshares60,380,743.00---60,380,743.00
-LegalpersonregisteredwithinChinashares5,114,297.00---5,114,297.00
-NaturalpersonregisteredwithinChinashares3,113.00---3,113.00
428,126,983.00---428,126,983.00
2018AtbeginningoftheyearIncreaseduringthecurrentyearAtendoftheyear
IssueofnewshareOthersSubtotal
Listedshareswithoutrestrictionoftrading:
-Ashares,listed307,744,355.00---307,744,355.00
-Bshares,listed54,885,600.00-(1,125.00)(1,125.00)54,884,475.00
Listedshareswithrestrictionoftrading:
-State-ownedlegalpersonshares60,380,743.00---60,380,743.00
-LegalpersonregisteredwithinChinashares5,114,297.00---5,114,297.00
-NaturalpersonregisteredwithinChinashares1,988.00-1,125.001,125.003,113.00
428,126,983.00---428,126,983.00

VNotestotheconsolidatedfinancialstatements(Continued)

38.Capitalsurplus

2019AtbeginningoftheyearIncreaseDecreaseAtendoftheyear
Sharepremium2,118,174,787.27--2,118,174,787.27
Othercapitalsurplus-
Significantreorganization1,173,907,763.19--1,173,907,763.19
Transferofcapitalsurplusrecognisedunderthepreviousaccountingsystem2,650,322.00--2,650,322.00
Otherchangesinequityofinvestedunitsundertheequitymethod(a)(94,032,514.34)42,022,530.06-(52,009,984.28)
Others(b)1,120,284,623.39--1,120,284,623.39
4,320,984,981.5142,022,530.06-4,363,007,511.57
2018AtbeginningoftheyearIncreaseDecreaseAtendoftheyear
Sharepremium2,118,174,787.27--2,118,174,787.27
Othercapitalsurplus-
Significantreorganization1,173,907,763.19--1,173,907,763.19
Transferofcapitalsurplusrecognisedunderthepreviousaccountingsystem2,650,322.00--2,650,322.00
Otherchangesinequityofinvestedunitsundertheequitymethod(a)(113,303,807.47)19,271,293.13-(94,032,514.34)
-1,120,284,623.39-1,120,284,623.39
3,181,429,064.991,139,555,916.52-4,320,984,981.51

(a)TherewasanincreaseofRMB42,022,530.06inthecurrentyear’sothercapitalreservesofthe

investedentityandthiswasduetotheincreaseofthebookvalueofalong-termequityinvestmentoftheGroup’sassociatecompany,ShyndecPharma,whichresultedinacapitalsurplusofRMB42,022,530.06.TherewasanincreaseofRMB19,271,293.13inothercapitalreservesoftheinvestedentityin2018andthiswasduetothedecreaseofthebookvalueofalong-termequityinvestmentoftheGroup’sassociatecompany,ShyndecPharma,whichresultedinacapitalsurplusofRMB139,312.34.SincethesubsidiaryofShyndecPharmafailedtocompletetheValuationAdjustmentMechanism,ShyndecPharma’ssharesthattheGroupholdschanged,whichresultedinanincreaseofRMB19,410,605.47inthecapitalsurplus.

(b)TherewasanincreaseofRMB1,120,284,623.39inthecurrentyear’sothercapitalreservesandthiswasduetotheintroductionofastrategicinvestor,WalgreensBootsAlliance(HongKong)InvestmentsLimited,fromtheGroup’ssubsidiary,GuodaPharmacy.WBAinvestorincreasedcapitalbyRMB2,766,700,000.00,whichresultedinacapitalpremiumofRMB1,120,284,623.39.

VNotestotheconsolidatedfinancialstatements(Continued)

39.Othercomprehensiveincome

Accumulatedbalanceofothercomprehensiveincomeattributabletoshareholdersoftheparentcompanyintheconsolidatedbalancesheet

1January2019Increaseordecrease31December2019
Changeinthefairvalueofotherequityinvestments-46,050,708.9646,050,708.96
Othercomprehensiveincomeusingtheequitymethodthatmaybereclassifiedtoprofitorloss-(133,366.19)(133,366.19)
-45,917,342.7745,917,342.77

Thecurrentoccurrenceamountofothercomprehensiveincomeintheconsolidatedincomestatementisas

follows:

OccurrenceamountbeforetaxMinus:IncometaxAttributabletoshareholdersofownersoftheparentAttributabletonon-controllinginterests
Othercomprehensiveincomeitemswhichwillnotbereclassifiedsubsequentlytoprofitorloss
Changeinthefairvalueofotherequityinvestments102,335,240.0025,583,810.0046,050,708.9630,700,721.04
Othercomprehensiveincomethatmaybereclassifiedtoprofitorloss
Othercomprehensiveincomeusingtheequitymethodthatmaybereclassifiedtoprofitorloss(133,366.19)-(133,366.19)-
102,201,873.8125,583,810.0045,917,342.7730,700,721.04

VNotestotheconsolidatedfinancialstatements(Continued)

40.Surplusreserves

31December201931December2018
Statutorysurplusreserves214,063,491.50214,063,491.50

AccordingtotheprovisionsoftheCompanyLawandtheCompany’sarticlesofassociation,theCompanyappropriatesstatutorysurplusreservesat10%ofthenetprofit.Wheretheaccumulatedamountofsurplusreservesreaches50%ormoreoftheCompany’sregisteredcapital,additionalappropriationisnotneeded.Aftertheappropriationofstatutorysurplusreserves,theCompanymayappropriatediscretionarysurplusreserves.Whenapproved,thediscretionarysurplusreservescanbeusedtorecoveraccumulatedlossesorincreasesharecapital.TheaccumulatedamountofthestatutorysurplusreservesoftheGrouphasalreadyreached50%oftheregisteredcapital.AccordingtotheCompany’sarticlesofassociation,theGroupdidnotextractthesurplusreservesanymore.

41.Retainedearnings

31December201931December2018
Retainedearningsattheendoftheprioryear6,655,257,147.275,572,952,806.39
Add:Netprofitattributabletotheparent1,271,289,183.011,210,742,435.78
Less:Withdrawalfromthesurplusreserves--
Cashdividendspayableforordinaryshares(a)171,250,793.20128,438,094.90
Retainedearningsatendofyear7,755,295,537.086,655,257,147.27
(a)PursuanttotheresolutionoftheGeneralMeetingoftheShareholderson17May2019,theCompanypaidacashdividendofRMB4.00forevery10sharestoallshareholders.Thecashdividendwascalculatedonthebasisof428,126,983sharesinissue,withanaggregateamountofRMB171,250,793.20.

