China National Accord Medicines Corporation Ltd.
Annual Report 2018
April 2019
1
Section I. Important Notice, Contents and Paraphrase
Board of Directors, Supervisory Committee, all directors, supervisors and senior
executives of China National Accord Medicines Corporation Ltd. (hereinafter
referred to as the Company) hereby confirm that there are no any fictitious
statements, misleading statements, or important omissions carried in this report,
and shall take all responsibilities, individual and/or joint, for the reality,
accuracy and completion of the whole contents.
Lin Zhaoxiong, Principal of the Company, Wei Pingxiao, person in charger of
accounting works and Wang Ying, person in charge of accounting organ
(accounting principal) hereby confirm that the Financial Report of 2018 Annual
Report is authentic, accurate and complete.
Other directors attending the Meeting for annual report deliberation except for
the followed
Name of director absent Title for absent director Reasons for absent Attorney
Li Zhiming director Official business Liu Yong
Jiang Xiuchang director Official business Liu Yong
Affected by various risk factors, the company’s business operations are facing
risks in terms of changes in industry policies and intensified market competition.
The company has made a specific statement on the “Future Development
Prospects” of the fourth section “Discussion and Analysis of the Operation” in
this annual report, and all investors should pay attention to it.
The profit distribution plan that deliberated and approved by the Board is:
based on total stock issued 428,126,983 shares, distributed 4.00 Yuan (tax
included) bonus in cash for every 10-share hold by all shareholders, 0 shares
bonus issued (tax included) and no capitalizing of common reserves carried out.
1
Contents
Section I Important Notice, Contents and Paraphrase...................................................................1
Section II Company Profile and Main Financial Indexes...............................................................5
Section III Summary of Company Business.................................................................................... 9
Section IV Discussion and Analysis of the Operation................................................................... 13
Section V Important Events............................................................................................................ 37
Section VI Changes in shares and particular about shareholders...............................................67
Section VII Preferred Stock............................................................................................................ 75
Section VIII Particulars about Directors, Supervisors, Senior Executives and Employees......76
Section IX Corporate Governance..................................................................................................89
Section X Corporate bond............................................................................................................... 97
Section XI Financial Report............................................................................................................ 98
Section XII Documents available for reference........................................................................... 351
2
Paraphrase
Items Refers to Contents
Listed Company,
Company, the Company,
Refers to China National Accord Medicines Corporation Ltd.
Sinopharm Accord, the
Group
SINOPHARM Refers to China National Pharmaceutical Group Corporation
Sinopharm Holding Refers to Sinopharm Group Co., Ltd，Controlling shareholder of the Company
Company Law Refers to Company Law of the People’s Republic of China
Securities Law Refers to Securities Law of the People’s Republic of China
Yuan, 10 thousand Yuan,
Refers to RMB, RMB 10 thousand, RMB 100 million
100 million Yuan
Terminology: Refers to
The first invoice refers to the invoice from the manufacturer to the
distributor, and the second invoice refers to the invoice from the
Two Invoices System Refers to distributor to the medical service provider. By this way, circulation
links have been greatly reduced and the number of distributors for
each medicine category shall not exceed two.
It is a kind of operation activity that the medical organization has
medicine enterprise with strong management ability and larger risk
appetites to operate and manage their drugstores in the form of
contracts with payment, which has clearly stated the relationship of
Pharmacy Trust Refers to right and duty between hospitals and pharmacy owners and operators,
ensuring preservation and appreciation of hospital and pharmacy
property and creating a kind of management activity with
considerable social benefit and economic benefit, under the condition
that there is no change in the ownership of drugstores
GPO Refers to Group purchasing organizations
Direct selling Refers to A sales method of selling drug to the hospital directly
Certification of quality management standards for pharmaceutical
GSP authentication Refers to
trading
Supply Chain Refers to The CMS, an information system for processing work flow and
3
Management System purchasing, inventory and sales documents
Abbreviation: Refers to
Sinopharm Holding
Refers to Sinopharm Holding Guangzhou Co., Ltd.
Guangzhou
Guoda Drugstore Refers to Sinopharm Holding Guoda Drugstore Co., Ltd.
Sinopharm Holding
Refers to Sinopharm Holding Guangxi Co., Ltd.
Guangxi
Foshan Nanhai Refers to Foshan Nanhai Pharmaceutical Group Co., Ltd.
Nanfang Pharmaceutical
Refers to Guangdong Nanfang Pharmaceutical Foreign Trade Co., Ltd.
Foreign Trade
China National Zhijun,
Refers to China National Zhijun (Shenzhen) Pharmaceutical Co., Ltd.
Zhijun Pharmaceutical
Zhijun Pharmacy Trade Refers to Shenzhen Zhijun Pharmacy Trade Co., Ltd.
Zhijun Pingshan,
Refers to China National Zhijun (Shenzhen) Pingshan Pharmaceutical Co., Ltd.
Pingshan Pharmaceutical
Main Luck
Refers to Shenzhen Main Luck Pharmaceuticals Inc.
Pharmaceuticals
4
Section II Company Profile and Main Financial Indexes
I. Company profile
Short form of the stock Sinopharm Accord ; Accord B Stock code 000028, 200028
Stock exchange for listing Shenzhen Stock Exchange
Name of the Company (in
国药集团一致药业股份有限公司
Chinese)
Short form of the Company
国药一致
(in Chinese)
Foreign name of the Company
China National Accord Medicines Corporation Ltd.
(if applicable)
Short form of foreign name of
Sinopharm Accord
the Company (if applicable)
Legal representative Lin Zhaoxiong
Registrations add. Accord Pharm. Bldg , No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong Province
Code for registrations add 518029
Offices add. Accord Pharm. Bldg, No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong Province
Codes for office add. 518029
Company’s Internet Web Site http://www.szaccord.com.cn
E-mail gyyz0028@sinopharm.com
II. Person/Way to contact
Secretary of the Board Securities affairs representative
Name Chen Changbing Wang Zhaoyu
Accord Pharm. Bldg., No. 15, Ba Gua Si
Accord Pharm. Bldg., No. 15, Ba Gua Si
Contact add. Road, Futian District, Shenzhen, Road, Futian District, Shenzhen,
Guangdong Province Guangdong Province
Tel. +(86)755 25875195 +(86)755 25875222
Fax. +(86)755 25195435 +(86)755 25195435
E-mail gyyzinvestor@sinopharm.com gyyz0028@sinopharm.com
III. Information disclosure and preparation place
Newspaper appointed for information disclosure Securities Times; China Securities Journal; Hong Kong Commercial Daily
Website for annual report publish appointed by CSRC http://www.szse.cn ； http://www.cninfo.com.cn
Preparation place for annual report Secretariat of the Board of Directors
IV. Registration changes of the Company
Organization code 19218626-7
Changes of main business since listing (if
No change.
applicable)
5
Previous changes for controlling
No change.
shareholders (if applicable)
V. Other relevant information
CPA engaged by the Company
Name of CPA Ernst & Young CPA (Special General partnership)
Offices add. for CPA 21/F, China Resources Building, No. 5001, Shennan East Road, Luohu District, Shenzhen
Sponsor engaged by the Company for performing continuous supervision duties in reporting period
□ Applicable √ Not applicable
Financial consultant engaged by the Company for performing continuous supervision duties in reporting period
√Applicable □Not applicable
Name of the financial Offices add. for the financial
Financial adviser Continuous supervision period
consultant consultant
27/F-28/F, Building 2,
China International Capital International Trade Mansion,
Zhang Lei, Chen Chao 2017-2018
Corporation Limited No.1 Jianguomen Outer Street,
Beijing
VI. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data
□Yes √No
2018 2017 Changes over last year 2016
Operating income (RMB) 43,122,385,521.23 41,263,393,427.41 4.51% 41,248,341,665.46
Net profit attributable to
shareholders of the listed company 1,210,742,435.78 1,057,791,930.67 14.46% 1,186,539,201.93
(RMB)
Net profit attributable to
shareholders of the listed company
1,175,971,967.39 1,035,461,581.00 13.57% 834,359,349.80
after deducting non-recurring gains
and losses (RMB)
Net cash flow arising from
1,322,606,352.27 1,285,291,911.82 2.90% 1,472,342,476.16
operating activities (RMB)
Basic earnings per share
2.83 2.47 14.57% 2.80
(RMB/Share)
Diluted earnings per share
2.83 2.47 14.57% 2.80
(RMB/Share)
Weighted ROE 11.56% 11.91% -0.35% 15.05%
Changes over end of
End of 2018 End of 2017 End of 2016
last year
Total assets (RMB) 28,930,300,519.97 22,343,643,527.77 29.48% 21,316,548,247.95
Net assets attributable to
shareholder of listed company 11,618,432,603.28 9,396,572,345.88 23.65% 8,452,426,863.52
(RMB)
6
VII. Difference of the accounting data under accounting rules in and out of China
1. Difference of the net profit and net assets disclosed in financial report, under both IAS (International
Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable √ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under either IAS (International
Accounting Standards) or Chinese GAAP (Generally Accepted Accounting Principles) in the period.
2. Difference of the net profit and net assets disclosed in financial report, under both foreign accounting
rules and Chinese GAAP (Generally Accepted Accounting Principles)
□ Applicable √ Not applicable
The Company had no difference of the net profit or net assets disclosed in financial report, under either foreign accounting rules or
Chinese GAAP (Generally Accepted Accounting Principles) in the period.
VIII. Quarterly main financial index
In RMB
First quarter Second quarter Third quarter Fourth quarter
Operating income 10,256,566,731.51 10,522,599,968.16 10,987,540,368.77 11,355,678,452.79
Net profit attributable to
292,731,685.33 348,995,349.60 285,244,535.54 283,770,865.31
shareholders of the listed company
Net profit attributable to
shareholders of the listed company
284,982,162.39 338,314,176.95 282,319,350.57 270,356,277.48
after deducting non-recurring gains
and losses
Net cash flow arising from
-864,716,289.96 1,090,073,999.16 338,633,586.16 758,615,056.91
operating activities
Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial
index disclosed in the company’s quarterly report and semi-annual report
□ Yes √ No
IX. Items and amounts of extraordinary profit (gains)/loss
√Applicable □ Not applicable
In RMB
Item 2018 2017 2016 Note
Gains/losses from the disposal of non-
The gains from fixed
current asset (including the write-off that 7,048,337.10 -203,279.86 11,931,729.24
assets disposal .
accrued for impairment of assets)
Governmental subsidy reckoned into current Mainly for receiving
30,098,383.86 26,854,027.03 34,000,702.25
gains/losses (not including the subsidy of all kinds of special
7
enjoyed in quota or ration according to subsidies and fiscal
national standards, which are closely interest discount in the
relevant to enterprise’s business) period.
Investment costs while acquiring
subsidiaries, joint ventures and associated Negative goodwill
enterprise, less than fair value of the 729.29 58,022.12 from subsidiary
identifiable net assets from invested acquisition.
enterprise which should be enjoined
Current net gain/losses of the subsidiary
merger under the same control from -1,096.00 260,423,077.82
beginning of the period to combination date
Switch back of provision for depreciation of
account receivable which was singly taken Not applicable 1,642,360.26 5,952,565.52
depreciation test
Switch back of provision for depreciation of
account receivable and contract assets which 5,301,091.66 Not applicable Not applicable
were singly taken depreciation test
The gains obtained
from offering entrust
Gains and losses on foreign entrusted loans 3,246,925.69 1,907,519.89 2,880,583.33 loans to China
National Zhijun
(Suzhou).
Consigning fee received for consigned
516,929.44 393,081.77
operation
Other non-operating income and expenditure
5,069,438.37 377,281.07 6,300,281.94
except for the aforementioned items
Other gains/losses satisfy a definition of
1,445,926.01 134,740.70 121,754,182.26
extraordinary gains/losses
Less: Impact on income tax 12,137,071.11 6,690,220.38 28,392,824.03
Impact on minority shareholders’
5,820,221.92 1,749,005.16 63,063,527.97
equity (post-tax)
Total 34,770,468.39 22,330,349.67 352,179,852.13 --
Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies
Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to
the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their
Securities to the Public --- Extraordinary Profit/loss, explain reasons
□ Applicable √ Not applicable
In reporting period, the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of
extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to
the Public --- Extraordinary Profit/loss
8
Section III. Summary of Company Business
I. Main businesses of the company in the reporting period
Whether the company needs to comply with the disclosure requirements of the particular industry
Reference disclosure
Retailing industry
The Company complies with the disclosure requirement of Information Disclosure Guidelines for the Shenzhen Stock Exchange No.
8- Listing Company Engaged in Retailing Industry
In the reporting period, the main business of Sinopharm Accord includes pharmaceutical distribution and
pharmaceutical retail, specifically as follows:
(i) In the pharmaceutical distribution field, the company continues to integrate the distribution and logistics
business, deeply penetrates into the end markets, improves the stepped distribution network, creates intelligent
supply chain, and devotes to become a provider for pharmaceutical and health care products and services with the
strongest influence, the highest share, the most complete variety, the best service, and the fastest delivery in south
district of China.
1. The Company’s pharmaceutical distribution business is established in Guangdong and Guangxi, the company
has completed the network construction of Guangdong and Guangxi in 2013, and the business has extended to the
county-level regions; in 2014, we accelerating the integration of three-tier companies and the Company achieved
an operation all over the network in 2015; moreover, the distribution network has further expansion in 2018 and
main development direction is retail terminals, including: 982 secondary and tertiary medical institutions, 4996
primary medical customers and 1947 retail terminal customers (chain drugstores and single store).
2. The Company’s pharmaceutical distribution business has achieved the first scale in Guangdong and Guangxi
and the leading position in market segment of Guangdong and Guangxi, and has obtained the relatively leading
position in vaccine, instrument, and e-commerce industries.
(ii) In the pharmaceutical retail field, Guoda Drugstore is a pharmaceutical retail enterprise that ranks the first in
the sales volume throughout the country, and is one of the few enterprises in China with national direct sales drug
retail network. The retail chain network of Guoda Drugstore spreads over 19 provinces, autonomous regions and
municipalities, covers nearly 70 large and medium-sized cities,.
By the end of 2018, Guoda Drugstore has operated 4275 stores, covering 19 provinces, autonomous regions and
municipalities, entering nearly 70 large and medium sized cities, which has formed a drugstore networks covering
eastern and northern China, southern coastal cities, and gradually expanded into northeast, central plains and
inland cities, the sales scale of which has exceeded 10 billions, ranking the first within industry. Guoda drugstore,
the business of which were mainly relying on modern retail drugstores, has been putting great attention on the
development of professional service system with medical resources as core competitiveness, building a group of
stores with professional commercial activities, which are able to provide retails and therapy services that
integrating medical service and health-care products sales and cooperate with hospitals; at the same time, the
9
Company has been vigorously developing new business, exploring and expanding new sales channels, improving
professional services, being dedicated to transit from a traditional medical retail into an innovative service
enterprise. By means of conventional products retail management, improving major brands and exploring business
cooperation with supplier, accelerating the establishment of DTP business and continuous health care service
system, Guoda has built industry-leading professional service ability. Besides, the leading scale of Guoda is
regarded as one of the core competitiveness, for the reason that the advantage in scale has reduced its procurement
cost and enhanced its negotiation advantages.
II. Major changes in main assets
1. Major changes in main assets
Major assets Note of major changes
Increased 223.1634 million Yuan over that of period-begin with 13.81% rate of change, mainly because
Equity assets
the investment income from joint ventures increased in the period.
Increased 56.2234 million Yuan over that of period-begin with 10.19% rate of change, mainly because
Fixed assets office building purchased by subsidiary and office & machinery equipment purchased for medical
cooperation projects
Decreased 6.5443 million Yuan over that of period-begin with 2.01% rate of change, no major changes in
Intangible assets
reporting period.