VNotestotheconsolidatedfinancialstatements(Continued)

42.Operatingrevenueandcost

20192018
RevenueCostRevenueCost
Principaloperations51,672,871,710.1246,245,490,002.6842,778,939,792.9037,991,076,562.19
Otheroperations372,892,433.0946,918,837.85343,445,728.3333,032,068.96
52,045,764,143.2146,292,408,840.5343,122,385,521.2338,024,108,631.15

Revenueisasfollows:

2019

20192018
Revenuefromcontractswithcustomers51,970,971,594.5243,040,868,416.94
Rentals74,792,548.6981,517,104.29
52,045,764,143.2143,122,385,521.23

Disaggregationofrevenuefromcontractswithcustomersisasfollows:

2019

20192018
Placeofbusiness
China51,970,971,594.5243,040,868,416.94
Typeofmajoractivities
Pharmaceuticaldistribution38,886,408,981.7931,866,749,848.53
Retailpharmacy13,000,514,605.2811,110,718,685.75
Others84,048,007.4563,399,882.66
51,970,971,594.5243,040,868,416.94
Typeofmajorgoods
Pharmaceuticals48,181,069,748.3640,634,670,075.31
Medicaldevicesanddisposables2,756,591,633.831,589,598,645.85
Diagnosticreagents692,370,435.53548,790,740.10
Medicalequipments256,891,769.35204,409,073.02
Others84,048,007.4563,399,882.66
51,970,971,594.5243,040,868,416.94

VNotestotheconsolidatedfinancialstatements(Continued)

42.Operatingrevenueandcost(Continued)

Disaggregationofrevenuefromcontractswithcustomersisasfollows:(Continued)2019

20192018
Timingofrevenuerecognition
Atapointintime
Saleofgoods51,886,923,587.0742,977,468,534.28
Overtime
Providingservices40,334,878.3526,942,724.22
Storageandlogistics43,713,129.1036,457,158.44
51,970,971,594.5243,040,868,416.94

Revenuerecognisedthatwasincludedincontractliabilitiesatthebeginningoftheyear:

2019

20192018
Saleofgoods255,590,612.37216,938,239.32

TheGrouphasrecognisedcontractliabilitiesintotalofRMB302,650,567.97throughthesaleofgoodsandprovisionofservicesinthecurrentyear.TheexpectedrevenuerecognitiontimefortheGroup’scontractobligationsaboveisinyear2020.InformationabouttheGroup’sperformanceobligationsissummarisedbelow:

InformationabouttheGroup’sperformanceobligationsissummarisedbelow:

(1)

(1)Revenueisrecognisedwhencontrolofthegoodshastransferredandpaymentisgenerallyduewithin30to210daysfromdelivery;
(2)Revenueisrecognisedintheservicedurationandthepaymentisgenerallyduewithin30to210dayssincetheserviceiscompleted.

VNotestotheconsolidatedfinancialstatements(Continued)

43.Taxesandsurcharges

20192018
Citymaintenanceandconstructiontax52,815,864.8047,477,033.41
Educationalsurcharge37,750,316.0532,650,733.37
Stampduty36,114,032.5832,467,464.05
Propertytax7,420,032.756,961,154.31
Landtax1,021,455.29830,516.37
River&embankmentmaintenancefee778,070.25250,164.71
Vehicleandvesselusetax144,023.76159,260.61
Others249,900.06215,812.19
136,293,695.54121,012,139.02

44.Sellingexpenses

20192018
Employeebenefits1,600,018,824.191,388,569,241.35
Depreciationexpensesofright-of-useassets624,933,188.71-
Rentalexpenses124,901,006.05667,385,735.96
Amortizationoflong-termdeferredexpenses94,423,270.1879,264,643.73
Transportationexpenses92,959,071.8672,790,376.76
Technicalservicefee80,597,774.81122,040,418.95
Depreciationexpensesoffixedassets69,824,366.4557,211,707.70
Utilities66,594,129.6858,460,806.07
Promotionandmarketingexpenses50,135,450.6644,772,075.33
Officeallowance44,962,674.7137,866,925.91
Entertainmentexpenses32,702,753.9228,339,849.02
Propertymanagementfee29,632,095.5026,325,349.03
Storageexpenses26,872,236.6826,735,260.77
Repairingfees12,941,004.9512,410,974.80
Conferenceexpenses11,996,153.129,254,374.47
Travelallowances9,773,557.459,659,289.87
Marketdevelopmentfee6,347,031.837,741,076.04
Others75,789,077.41113,961,780.01
3,055,403,668.162,762,789,885.77

VNotestotheconsolidatedfinancialstatements(Continued)

45.Administrativeexpenses

20192018
Employeebenefits577,208,734.38540,166,368.56
Officeallowance29,676,021.1225,785,743.03
Depreciationexpensesoffixedassets27,124,509.4525,989,962.32
Depreciationexpensesofright-of-useassets22,873,594.08-
Technicalservicefee20,634,230.6717,309,623.25
Amortizationofintangibleassets19,679,232.7916,833,469.40
Rentalexpenses16,718,745.7434,452,292.21
Entertainmentexpenses15,897,238.7915,124,722.99
Agencyservicefee15,872,236.2119,335,780.45
Promotionandmarketingexpenses12,495,124.139,239,323.28
Amortizationoflong-termdeferredexpenses12,267,769.449,609,145.68
Travelallowance11,579,577.9211,970,208.11
Vehiclemanagementexpenses7,770,897.509,508,891.07
Repairingfee6,592,921.584,726,047.17
Utilities5,930,248.655,740,238.76
Propertymanagementfee5,511,193.473,993,814.78
Others34,182,707.6133,552,677.13
842,014,983.53783,338,308.19

46.Financecosts

20192018
Interestexpenses271,718,934.85140,315,267.43
Less:Interestincome139,842,489.1181,119,506.63
Cashdiscountfrompurchase43,252,757.8842,424,361.51
Exchanges(loss)/gain(390,756.61)325,611.60
Others31,740,023.5434,393,009.70
119,972,954.7951,490,020.59

Abreakdownforinterestincomeisasfollows:

20192018
Cash139,842,489.1181,119,506.63

VNotestotheconsolidatedfinancialstatements(Continued)