Increased 13.4654 million Yuan over that of period-begin with 58.68% rate of change, mainly because
Construction in progress
more investment in ERP system construction and supply chain extension project
Increased 3898.1259 million Yuan over that of period-begin with 93.00% rate of change, mainly because
Monetary fund
received an addition funds investment from strategic investors to subsidiary in the period
Other non-current Increased 140 million Yuan over that of period-begin with 100% rate of change, mainly due to the
financial assets investment of China National Zhongjin Medical Industry Fund
Decreased 69.6566 million Yuan over that of period-begin with 49.05% rate of change, mainly because
Other non current assets
the account paid in advance for investment and engineering and equipment declined
2. Main overseas assets
□ Applicable √ Not applicable
III. Core competitiveness analysis
Whether the company needs to comply with the disclosure requirements of the particular industry
Yes
Retailing industry
1. Strong network coverage and layout
10
Do a good job in resource sharing of wholesale and retail integration by relying on the perfect distribution
network and variety resources:
Establish the leading and perfect distribution networks in Guangdong and Guangxi: The company has complete
pharmaceutical distribution networks in Guangdong and Guangxi provinces, comprehensively covering the
Grade-III and Grade-II medical institutions and retail chain terminals in Guangdong and Guangxi. In recent years,
it has seized the opportunity to develop retail customers, and has vigorously expanded its distribution retail
pharmacies and small social medicals and other related businesses, of which the sales has achieved rapid growth.
Take the lead in scale and cover the countrywide retail network: Guoda Drugstore is a pharmaceutical retail
enterprise with sales volume ranking first throughout the country, established 28 regional chain enterprises, with
retail network spreading over 19 provinces and municipalities and autonomous regions and covering nearly 70
cities.
2. Abundant variety resources
In the pharmaceutical distribution, the company has established extensive cooperative relations with thousands of
domestic manufacturers and commercial enterprises and established stable business relationships with hundreds of
import and joint venture manufacturers, and has rich variety resources.
Guoda Drugstore operates nearly 120,000 merchandises. With its relatively comprehensive purchasing network
and years of experience in commodity management, Guoda Drug Store has established a merchandise system with
wide coverage, high professionalization, and rich varieties.
3. Complete logistics and distribution system
Accord distribution adopts supply chain management and warehouse management solutions system, it has built
large-scale first-grade logistics centers in Guangzhou, Nanning, Shenzhen and other places and established
distribution centers in Guangdong and Guangxi which has formed ladder logistics and distribution networks, it is
the first enterprise in Guangdong and Guangxi that has achieved the third-party logistics qualification and has the
professional pharmaceutical logistics capabilities with the largest scale, the most extensive network, and the most
complete modes in southern China.
Guoda Drugstore has a nationwide modern logistics and distribution system, and has established the logistics and
distribution network covering all the stores throughout the country, including Shanghai National Logistics Center
and 23 provincial and municipal distribution centers.
4. The advantages of medical insurance resources
Regarding medicine retails, the subsidiaries of Guoda Drugstore have featured generally higher medical insurance
acquiring ability, with higher medical insurance sales ratio and steady operation.
5. The advantages of Compliance: the Company had a big lead under an increasingly stringent regulatory
environment for the reason that it has kept emphasizing legalization and compliance in the process of operation
and management.
6. Unique-influence Sinopharm brand
Brand of the Company and distribution, industry child-brand and controlling shareholder and actual controller’s
brand come down in one continuous line, depending on powerful force of central enterprises, the Company’s
11
popularity and influence are prominent day by day in the industry.
12
Section IV. Discussion and Analysis of Business
1. Introduction
In 2018, Sinopharm Accord sought breakthroughs in development and change. With the implementation of
medical reform, Sinopharm Accord took the initiative to meet the changes, and conscientiously implemented the
working policy of “breaking the situation, saving the strength, and financing” of Sinopharm Group, fully
cooperated with the implementation of the government’s medical reform policy, and actively grasped the market
and policy opportunities, and focused on the objectives made at the beginning of the year to further promote
development through transformation and upgrading, resolved various unfavorable factors, and seized
opportunities. In 2018, the company took the pace of internationalization and achieved better and smoother
development on the basis of consolidating business advantages and improving service capabilities.
(i)The business condition of the Company in 2018
As of end of 2018, Sinopharm Accord achieved an operation revenue of 43,122 million Yuan, with year-on-year
growth of 4.51 percent; operation profits amounted as 1,671 million Yuan, a 14.15 percent from a year earlier; the
net profit attributable to shareholder of listed company amounted as 1,211 million Yuan, a 14.46 percent up on a
y-o-y basis.
Ended as 2018, the distribution business of Sinopharm Accord has gained revenue of 32,757 million Yuan in
operation, with year-on-year growth of 3.92 percent; net profit amounted as 716 million Yuan, a 11.89 percent up
from a year earlier; Guoda Drugstore achieved an operation revenue of 108.78 million Yuan, a 8.45 percent
growth on a y-o-y basis; net profit gains 302 million Yuan, with y-o-y growth of 15.1 percent.
(II) Overview of the main work of the company in 2018
1. Continue to promote the “wholesale and retail integration” strategy
After the completion of major asset restructuring, the company actively promoted the “wholesale and retail
integration” strategy, made full use of the commercial platform with mature distribution and the terminal
advantageous network with wide retail sales to extend the commodity to the retail terminal through effective
resource integration means and give play to the scale effect so as to achieve the synergistic interaction between
distribution and retail, enhance the competitive advantage of brand, service and profitability, and establish an
integrated business model. It integrated resources through the implementation of wholesale and retail procurement
synergy, investment and M&A integration, prescription complementation, membership management sharing,
brand image classification, logistics integration systemization, information system integration and other means,
after two years of development, wholesale and retail synergy has achieved initial success, and the retail scale and
synergy continued to break through, in 2018, the sales revenue of wholesale and retail synergy was 590 million
yuan, a year-on-year increase of 75%, at the same time, it created the new model of distribution-Guoda wholesale
13
and retail “member store”, and gave play to the advantages of commercial distribution center in variety,
background connection, and delivery, combined with Guangdong Guoda retail network, developed member stores
in Guangdong and Guangxi, and the members increased to 86 stores throughout the year. We also integrated the
distribution and retail strategy varieties, carried out category planning and resource sharing, and already have had
more than 100 cooperative manufacturers in the catalogue of wholesale and retail integration varieties, and over
600 cooperative product specifications, and promoted more than 1,000 prescription drugs to open retail channels.
2. Invest in mergers and acquisitions and self-open stores, and expand network layout
The company has formed strong business networks in the southern area of China, its business has covered more
than 4,000 medical institutions in Guangdong and Guangxi provinces, which basically achieved full coverage in
Guangdong and Guangxi. On this basis, in 2018, the distribution business layout continued, through investment in
mergers and acquisitions and new establishments, Sinopharm Holding Guangxi Hezhou Co., Ltd., Sinopharm
Holding Guangxi Qinzhou Co., Ltd., Sinopharm Holding Guangxi Hechi Co., Ltd., Sinopharm Holding Guorun
Medical Supply Chain Service (Guangxi) Co., Ltd., and Sinopharm Holding Baiyi Pharmacy Guangxi Co., Ltd.
have been established.
Based on the retail business developed in nearly 70 cities in 19 provinces and autonomous regions, Guoda
Drugstore expanded their retail scale advantage with the “self-opening + M&A” model, at the end of 2018, the
total number reached 4,275 stores, including a net increase of 441 stores, meanwhile, it completed the investment
in newly establishing Fujian Guoda Medicine Co., Ltd., newly establishing Shanghai Guoda Ruijing Pharmacy
Co., Ltd., newly establishing Sinopharm Holding Guoda Drugstore Zhengzhou Chain Co., Ltd., newly
establishing Inner Mongolia Guoda Drugstore Pharmaceutical Co., Ltd., and the acquisition of 100% equity of
Shanxi Zhongao Pharmaceutical Co., Ltd., the acquisition of relevant retail business and assets of Inner Mongolia
Tongren Pharmacy Chain Co., Ltd., and the acquisition of 100% equity of Shanxi Yixintang Pharmacy Co., Ltd.
3. The transformation and innovation of distribution business strongly develop in four directions
Promoted the transformation of traditional distribution business, explored advanced supply chain management
mode and informatization means, realized the traceable management of hospital medical materials circulation,
improved the drug supply chain management efficiency and reduced operating costs. At the same time, relied on
the network layout of distribution, and accelerated the optimization of terminal network construction. In 2018,
according to changes in the market environment, the company actively expanded its business development areas,
clearly focused on the development of four business directions including retail direct sales, equipment
consumables, retail diagnosis and treatment, and primary care, and achieved effective breakthroughs: retail direct
sales increased by 34% on a year-on-year basis, and equipment consumables increased by 29% on a year-on-year
basis, retail diagnosis and treatment increased by 49% on a year-on-year basis, and primary care increased by 17%
on a year-on-year basis.
(1) Solidly completed the traditional business. Quickly adjusted strategies for changes in industry rules such as
bidding, GPO, two-vote system, and anti-cancer drug tax reform, pooled the resources, and completed the variety
development and strategy response.
Sinopharm Guangzhou was awarded the centralized bargaining qualification of the pharmaceutical business
enterprises commissioned by Guangzhou GPO Medical Institutions; supported the GPO multi-platform operation
14
mode in other regions of Guangdong, and signed strategic cooperation framework agreements with prefecture-
level municipal governments such as Heyuan and Maoming.
After promoting the implementation of 131 key cooperation projects of two vote system, the income of
Guangdong’s pure sales business increased by 958 million yuan. At the same time, improved the efficiency of the
supply chain through the establishment of invoice management system, the optimization of purchase tax refund
process, the inventory management of multi-warehouse operation and other means, and further improved the
operation process specifications of prepayment and cash deposit, and ensured fast switching of the two-vote
system.
Integrated the upstream resources and expanded the primary care networks. Explored the overall solution of direct
delivery for community service for home care of elderly community health care pharmacy and the model of
“community health care + Guoda
Drugstore”, created a health archive information platform, provided community service for home care of elderly
and family doctors door-to-door service, promoted health consultation with integrated traditional Chinese and
Western medicine, and provided nearby medicine taking and door-to-door delivery services.
(2) Increased retail direct sales coverage. By expanding the terminal network, platform construction and
background driving, accelerated the sinking of network and enhanced the competitiveness of business, and
operated 49 top one hundred chain stores. Completed the B2B background upgrade, the Hengxing station APP has
been online, and achieved 1425 terminal customers through online marketing.
(3) Built the core competitiveness of retail diagnosis and treatment. Accelerated the stationing of distribution and
retail, there were 61 open drugstores throughout the year, including 23 drugstores newly opened in 2018 (12
cooperative drugstores in the hospitals, 6 drugstores near the hospitals, and 5 DTP pharmacies), the quality of the
drugstores was gradually improved, and the sales revenue increased by 36% on a year-on-year basis. Built
distinctive service models, brand recognition and industry influence were promoted, Foyi Drugstore has obtained
the qualification of medical insurance for major illnesses, Foshan Drugstore and Foyi Drugstore have obtained the
qualifications of the designated pharmacies for out-patient outsourcing medicine for special diseases, and 2
pharmacies in Huizhou have become the national negotiation drug agreement pharmacies; introduced the health
testing all-in-one machine, drug-seeking robots, and other intelligent devices to create smart professional
pharmacies. Undertook prescription outflows and explore new models, created a prescription transfer docking
system, linked the cloud hospital, the provincial internet hospital and other platforms to explore prescriptions
undertaking.
(4) Fully developed the equipment consumables business. Vigorously developed SPD equipment consumables
business, assisted hospitals to improve consumables management level and reduce hospital costs. A number of
hospitals have launched SPD and ‘smart chain’ (ISC) integrated management solutions, and have become “Top
Ten Pharmaceutical Supply Chain Service Innovation Cases” and “Excellent Cases of Pharmaceutical Supply
Chains” in the pharmaceutical distribution industry in 2018. The reagent business has established a model of the
top three hospitals, the equipment maintenance business has established a medical treatment alliance mode in
Haizhu District of Guangzhou, and the disinfection supply business has been officially put into operation. The
company is driving a transformation of services centering on consumers and end patients.
15
4. Open up the process of internationalization and build a “new Guoda”
In July 2018, Guoda Drugstore completed the introduction of Walgreens Boots Alliance, the world’s largest
drugstore chain, and became a Sino-foreign joint venture after the equity transfer. Through the cooperation with
Walgreens Boots Alliance, the company will introduce internationally advanced management concepts,
information technology, and product supply chain management to bring about all-round improvement for Guoda
Drugstore in operational efficiency, pharmaceutical service capabilities and diversified category management
capabilities, hoping to lead the development of China’s pharmaceutical retail industry, to meet the differentiated
needs of customers, and to create new features for China’s pharmaceutical retail. The new session of board of
directors of Guoda Drugstore has defined the strategic plan for the retail business for the next 3-5 years and has
formed specific strategic measures, and it has launched multiple projects for strategic measures, such as
development strategies and paths, merger and acquisition strategies, retail terminal operational capacity
enhancement, organizational structure design, and new store model pilot, digital innovation and new channels,
category optimization, private brand strategy, centralized procurement, information technology and so on.
By the end of 2018, Guoda Drugstore has a total number of 4275 drugstores, with a year-on-year increase of 441
stores compared with 2017. Among them, there are 361 hospital-side stores, increased 58 new ones; 1213 national
chronic disease stores, a year-on-year increase of 33%; 2670 medical insurance stores of direct sales.
(1) Optimized and improved basic management, and promoted the front-desk marketing management. Established
a retail price control system by strengthening management, teaching methods, and grasping promotions, and
carried out the loss management through project system management. In 2018, the sales revenue of direct
comparable stores was 6.23 billion yuan, a year-on-year increase of 3.7%; the loss management was improved,
and 121 stores stopped losses in 2018.
(2) Integrated the wholesale and retail integration resources, effectively managed the commodity procurement and
category planning, and centralized purchasing and sales has a year-on-year growth of 20%; strengthened the
capacity improvement of pharmaceutical service, and continued to optimize in member management, pharmacist
training, job skills training, and commissioner’s business capabilities, the total number of members for the year
reached 19.76 million;
(3) Continued to advance the innovative business. Built and promoted the OTO self-operated platform, third-party
OTO (Meituan, Jingdong Daojia, etc.), the instant distribution reached a total sales of 14.04 million, a year-on-
year increase of 167%; commercial insurance card business increased by 17%; the stored value card business
increased by 16%; the electronic prescription platform had a total prescription of more than 500,000 orders.
5. Build new organizational capabilities
To match strategy and control needs, the company improved organizational effectiveness by optimizing corporate
governance, ownership structure, and organizational structure. Sinopharm Accord headquarters took “defining
strategy, controlling risks, and allocating resources” as its core positioning, optimized management and control
mechanism, improved organizational platform and service efficiency; optimized the financial control system by
improving investment platform and matching investment with resources, operated full-process management,
controlled risk and fully supervised, and built assets, safety, legal system, and platform management; took
business-oriented, strengthened the construction of talent team, built a diversified human resource management
16
system and incentive mechanism, and stimulated organizational vitality; took special governance as the starting
point, optimized resource allocation, focused on operational improvement, improved organizational efficiency,
strengthened integrated operational management capabilities, and improved strategic development execution
efficiency and business operation efficiency.
6. Promote technological transformation, and promote business informationization and intelligent logistics
The company strengthened the construction of scientific and technological talents, strengthened the advantages of
information technology, optimized basic management, built a financial sharing platform, and the integrated first
marketing platform, cloud platform, intelligent logistics platform, and integrated new technologies promoted the
implementation of four major businesses of distribution. Introduced AI intelligence, launched the AGV robot
project in Dongguan, and launched 20 automatic drug sales machines in Shenzhen and Inner Mongolia, and
promoted intelligent unmanned drug sales projects.
7. Prevent risks all round, and ensure compliance
The company formed a comprehensive risk prevention and control system by improving the compliance system,
fostering the employees’ compliance awareness, strengthening risk supervision, and giving full play to the
supervisory role of discipline inspection + finance + risk operation + legal + internal audit. On the one hand, we
improved risk prevention and control system, and strengthened risk supervision; on the other hand, we took
measures to strengthen pressure control to “receivables and de-stocking” and internal audit, supervised the whole
process of major projects, strictly abided by the quality bottom line, Sinopharm Accord and its subordinate
enterprises passed the Good Supply Practice Certification for Pharmaceutical Products, and passed 2008 review of
ISO9001 with zero defect, and no major quality accidents occurred.
8. Grasp the grassroots and consolidate the party building
Sinopharm Accord has consistently adhered to political responsibility, after the headquarters took the lead in
completing the work of party building into the charter, in 2018, the general requirements for party building into
the charter have been fully completed at the subsidiary level. By consolidating the grassroots foundation, we
carried out the specific action of “party building strengthening foundation”, strictly implemented the inner-party
system, established templates and guidelines, and enhanced grassroots organizational strength; highlighted
political leadership, and organized various inner-party learning and training to temper party spirit and firm ideals
and beliefs; implemented “two responsibilities”, strengthened annual inspections, and played the role of “swords”;
deepened the construction of incorruptible culture, and provided discipline guarantee for the company’s
compliance operations and high-quality development.
The Company complies with the disclosure requirement of “Information Disclosure Guidelines for the Shenzhen
Stock Exchange No. 8- Listing Company Engaged in Retailing Industry”
1. The business activities of entity management and business condition of stores during the reporting period
By the end of 2018, Guoda Drugstore has opened up 3202 direct-sale stores, with total revenue up to 10.02 billion
Yuan, increased by 9.87 percent from a year earlier, it also has 1073 franchised stores, which has earned 1.183
billion Yuan of distribution revenue, with year-on-year growth of 6.25 percent.
17
Direct-sale store Franchised outlet
Region Numbers of Sales income Y-o-y Numbers Dispatching income Y-o-y
the store (in 10 thousand Yuan) changes of the store (10 thousand Yuan) changes
North 1,510 523,851.89 12.28% 322 47,602.24 13.66%
East China 793 233,009.72 5.40% 578 56,150.58 -0.42%
South China 409 139,736.67 8.06% 67 9,021.40 14.71%
Central China 267 52,345.43 12.10% 106 5,477.87 6.10%
Northwest 223 53,174.48 9.76% - - 0.00%
Total 3,202 1,002,118.21 9.87% 1,073 118,252.09 6.25%
Note: North: Liaoning, Shanxi, Inner Mongolia, Beijing, Tianjin, Hebei
East China: Shanghai, Jiangsu, Anhui, Shandong, Fujian, Zhejiang
South China: Guangdong, Guangxi
Central China: Henan, Hunan
Northwest: Ningxia Xinjiang
(1) Details of top ten sales stores
Opening Operatin Business Actual operating Property
Serial Region Store name
year g mode format area(M2) ownership
1 Shanxi Zhongli Branch in Yiyuan 2002
Direct- 5+X 820.00 Property rental
sale
2 Inner
Headquarter 2003 Direct- 5+X 1,689.26 Property rental
Mongolian sale
3 Guangdo Exhibition hall branch 2006 Direct- Modern 260.00 Property rental
ng of Guoda Drugstore sale Pharmacy
4 Shanxi Eryuan Branch in Yiyuan 2011 Direct- 5+X 600.00 Property rental
sale
5 1997 Direct- Modern 773.16 Property rental
Beijing Xidan Jinxiang sale Pharmacy
6 Pharmaceutical market 1991 Direct- Modern 620.00 Property rental
Jiangsu sale
in Yangzhou Baiyulan Pharmacy
7 2010 Direct- Traditional 1,206.00 Property rental
sale Chinese
Hebei Le Ren Tang Headquarter
Medicine
outpatient store
8 Xiamen New Special 2005 Direct- Modern 132.90 Property rental
Fujian sale
Medicine Pharmacy
9 2000 Direct- Traditional 280.00 Property rental
Kangning store of Le sale Chinese
Hebei
Ren Tang Medicine
outpatient store
10 Guangdo Zhenxing Branch of 2002 Direct- Modern 200.00 Property rental
ng Guoda Drugstore sale Pharmacy
(2) In 2018, the Company has opened 474 new direct-sale stores and closed 75 stores, with a net increase of 399
stores
Direct-sale store Franchised outlet
Region Number of store Number of stores Number of store Number of stores
Total area
increased shut down increased shut down
North 263 33,151.88 -31 46 -9
18
East China 80 8,774.95 -20 25 -41
South China 55 5,732.05 -12 15 -7
Central China 39 4,452.47 -6 25 -14
Northwest 37 4,606.04 -6 - -
Total 474 56,717.39 -75 111 -71
2. In 2018, the online sales were steadily carried out, and overall e-commerce revenue growth slowed down, and
O2O platform sales totaled 255 million yuan, an increase of 3.1% on a year-on-year basis; among them, Daojia
services grew rapidly and achieved sales of 14.04 million yuan in 2018, an increase of 167% on a year-on-year
basis. Details were as follows:
In 10 thousand Yuan
Cooperation platform Operation revenue
China National Health On-line 20,174.84
800FANG.CN
247.14
(www.800pharm.com)
Yaofangwang (www.yaofangwang.com) 1,457.40
Yiyaowang (www.111.com.cn) 157.99
Other B2C online retailers 1,304.43
JD daojia (http://daojia.jd.com) 673.18
Ali Health 73.94
Yao Dao Jia 1.20
Wanda Online Retailer 2.49
Baidu Takeaway 18.26
ele.me
906.18
(www.ele.me/home)
Meituan Waimai
254.80
(waimai.meituan.com)
Baheal Pharmaceutical 49.19
Wechat Mall 212.03
Total 25,533.06
3. Purchasing inventory and suppliers:
Top 5 suppliers for year of 2018:
In 10 thousand Yuan
Suppliers Purchase amount (tax included) Procurement ratio
No.1 20,352 13%
No.2 15,756 10%
No.3 11,778 8%
No.4 9,499 6%
No.5 9,364 6%
4. The status of warehousing logistics:
In 2018, Guoda Drugstore has 27 large and small sized logistic warehouses in total, covering more than 120,000
square meters, spreading out across 17 provinces.
Logistic charge
Province Region Warehouse area (M2) Management ownership Rate
(in 10 thousand
19
Yuan)
Liaoning Shenyang 18,821 Self-management 1449.37 1.00%
Guangzhou Guangzhou Hengchang
6,950
Logistic entrusted
684.70 0.87%
Guangdong Shanzhen
Jiangmen 5,072 Self-management 486.24 1.73%
Shanxi Wanmin 10,919 Self-management 1020.74 1.09%
Shanxi
Shanxi Yiyuan 8,860 Self-management 752.91 0.70%
Dadesheng 4,869 Self-management 275.31 0.92%
Jiangsu Nanjing 2,200 Self-management 225.79 2.02%
Liyang 1,920 Self-management 147.95 0.86%
Fujian 2,395 Self-management 253.71 0.93%
Fujian
Quanzhou 1,096 Self-management 54.91 0.83%
Hebei Hebei 4,300 Self-management 391.82 0.83%
Shandong Shandong 5,800 Self-management 418.72 1.19%
Ningxia Ningxia 3,300 Self-management 291.54 1.33%
Hunan Hunan 3,600 Self-management 334.03 1.32%
Henan Henan 3,610 Self-management 340.76 1.35%
Inner Mongolia Inner Mongolia 2,314 Self-management 421.33 0.98%
Guangxi Guangxi 1,950 Self-management 233.65 1.17%
Beijing Guoda
Beijing 4,389 Self-management 795.40 1.59%
Beijing Jinxiang
Tianjin Tianjin 1,200 Self-management 158.00 1.78%
Anhui Anhui 1,000 Self-management 91.30 2.12%
Xinjiang Xinjiang 3,517 Self-management 297.69 1.23%
Shanghai Fumei
20,000 Self-management 2671.88 1.49%
Shanghai Shanghai Guoda
Hangzhou 974 Self-management 105.49 2.68%
Sinopharm Logistic
Guoda Headquarter Headquarter 8,000 1291.27 1.03%
entrusted
Total 127,055 13,194.52 1.27%
5. Most of commodity suppliers of Guoda Drugstore are from external, with some relative enterprises and private
own brand of Sinopharm Group as auxiliary. The sales of 2018 were as below:
In 10 thousand Yuan
Sales amount (tax
Own brand Nature Category Ratio
included)
a Group-buying OEM Health food 3,368 0.336%
b Group-buying OEM Children 46 0.005%
c Group-buying OEM Gynaecology 33 0.003%
d Group-buying OEM Cold 47 0.005%
e Group-buying OEM Personal care 12 0.001%
20
f Group-buying OEM Family health 3,096 0.309%
g Group-buying OEM Anti-infection 175 0.018%
h Group-buying OEM Anti-allergy & anti-vertigo 68 0.007%
i Group-buying OEM Clearing heat & toxic material 259 0.026%
j Group-buying OEM Drugs for external use 270 0.027%
k Group-buying OEM Otorhinolaryngology 295 0.029%
l Group-buying OEM TCM decoction pieces 3,459 0.345%
Total - - 11,129.07 1.11%
II. Main business analysis
1. Overview
Found more in I. Introduction in Discussion and Analysis of Business
2. Revenue and cost
(1) Constitute of operation revenue
In RMB
2018 2017
Increase/decrease y-
Ratio in operation Ratio in operation
Amount Amount o-y
revenue revenue
Total of operation
43,122,385,521.23 100% 41,263,393,427.41 100% 4.51%
revenue
According to industries
Medicine wholesale 31,866,749,848.53 73.90% 31,022,967,423.15 75.18% 2.72%
Medicine retail 10,873,162,895.62 25.21% 9,892,835,784.75 23.97% 9.91%
Logistic & storage
26,109,809.27 0.06% 29,568,712.15 0.07% -11.70%
service
Lease and other 356,362,967.81 0.83% 318,021,507.36 0.78% 12.06%
According to products
Medicine 41,115,048,626.41 95.35% 39,683,832,010.20 96.17% 3.61%
Apparatus 1,340,837,068.09 3.11% 1,125,368,079.05 2.73% 19.15%
Other 666,499,826.73 1.54% 454,193,338.16 1.10% 46.74%
According to region
Domestic revenue 43,122,385,521.23 100.00% 41,263,393,427.41 100.00% 4.51%
Foreign revenue 0 0 0 0 0
21
(2) About the industries, products, or regions accounting for over 10% of the company’s operating income
or operating profit
√Applicable □ Not applicable
Whether the company needs to comply with the disclosure requirements of the particular industry
Yes
Retailing industry
In RMB
Increase/decrease Increase/decrease Increase/decrease
Operating revenue Operating cost Gross profit ratio of operating of operating cost of gross profit
revenue y-o-y y-o-y ratio y-o-y
According to industries
Medicine 31,866,749,848.53 29,606,073,176.14 7.09% 2.72% 0.99% 1.58%
wholesale
Medicine 10,873,162,895.62 8,368,907,348.19 23.03% 9.91% 12.23% -1.59%
retail
According to products
Medicine 41,115,048,626.41 36,456,947,511.65 11.33% 3.61% 2.32% 1.11%
According to region
Domestic
43,122,385,521.23 38,024,108,631.15 11.82% 4.51% 3.27% 1.05%
revenue
Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on
latest one year’s scope of period-end
□Applicable √Not applicable
(3) Income from physical sales larger than income from labors
Yes
(4) Fulfillment of the company’s signed significant sales contracts up to this reporting period
□Applicable √Not applicable
(5) Constitute of operation cost
In RMB
2018 2017
Increase/decr
Industries Item Ratio in operation Ratio in operation
Amount Amount ease y-o-y
cost cost
Medicine
Sales cost 29,606,073,176.14 77.87% 29,315,028,286.33 79.62% 0.99%
wholesale
Medicine retail Sales cost 8,368,907,348.19 22.01% 7,457,091,704.13 20.25% 12.23%
Logistic & Transportation &
13,025,190.40 0.03% 11,065,889.25 0.03% 17.71%
storage service storage cost
Lease and other Service cost 36,102,916.42 0.09% 36,367,036.09 0.10% -0.73%
22
(6) Whether the changes in the scope of consolidation in Reporting Period
√Yes □ No
Details of the changes in the scope of consolidation in reporting Period can be seen in Note VI of Financial Report.