47.Otherincome

20192018
Governmentgrantsrelatedtodailyoperatingactivities42,905,261.4927,012,475.30
Taxationservicechargerefund508,168.931,445,926.01
43,413,430.4228,458,401.31
Governmentgrantsrelevanttodailyoperation:
20192018Relatedtoasset/income
Guangzhoulogisticsstandardizationproject546,246.84546,246.84Relatedtoasset
Guangxilogisticsproject408,073.08496,406.40Relatedtoasset
Grantsforacomprehensiveexperimentalunitofthemodernserviceindustry300,000.00300,000.00Relatedtoasset
Third-partymedicinemodernlogisticspublicinformationplatform18,800.4018,800.40Relatedtoasset
Others1,699,402.111,174,150.74Relatedtoasset
2,972,522.432,535,604.38
Jobstablizationgrants8,704,495.352,371,741.63Relatedtoincome
Taxreturn7,944,738.619,153,184.19Relatedtoincome
Governmentsupportfunding6,302,515.342,632,800.00Relatedtoincome
VATreductionforsmall-scaletaxpayers6,159,608.34449,851.78Relatedtoincome
Governmentgrantsformedicinereserveexpenses3,417,500.003,220,625.00Relatedtoincome
Enterpriseeconomyaward2,555,293.341,535,325.00Relatedtoincome
Economiccontributionaward300,000.00150,000.00Relatedtoincome
Others4,548,588.084,963,343.32Relatedtoincome
39,932,739.0624,476,870.92
42,905,261.4927,012,475.30

48.Investmentincome

20192018
Long-termequityinvestmentincomeundertheequitymethod331,171,902.87319,903,890.47
Investmentincomefromdisposaloflong-termequityinvestments919,446.05(526,137.60)
Dividendincomefromotherequityinvestmentsthatarestillheld471,386.60519,419.36
Investmentincomefromthederecognitionoffinancialassetsmeasuredatamortisedcost(86,377,492.55)(61,372,718.53)
246,185,242.97258,524,453.70

VNotestotheconsolidatedfinancialstatements(Continued)

49.Creditimpairmentlosses

20192018
Impairmentlossonaccountsreceivable4,852,462.91(4,432,424.30)
Impairmentlossonotherreceivables48,311,027.704,730,903.85
53,163,490.61298,479.55

50.Impairmentlosses

20192018
Provisionforinventories1,251,609.682,744,605.36
Long-termequityinvestmentprovision1,857,279.52-
3,108,889.202,744,605.36

51.Gainondisposalofassets

20192018
Gainondisposalofintangibleassets-3,892,019.91
Gainondisposaloffixedassets688,411.843,500,527.65
Gainondisposalofright-of-useassets1,862,763.18-
2,551,175.027,392,547.56

52.Non-operatingincome

20192018
Gainfromwritingofftheunnecessarypayment16,601,380.585,000,021.34
Governmentgrantsirrelevanttodailyoperation5,015,608.562,698,408.56
Others3,969,927.005,016,923.61
25,586,916.1412,715,353.51

Governmentgrantsareasfollows:

2019

20192018Relatedtoasset/income
ResettlementCompensationofGuangxiLogistics2,698,408.562,698,408.56Assetrelated
GuangxiLogistics’(“Watersupply,powersupply,heatingandpropertymanagement”)financialsubsidies2,317,200.00-Incomerelated
5,015,608.562,698,408.56

VNotestotheconsolidatedfinancialstatements(Continued)

53.Non-operatingexpenses

20192018
Penaltyexpenses1,067,800.751,097,787.61
Donationexpenses450,000.00449,466.05
Lossondamageinnon-currentassetsneededtobescrapped210,249.05345,180.28
Others2,748,199.102,872,416.21
4,476,248.904,764,850.15

Thegovernmentgrants,whichareoffsetagainstthecarryingamountsoftherelatedassetsandexpensesassetoutbelow,arepresentedonanetbasis.

20192018
Governmentgrantsrelatedtoassets
Offsetagainstintangibleassets-1,210,000.00
Governmentgrantsrelatedtoincome
Offsetagainstfinancecosts(Note)1,378,372.43387,500.00
1,378,372.431,597,500.00

Note:In2019,theGroupreceivedtheloandiscountfundofRMB1,041,600.00fromanindustrialdevelopmentfundofFutianDevelopmentServiceCenterofShenzhen,GuangdongProvinceandtheloandiscountfundofRMB336,772.43fromthePharmaceuticalReserveMaterialsfundoftheDepartmentofFinanceofGuangxiZhuangAutonomousRegion.Accordingtotherelevantprovisionsof“CAS16”,theGroupwouldoffsettheabove-mentionedloandiscountfundwhichwasreceivedin2019againstthefinancecostsofthecurrentyear.Fordetailsofothergovernmentsubsidies,pleaserefertoNoteV(35&47)

VNotestotheconsolidatedfinancialstatements(Continued)

55.Expensesbynature

Theoperatingcosts,sellingexpensesandadministrativeexpensesareclassifiedbynatureandlistedasfollows:

2019

20192018
Inventoriesoffinishedandwork-in-progressgoods/Costofinventories46,272,149,768.8338,010,404,118.17
Employeebenefits2,184,975,042.371,937,354,409.70
Depreciationandamortization899,601,990.12206,110,412.41
Rentalexpenses141,619,751.79701,838,028.17
Technicalservicefee101,232,005.48139,350,042.20
Transportationexpenses92,959,071.8672,790,376.76
Utilities74,917,949.1366,988,900.15
Officetelecomandinternetexpenses74,638,695.8363,652,668.94
Promotionandmarketingexpenses68,977,606.6261,752,474.65
Entertainmentexpenses48,599,992.7143,464,572.01
Propertymanagementfee35,143,288.9730,319,163.81
Travelallowance30,448,970.1829,081,374.94
Storageexpenses26,872,236.6826,735,260.77
Repairingfee19,533,926.5317,137,021.97
Conferenceexpenses18,138,447.0312,927,363.12
Agencyservicefee15,872,236.2119,335,780.45
Others84,146,511.88130,994,856.89
50,189,827,492.2241,570,236,825.11

VNotestotheconsolidatedfinancialstatements(Continued)

56.Incometaxes

20192018
Currentincometax367,807,504.00330,119,712.81
Deferredincometax4,631,937.37378,532.87
372,439,441.37330,498,245.68

Thereconciliationofincometaxcalculatedbasedonapplicabletaxratesandtotalprofitpresentedintheconsolidatedfinancialstatementstotheincometaxesisshownbelow:

2019

20192018
Profitbeforeincometaxes1,856,658,136.501,678,929,357.53
Incometaxescalculatedatapplicabletaxrates464,164,534.12419,732,339.38
Lowertaxratesenactedbylocalauthorities(28,039,776.17)(26,400,897.47)
Incomenotsubjecttotax(82,792,975.72)(80,379,054.34)
Expensesnotdeductiblefortax16,311,566.2612,549,148.66
Deductiblelossonunconfirmeddeferredtaxassetsatendoftheyear5,644,794.112,994,369.39
Utilizationofpreviouslyunrecognisedtaxlosses705,689.03752,138.09
Adjustmentofincometaxexpenseofpreviousyears(3,554,390.26)1,250,201.97
Incometax372,439,441.37330,498,245.68

57.Earningspershare

20192018
RMB/shareRMB/share
Basicearningspershare
Continuingoperations2.972.83
Dilutedearningspershare
Continuingoperations2.972.83

ThebasicearningspersharearecalculatedbydividingtheconsolidatednetprofitofthecurrentyearattributabletotheordinaryshareholdersoftheCompanybytheadjustedweightedaveragenumberofordinarysharesoutstanding.Inyear2019,theCompanyhadnopotentialdilutiveordinarysharesandthedilutedearningspersharewerethesameasthebasicearningspershare.