(7) Major changes or adjustment in business, product or service of the Company in Reporting Period
□ Applicable √ Not applicable
(8) Major sales and main suppliers
Major sales client of the Company
Total top five clients in sales (RMB) 2,461,206,643.89
Proportion in total annual sales volume for top five clients 5.75%
Ratio of related parties in annual total sales among the top
0.00%
five clients
Information of top five clients of the Company
Serial Name Sales amount (RMB) Proportion in total annual sales
1 No. 1 653,110,735.98 1.53%
2 No. 2 495,339,192.61 1.16%
3 No. 3 484,534,000.41 1.13%
4 No. 4 415,202,332.84 0.97%
5 No. 5 413,020,382.05 0.97%
Total -- 2,461,206,643.89 5.75%
Other situation of main clients
□ Applicable √ Not applicable
Main suppliers of the Company
Total purchase amount from top five suppliers (RMB) 5,079,663,728.26
Proportion in total annual purchase amount for top five
16.24%
suppliers
Ratio of related parties in annual total sales among the top
2.94%
five suppliers
Information of top five suppliers of the Company
Serial Suppliers Purchase amount (RMB) Proportion in total annual purchases
1 No. 1 2,315,361,149.80 7.40%
2 No. 2 918,094,680.06 2.94%
3 No. 3 724,064,793.44 2.32%
4 No. 4 565,948,629.46 1.81%
5 No. 5 556,194,475.50 1.78%
Total -- 5,079,663,728.26 16.24%
Other notes of main suppliers of the Company
□ Applicable √ Not applicable
3. Expenses
In RMB
Increase/decrease
2018 2017 Note of major changes
y-o-y
Sales expense 2,762,789,885.77 2,305,909,071.71 19.81% No major changes occurred
Management expense 783,338,308.19 735,953,967.13 6.44% No major changes occurred
23
Financial expense 112,862,739.12 110,360,539.56 2.27% No major changes occurred
4. R&D expenses
□ Applicable √ Not applicable
5. Cash flow
In RMB
Item 2018 2017 Y-o-y changes
Subtotal of cash in-flow from
47,475,381,467.60 46,751,355,521.20 1.55%
operation activity
Subtotal of cash out-flow from
46,152,775,115.33 45,466,063,609.38 1.51%
operation activity
Net cash flow from operation
1,322,606,352.27 1,285,291,911.82 2.90%
activity
Subtotal of cash in-flow from
238,641,593.44 138,275,319.85 72.58%
investment activity
Subtotal of cash out-flow from
461,099,860.32 424,456,513.79 8.63%
investment activity
Net cash flow from investment
-222,458,266.88 -286,181,193.94 -22.27%
activity
Subtotal of cash in-flow from
3,363,461,854.03 514,921,208.46 553.20%
financing activity
Subtotal of cash out-flow from
504,680,787.88 991,944,325.18 -49.12%
financing activity
Net cash flow from financing
2,858,781,066.15 -477,023,116.72 -699.30%
activity
Net increased amount of cash and
3,958,618,329.29 522,583,265.99 657.51%
cash equivalent
Main reasons for y-o-y major changes in aspect of relevant data
√Applicable □ Not applicable
(1) Subtotal of cash in-flow from investment activity: has 72.58% up from a year earlier, mainly because bonus received from
associated enterprise increased on a y-o-y growth in the period;
(2) Subtotal of cash in-flow from financing activity: has 553.20% up from a year earlier, mainly because received a capital increase
for subsidiary Guoda Drugstore in the period from strategic investor;
(3) Subtotal of cash out-flow from financing activity: has 49.12% down from a year earlier, mainly because the cash paid for debts
are declined on a y-o-y basis due to the change of documentary bill from the bank in the period;
(4) Net cash flow from financing activity: has 699.30% down from a year earlier, mainly because received a capital increase for
subsidiary Guoda Drugstore in the period from strategic investor;
(5) Net increased amount of cash and cash equivalent : has 657.51% up from a year earlier, mainly because received a capital
increase for subsidiary Guoda Drugstore in the period from strategic investor;
Reasons of major difference between the cash flow of operation activity in report period and net profit of the Company
□Applicable √Not applicable
III. Analysis of the non-main business
□ Applicable √ Not applicable
24
IV. Assets and liability
1. Major changes of assets composition
In RMB
Year-end of 2018 Year-begin of 2018
Ratio
Ratio in Ratio in Notes of major changes
Amount Amount changes
total assets total assets
Mainly because received a capital
increase for subsidiary Guoda
Monetary fund 8,089,781,304.56 27.96% 4,191,655,438.51 18.76% 9.20%
Drugstore in the period from strategic
investor
Account
9,336,861,647.92 32.27% 7,589,412,679.88 33.97% -1.70% No major changes occurred 。
receivable
Inventory 4,389,335,942.19 15.17% 3,781,858,238.12 16.93% -1.76% No major changes occurred 。
Investment real
144,894,495.97 0.50% 153,678,339.11 0.69% -0.19% No major changes occurred 。
estate
Long-term
equity 1,880,393,786.10 6.50% 1,650,619,373.09 7.39% -0.89% No major changes occurred 。
investment
Fix assets 607,933,827.67 2.10% 551,710,434.02 2.47% -0.37% No major changes occurred 。
Mainly because more investment in
Construction in
36,412,614.61 0.13% 22,947,258.99 0.10% 0.03% ERP system construction and supply
progress
chain extension project
Affected by the more financing for
Short-term loans 2,597,652,702.43 8.98% 1,561,354,521.64 6.99% 1.99%
supply chain
Long-term loans 31,600,000.00 0.11% 31,600,000.00 0.14% -0.03% No major changes occurred 。
2. Assets and liability measured by fair value
√Applicable □ Not applicable
1. Assets and liability measured by fair value
Year of 2018
Input value used for fair value measurement
Important un- Total
Active market Important observable
observable input
quotation input value
value
(1st Level) (2nd Level) (3rd Level )
Continuous fair value
measurement
Note receivable - 567,775,275.40 - 567,775,275.40
Other equity instrument -- -
investment 13,685,760.00 13,685,760.00
Other non-current financial - 140,000,000.00 140,000,000.00
25
assets
- 581,461,035.40 140,000,000.00 721,461,035.40
Year of 2017
Input value used for fair value measurement
Important un- Total
Active market Important observable
observable input
quotation input value
value
(1 Level)
st
(2nd Level) (3rd Level )
Continuous fair value
measurement
Financial assets available for
sale - 13,685,760.00 - 13,685,760.00
2. Assets and liability released by fair value
Year of 2018
Input value used for fair value measurement
Important un- Total
Active market Important observable
observable input
quotation input value
value
(1st Level) (2nd Level) (3rd Level )
Long-term loans - 31,600,000.00 - 31,600,000.00
Year of 2017
Input value used for fair value measurement
Important un- Total
Active market Important observable
observable input
quotation input value
value
(1st Level) (2nd Level) (3rd Level )
Long-term loans - 31,600,000.00 - 31,600,000.00
3. Assets right restriction till end of reporting period
Nil
V. Investment
1. Overall situation
During the reporting period, the Company achieved an enterprise combined under the different control for the
follow three enterprises by cash acquisition of Taiyuan Tongxinli Guoda Drugstore Co., Ltd (100%), Shanxi
Zhongao Pharmaceutical Co., Ltd (100%) and Sinopharm Holding Guangzhou Huadu Co., Ltd (70%). The new
subsidiaries established in the period including: Sinopharm Holding Foshan Medical Supplies Supply Chain Co.,
Ltd.(70%), Sinopharm Holding Medicine Supply Chain Service (Guangxi )Co., Ltd. (30.6%), Sinopharm Holding
26
Baiyi Pharmacy Guangxi Co., Ltd(51%), Sinopharm Holding Hezhou Co., Ltd(100%), Sinopharm Holding Guoda
Drugstore Zhengzhou Chain Co., Ltd(60%), Fujian Guoda Medicine Co., Ltd(100%), Sinopharm Holding
Qinzhou Co., Ltd (100%), Sinopharm Holding Hechi Co., Ltd (100%), China National Shanghai Guoda Ruijing
Pharmacy Co., Ltd(55%) and Shanghai Guoda Haohai Pharmacy Co., Ltd.(51%) . Meanwhile, the Company has
2.53% equity participated in Shanghai Dingqun Enterprise Management Consulting Co., Ltd. For more
investment details, see the Note (vi) and Note (vii) in Financial Report
2. The major equity investment obtained in the reporting period
□ Applicable √ Not applicable
3. The major non-equity investment doing in the reporting period
□ Applicable √ Not applicable
4. Financial assets investment
(1) Securities investment
□ Applicable √ Not applicable
The company had no securities investment in the reporting period.
(2) Derivative investment
□ Applicable √ Not applicable
The company had no derivative investment in the reporting period.
5. Application of raised proceeds
√Applicable □ Not applicable
(1) Overall application of raised proceeds
√Applicable □ Not applicable
In 10 thousand Yuan
Usage of
Cumulativ Ratio of the
Total
e raised cumulative retained
Total Total Total raised Total Raised
capitals raised raised
raise raised accumulati capital has accumulati capitals
has capitals capitals
Year Way d capital ve raised purpose of ve raised idle for
purpose of has and what
capit used capitals uses capitals more than
uses purpose of is expected
als in Period used changed in unused two years
changed in uses to invested
Period
total changed with those
capitals
Non-public offering 27,36 Deposit
2016 5,472.4 22,469.34 0 0 0.00% 4,892.15 0
of shares 1.49 bank
27
27,36
Total -- 5,472.4 22,469.34 0 0 0.00% 4,892.15 -- 0
1.49
Explanation on General usage of raised capital
More details of the use of raised capitals can be seen in Special report on the storage and the actual use of raised capitals of
Sinopharm Accord in 2018 disclosed on 25 April 2019
(2) Situation of committed project of raised proceeds
√Applicable □ Not applicable
In 10 thousand Yuan
Amount of
Committed Projects Project
Total Total accumulateInvestment
investment projects changed or Amount Reach the feasibility
committed investment d program till Predicted Realized
and capital invested not invested in predicted was
investment after investment the period-useable date interests
in areas with fund (including report interest or changed
of raised adjustment till the end of project in Period
raising out of the changed period not hugely or
capitals (1) period-end (3)=(2)/(1)
plan partially) not
(2)
Committed investment projects
Cash consideration
of 49% equity of
Guangdong Not
Nanfang N 26,781.67 26,781.67 5,472.4 21,889.52 81.73% 0 applicabl N
Pharmaceutical e
Foreign Trade Co.,
Ltd. paid
Not
Payment of issuance
N 579.82 579.82 0 579.82 100.00% 0 applicabl N
cost
e
Subtotal of
committed -- 27,361.49 27,361.49 5,472.4 22,469.34 -- -- 0 -- --
investment projects
Capital invested in areas with fund raising out of the plan
Not applicable
Total -- 27,361.49 27,361.49 5,472.4 22,469.34 -- -- 0 -- --
Situation about not
coming up to
schemed progress or
Not applicable
expected revenue
and the reason(In
specific project)
Explanation on
major changes on Not applicable
project feasibility
28
Amount, usage and
progress of using for
Not applicable
fund raising out of
the plan
Change of
implementation
place of investment Not applicable
project of raised
capitals
Regulation of
implementation
ways of investment Not applicable
project of raised
capitals
Preliminary
investment and
replacement of Not applicable
investment project
of raised capitals
Temporarily
supplement for the
Not applicable
current capitals with
idle raised capitals
Amount and reason
for surplus of raised
capitals when Not applicable
implementing
projects
Usage of the
retained raised fund
and what is Not applicable
expected to invested
with those fund
Issues or other
conditions found in Use of the fund raised are strictly execute in line with the tri-party supervision agreement for fund raised, and
use of fund raised no related issues or other conditions been found
and disclosure
(3) The changed project of raised proceeds
□ Applicable √ Not applicable
The Company has no project of raised proceeds changed in the Period.
29
VI. Sales of major assets and equity
1. Sales of major assets
□ Applicable √ Not applicable
The Company has no sales of major assets in the Period.
2. Sales of major equity
□ Applicable √ Not applicable
VII. Analysis of main holding company and stock-jointly companies
√Applicable □ Not applicable
In RMB
Company Register Operating Operating
Type Main business Total assets Net Assets Net profit
name capital revenue profit
Chinese traditional
patent medicine,
chemical preparations,
antibiotics, bio-chemical
medicine, biological
medicine, diagnosis
Sinopharm medicine, biological
Holding medicine with features
Subsidia 1,683,333,333 9,035,418,2 4,976,217,2 10,878,025,717. 407,069,332.3 301,751,569.6
Guoda of treatment and
ry .00 75.87 59.05 94 1 9
Drugstore diagnosis, shaped
Co., Ltd. packing food, chemical
products, and various
commodity and
technique hold by self-
support and agency as
well as import & export
of technology
Sales of drugs, medical
apparatus and
instruments, freight
transportation, storage,
loading and unloading,
Sinopharm glass wares, cosmetics
Holding Subsidia and daily merchandise; 3,553,249,393 12,614,084, 4,250,640,1 23,650,912,944. 635,435,707.4 472,276,993.7
Guangzho ry other business services, .17 814.56 06.09 66 3 7
u Co., Ltd. other professional
consultation, various
goods agency and for
self-operation, import &
export of technology,
houses leasing
Retail and distribution
in respect of
Sinopharm
pharmaceutical products
Holding Subsidia 521,407,965.7 3,483,436,2 1,035,466,0 5,232,538,175.1 194,700,860.1 169,313,898.6
and medical apparatus
Guangxi ry 9 84.46 26.91 1 6 3
and instruments,
Co., Ltd.
wholesale and retails of
health products
Particular about subsidiaries obtained or disposed in report period
√Applicable □ Not applicable
30
The method of
obtaining and
handling
Company Name The influence to the whole production and performance
subsidiaries
during the
report period
Further consolidated the pharmaceutical distribution business in
Sinopharm Holding Foshan Medical Supplies
Establishment Guangxi & Guangdong and without major influence on performance
Supply Chain Co., Ltd.
of the Company
Further consolidated the pharmaceutical distribution business in
Sinopharm Holding Medical Supply Chain
Establishment Guangxi & Guangdong and without major influence on performance
Service Co., Ltd.
of the Company
Expand local medicine retail business layout, and without major
Shanghai Guoda Haohai Pharmacy Co., Ltd. Establishment
influence on performance of the Company
Sinopharm Holding Baiyi Pharmacy Guangxi Expand local medicine retail business layout, and without major
Establishment
Co., Ltd influence on performance of the Company
Further consolidated the pharmaceutical distribution business in
Sinopharm Holding Hezhou Co., Ltd Establishment Guangxi & Guangdong and without major influence on performance
of the Company
Sinopharm Holding Guoda Drugstore Expand local medicine retail business layout, and without major
Establishment
Zhengzhou Chain Co., Ltd influence on performance of the Company
Expand local medicine retail business layout, and without major
Shanghai Guoda Ruijing Pharmacy Co., Ltd Establishment
influence on performance of the Company
Expand local medicine retail business layout, and without major
Fujian Guoda Medicine Co., Ltd Establishment
influence on performance of the Company
Further consolidated the pharmaceutical distribution business in
Sinopharm Holding Qinzhou Co., Ltd Establishment Guangxi & Guangdong and without major influence on performance
of the Company
Further consolidated the pharmaceutical distribution business in
Sinopharm Holding Hechi Co., Ltd Establishment Guangxi & Guangdong and without major influence on performance
of the Company
Further consolidated the pharmaceutical distribution business in
Sinopharm Holding Guangzhou Huadu Co.,
Acquisition Guangxi & Guangdong and without major influence on performance
Ltd
of the Company
Expand local medicine retail business layout, and without major
Shanxi Zhongao Pharmaceutical Co., Ltd Acquisition
influence on performance of the Company
Expand local medicine retail business layout, and without major
Taiyuan Tongxinli Guoda Drugstore Co., Ltd Acquisition
influence on performance of the Company
VIII. Structured vehicle controlled by the Company
□ Applicable √ Not applicable
31
IX. Future Development Prospects
(i)The analysis on industry environment
The overall scale of China’s pharmaceutical market continues to grow, but due to the impacts of slowdown in
growth in macroeconomic and medical insurance expenditure, medical insurance control fees and other industrial
policies, the growth rate of the pharmaceutical industry is slowing down, and the growth rate of the
pharmaceutical circulation industry also slows down together with the overall pharmaceutical industry. In recent
years, the policies for various links of the pharmaceutical industry have been frequently issued, which profoundly
affected the industry pattern and promoted the industrial transformation and upgrading, and the pattern of China’s
pharmaceutical circulation industry and the upstream and downstream environment has been undergoing far-
reaching structural changes. Under the guidance of policies and social capital, the medical and health industry
continues to flourish, the penetration and influence of the accelerated iteration of new technologies and the
Internet + and multi-dimensional cross-border development on traditional drug circulation industry is far-reaching,
and competition is intensifying.
Market opportunities come out while the growth rate of the pharmaceutical industry is slowing down. First, in the
next few years, medical insurance control fees are still the main trend in the development of pharmaceutical
industry, so the commercial leaders with fund strength are expected to maintain their core advantages. Second, the
pharmaceutical circulation cycle will continue to bear pressure, and the market concentration brought about by the
two-vote system will continue to be promoted, the channel networks of commercial leaders accelerate to put
together , and the market share is expected to further increase. Third, with the advancement of separation of
hospitals and medicine, the outflow of prescriptions is expected to accelerate, and the value of retail terminal
networks will increase, under the influence of policies such as “4+7” procurement, the growth of retail market is
expected to accelerate, and the concentration of chain pharmacies is expected to continue to increase. From the
perspective of medical insurance support, the “Guiding Opinions on the Pilot Classification Management of Retail
Pharmacies (public comment draft)” proposes that “the local medical insurance management department can refer
to the grading results of retail pharmacy in terms of medical insurance designated pharmacy settings, medical
insurance fund management, etc.”, “Priority is given to policy support”. From the perspective of manufacturer
cooperation, the channel value of retail pharmacies has been valued by upstream industrial enterprises, foreign
companies and domestic first-line leaders have begun to switch from natural sales to establishing pharmacy sales
teams. Fourth, with the promotion of policies such as grading diagnosis and treatment, the grassroots have made
expansion, and the primary medical market will become a fast-growing market. Fifth, the medical apparatus and
instruments (consumables) industry is developing rapidly, and the industry concentration is low and has large
market potential, or it will become important market growth points. Sixth, with the rapid development of new
technologies such as big data, Internet of Things, cloud computing, etc., new opportunities for innovating business
models and upgrading service models have been brought about for traditional pharmaceutical businesses.
(ii) Key work in 2019:
Sinopharm Accord is committed to “building a leading international medicine and health service platform to
enable people to enjoy a happy and healthy life”. Under the impetus of the industry environment and new
32
technologies and new applications, Sinopharm Accord has proposed the development direction of “taking
wholesale and retail integration as the core, upgrading service model through technology empowerment and
customer value driving, providing full-service solutions for upstream and downstream industry chains, and
transforming from a pharmaceutical distributor to a pharmaceutical business service solution provider”.