VNotestotheconsolidatedfinancialstatements(Continued)

57.Earningspershare(Continued)

Thecalculationofbasicanddilutedearningspershareisasfollows:

20192018
Earnings1,271,289,183.011,210,742,435.78
Consolidatednetprofitattributabletotheshareholdersoftheparent1,271,289,183.011,210,742,435.78
Netprofitattributabletothecalculationofearningspershare1,271,289,183.011,210,742,435.78
Shares
Adjustedweightedaveragenumberofordinarysharesoutstanding428,126,983.00428,126,983.00
Basicanddilutedearningspershare2.972.83

58.Notestoitemsinthecashflowstatement

Othercashreceiptsrelatingtooperatingactivities2019

20192018
Interestincome139,464,471.8279,501,556.12
Rentincome62,779,668.7270,082,395.95
Governmentgrantsexcepttaxreturn31,971,665.1115,323,686.73
Others506,514,549.70514,689,083.24
740,730,355.35679,596,722.04

Othercashpaymentsrelatingtooperatingactivities2019

20192018
Rentalexpenses177,149,079.15732,157,191.98
Advertisingexpenses74,638,695.8361,752,474.65
Officeexpenses68,977,606.6249,240,163.51
Entertainmentexpenses48,599,992.7143,464,572.01
Bankcharges30,448,970.1839,831,488.02
Travelexpenses29,123,133.4729,081,374.94
Conferenceexpenses18,138,447.0312,927,363.12
Others725,948,768.25757,256,302.59
1,173,024,693.241,725,710,930.82

VNotestotheconsolidatedfinancialstatements(Continued)

58.Notestoitemsinthecashflowstatement(Continued)

Othercashreceiptsrelatingtoinvestingactivities2019

20192018
Receivedentrustedloaninterests3,180,035.981,656,563.34
ReceiptsrelatingtoplantsandequipmentsofShyndecPharma’sPingshanbase-51,695,586.01
Receivedentrustedloanpayments-44,000,000.00
Others8,444.091,440,936.05
3,188,480.0798,793,085.40

Othercashpaymentsrelatingtoinvestingactivities2019

20192018
Expensepaymentof”Watersupply,powersupply,heatingandpropertymanagement”1,093,125.00-
EntrustedborrowingspaidtoZhijunSuzhou-44,000,000.00
Others1,504,625.7437,042,904.53
2,597,750.7481,042,904.53

Othercashreceiptsrelatingtofinancingactivities

2019

20192018
Factoringpayablereceived114,349,993.77335,542,301.71
Financingrestrictedmonetaryfundsreceived134,955,774.35135,678,166.90
Others-12,818,350.59
249,305,768.12484,038,819.20

Othercashpaymentsrelatingtofinancingactivities2019

20192018
Paymentoftheleaseprincipal708,869,138.96-
Purchaseofequityofminorityshareholders-54,722,980.00
Others9,803,690.9229,752,802.06
718,672,829.8884,475,782.06

VNotestotheconsolidatedfinancialstatements(Continued)

59.Supplementaryinformationofthecashflowstatement

(1)Supplementaryinformationofthecashflowstatement

Reconciliationofnetprofittocashflowsfromoperatingactivities2019

20192018
Netprofit1,484,218,695.131,348,431,111.85
Add:Provisionforassetimpairment56,272,379.813,043,084.91
Depreciationoffixedassetsandinvestmentproperties106,244,432.7691,786,656.69
Depreciationofright-of-useassets655,157,953.51-
Amortizationofintangibleassets30,227,090.9924,468,087.41
Amortizationoflong-termprepaidexpenses107,972,512.8689,855,668.31
Gainsondisposaloffixedassets(2,340,925.97)(7,047,367.28)
Financecosts207,214,696.4281,747,385.77
Investmentincome(246,185,242.97)(258,524,453.70)
Increaseindeferredtaxassets(4,532,447.06)(2,488,130.63)
Increaseindeferredtaxliabilities9,164,384.432,768,712.60
Increaseininventories(524,154,050.42)(608,950,788.81)
Increaseinoperatingreceivablesitems(818,470,196.97)(1,663,980,387.42)
Increaseinoperatingpayableitems1,059,506,443.672,296,682,476.23
Increaseinrestrictedoperatingcashwithrestriction(119,943,642.99)(75,185,703.66)
Netcashgeneratedfromoperatingactivities2,000,352,083.201,322,606,352.27

Movementofcash2019

20192018
Cashattheendofyear8,422,676,765.487,632,117,020.77
Less:Cashatthebeginningofyear7,632,117,020.773,673,498,691.48
Netincreaseincash790,559,744.713,958,618,329.29

VNotestotheconsolidatedfinancialstatements(Continued)

59.Supplementaryinformationofthecashflowstatement(Continued)

(2)Acquisitionanddisposalofsubsidiariesandotheroperatingunits
Acquisitionofsubsidiariesandotheroperatingunits
20192018
Priceofacquiringsubsidiariesandotheroperatingunits143,993,800.0019,920,651.60
Including:GuodaPu’er90,000,000.00-
GuodaPharmacyYongxingtangChainStore(Chaoyang)Co.,Ltd.30,000,000.00-
InnerMongoliaTongren17,320,000.00-
GuangzhouMedicine6,660,000.00-
GuodaPharmacy(Chaoyang)RenaiPharmacyCo.,Ltd.(“ChaoyangRenai”)13,800.00-
SinopharmGuangzhouHuaduCo.,Ltd.(“SinopharmHuadu”)-16,380,000.00
SinopharmHoldingGuodaShanxiPharmaceuticalCo.,Ltd.(Formerlyas"ShanxiZhongaoPharmaceuticalCo.,Ltd.")-450,651.60
TaiyuanTongxinli-3,090,000.00
Cashandcashequivalentspaidforacquisitionsofsubsidiariesandotheroperatingunits106,262,760.0019,920,651.60
Including:GuodaPu’er54,000,000.00-
GuodaPharmacyYongxingtangChainStore(Chaoyang)Co.,Ltd.30,000,000.00-
InnerMongoliaTongren15,600,000.00-
GuangzhouMedicine6,660,000.00-
ChaoyangRenai2,760.00-
SinopharmHuadu-16,380,000.00
SinopharmHoldingGuodaShanxiPharmaceuticalCo.,Ltd.-450,651.60
TaiyuanTongxinli-3,090,000.00
Less:Cashandcashequivalentsheldbysubsidiariesandotheroperatingunitsattheacquisitiondate8,460,831.8422,389,173.93
Including:GuodaPu’er3,160,882.96-
GuangzhouMedicine4,477,124.50-
ChaoyangRenai822,824.38-
GuodaTaishan-21,146,145.15
ShanxiZhong’ao-1,160,397.85
TaiyuanTongxinli-82,630.93
Netcashoutflow/(inflow)onacquisitionofthesubsidiariesandotheroperatingunits97,801,928.16(2,468,522.33)