In 2019, the company will continue to promote the strategic direction of taking wholesale and retail integration as
the core, grasp the three themes of “consolidating foundation, making transformation and innovation, and
ensuring development”, and focus on the following work:
1. Deepen the strategy of wholesale and retail integration
Through technology empowerment, form the all-channel service networks for wholesale and retail integration,
create a three-dimensional retail system with reform of medicine, medical treatment and medical insurance and
high integration of online and offline. By getting through the “three links” platform (retail channels and medical
treatment channels, retail business and wholesale business, online business and offline business) between
distribution and retail, increase the variety introduction of distribution and retail products, promote the sharing of
wholesale and retail logistics, and enhance the admittance to hospital of retail grafting distribution and the
professional service capabilities to achieve the integration of distribution and retail terminal services.
2. Distribution business: focus on the four business directions for transformation and innovation
Focus on the four business directions of retail direct sales, equipment consumables, retail diagnosis and treatment,
and primary care, consolidate the integrated operation foundation, give play to the integrated benefits, improve the
efficiency of logistics operations, and rapidly develop with transformation and innovation to build new
competitive advantages. Deeply develop and upgrade the traditional businesses, sink channels, integrate
professional marketing platforms, thoroughly boost the primary care business, help to solve the current situation
of lack of doctors and medicines at the grassroots level; give play to the advantages of wholesale and retail
integration, build a retail direct sales network, promote the regional distribution sinking; accelerate the network
layout of retail diagnosis and treatment, build DTP professional pharmacy brand image; grasp the development
trend of equipment industry, and take value-added services of hospitals as the starting point to accelerate business
layout.
Improve efficiency and promote supply chain upgrade: comprehensively promote institutional process
optimization projects; optimize and improve the integrated management and control; promote information and
logistics service levels through technology empowerment, center on the performance improvement of supply
chain, accelerate the development and optimization of system functions, and enhance the internal and external
supply chain efficiency such as quality, operation, order processing, bill processing, financial processing, etc.,
revolve around the distribution business structure, replan the logistics centers, highlight the four capacity
buildings of the logistics center, and comprehensively improve the service efficiency of the logistics supply chain.
3. Guoda Drugstore: create a professional pharmaceutical retail ecosystem
Promote the implementation of key strategic projects, including retail terminal operational capacity improvement,
store new model pilot, digital innovation and new channels, information technology and so on, create a “New
Guoda”, deeply dig professional capabilities, create a new professional pharmaceutical retail ecosystem, increase
the expansion of terminal stores, continue to promote wholesale and retail integration, strengthen the management
33
and service functions of the headquarters, promote the construction of provincial platforms, integrate regional
resources, and strengthen regional advantages.
Reform the IT architecture and upgrade the big data system to empower the business assurance technology;
remodel the organizational structure and optimize the human resources system to empower the echelon
construction; improve the pharmaceutical affairs service capabilities to empower the professionalization pharmacy
services; accelerate the investment project and regional expansion, it’s targeted to expand 600 stores, develop
advantageous business circle, focus on breaking through the stores near the hospitals, develop urban and rural
integration stores, set up franchise management team, open franchise channels, break through franchise bottleneck;
break through the new business model of e-commerce members; upgrade the brand, enrich resources, quickly
deploy the blank areas of the country, emphasize the standardization management, create model areas, and
empower the scale development.
4. Continue to advance the internationalization process
By virtue of the cooperation opportunity with Walgreens Boots Alliance, strengthen the construction of the
company’s management and control platform and information platform, promote the company’s management
internationalization and talent internationalization, and actively search for global high-quality resources, and
promote the product internationalization through investment and shareholding; track the global industry’s leading
trends, continue to expand international horizons, and enhance international cooperation capabilities.
5. Production and financing double drive, enhance scale advantages
In the face of fierce competition, actively grasp the opportunities of organic growth and cooperative mergers and
acquisitions, further accelerate the integration of industry resources around the main business, and carry out multi-
capital cooperation methods by taking mergers and acquisitions as the principle, and taking share holding,
alliances and strategic cooperation as the auxiliary, continue to deepen the network coverage, increase the mergers
and acquisitions, and enhance scale advantages. At the same time, control risks, ensure compliance, operate
steadily, strengthen risk prevention, concentrate efforts on solid foundation, ensure compliance operations, and
comprehensively prevent and control operational risks.
6. Technology leads and reinforces service upgrades and model innovation
The company will continue to explore new technologies such as the application internet, big data, and cloud
computing, and explore and build a intelligent pharmaceutical business service system by customer-oriented and
value-driven. Strengthen the overall planning and technology investment of information technology, implant
informatization thinking, explore advanced informatization operation and management mode, ensure information
investment, and optimize the architecture system; build hospital supply chain management information platform
and retail professional supply chain management information platform, integrate WBA technical resources,
optimize Guoda IT architecture, upgrade big data systems, and accelerate the construction of information
technology talent teams.
(iii) Possible risks
1. The management risks in sustainable expansion of marketing network of Guoda Drugstore
34
The marketing network of Guoda Drugstore has maintained stable growth trend in recent years through newly
opened stores and extended mergers. The expansion of sales area and increase of stores have brought pressure on
the site selection, distribution, cash management, marketing and human resource management of the stores of
Guoda Drugstore. The company will strengthen the management and construction in merchandise procurement,
logistics and distribution, marketing and other links and establish corresponding management methods for each
link so as to ensure the unified standards and management quality for store expansion.
2. Risks of intensifying market competition
At present, the market concentration ratio of domestic pharmaceutical retail market industry is relatively low, and
the national and regional pharmaceutical retail enterprises have fierce market competition. As the country
continues to introduce corresponding policies to encourage the integration of pharmaceutical retail industry, the
major pharmaceutical retail enterprises in the industry have accelerated the pace of mergers and acquisitions, and
continued to expand the marketing networks, improve the logistics center constructions, and innovate the business
and profit models so that the sales scale and comprehensive strength continuously strengthen. At the same time,
with the upgrading of consumption and the gradual opening of market, the foreign pharmaceutical distribution
enterprises with powerful strength are entering the domestic pharmaceutical distribution markets through a variety
of ways, so the industry competition is further intensifying. Sinopharm Accord will integrate the existing
resources, create a two-wheel drive development model with integration of both wholesale and retail, deeply give
full play to synergistic effect, directly face the end patients and consumers by varieties complementation, capital
cooperation, supply chain collaboration, internationalization promotion and other measures, and achieve brand
globalization through capital operation.
3. Risks of changes in industry policy
The development of pharmaceutical retail industry is regulated and influenced by the relevant national policies.
The state has promulgated a series of documents such as Good Supply Practice for Prescription Products and
Some Opinions on Further Reform and Improvement of Drug Production, Circulation and Use Policy, which put
forward specific requirements to the industry operation. Along with the gradual increase of management standards
for management standard, the regulations are constantly being revised and improved and put forward higher
requirements to the business operations. In addition, with the promotion and implementation of the new medical
reform, the state has implemented the essential medicine system, public hospital reform, drug centralized
procurement bidding system and tax reduction policy for anticancer drugs throughout the country, and repeatedly
introduced policies to reduce the drug retail price ceiling in order to reduce the burden of drug use. If the policies
introduced in the process of implementing new medical reform impose restrictions on the industrial development
and the product price of retail drug stores, the operation and profitability of Guoda Drugstore may have to face
some challenges.
4. Risks of facing the horizontal competition
In the pharmaceutical retail field, Sinopharm Holding’s affiliated distribution subsidiaries have also opened some
social retail pharmacies, which constitute a certain degree of horizontal competition with the subordinate Guoda
35
Drugstore. Sinopharm Holding and SINOPHARM have pledged to take effective measures to resolve the possible
horizontal competition.
5. The risk of goodwill impairments
On 31 December 2018, the book value of goodwill in consolidate financial statement listed as 833,547,800.60
Yuan, and distributed to the assets group of distribution business and retail business. In accordance with the
Accounting Standards for Business Enterprises, the Company carried out annual impairment test for the goodwill.
Impairment of goodwill will released on the Note V.-16 and Note III-20 & 30 listed under the Financial Statement
X. Reception of research, communication and interview
1. In the report period, reception of research, communication and interview
√Applicable □ Not applicable
Time Way Type Basic situation index of investigation
17 Apr. 2018 Field research Institute Notice of Resolution of AGM 2017
Reception (times) 1
Number of hospitality 80
Number of individual reception 5
Number of other reception 0
Disclosed, released or let out major undisclosed information No disclosed, released or let out major undisclosed information
36
Section V. Important Events
I. Profit distribution plan of common stock and capitalizing of common reserves plan
Formulation, Implementation and Adjustment of common stock Profit Distribution Policy Especially Cash Dividend policy during
the Reporting Period
√Applicable □ Not applicable
On 17 April 2018, the profit distribution plan for year of 2017 was deliberated and approved by annual general
meeting of 2017, that is taking total 428,126,983 shares as base, distributed RMB 3.00 (tax included) for each 10
shares in cash. The announcement of 2017 interest distribution implementation was released on 6 June 2018 by
the Board (published in Securities Times, China Securities Journal, Hong Kong Commercial Daily and Juchao
Website http://www.cninfo.com.cn), the profit distribution plan for year of 2017 was completed, and dividend for
public shares was distributed to the account of shareholders dated 13 June 2018 (A-share) and 15 June 2018 (B-
share) respectively.
Special explanation on cash dividend policy
Satisfy regulations of General Meeting or requirement of Article
Y
of Association (Y/N):
Well-defined and clearly dividend standards and proportion
Y
(Y/N):
Completed relevant decision-making process and mechanism
Y
(Y/N):
Independent directors perform duties completely and play a
Y
proper role (Y/N):
Minority shareholders have opportunity to express opinions and
Y
demands totally and their legal rights are fully protected (Y/N):
Condition and procedures are compliance and transparent while
N
the cash bonus policy adjusted or changed (Y/N):
Profit distribution plan (pre-plan) of common stock and capitalizing of common reserves plan (pre-plan) in latest three years
(including the reporting period)
(1) Profit distribution plan for year of 2016
Taking the total 428,126,983 shares as base, cash bonus of RMB 3.30 (before tax) each 10 shares will be
distributed to the whole shareholders. This profit distribution did not convert capital reserve into share capital.
(2) Profit distribution plan for year of 2017
Taking the total 428,126,983 shares as base, cash bonus of RMB 3.00 (before tax) each 10 shares will be
distributed to the whole shareholders. This profit distribution did not convert capital reserve into share capital.
(3) Profit distribution plan for year of 2018
Taking the total 428,126,983 shares as base, cash bonus of RMB 4.00 (before tax) each 10 shares will be
distributed to the whole shareholders. This profit distribution did not convert capital reserve into share capital.
37
Cash dividend of common stock in latest three years (including the reporting period)
In RMB
Ratio of the
Ratio of the
total cash
Ratio of the cash cash bonus by
Net profit bonus (other
bonus in net Proportion other ways in
attributable to ways included)
profit attributable for cash net profit
common stock Total cash in net profit
Year for Amount for cash to common stock bonus by attributable to
shareholders of bonus attributable to
bonus bonus (tax shareholders of other common stock
listed company in (including common stock
shares included) listed company ways(i.e. shareholders of
consolidation other ways) shareholders of
contained in share buy- listed company
statement for bonus listed company
consolidation backs) contained in
year contained in
statement consolidation
consolidation
statement
statement
2018 171,250,793.20 1,210,742,435.78 14.14% 0.00 0.00% 171,250,793.20 14.14%
2017 128,438,094.90 1,057,791,930.67 12.14% 0.00 0.00% 128,438,094.90 12.14%
2016 141,281,904.39 1,186,539,201.93 11.91% 0.00 0.00% 141,281,904.39 11.91%
The Company gains profits in reporting period and the retained profit of common stock shareholders provided by parent company is
positive but no plan of cash dividend proposed of common stock
□ Applicable √ Not applicable
II. Profit distribution plan and capitalizing of common reserves plan for the Period
√Applicable □ Not applicable
Bonus shares for every 10-share (Share) 0
Dividends for every 10-share (RMB) (Tax
4.00
included)
Equity base of distribution plan (Share) 428,126,983
Cash dividend(RMB) (Tax included) 171,250,793.20
Proportion for cash bonus by other ways(i.e. share
0.00
buy-backs)
Total cash bonus (including other ways) 171,250,793.20
Distributable profits (RMB) 3,956,556,754.02
Ratio of cash dividend in total profit distribution 100%
Cash dividend policy:
If the company’s development is at the growth stage with significant capital expenditures, the minimum proportion of cash
dividend in the profit distribution should reach 40%.
Detail explanation on profit distribution or capitalization from capital public reserve
38
III. Implementation of commitment
1. Commitments completed in Period and those without completed till end of the Period from actual
controller, shareholders, related parties, purchaser and companies
√Applicable □ Not applicable
Type of Comm Comm
Commitm Impleme
Promise commitme Content of commitments itment itment
ents ntation
nts date term
Commitm
ents for
share
merger
reform
"As a large pharmaceutical commercial enterprise whose business
involves pharmaceutical wholesale and retail, Sinopharm Holding
may overlap with the Company in geographical segmentation during
its future business development. To avoid the potential peer
competition brought by such geographical overlap, Sinopharm
Holding undertakes that, upon the transfer of shares of Sinopharm
Commitm
Holding Guangzhou it held to Sinopharm Accord, “1. it will not
ents in Commitm Long-
newly-establish or broaden within Guangdong any business operation 21 Normally
report of Sinopharm ent of term
that actually compete with that of Sinopharm Accord, or set up any June implemen
acquisition Holding shareholde effecti
new subsidiaries or subordinate enterprises who engage in such 2005 ting
or equity rs ve
business. 2. It will enter into business delineation with Sinopharm
change
Accord and Sinopharm Holding Guangzhou, thereby giving the three
parties clear geographical areas to carry out pharmaceutical
wholesale and retail businesses, so as to avoid potential peer
competition. Apart from above, Sinopharm Holding will no longer
newly-establish any enterprise that may compete with Sinopharm
Accord in the production and R&D of pharmaceutical products.”
“Sinopharm Holding and Sinopharm Foreign Trade made
Sinopharm commitments in the Report about China National Accord Medicines
Group Corporation Ltd. Purchasing Assets and Raising Supporting Funds
Co., and Related Transactions by Asset Sale, Stock Issuance and Cash
Commitm Ltd;China Payment that the non-public offering of shares of Sinopharm Accord
Commitm
ents in National obtained from this transaction shall not be transferred within 36 31 36 Normally
ent on
assets Pharmace months since the finish date of issuance and shall be unlocked after May month implemen
restricted
reorganiza utical 36 months since the date of listing. Within 6 months after the 2016 s ting
shares
tion Foreign completion of this transaction, if the closing price of the stock of
Trade Sinopharm Accord is less than the issue price in continuous 20
Corporatio trading days, or the closing price at the end of 6 months after the
n completion of this transaction is less than the issue price, the lockup
period of the stock of Sinopharm Group and Sinopharm Foreign
39
Trade obtained from Sinopharm Accord by this transaction will
automatically prolong at least 6 months. The shares derived from
stock dividends allocation and capital reserve increase transferring of
Sinopharm Accord based on the non-public offering of shares of
Sinopharm Accord obtained by this transaction should also abide by
the above stock restricted arrangements.”
"Ping An Asset Management Co., Ltd. made commitments in the
Report about China National Accord Medicines Corporation Ltd.
Purchasing Assets and Raising Supporting Funds and Related
Ping’an Transactions by Asset Sale, Stock Issuance and Cash Payment that
Commitm
Assets the non-public offering of shares of Sinopharm Accord obtained from 31 36 Normally
ent on
Managem this transaction shall not be transferred within 36 months since the May month implemen
restricted
ent Co., finish date of issuance and shall be unlocked after 36 months since 2016 s ting
shares
Ltd. the date of listing. After placement completed, the shares of the listed
company increased due to bonus shares and turning to increase
capital should pursuit to the restriction arrangement the above
mentioned.
“Sinopharm Holding made commitments in the Report about China
National Accord Medicines Corporation Ltd. Purchasing Assets and
Raising Supporting Funds and Related Transactions by Asset Sale,
Stock Issuance and Cash Payment that the 2016 annual net profits of
Foshan Nanhai, Guangdong Uptodate & Special Medicines and
Guoda Drugstore should respectively be no less than RMB
47,385,600.00, RMB 19,167,000.00, and RMB 98,466,100.00, while
Performan
the 2017 annual net profits should respectively be no less than RMB
ce
Sinopharm 49,394,500.00, RMB 20,209,700.00, and RMB 110,998,90.00, and 31
commitme 2018- Complete
Group the 2018 annual net profits should respectively be no less than RMB May
nt and 12-31 d
Co., Ltd 51,148,200.00, RMB 21,330,100.00, and RMB 131,275,500.00. Net 2016
compensat
profit refers to the lower one between the after-tax net profit
ion
attributable to the owners of parent company planning to invest in the
target company and the net profit attributable to the owners of parent
company after deducting the non-recurring gains and losses. If the
actual net profit of the target company doesn’t reach the committed
net profit, Sinopharm Group will need to compensate according to the
stipulations of the "Profit Forecast Compensation Agreement for the
Stock Issuance and Assets Purchase.”
China Performan "Sinopharm Foreign Trade made commitments in the Report about
National ce China National Accord Medicines Corporation Ltd. Purchasing
Pharmace commitme Assets and Raising Supporting Funds and Related Transactions by
31
utical nt and Asset Sale, Stock Issuance and Cash Payment that the 2016 annual 2018- Complete
May
Foreign compensat net profits of Nanfang Pharmaceutical Foreign Trade should be no 12-31 d
2016
Trade ion less than RMB 39,880,700, while the 2017 annual net profits should
Corporatio arrangeme be no less than RMB 47,323,200, and should not less than RMB
n nt 55,364,600 in 2018. Net profit refers to the lower one between the
40
after-tax net profit attributable to the owners of parent company
planning to invest in the target company and the net profit attributable
to the owners of parent company after deducting the non-recurring
gains and losses. If the actual net profit of the Nanfang
Pharmaceutical Foreign Trade doesn’t reach the committed net profit,
Sinopharm Foreign Trade will need to compensate according to the
stipulations of the "Profit Forecast Compensation Agreement for the
Stock Issuance and Assets Purchase.”
Fu
Jiancheng;
“Fu Yuequn and other 10 natural person made commitments in the
Fu Yuequn
Report about China National Accord Medicines Corporation Ltd.
Gu
Purchasing Assets and Raising Supporting Funds and Related
Chaoqun;
Transactions by Asset Sale, Stock Issuance and Cash Payment that
Guo
Performan the 2016 annual net profits of Nanfang Pharmaceutical Foreign Trade
Shu’er;
ce should be no less than RMB 39,880,700, while the 2017 annual net
Huang
commitme profits should be no less than RMB 47,323,200, and should not less
Qiufang; 31
nt and than RMB 55,364,600 in 2018. Net profit refers to the lower one 2018- Complete
Li May
compensat between the after-tax net profit attributable to the owners of parent 12-31 d
Hongbing; 2016
ion company planning to invest in the target company and the net profit
Liao Zhi;
arrangeme attributable to the owners of parent company after deducting the non-
Lin
nt recurring gains and losses. If the actual net profit of the Nanfang
Wanqun;
Pharmaceutical Foreign Trade doesn’t reach the committed net profit,
SunWei;
Fu Yuequn and other 10 natural person will need to compensate
Zhang
according to the stipulations of the "Profit Forecast Compensation
Zhaohua;
Agreement for the Stock Issuance and Assets Purchase.”
Zhang
Zhaotang
“Sinopharm Accord made commitments in the Report about China
National Accord Medicines Corporation Ltd. Purchasing Assets and
Raising Supporting Funds and Related Transactions by Asset Sale,
Stock Issuance and Cash Payment that the net profits attributable to
the owners of parent company after deducting the non-recurring gains
Performan
and losses committed by Zhijun Pharmaceutical in 2016, 2017 and
China ce
2018 should be respectively no less than RMB 222,671,700.00, RMB
National commitme
232,561,600.00, and RMB 241,878,700.00; the net profits 31
Accord nt and 2018- Impleme
attributable to the owners of parent company after deducting the non- May
Medicines compensat 12-31 nting
recurring gains and losses committed by Zhijun Pharmacy Trade in 2016
Corporatio ion
2016, 2017 and 2018 should be respectively no less than RMB
n Ltd. arrangeme
2,379,600.00, RMB 2,335,100.00, and RMB 2,345,600.00; the net
nt
profits attributable to the owners of parent company after deducting
the non-recurring gains and losses committed by Pingshan
Pharmaceutical in 2016, 2017 and 2018 should be respectively no
less than RMB 39,716,300.00, RMB 43,033,500.00, and RMB
50,325,500.00. If the actual net profits attributable to the owners of
41
parent company after deducting the non-recurring gains and losses of
Zhijun Pharmaceutical / Zhijun Pharmacy Trade / Pingshan
Pharmaceutical don’t reach the committed net profits attributable to
the owners of parent company after deducting the non-recurring gains
and losses, Sinopharm Accord should compensate in accordance with
the stipulations of the Profit Forecast Compensation Agreement for
the Stock Issuance and Assets Purchase.”
China
“The listed company, controlling shareholders, the actual controllers
National
made commitments in the Report about China National Accord
Accord
Medicines Corporation Ltd. Purchasing Assets and Raising
Medicines
Supporting Funds and Related Transactions by Asset Sale, Stock Long-
Corporatio Other 31 Normally
Issuance and Cash Payment that the Company shall not violate the term
n Ltd.; commitme May implemen
relevant regulations of Article 16 in Securities Issuance and effecti
Sinopharm nts 2016 ting
Underwriting Management Approach, and directly or indirectly ve
Group
providing financial assistance or compensation for the subscription
Co., Ltd;
objects and its shareholders / partners / clients (if any) of this non-
SINOPHA
public offering does not exist and will not occur in the future.”
RM
“Ping An Asset Management Co., Ltd. Promises that the unit intends
to utilize Ping An Asset Xinxiang No.3 asset management product
and Ping An Asset Xinxiang No.7 asset management product to fund
and subscribe some non-public offering of shares of Sinopharm
Accord in this major asset restructuring process, and has the ability to
Ping’an
subscribe the shares, the relevant capital sources are legitimate, there Long-
Assets Other 24 Normally
is no hierarchical income and other structured arrangements, and term
Managem commitme March implemen
there is no use of leveraged funds. The unit does not receive financial effecti
ent Co., nts 2016 ting
assistance or compensation from Sinopharm Accord and its ve
Ltd.
controlling shareholders, or the actual controllers. The investors’
structure of above - mentioned products do not change from the issue
date of the commitment letter to the end date of the lockup period of
the stock that the unit subscribes from Sinopharm Accord.”
“Sinopharm made commitments in the Report about China National
Three
Accord Medicines Corporation Ltd. Purchasing Assets and Raising
years
Supporting Funds and Related Transactions by Asset Sale, Stock
from There is
Issuance and Cash Payment that 1. if the stock intraday price of
the no need
Increase Sinopharm Accord on any trading day of the 30 trading days after the
end of for actual
SINOPHA holding listing of newly increased shares in this transaction is less than the 6 Jan.
increas controller
RM commitme issue price of newly increased shares in this transaction, Sinopharm 2017
e s to
nt will accumulatively invest no more than RMB 150 million in these 30
holdin increase
trading days to increase the holding by the stock trading system of the
g (if holdings
Shenzhen Stock Exchange (this increase of holding) until the earlier
applic
one of below two situations occurs: (1) the above-mentioned funds
able)
are use up; (2) the intraday price of Sinopharm Accord is no less than
42
the issue price of newly increased shares in this transaction. 2.
Sinopharm shall not sell the shares obtained from this increase of
holding within 3 years after the end of this increase of holding.”
“Sinopharm Holding made commitments in the Report about China
National Accord Medicines Corporation Ltd. Purchasing Assets and
Raising Supporting Funds and Related Transactions by Asset Sale,
Stock Issuance and Cash Payment that the Company shall be the
controlling shareholder of China National Accord Medicines
Corporation Ltd. (hereinafter referred to as Sinopharm Accord) up to
the issue date of this commitment letter, after the completion of this
major assets reorganization (hereinafter referred to as “this
reorganization”), Sinopharm Accord shall no longer hold shares or
operate relevant businesses of pharmaceutical industry, the main
business will become the national pharmaceutical retail and
pharmaceutical distribution business in Guangdong and Guangxi. In
order to support the business development of Sinopharm Accord and
avoid horizontal competition with Sinopharm Accord and its
controlling enterprises, the Company made following irrevocable
commitments and promises:1, after the completion of this
reorganization, as for the social retail drugstore assets except for
Commitm
Sinopharm Holding Guoda Drugstore Co., Ltd. and its subsidiaries
ents on
and branches owned or controlled by the Company, the Company
horizontal Long-
Sinopharm promised to take appropriate measures to solve the horizontal 28 Normally
competitio term
Group competition problem in the pharmaceutical retail business between Dec. implemen
n, relation effecti
Co., Ltd the Company and Sinopharm Accord within 5 years since the 2016 ting
transaction ve
completion date of this reorganization. 2. The Company's way of
and capital
resolving horizontal competition problems includes and is not limited
occupation
to purchasing the social retail drugstore assets subordinated to the
Company by Sinopharm Accord, taking the entrusted operation,
leasing or contracting operation by Sinopharm Accord and its
controlling enterprises in accordance with the methods permitted to
national laws to hold or control the social retail drugstore assets, or
transferring the controlling stake of the social retail drugstore assets
by the Company. 3. If the shareholders of the social retail drugstore
assets (hereinafter referred to as "the third party") of the Company or
the enterprises controlled by the Company have or are going to
perform the preemptive rights under the same conditions in
accordance with relevant laws and corresponding Articles of
Association, then the above commitment will not be applicable, but
in this case, the Company should try its utmost to urge the third party
to waive its preemptive rights. If the Company is unable to urge the
third party to give up the preemptive rights, the Company will urge
the enterprises controlled by the Company to transfer the social retail
drugstore assets to the third party to solve the horizontal competition
43
problem. 4. The pharmaceutical distribution assets currently owned or
controlled by the Company are distributed outside Guangdong and
Guangxi regions, there is no horizontal competition with Sinopharm
Accord, the Company will not engage in the same or similar
operation businesses to Sinopharm Accord in Guangdong and
Guangxi in the future, if the Company and its holding enterprises
obtain the new business opportunities constituting substantial
horizontal competition (hereinafter referred to as competitive new
business) within the pharmaceutical distribution business scope of
Sinopharm Accord in Guangdong and Guangxi, the Company will
send written notice to Sinopharm Accord and try its utmost to firstly
provide the new business opportunities to Sinopharm Accord or its
holding enterprises according to the reasonable and fair terms and
conditions so as to avoid the horizontal competition with Sinopharm
Accord and its holding enterprises. 5. Since the issue date of this
commitment letter, the Company promises to indemnify Sinopharm
Accord for all actual losses, damages and expenses caused by the
Company in violation of any commitments under this commitment
letter. 6. This commitment letter terminates when following
circumstances occur (subject to the earlier one): (1) the Company is
no longer the controlling shareholder of Sinopharm Accord; or (2) the
shares of Sinopharm Accord terminate the listing at the stock
exchange.”
“SINOPHARM made commitments in the Report about China
National Accord Medicines Corporation Ltd. Purchasing Assets and
Raising Supporting Funds and Related Transactions by Asset Sale,
Stock Issuance and Cash Payment that the Company shall be the
actual controller of China National Accord Medicines Corporation
Ltd. (hereinafter referred to as Sinopharm Accord) up to the issue
date of this commitment letter, after the completion of this major
Commitm
assets reorganization (hereinafter referred to as “this reorganization”),
ents on
Sinopharm Accord shall no longer hold shares or operate relevant
horizontal Long-
businesses of pharmaceutical industry, the main business will become 28 Normally
SINOPHA competitio term
the national pharmaceutical retail and pharmaceutical distribution Dec. implemen
RM n, relation effecti
business in Guangdong and Guangxi. In order to support the business 2016 ting
transaction ve
development of Sinopharm Accord and avoid horizontal competition
and capital
with Sinopharm Accord and its controlling enterprises, the Company
occupation
made following irrevocable commitments and promises:1, after the
completion of this reorganization, as for the social retail drugstore
assets except for Sinopharm Group Guoda Drugstore Co., Ltd. and its
subsidiaries and branches owned or controlled by the Company, the
Company promised to take appropriate measures to solve the
horizontal competition problem in the pharmaceutical retail business
between the Company and Sinopharm Accord within 5 years since
44
the completion date of this reorganization. 2. The Company's way of
resolving horizontal competition problems includes and is not limited
to purchasing the social retail drugstore assets subordinated to the
Company by Sinopharm Accord, taking the entrusted operation,
leasing or contracting operation by Sinopharm Accord and its
controlling enterprises in accordance with the methods permitted to
national laws to hold or control the social retail drugstore assets, or
transferring the controlling stake of the social retail drugstore assets
by the Company. 3. If the shareholders of the social retail drugstore
assets (hereinafter referred to as "the third party") of the Company or
the enterprises controlled by the Company have or are going to
perform the preemptive rights under the same conditions in
accordance with relevant laws and corresponding Articles of
Association, then the above commitment will not be applicable, but
in this case, the Company should try its utmost to urge the third party
to waive its preemptive rights. If the Company is unable to urge the
third party to give up the preemptive rights, the Company will urge
the enterprises controlled by the Company to transfer the social retail
drugstore assets to the third party to solve the horizontal competition
problem. 4. The pharmaceutical distribution assets currently owned or
controlled by the Company are distributed outside Guangdong and
Guangxi regions, there is no horizontal competition with Sinopharm
Accord, the Company will not engage in the same or similar
operation businesses to Sinopharm Accord in Guangdong and
Guangxi in the future, if the Company and its holding enterprises
obtain the new business opportunities constituting substantial
horizontal competition (hereinafter referred to as competitive new
business) within the pharmaceutical distribution business scope of
Sinopharm Accord in Guangdong and Guangxi, the Company will
send written notice to Sinopharm Accord and try its utmost to firstly
provide the new business opportunities to Sinopharm Accord or its
holding enterprises according to the reasonable and fair terms and
conditions so as to avoid the horizontal competition with Sinopharm
Accord and its holding enterprises. 5. This commitment letter
terminates when following circumstances occur (subject to the earlier
one): (1) the Company is no longer the actual controller of Sinopharm
Accord; or (2) the shares of Sinopharm Accord terminate the listing at
the stock exchange.”
Commitm Sinopharm Holding made commitments in the Commitment Letter Controlli
ents make Commitm About Sinopharm Group Co., Ltd. to Avoid Horizontal Competition: Long- ng
in initial Sinopharm ent of “First, the Company and the Company’s wholly-owned, controlling 5 Sept. term sharehold
public Holding shareholde or other enterprises with actual control (in addition to Sinopharm 2013 effecti er is
offering or rs Accord and its controlling enterprises, hereinafter the same) don’t ve implemen
re- have businesses and operations constituting the substantial horizontal t in real
45
financing competition to Sinopharm Accord and its controlling enterprises. earnest,
Second, the Company and the Company’s wholly-owned, controlling Sinophar
or other enterprises with actual control shall not engage, participate in m Accord
or do businesses and activities in Guangdong and Guangxi which will
constitute substantial competition to Sinopharm Accord and actively
pharmaceutical business services. Third, the Company and the urged the
Company’s wholly-owned, controlling or other enterprises with controllin
actual control shall not engage, participate in or do businesses and g
activities which constitute substantial competition to Sinopharm sharehold
Accord and pharmaceutical industry businesses. Fourth, the Company er and
shall not take advantage of the control to Sinopharm Accord to actual
damage the legitimate rights and interests of Sinopharm Accord and controller
other shareholders (especially medium and small shareholders). This to fulfill
commitment letter takes effect from the issue date, and remains in commitm
effect for the entire period when the Company acts as the controlling ents
shareholder or its related party of Sinopharm Accord. Within the
effective period of the commitment, if the Company violates this
commitment and causes a loss to Sinopharm Accord, the Company
will timely make full compensation for Sinopharm Accord.”