VNotestotheconsolidatedfinancialstatements(Continued)

59.Supplementaryinformationofthecashflowstatement(Continued)

(2)Acquisitionanddisposalofsubsidiariesandotheroperatingunits(Continued)

Disposalofsubsidiariesandotheroperatingunits2019

2019Priceofdisposingofsubsidiariesandotheroperatingunits

Priceofdisposingofsubsidiariesandotheroperatingunits1,530,000.00
Including:QinhuangdaoGuodaPharmacyChainStoreCo.,Ltd.1,530,000.00
Cashandcashequivalentsreceivedfordisposalsofsubsidiariesandotheroperatingunits1,530,000.00
Less:Cashandcashequivalentsheldbyformersubsidiariesandotheroperatingunits738,535.24
Including:QinhuangdaoGuodaPharmacyChainStoreCo.,Ltd.738,535.24
Netcashinflowondisposalofthesubsidiariesandotheroperatingunits791,464.76
Cash
20192018
Cashonhand5,077,406.655,587,191.18
Bankdepositsondemand8,417,599,358.837,626,529,829.59
Cashbalanceattheendoftheyear8,422,676,765.487,632,117,020.77

VNotestotheconsolidatedfinancialstatements(Continued)

60.Assetsunderrestrictedownershiporrighttouse

20192018Note
Cashandcashequivalents442,672,297.43457,664,283.79Note1
Notesreceivablethatwerediscounted64,038,348.12170,013,427.11Note2
Notesreceivablethatwereendorsed-301,416.00Note3
506,710,645.55627,979,126.90

Note1:At31December2019,theGrouphadbankacceptancebillsdeposits,depositsforlettersof

creditaswellasfixeddepositsornoticedepositsofRMB442,672,297.43(31December2018:

RMB457,664,283.79)(NoteV(1)).Note2:At31December2019,theGrouphadcommercialacceptancebillsreceivableof

RMB64,038,348.12,discountedbutnotpastdue(31December2018:RMB170,013,427.11)

(NoteV(2)).Note3:At31December2019,theGrouphadcommercialacceptancebillsreceivableofRMB0.00,

endorsedbutnotpastdue(31December2018:RMB301,416.00)(NoteV(2)).

61.Foreignmonetaryitems

31December201931December2018
OriginalcurrencyExchangerateEquivalenttoRMBOriginalcurrencyExchangerateEquivalenttoRMB
Short-termborrowings------
UnitedStatesdollar(Note)---10,585,564.966.957973,653,234.88
-73,653,234.88

Note:Accordingtoarelatedcontract,currencyexchangewillbesettledwiththeapplicablesaleexchangequotationonthedateonwhichrepaymentisdeducted.

VIChangesinthescopeofconsolidation

1.Businesscombinationsnotinvolvingenterprisesundercommoncontrol

1.1AcquiringGuangzhouMedicine

Inthecurrentyear,theGroupacquireda70%stakeofGuangzhouSenmingyouhePharmaceuticalCo.,Ltd.forRMB6,660,000.00toconstituteabusinesscombinationinvolvingenterprisesnotundercommoncontrol.Aftertheacquisition,thecompanywasrenamedasSinopharmAccord(Guangzhou)MedicineCo.,Ltd.Theacquisitionwascompletedon31August2019.ThefairvaluesandcarryingamountsofidentifiableassetsandliabilitiesandcontingentliabilitiesofGuangzhouMedicineontheacquisitiondatearepresentedasfollows:

31August201931August2019
FairvalueCarryingamount
Cashandbankbalances4,477,124.504,477,124.50
Accountsreceivable7,222,433.737,222,433.73
Advancestosuppliers153,846.66153,846.66
Otherreceivables74,747.6274,747.62
Inventories1,625,509.091,625,509.09
Othercurrentassets127,418.79127,418.79
Fixedassets86,346.7686,346.76
Deferredtaxassets1,229.691,229.69
Accountspayable3,163,385.023,163,385.02
Contractliabilities12,208.4412,208.44
Employeebenefitspayable219,425.04219,425.04
Taxpayable24,756.7624,756.76
Otherpayables834,595.87834,595.87
Netassets9,514,285.719,514,285.71
Less:Non-controllinginterests2,854,285.712,854,285.71
Netassetsacquired6,660,000.006,660,000.00
Amountexceedingthecostofmergerrecognisedasprofitorlossinthecurrentperiod-
6,660,000.00(Note)

Note:TheamountreferstothecashpaymentofRMB6,660,000.00thattheGrouppaidinacquisition.OperatingresultsandcashflowsofGuangzhouMedicinefortheperiodfromtheacquisitiondatetothe

endoftheyeararepresentedasfollows:

Periodfrom31August2019to

31December2019Operatingrevenue

Operatingrevenue7,137,510.03
Netprofit156,140.70
Netcashflows2,293,658.52

VIChangesinscopeofconsolidation(Continued)

1.Businesscombinationsnotinvolvingenterprisesundercommoncontrol(Continued)

1.2Acquiringthemanagementrightof12storesofInnerMongoliaTongren

Inthecurrentyear,SinopharmHoldingGuodaPharmacyBayannurCo.,Ltd.,asubsidiaryoftheGroup,obtainedthemanagementrightof12storesofInnerMongoliaTongrenwithcashofRMB17,320,000.00.Theacquisitionwascompletedon31March2019.Thefairvaluesandcarryingamountsofidentifiableassetsandliabilitiesaswellascontingentliabilitiesofthemanagementrightof12storesofInnerMongoliaTongrenontheacquisitiondatearepresentedasfollows:

31March201931March2019
FairvalueCarryingamount
Fixedassets513,000.00513,000.00
Intangibleassets106,800.00106,800.00
Inventories3,206,200.003,206,200.00
Netassets3,826,000.003,826,000.00
Netassetsacquired3,826,000.003,826,000.00
Goodwillarisingfromacquisition13,494,000.00
17,320,000.00(Note)

Note:TheamountreferstothecashpaymentofRMB17,320,000.00theGrouppaidinacquisition.Operatingresultsandcashflowsofthemanagementrightof12storesofInnerMongoliaTongrenfortheperiodfromtheacquisitiondatetotheendoftheyeararepresentedasfollows:

Periodfrom31March2019to

31December2019Operatingrevenue

Operatingrevenue21,959,113.73
Netprofit833,651.52
Netcashflows(4,225,240.76)