Sinopharm Holding made commitments in the Commitment Letter
About Sinopharm Group Co., Ltd. to Regulate the Related
Transactions with China National Accord Medicines Corporation Controlli
Ltd.: “First, when the Company is controlling Sinopharm Accord, the ng
Company and the companies and enterprises directly and indirectly sharehold
controlled by the Company (“related party” for short) will strictly er is
regulate the related transactions with Sinopharm Accord and its implemen
controlling enterprises. Second, for the related transactions that can t in real
not be avoided nor have reasonable reasons to occur, the Company earnest,
and related party shall sign normative related transaction agreement Sinophar
in accordance with relevant laws with Sinopharm Accord. Sinopharm m Accord
Commitm Long-
Accord implements the approval procedures and fulfills the will
Sinopharm ent of 5 Sept. term
information disclosure obligations of the related transactions actively
Holding shareholde 2013 effecti
according to relevant laws, regulations, rules, other normative urged the
rs ve
documents and the constitutions of Sinopharm Accord. Third, for the controllin
related transactions that can not be avoided or have reasonable g
reasons to occur, the Company and related party shall abide by the sharehold
open, fair and just market principles and confirm the price of related er and
transactions in accordance with the price that the independent third actual
party without association sets for the same and similar transactions, controller
and ensure the fairness of the price of the related transactions. Fourth, to fulfill
when the board of directors and the general meeting of stockholders commitm
of Sinopharm Accord vote on the related transactions involving the ents
Company and other enterprises controlled by the Company, the
Company shall fulfill the necessary obligations that the associated
46
directors and associated shareholders abstain from voting in
accordance with the relevant provisions, and abide by the legal
procedures for approving related transactions and the information
disclosure obligations. Fifth, the Company guarantees to participate
in the shareholders' general meeting, equally exercise the
corresponding rights and take the corresponding obligations in
accordance with the constitutions of Sinopharm Accord, not to take
advantage of controlling shareholder status to seek improper benefits
or utilize related transactions to illegally transfer the funds and profits
of Sinopharm Accord, and not to damage the legitimate rights and
interests of other shareholders (especially the medium and small
shareholders) of Sinopharm Accord. Sixth, this commitment letter
comes into force from the issue date and remains in effect for the
entire period when the Company acts as the controlling shareholder
or its related party of Sinopharm Accord. Within the effective period
of the commitment, if the Company violates this commitment and
causes a loss to Sinopharm Accord, the Company will timely make
full compensation for Sinopharm Accord.”
"SINOPHARM made commitments in the Commitment Letter About
China National Pharmaceutical Group Corporation to Avoid Actual
Horizontal Competition with China National Accord Medicines Controlle
Corporation Ltd.: “First, in the next five years, Sinopharm plans to r is
take appropriate measures (including assets replacement or implemen
acquisition, equity reorganization, etc.) to resolve the horizontal t in real
competition between Sinopharm Weiqida and Sinopharm Accord. earnest,
Second, in addition to the past matters and matters disclosed in this Sinophar
commitment letter, the Company and the Company’s wholly-owned, m Accord
Commitm controlling or other enterprises with actual control rights (except for Long- will
16
SINOPHA ent of Sinopharm Accord and its controlling enterprises, the same as below) term actively
Oct.
RM actual shall not directly engaged in, participate in or do the businesses an effecti urged the
2013
controller activities constituting actual competition to the production and ve controllin
operation of Sinopharm Accord in China. The relevant commitments g
about avoiding horizontal competition that the Company made in the sharehold
past still remain in effect. Third, the Company shall not take er and
advantage of the control relationship to Sinopharm Accord to damage actual
the legitimate rights and interests of Sinopharm Accord and its controller
shareholders (especially the medium and small shareholders). Fourth, to fulfill
this commitment letter comes into force from the issue date and commitm
remains in effect for the entire period when the Company acts as the ents
controlling shareholder or its related party of Sinopharm Accord.”
Commitm "SINOPHARM made commitments in the Commitment Letter About Long- Actual
22
SINOPHA ent of Sinopharm Group Co., Ltd. to Regulate the Related Transactions with term Controlle
Sept.
RM actual China National Accord Medicines Corporation Ltd.: “First, when the effecti r is
2013
controller Company is controlling Sinopharm Accord, the Company and the ve implemen
47
companies and enterprises directly and indirectly controlled by the t in real
Company (“related party” for short) will strictly regulate the related earnest,
transactions with Sinopharm Accord and its controlling enterprises. Sinophar
Second, for the related transactions that can not be avoided or have m Accord
reasonable reasons to occur, the Company and related party shall sign will
normative related transaction agreement in accordance with relevant actively
laws with Sinopharm Accord. Sinopharm Accord implements the urged the
approval procedures and fulfills the information disclosure controllin
obligations of the related transactions according to relevant laws, g
regulations, rules, other normative documents and the constitutions of sharehold
Sinopharm Accord. Third, for the related transactions that can not be er and
avoided or have reasonable reasons to occur, the Company and actual
related party shall abide by the open, fair and just market principles controller
and confirm the price of related transactions in accordance with the to fulfill
price that the independent third party without association sets for the commitm
same and similar transactions, and ensure the fairness of the price of ents
the related transactions. Fourth, when the board of directors and the
general meeting of stockholders of Sinopharm Accord vote on the
related transactions involving the Company and other enterprises
controlled by the Company, the Company shall fulfill the necessary
obligations that the associated directors and associated shareholders
abstain from voting in accordance with the relevant provisions, and
abide by the legal procedures for approving related transactions and
the information disclosure obligations. Fifth, the Company guarantees
not to take advantage of actual controller status to seek improper
benefits or utilize related transactions to illegally transfer the funds
and profits of Sinopharm Accord, and not to damage the legitimate
rights and interests of other shareholders (especially the medium and
small shareholders) of Sinopharm Accord. Sixth, this commitment
letter comes into force from the issue date and remains in effect for
the entire period when the Company acts as the actual controller or its
related party of Sinopharm Accord.
Equity
incentive
commitme
nt
Other
commitme
nts for
medium
and small
shareholde
rs
Completed Y
48
on time
(Y/N)
2. Concerning assets or project of the Company, which has profit forecast, and reporting period still in
forecasting period, explain reasons of reaching the original profit forecast
√Applicable □ Not applicable
Reasons of
Current Current
fails to
Assets or project forecast actually Disclosure date
achieved the
with profit Starting time Terminal time performance performance for former Index
forecast
forecast (in 10 thousand (in 10 thousand prediction
number (if
Yuan) Yuan)
applicable)
”Sinopharm
Accord:
Acquiring
Assets by
Offering
Foshan Nanhai 2016-01-01 2018-12-31 5,114.82 5,390.17 Not applicable 31 May 2016
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Acquiring
Guangdong Assets by
Uptodate & Offering
2016-01-01 2018-12-31 2,133.01 2,146.93 Not applicable 31 May 2016
Special Shares and
Medicines Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Acquiring
Assets by
Offering
Guoda Drugstore 2016-01-01 2018-12-31 13,127.55 21,683.72 Not applicable 31 May 2016
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
Nanfang 2016-01-01 2018-12-31 5,536.46 5,866.83 Not applicable 31 May 2016 ”Sinopharm
49
Pharmaceutical Accord:
Foreign Trade Acquiring
Assets by
Offering
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Shanghai
Shyndec
Pharmaceutical
Major changes Co., Ltd.. and
in policy, the Company
Zhijun
2016-01-01 2018-12-31 24,187.87 22,991.98 operation 31 May 2016 of Acquiring
Pharmaceutical
environment Assets by
and market Offering
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Shanghai
Shyndec
Pharmaceutical
Co., Ltd.. and
the Company
Pingshan
2016-01-01 2018-12-31 5,032.55 5,195.56 Not applicable 31 May 2016 of Acquiring
Pharmaceutical
Assets by
Offering
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
”Sinopharm
Accord:
Zhijun Pharmacy
2016-01-01 2018-12-31 234.56 322.54 Not applicable 31 May 2016 Shanghai
Trade
Shyndec
Pharmaceutical
50
Co., Ltd.. and
the Company
of Acquiring
Assets by
Offering
Shares and
Profit Forecast
Compensation
Agreement” on
Juchao website
Commitment made by shareholders of the Company and counter party in annual operation performance
□ Applicable √ Not applicable
Completion of the performance commitment and influence on impairment test of goodwill
IV. Non-operational fund occupation from controlling shareholders and its related party
□ Applicable √ Not applicable
No non-operational fund occupation from controlling shareholders and its related party in period.
V. Explanation from Board of Directors, Supervisory Committee and Independent Directors
(if applicable) for “Qualified Opinion” that issued by CPA
□ Applicable √ Not applicable
VI. Particulars about the changes in aspect of accounting policy, estimates and calculation
method compared with the financial report of last year
√Applicable □Not applicable
On July 5, 2017, the Ministry of Finance issued the revised “Accounting Standards for Business Enterprises No.
14 – Income”, enterprises listed at home and abroad at the same time should implement the new income standards
from January 1, 2018, and other listed enterprises in China should implement from January 1, 2020. The company
has implemented the new standards on January 1, 2018. According to the stipulation of converting and linking the
new and old standards, the enterprise should adjust the retained earnings at the beginning of the period and the
amount of other related items in the financial statements according to the cumulative impact of the first
implementation of the standard, and the information for the comparable period will not be adjusted. The
implementation of the standard will not lead to major changes in the company’s income recognition method, nor
have a significant impact on the company’s current and prior period net profit, total assets and net assets.
On March 31, 2017, the Ministry of Finance issued the revised “Accounting Standards for Business Enterprises
No. 22 - Recognition and Measurement of Financial Instruments”, “Accounting Standards for Business
Enterprises No. 23 - Transfer of Financial Assets” and “Accounting Standards for Business Enterprises No. 24 -
Hedge Accounting”, on May 2, the Ministry of Finance issued the revised “Accounting Standards for Business
Enterprises No. 37 - Presentation of Financial Instruments” (collectively referred to as “New Financial
51
Instruments Series Standards”), enterprises listed at home and abroad at the same time should implement from
January 1, 2018, and other listed enterprises in China should implement from January 1, 2019. (1) Sinopharm
Holding Guoda Drugstore Co., Ltd., a subsidiary of the Company, holds a stake in Shanghai Guoda Shuguang
Drugstore Co., Ltd., Shanghai Guoren Drugstore Co., Ltd., Sinopharm Holding Hubei Guoda Drugstore Co., Ltd.,
Hunan Zhongbai Pharmaceutical Investment Co., Ltd. and China National Health Online Co., Ltd., with voting
rights ratio of 25%, 10%, 10%, 6.31% and 8.06% respectively, but the directors and key management personnel of
the above five companies are not appointed by the Group, and the Group has not participated in or affected the
finance and operational decisions or daily business activities of the above companies in other ways, so that the
Group does not have significant influence on the above five companies, and it is originally accounted for as an
available-for-sale equity instrument and its business accounting is based on book value. After adopting the newly
revised financial instrument standards, the company decides to designate it as a financial asset measured at fair
value and its changes are included in other comprehensive income after considering the characteristics of its
contractual cash flow and its business model, which will be subsequently measured at fair value and its changes
are included in other comprehensive income . When the financial assets are derecognized, the accumulated gains
or losses previously included in other comprehensive income shall be transferred from other comprehensive
income and included in retained earnings. There is also no need for retrospective adjustments. During the
reporting period, “other equity instrument investments” increased by 13,685,760.00 yuan, and “available for sale
financial assets” decreased by 13,685,760.00 yuan. The above-mentioned changes in accounting policies related
to financial instruments have no significant impact on the Company’s retained earnings and other comprehensive
income at the beginning of 2018. (2) The new financial instrument standards requires that the measurement of
impairment of financial assets be changed from “Incurred Loss Model” to “Expected Credit Loss Model”. The
company judges that the adoption of new financial instrument standards would not have a material impact on
company’s financial report. .
On June 15, 2018, the Ministry of Finance revised and issued the “Notice of the Ministry of Finance on Revising
and Issuing the Financial Statements Format for General Enterprises”, which revised the financial statements
format of general enterprises and is applied to the financial statements for the year 2018 and beyond. The Group
has implemented the requirements of the above-mentioned standards and has prepared the company’s financial
statements in accordance with the financial statements format of general enterprises (Applicable for enterprises
that have implemented new financial standards or new income standards), and the comparative data has been
adjusted accordingly. The names and amounts of the affected statements items are as follows:
In balance sheet, the “Note receivable” and “Account receivable” are merger shown as “Note receivable and
account receivable”, amount at period-end accounted as 9,336,861,647.92 yuan while 7,589,412,679.88 yuan at
beginning of the period; ”Interest receivable” and “Dividend receivable” are merger shown as “Other account
receivable”, ending amount of “Other account receivable” adjusted and increased 8,223,327.64 yuan while
61,441.11 yuan at beginning of the period; the “Disposal of fixed assets” merge into “Fixed assets”, which has no
impact on the amount of “fixed assets” at begging and ending of the period; “Engineering material” merge into
“Construction in progress”, which has no impact on the amount of “Construction in progress” at begging and
ending of the period; ”Note payable” and “Account payable” are merger shown as “Note payable and account
payable”, ending amount was 9,885,291,642.97 yuan while 8,876,658,828.52 yuan at beginning of the
period; ”Interest payable” and “Dividend payable” are merger shown as “Other account payable”, ending amount
52
of “Other account payable” adjusted and increased 28,295,981.59 yuan while 19,201,262.76 yuan at beginning of
the period; ”Special account payable” merger into “Long-term account payable”, ending amount of “Long-term
account payable” adjusted and increased 800,000.00 yuan while 800,000.00 yuan at beginning of the period.
Newly increase “R&D Expenses” item to the income statement, and reclassify the R&D expenses in the original
“Management Expenses” into “R&D Expenses” for separate presentation, and the comparative data is adjusted
accordingly, the Group has sorted out the relevant business, as no related business was involved in 2017 and 2018,
this change had no significant impact on the Group’s operating results. Under the financial expenses in the income
statement, the items “of which: interest expenses” and “interest income” are newly added, and the comparative
data is adjusted accordingly.
In the statement of changes in owner’s equity, the item “variation of defined benefit plans carrying over to
retained earnings” and “other comprehensive income carrying over to retained earnings” are newly added. The
Group has sorted out related business, since it does not involve related business, the change has no significant
impact on the Group’s operating results.
VII. Major accounting errors within reporting period that needs retrospective restatement
□ Applicable √ Not applicable
No major accounting errors within reporting period that needs retrospective restatement for the Company in the period.
VIII. Compare with last year’s financial report; explain changes in consolidation statement’s
scope
√Applicable □ Not applicable
Details of changes in consolidation statement’s scope can be seen in Note VI of Financial Report.
IX. Appointment and non-reappointment (dismissal) of CPA
Accounting firm appointed
Name of domestic accounting firm Ernst & Young CPA (Special General partnership)
Remuneration for domestic accounting firm (in 10 thousand
332.78
Yuan)
Continuous life of auditing service for domestic accounting firm 3- year
Name of domestic CPA Li Jianguang, Yan Ping
Continuous life of CPA from the domestic accounting firm for
3-year
auditing service
Name of foreign accounting firm (if applicable) N/A
Continuous life of auditing service for foreign accounting firm (if
N/A
applicable)
Name of foreign CPA (if applicable) N/A
Continuous life of CPA from the foreign accounting firm for
N/A
auditing service (if applicable)
Re-appointed accounting firms in this period
53
□ Yes √ No
Appointment of internal control auditing accounting firm, financial consultant or sponsor
√Applicable □ Not applicable
The Company engaged Ernst & Young CPA (Special General partnership) as the audit body for internal control, and auditing charge
for internal control amounting as 826,000 yuan.