VIChangesinscopeofconsolidation(Continued)

1.Businesscombinationsnotinvolvingenterprisesundercommoncontrol(Continued)

1.3Acquiringthemanagementrightof31storesofChaoyangYongxingtang

Inthecurrentyear,GuodaYongxingtang,asubsidiaryoftheGroup,obtainedthemanagementrightof31storesofChaoyangYongxingtangwithcashofRMB30,000,000.00.Theacquisitionwascompletedon31May2019.Thefairvaluesandcarryingamountsofidentifiableassetsandliabilitiesaswellascontingentliabilitiesofthemanagementrightof31storesofChaoyangYongxingtangontheacquisitiondatearepresentedasfollows:

31May201931May2019
FairvalueCarryingamount
Inventories4,800,000.004,800,000.00
Fixedassets248,797.14248,797.14
Intangibleassets17,126.9717,126.97
Deferredtaxassets346,441.10346,441.10
Othernon-currentliabilities1,385,764.381,385,764.38
Netassets4,026,600.834,026,600.83
Netassetsacquired4,026,600.834,026,600.83
Goodwillarisingfromacquisition25,973,399.17
30,000,000.00(Note)

Note:TheamountreferstothecashpaymentofRMB30,000,000.00theGrouppaidintheacquisition.Operatingresultsandcashflowsofthemanagementrightof31storesofChaoyangYongxingtangfortheperiodfromtheacquisitiondatetotheendoftheyeararepresentedasfollows:

Periodfrom31May2019to

31December2019Operatingrevenue

Operatingrevenue44,268,861.28
Netprofit1,260,375.96
Netcashflows(69,401.06)

VIChangesinscopeofconsolidation(Continued)

1.Businesscombinationsnotinvolvingenterprisesundercommoncontrol(Continued)

1.4

AcquiringGuodaPu’er

Inthecurrentyear,GuodaPharmacy,asubsidiaryoftheGroup,acquired60%sharesofPu'erSongmaoJiantangPharmaceuticalCo.,Ltd.withcashofRMB90,000,000.00.Aftertheacquisition,thecompanywasrenamedasGuodaPharmacy(Pu’er)SongmaoCo.,Ltd.Theacquisitionwascompletedon30November2019.ThefairvaluesandcarryingamountsofidentifiableassetsandliabilitiesandcontingentliabilitiesofGuodaPu’erontheacquisitiondatearepresentedasfollows:

30November201930November2019
FairvalueCarryingamount
Cashandbankbalances3,160,882.963,160,882.96
Accountsreceivable11,146,573.2011,146,573.20
Advancestosuppliers2,257,777.792,257,777.79
Otherreceivables16,020,033.2516,020,033.25
Inventories30,951,227.6530,951,227.65
Fixedassets598,797.73598,797.73
Intangibleassets764,535.25764,535.25
Long-termprepaidexpenses4,962,412.844,962,412.84
Deferredtaxassets42,970.3242,970.32
Accountspayable25,863,250.9425,863,250.94
Contractliabilities780,565.05780,565.05
Employeebenefitspayable2,135,940.002,135,940.00
Taxpayable3,358,307.153,358,307.15
Otherpayables6,208,289.176,208,289.17
Netassets31,558,858.6831,558,858.68
Less:Non-controllinginterests12,623,543.4712,623,543.47
Netassetsacquired18,935,315.2118,935,315.21
Goodwillarisingfromacquisition71,064,684.79
90,000,000.00(Note)

Note:

TheamountreferstothecashpaymentofRMB90,000,000.00theGrouppaidinacquisition.OperatingresultsandcashflowsofGuodaPu’erfortheperiodfromtheacquisitiondatetotheendoftheyeararepresentedasfollows:

Periodfrom30November2019to

31December2019Operatingrevenue

Operatingrevenue13,032,058.57
Netprofit(227,234.08)
Netcashflows2,228,990.37

VIChangesinscopeofconsolidation(Continued)

1.Businesscombinationsnotinvolvingenterprisesundercommoncontrol(Continued)

1.5

AcquiringChaoyangRenaiIn2019,GuodaShenyang,thesubsidiaryoftheGroup,acquired51%equityofChaoyangRenaifromChaoyangMingyangBusinessServiceCo.,Ltd.withRMB13,800.00andachievedthecontrollingstakeofChaoyangRenai.Theacquisitionwascompletedon31October2019.ThefairvaluesandcarryingamountsofidentifiableassetsandliabilitiesandcontingentliabilitiesofChaoyangRenaiontheacquisitiondatearepresentedasfollows:

31October201931October2019
FairvalueCarryingamount
Cashandbankbalances822,824.38822,824.38
Accountsreceivable8,358.668,358.66
Advancestosuppliers77,059.7677,059.76
Inventories1,318,528.381,318,528.38
Fixedassets46,082.6846,082.68
Long-termprepaidexpenses95,977.6895,977.68
Contractliabilities13,020.0013,020.00
Accountspayable2,261,755.442,261,755.44
Employeebenefitspayable10,560.0010,560.00
Taxpayable33,073.4933,073.49
Otherpayables23,335.0723,335.07
Netassets27,087.5427,087.54
Less:Non-controllinginterests13,272.8913,272.89
Netassetsacquired13,814.6513,814.65
Amountexceedingthecostofmergerrecognisedasprofitorlossinthecurrentperiod14.65
13,800.00(Note)

Note:TheamountreferstothecashpaymentofRMB13,800.00theGrouppaidinacquisition.OperatingresultsandcashflowsofChaoyangRenaifortheperiodfromtheacquisitiondatetotheendoftheyeararepresentedasfollows:

Periodfrom31October2019to

31December2019Operatingrevenue

Operatingrevenue4,289,886.90
Netprofit71,324.46
Netcashflows(270,002.50)

VIChangesinscopeofconsolidation(Continued)

2.Disposalofsubsidiaries

PlaceofregistrationBusinessnatureTotalshareholdingratiooftheGroup(%)ProportionofvotingrightsownedbytheGroup(%)Reasonfornolongerbeingasubsidiary
QinhuangdaoGuodaPharmacyChainStoreCo.,Ltd.QinhuangdaoCommercial51.0051.00Transfer

HebeiLerentang,asubsidiaryoftheGroup,signedanequitytransferagreementwithWengongtosellits51%equityinQinhuangdaoGuodaPharmacyChainStoreCo.,Ltd.forRMB1,530,000.00.Thedisposalwascompletedon1January2019.Therefore,from1January2019,theGroupwouldnolongerincludeQinhuangdaoGuodaPharmacyChainStoreCo.,Ltd.inthescopeofconsolidation.RelevantfinancialinformationofQinhuangdaoGuodaPharmacyChainStoreCo.,Ltd.islistedasfollows:

1January201931December2018
CarryingamountCarryingamount
Currentassets2,846,730.642,846,730.64
Non-currentassets916,984.74916,984.74
Currentliabilities2,561,667.492,561,667.49
Non-currentliabilities4,883.284,883.28
1,197,164.611,197,164.61
Less:Non-controllinginterests586,610.66586,610.66
Fairvalueofremainingequity610,553.95610,553.95
Disposalgainsandlosses919,446.05
Disposalconsideration1,530,000.00

VIChangesinscopeofconsolidation(Continued)

3.Establishmentofsubsidiaries

31December2019Netassets2019Netprofit
LiaoningGuodaPharmaceuticalCo.,Ltd.(a)24,028,617.284,028,617.28
GuodaYongxingtang(b)33,260,375.961,260,375.96
SinopharmHoldingGuangyiHealthManagement(Zhanjiang)Co.,Ltd.(c)--
SinopharmAccordMedicialSupplyChain(Shenzhen)Co.,Ltd.(d)32,791,820.49(538,179.51)
SinopharmHoldingGuozhiPharmacy(Heyuan)Co.,Ltd.(e)3,800,554.06(1,199,445.94)

PharmaceuticalCo.,Ltd.Asattheendof2019,paymenthasbeencompleted.

(b)On30April2019,theGroupandChaoyangBoweiConsultingServiceCo.,Ltd.(“Bowei

Consulting”)accumulativelyinvestedRMB19,380.00thousandandRMB18,620.00thousandtoestablishChaoyangYongxingtangrespectively.Aftertheestablishment,theGroupheld51%ofequityinterestinthecompany.Asattheendof2019,theGroupinvestedRMB16,320.00thousandandBoweiConsultinginvestedRMB15,680.00thousand.

(c)On26March2019,theGroupandZhanjiangGuangyiPharmaceuticalTechnology

DevelopmentCo.,Ltd.accumulativelyinvestedRMB300.00thousandandRMB200.00thousandtoestablishSinopharmHoldingGuangyiHealthManagement(Zhanjiang)Co.,Ltd.,respectively.Aftertheestablishment,theGroupheld60%ofequityinterestinthecompany.Asattheendof2019,paymenthasnotbeencompletedyet.

(d)On21August2019,theGroupandShenzhenKetaiMedicialScienceandTechnologyCo.,Ltd.

accumulativelyinvestedRMB19,998.00thousandandRMB13,332.00thousandtoestablishSinopharmAccordMedicialSupplyChain(Shenzhen)Co.,Ltd.,respectively.Aftertheestablishment,theGroupheld60%ofequityinterestinthecompany.Asattheendof2019,paymenthasbeencompleted.

(e)On14August2019,theGroupandHeyuanMairuiTradingCo.,Ltd.accumulativelyinvested

RMB3,500.00thousandandRMB1,500.00thousandtosetupSinopharmHoldingGuozhiPharmacy(Heyuan)Co.,Ltd.,respectively.Aftertheestablishment,theGroupheld70%ofequityinterestinthecompany.Asattheendof2019,paymenthasbeencompleted.

VIChangesinscopeofconsolidation(Continued)

4.Cancellationofsubsidiary

PrincipalplaceofbusinessPlaceofestablishmentRegisteredcapital(RMB‘0,000)NatureofbusinessShareholding(%)Reasonfornolongerbeingasubsidiary
DirectIndirect
BeijingJinxiangFuxingTechnologyCo.,Ltd.BeijingBeijing100.00Commercial-80.00Cancellationofcompany
SanheLixinJinxiangPharmacyCo.,Ltd.(a)LangfangLangfang1.00Commercial-100.00Cancellationofcompany

approved,yettheproceduresforindustrialandcommercialcancellationwerestillprocessing.Asofthedateofthefinancialstatements,theproceduresforindustrialandcommercialcancellationhavenotbeencompleted.

VIIInterestsinotherentities

1.Interestsinsubsidiaries

ThesubsidiariesoftheGroup

Subsidiaries

SubsidiariesPrincipalplaceofbusinessPlaceofincorporationNatureofbusinessRegisteredcapital(RMB0.000)ShareholdingVotingproportionWaysofacquisition
DirectIndirect
SinopharmGuilinGuilinGuilinCommercial2,000.00-100.00%100.00%Establishment
SinopharmBaiseBaiseBaiseCommercial3,500.00-100.00%100.00%Establishment
SinopharmHoldingZhongshanCo.,Ltd.ZhongshanZhongshanCommercial3,000.00-100.00%100.00%Establishment
SinopharmGuigangGuigangGuigangCommercial2,000.00-100.00%100.00%Establishment
SinopharmBeihaiBeihaiBeihaiCommercial1,500.00-100.00%100.00%Establishment
SinopharmHoldingGuangzhouMedicalTreatmentGuangzhouGuangzhouCommercial2,000.00-51.00%51.00%Establishment
ShenzhenJianminPharmaceuticalCo.,Ltd.(“SinopharmJianmin")ShenzhenShenzhenCommercial2,000.00100.00%-100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmHoldingShenzhenTraditional&HerbalMedicineCo.,Ltd.(“SinopharmTraditional&HerbalMedicine")ShenzhenShenzhenCommercial1,500.00100.00%-100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmHoldingShenzhenLogisticsCo.,Ltd.(“ShenzhenLogistics")ShenzhenShenzhenServices500.00100.00%-100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmGuangzhouGuangzhouGuangzhouCommercial355,325.00100.00%-100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmHoldingGuangdongHengxingCo.,Ltd.(“SinopharmHengxing")GuangzhouGuangzhouCommercial9,600.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmYulinYulinYulinCommercial1,000.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
VIIInterestsinotherentities(Continued)
1.Interestsinsubsidiaries(Continued)

ThesubsidiariesoftheGroup(Continued)Subsidiaries

SubsidiariesPrincipalplaceofbusinessPlaceofestablishmentNatureofbusinessRegisteredcapital(RMB0.000)ShareholdingVotingproportionWaysofacquisition
DirectIndirect
SinopharmLiuzhouLiuzhouLiuzhouCommercial2,053.06-51.00%51.00%Businesscombinationsinvolvingentitiesundercommoncontrol
GuangdongHuixinInvestmentCo.,Ltd.(“HuixinInvestment”)GuangzhouGuangzhouServices500.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmHoldingFoshanCo.,Ltd.(“SinopharmFoshan")FoshanFoshanCommercial4,100.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmHoldingGuangdongYuexingCo.,Ltd.(“SinopharmYuexing”)GuangzhouGuangzhouCommercial23,000.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmHoldingGuangdongLogisticsCo.,Ltd.(“GuangdongLogistic”)GuangzhouGuangzhouServices1,300.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmGuangxiNanningNanningCommercial52,141.00100.00%-100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
GuangxiLogisticNanningNanningServices710.07.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmWuzhouWuzhouWuzhouCommercial1,000.00-99.90%99.90%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmDongguanDongguanDongguanCommercial7,300.00-100.00%100.00%Businesscombinationsinvolvingentitiesnotundercommoncontrol
SinopharmZhanjiangZhanjiangZhanjiangCommercial13,100.00-100.00%100.00%Businesscombinationsinvolvingentitiesnotundercommoncontrol
SinopharmYanfengShenzhenShenzhenCommercial3,000.0051.00%-51.00%Businesscombinationsinvolvingentitiesnotundercommoncontrol
SinopharmMeizhouMeizhouMeizhouCommercial4,800.00-100.00%100.00%Businesscombinationsinvolvingentitiesnotundercommoncontrol
VIIInterestsinotherentities(Continued)
1.Interestsinsubsidiaries(Continued)

ThesubsidiariesoftheGroup(Continued)

Subsidiaries

SubsidiariesPrincipalplaceofbusinessPlaceofestablishmentNatureofbusinessRegisteredcapital(RMB‘0,000)ShareholdingVotingproportionWaysofacquisition
DirectIndirect
SinopharmHuizhouHuizhouHuizhouCommercial3,800.00-100.00%100.00%Businesscombinationsinvolvingentitiesnotundercommoncontrol
SinopharmZhaoqingZhaoqingZhaoqingCommercial4,000.00-100.00%100.00%Businesscombinationsinvolvingentitiesnotundercommoncontrol
SinopharmJiangmen(a)JiangmenJiangmenCommercial6,000.00-100.00%100.00%Businesscombinationsinvolvingentitiesnotundercommoncontrol
SinopharmShaoguanShaoguanShaoguanCommercial360.00-70.00%70.00%Businesscombinationsinvolvingentitiesnotundercommoncontrol
SinopharmHoldingShantouCo.,Ltd.("SinopharmShantou”ShantouShantouCommercial2,100.00-100.00%100.00%Businesscombinationsinvolvingentitiesnotundercommoncontrol
FoshanNanhaiMedicineCo.,Ltd.FoshanFoshanCommercial7,000.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
FoshanNanhaiUptodate&SpecialMedicinesCo.,Ltd.FoshanFoshanCommercial4,000.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
FoshanNanhaiMedicineCo.,Ltd.FoshanFoshanCommercial4,000.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
GuangdongUptodate&SpecialMedicinesGuangzhouGuangzhouCommercial5,000.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SouthPharma&TradeGuangzhouGuangzhouCommercial3,000.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmZhuhaiZhuhaiZhuhaiCommercial3,000.00-100.00%100.00%Businesscombinationsinvolvingentitiesnotundercommoncontrol
SinopharmMaomingMaomingMaomingCommercial200.00-100.00%100.00%Businesscombinationsinvolvingentitiesnotundercommoncontrol
SinopharmHoldingGuangzhouMedicalTechnologyCo.,Ltd.GuangzhouGuangzhouCommercial588.00-51.00%51.00%Establishment
SinopharmHoldingGuangzhouMedicalSupplyChainServiceCo.,Ltd.(b)GuangzhouGuangzhouCommercial2,000.00-51.00%51.00%Establishment
SinopharmHoldingHeyuanCo.,Ltd.HeyuanHeyuanCommercial1,340.00-70.00%70.00%Businesscombinationsinvolvingentitiesnotundercommoncontrol
GuodaPharmacyShanghaiShanghaiCommercial168,333.0060.00%-60.00%Businesscombinationsinvolvingentitiesundercommoncontrol
GuodaShanghaiShanghaiShanghaiCommercial3,000.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
VIIInterestsinotherentities(Continued)
1.Interestsinsubsidiaries(Continued)

ThesubsidiariesoftheGroup(Continued)

Subsidiaries

SubsidiariesPrincipalplaceofbusinessPlaceofestablishmentNatureofbusinessRegisteredcapital(RMB‘0,000)ShareholdingVotingproportionWaysofacquisition
DirectIndirect
BeijingGuodaPharmacyChainStoreCo.,Ltd.BeijingBeijingCommercial1,000.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
TianjinGuodaPharmacyChainStoreCo.,Ltd.TianjinTianjinCommercial1,000.00-80.00%80.00%Businesscombinationsinvolvingentitiesundercommoncontrol
GuangxiGuodaPharmacyConsultingChainStoreCo.,Ltd.NanningNanningCommercial300.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmHoldingGuodaPharmacyGuangdongCo.,Ltd.ShenzhenShenzhenCommercial5,000.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmGuodaPharmacyGuangxiChainCo.,Ltd.LiuzhouLiuzhouCommercial200.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
ZhejiangGuodaPharmacyCo.,Ltd.HangzhouHangzhouCommercial1,500.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmHoldingGuodaYangzhouDadeshengPharmacyChainStoreCo.,Ltd.YangzhouYangzhouCommercial4,400.00-93.68%93.68%Businesscombinationsinvolvingentitiesundercommoncontrol
NingxiaGuodaPharmacyChainStoreCo.,Ltd.YinchuanYinchuanCommercial7,000.00-70.00%70.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmHoldingGuodaNanjingPharmacyChainStoreCo.,Ltd.NanjingNanjingCommercial800.00-60.00%60.00%Businesscombinationsinvolvingentitiesundercommoncontrol
SinopharmHoldingGuodaShandongPharmacyChainStoreCo.,Ltd.LinyiLinyiCommercial2,900.00-55.00%55.00%Businesscombinationsinvolvingentitiesundercommoncontrol
GuodaShenyang(c)ShenyangShenyangCommercial5,000.00-51.00%51.00%Businesscombinationsinvolvingentitiesundercommoncontrol
FujianGuodaPharmacyChainStoreCo.,Ltd.XiamenXiamenCommercial3,750.00-100.00%100.00%Businesscombinationsinvolvingentitiesundercommoncontrol
VIIInterestsinotherentities(Continued)
1.Interestsinsubsidiaries(Continued)

ThesubsidiariesoftheGroup(Continued)

Subsidiaries

SubsidiariesPrincipalplaceofbusinessPlaceofestablishmentNatureofbusinessRegisteredcapital(RMB‘0,000)ShareholdingVotingproportionWaysofacquisition
DirectIndirect
AnhuiGuodaPharmacyChainStoreCo.,Ltd.HefeiHefeiCommercial1,000.00-60.00%60.00%Businesscombinationsinvolvingentitiesundercommoncontrol
GuodaQuanzhouQuanzhouQuanzhouCommercial2,000.00-51.00%51.00%Businesscombinationsinvolvingentitiesundercommoncontrol
ShanxiWanminTaiyuanTaiyuanCommercial2,000.00-85.00%85.