X. Particular about suspended and delisting after annual report disclosed
□ Applicable √ Not applicable
XI. Bankruptcy reorganization
□ Applicable √ Not applicable
No bankruptcy reorganization for the Company in reporting period.
XII. Significant lawsuits and arbitration of the Company
□ Applicable √ Not applicable
No significant lawsuits and arbitration occurred in the reporting period.
XIII. Penalty and rectification
□ Applicable √ Not applicable
No penalty and rectification for the Company in reporting period.
XIV. Integrity of the company and its controlling shareholders and actual controllers
√Applicable □Not applicable
In reporting period, controlling shareholder and actual controller of the Company has a sound integrity , and there are no cases of
failure to implement the effective judgement of the court and the large amount of debt due and unliquidated
XV. Implementation of the company’s stock incentive plan, employee stock ownership plan or
other employee incentives
□ Applicable √ Not applicable
During the reporting period, the company has no stock incentive plan, employee stock ownership plan or other employee incentives
that have not been implemented.
54
XVI. Major related transaction
1. Related transaction with routine operation concerned
(1) Related transaction with routine operation concerned can be found in “X. Related party and related transaction” carried in Section
XI. Financial Report;
(2) The related transactions are settled in cash and by notes, according to the Proposal of Expected Routine Related Transactions
with Subordinate Enterprise for Year of 2018 deliberated and approved by 30th session of 7th BOD held on 21 March 2018 and
Notice on Expected Routine Related Transaction for Year of 2018 (Notice No.: 2018-8) released on 23 March 2018, the related sales
takes 48.39% in total expected amount for the whole year, and related procurement takes 80.45% in total expected amount for the
whole year.
2. Related transactions by assets acquisition and sold
□ Applicable √ Not applicable
No related transactions by assets acquisition and sold for the Company in reporting period.
3. Main related transactions of mutual investment outside
□ Applicable √ Not applicable
No main related transactions of mutual investment outside for the Company in reporting period.
4. Contact of related credit and debt
√Applicable □ Not applicable
Whether the Company had non-operating contact of related credit and debt
□Yes √ No
The Company had no non-operating contact of related credit and debt in the reporting period.
5. Other related transactions
□ Applicable √ Not applicable
The Company had no other related transaction in the reporting period.
55
XVII. Significant contract and implementations
1. Trusteeship, contract and leasing
(1) Trusteeship
□ Applicable √ Not applicable
The Company had no trusteeship in the reporting period.
(2) Contract
□ Applicable √ Not applicable
No contract for the Company in reporting period.
(3) Leasing
□ Applicable √ Not applicable
No leasing for the Company in reporting period.
2. Major guarantees
√Applicable □ Not applicable
(1) Guarantees
In 10 thousand Yuan
Particulars about the external guarantee of the Company and the subsidiaries (Barring the guarantee for subsidiaries)
Guarant
Related Imple
Actual ee for
Name of the Company Announcemen Guarantee Actual date of Guarantee mente
guarantee Guarantee type related
guaranteed t disclosure limit happening term d
limit party
date (Y/N)
(Y/N)
Guarantee between the Company and the subsidiaries
Guarant
Related Imple
Actual ee for
Name of the Company Announcemen Guarantee Actual date of Guarantee mente
guarantee Guarantee type related
guaranteed t disclosure limit happening term d
limit party
date (Y/N)
(Y/N)
Sinopharm Holding Shenzhen Joint liability 2018-10-15-
22 Mar. 2018 500 15 Oct. 2018 379.11 N N
Jianmin Co., Ltd. assurance 2019-10-14
Sinopharm Holding Shenzhen Joint liability 2018-12-24-
19 Sept. 2018 1,000 24 Dec. 2018 540 N N
Jianmin Co., Ltd. assurance 2019-12-24
56
Sinopharm Holding Shenzhen Joint liability 2018-10-15-
22 Mar. 2018 500 15 Oct. 2018 256.54 N N
Medicinal Materials Co., Ltd. assurance 2019-10-14
China National Accord Joint liability 2018-7-13-
22 Mar. 2018 25,000 13 Jul. 2018 5,100 N N
Medicines Corporation Ltd. assurance 2018-9-30
China National Accord 14,037.8 Joint liability 2018-12-3-
19 Sept. 2018 20,000 3 Dec. 2018 N N
Medicines Corporation Ltd. 4 assurance 2019-11-27
Sinopharm Holding Joint liability 2018.5.20-
22 Mar. 2018 35,000 20 May 2018 3,091.75 N N
Guangzhou Co., Ltd. assurance 2019.5.20
Sinopharm Holding Joint liability 2018.11.28-
19 Sept. 2018 30,000 28 Nov. 2018 30,000 N N
Guangzhou Co., Ltd. assurance 2019.10.31
Sinopharm Holding Joint liability 2018.12.20-
19 Sept. 2018 60,000 20 Dec. 2018 42,113.3 N N
Guangzhou Co., Ltd. assurance 2019.12.19
Sinopharm Holding Joint liability 2018.8.7-
22 Mar. 2018 15,000 7 Aug. 2018 N N
Guangzhou Co., Ltd. assurance 2019.8.5
Sinopharm Holding Joint liability 2018.5.29-
22 Mar. 2018 50,000 29 May 2018 45,452.03 N N
Guangzhou Co., Ltd. assurance 2019.5.29
Sinopharm Holding Joint liability 2018.10.15-
19 Sept. 2018 35,000 15 Oct. 2018 N N
Guangzhou Co., Ltd. assurance 2019.10.14
Sinopharm Holding Joint liability 2018.6.5-
22 Mar. 2018 40,000 5 Jun. 2018 39,986.77 N N
Guangzhou Co., Ltd. assurance 2019.6.4
Sinopharm Holding Joint liability 2018.5.9-
22 Mar. 2018 40,000 9 May 2018 N N
Guangzhou Co., Ltd. assurance 2019.5.8
Sinopharm Holding Joint liability 2018.6.22-
22 Mar. 2018 20,000 22 Jun. 2018 19,084.6 N N
Guangzhou Co., Ltd. assurance 2019.6.21
Sinopharm Holding Joint liability 2018.7.5-
22 Mar. 2018 20,000 5 Jul. 2018 4,718.14 N N
Guangzhou Co., Ltd. assurance 2019.7.4
Sinopharm Holding Joint liability 2018.6.13-
22 Mar. 2018 60,000 13 Jun. 2018 24,041.24 N N
Guangzhou Co., Ltd. assurance 2019.6.12
Sinopharm Holding Joint liability 2018.4.19-
22 Mar. 2018 80,000 19 Apr. 2018 1,509.28 N N
Guangzhou Co., Ltd. assurance 2019.3.31
Sinopharm Holding Joint liability 2018.5.20-
22 Mar. 2018 5,000 20 May 2018 1,767.15 N N
Guangdong Yuexing Co., Ltd assurance 2019.5.20
Sinopharm Holding Joint liability 2018.10.15-
19 Sept. 2018 5,000 15 Oct. 2018 3,933.06 N N
Guangdong Yuexing Co., Ltd assurance 2019.10.14
Sinopharm Holding Joint liability 2018.1.5-
19 Apr. 2017 5,000 5 Jan. 2018 3,293.97 N N
Guangdong Yuexing Co., Ltd assurance 2019.1.4
Sinopharm Holding Guangdong Joint liability 2018.6.22-
22 Mar. 2018 5,000 22 Jun. 2018 N N
Yuexing Co., Ltd assurance 2019.6.21
SinopharmHoliding Jointliability
2018.7.12-
Guangdong Yuexing Co., Ltd 22 Mar. 2018 5,000 12 Jul. 2018 4,938.49 assurance N N
2019.6.12
Sinopharm Holding
Joint liability 2018.11.16-
Guangdong Hengxing Co., 19 Sept. 2018 3,000 9 Nov. 2018 2,381.56 N N
assurance 2019.10.31
Ltd
57
Sinopharm Holding
Joint liability 2018.6.6-
Guangdong Hengxing Co., 22 Mar. 2018 5,000 6 Jun. 2018 792.14 N N
assurance 2019.6.5
Ltd
Guangdong Dongfang New Joint liability 2018.08.20-
22 Mar. 2018 4,000 20 Aug. 2018 3,992.38 N N
Special Medicine Co., Ltd assurance 2019.08.19
Sinopharm Holding Huizhou Joint liability 2018.10.12-
19 Sept. 2018 1,000 12 Oct. 2018 298.52 N N
Co., Ltd assurance 2019.10.11
Sinopharm Holding Huizhou Joint liability 2018.09.18-
22 Mar. 2018 3,000 18 Sept. 2018 N N
Co., Ltd assurance 2019.09.17
Sinopharm Holding Jiangmen Joint liability 2018.10.15-
19 Sept. 2018 1,000 15 Oct. 2018 N N
Renren Co., Ltd. assurance 2019.10.14
Sinopharm Holding Shantou Joint liability 2018.10.15-
19 Sept. 2018 500 12 Oct. 2018 500 N N
Co., Ltd. assurance 2019.10.14
Sinopharm Holding Zhaoqing Joint liability 2018.10.15-
19 Sept. 2018 2,000 15 Oct. 2018 883.02 N N
Co., Ltd. assurance 2019.10.14
Sinopharm Holding Joint liability 2018.10.15-
19 Sept. 2018 1,000 15 Oct. 2018 N N
Zhongshan Co., Ltd. assurance 2019.10.14
Sinopharm Holding Joint liability 2018.06.14-
22 Mar. 2018 1,000 9 May 2018 N N
Zhongshan Co., Ltd. assurance 2019.06.13
Sinopharm Holding Zhuhai Joint liability 2018.10.15-
19 Sept. 2018 1,000 15 Oct. 2018 166.26 N N
Co., Ltd. assurance 2019.10.14
Sinopharm Holding Joint liability 2018.10.15-
19 Sept. 2018 2,000 15 Oct. 2018 N N
Dongguan Co., Ltd. assurance 2019.10.14
Sinopharm Holding Meizhou Joint liability 2018.10.15-
19 Sept. 2018 1,000 15 Oct. 2018 500 N N
Co., Ltd. assurance 2019.10.14
Guangdong Nanfang
Joint liability 2018.7.1-
Pharmaceutical Foreign Trade 22 Mar. 2018 15,000 1 July 2018 11,268.74 N N
assurance 2019.6.30
Co., Ltd.
Guangdong Nanfang
Joint liability 2018.7.19-
Pharmaceutical Foreign Trade 22 Mar. 2018 5,000 19 Jul. 2018 3,335.85 N N
assurance 2019.10.31
Co., Ltd.
Guangdong Nanfang
Joint liability 2018.7.2-
Pharmaceutical Foreign Trade 22 Mar. 2018 10,000 2 Jul. 2018 2,479.14 N N
assurance 2019.6.26
Co., Ltd.
Guangdong Nanfang
Joint liability 2018.9.7-
Pharmaceutical Foreign Trade 22 Mar. 2018 10,000 7 Sept. 2018 6,885.71 N N
assurance 2019.9.6
Co., Ltd.
Guangdong Nanfang
Pharmaceutical Foreign Trade Joint liability 2018.10.15-
19 Sept. 2018 3,000 15 Oct. 2018 N N
Co., Ltd. assurance 2019.10.14
Guangdong Nanfang
Joint liability 2018.4.17-
Pharmaceutical Foreign Trade 22 Mar. 2018 2,500 17 Apr. 2018 38.2 N N
assurance 2018.12.31
Co., Ltd.
58
Foshan Nanhai Medicine Co., Joint liability 2018.7.31-
22 Mar. 2018 5,000 31 Jul. 2018 N N
Ltd. assurance 2019.7.31
Foshan Nanhai Medicine Co., Joint liability 2018.10.15-
19 Sept. 2018 5,000 15 Oct. 2018 1,912.65 N N
Ltd. assurance 2019.10.14
Foshan Nanhai Medicine Co., Joint liability 2018.11.20-
19 Sept. 2018 5,000 20 Nov. 2018 3,987 N N
Ltd. assurance 2019.10.31
Foshan Nanhai Medicine Co., Joint liability 2018.11.20-
19 Sept. 2018 3,000 20 Nov. 2018 126.25 N N
Ltd. assurance 2019.11.19
Foshan Nanhai Uptodate & Joint liability 2018.5.23-
22 Mar. 2018 5,000 23 May 2018 N N
Special Medicines Co. Ltd. assurance 2019.5.22
Foshan Nanhai Uptodate & Joint liability 2018.7.31-
22 Mar. 2018 5,000 31 Jul. 2018 N N
Special Medicines Co. Ltd. assurance 2019.7.31
Foshan Nanhai Uptodate & Joint liability 2018.10.15-
19 Sept. 2018 6,000 15 Oct. 2018 1,013.53 N N
Special Medicines Co. Ltd. assurance 2019.10.14
Foshan Nanhai Uptodate & Joint liability 2018.11.16-
19 Sept. 2018 5,000 16 Nov. 2018 4,235.47 N N
Special Medicines Co. Ltd. assurance 2019.10.31
Foshan Nanhai Uptodate & Joint liability 2018.11.20-
19 Sept. 2018 3,000 20 Nov. 2018 130.14 N N
Special Medicines Co. Ltd. assurance 2019.11.19
Sinopharm Holding Foshan Joint liability 2018.10.15-
19 Sept. 2018 1,500 15 Oct. 2018 631.98 N N
Co., Ltd assurance 2019.10.14
Sinopharm Holding Foshan Joint liability 2018.11.20-
19 Sept. 2018 1,000 20 Nov. 2018 543.42 N N
Co., Ltd assurance 2019.11.19
Sinopharm Holding Joint liability 2018.11.21-
19 Sept. 2018 3,000 21 Nov. 2018 N N
Zhanjiang Co., Ltd assurance 2019.11.20
Sinopharm Holding Joint liability 2018.10.15-
19 Sept. 2018 1,000 15 Oct. 2018 1,000 N N
Zhanjiang Co., Ltd assurance 2019.10.14
Sinopharm Holding Guangxi Joint liability 2018.11.26-
19 Sept. 2018 20,000 26 Nov. 2018 13,311.03 N N
Co., Ltd. assurance 2019.11.26
Sinopharm Holding Guangxi Joint liability 2018.10.15-
22 Mar. 2018 28,000 15 Oct. 2018 207.32 N N
Co., Ltd. assurance 2019.10.14
Sinopharm Holding Guangxi Joint liability 2018.11.15-
19 Sept. 2018 25,000 15 Nov. 2018 12,740.59 N N
Co., Ltd. assurance 2019.11.7
Sinopharm Holding Guangxi Joint liability 2018.12.13-
19 Sept. 2018 15,000 13 Dec. 2018 11,992.28 N N
Co., Ltd. assurance 2019.11.27
Sinopharm Holding Guangxi Joint liability 2018.6.20-
22 Mar. 2018 10,000 20 Jun. 2018 1,708.2 N N
Co., Ltd. assurance 2019.6.20
Sinopharm Holding Guangxi Joint liability 2018.6.5-
22 Mar. 2018 5,000 5 Jun. 2018 N N
Co., Ltd. assurance 2019.6.5
Sinopharm Holding Guangxi Joint liability 2018.6.5-
22 Mar. 2018 5,000 5 Jun. 2018 2,989.87 N N
Co., Ltd. assurance 2019.6.5
Sinopharm Holding Guangxi
Joint liability 2018.6.22-
Co., Ltd. 22 Mar. 2018 5,000 22 Jun. 2018 4,967.52 N N
assurance 2019.6.21
59
Sinopharm Holding Liuzhou Joint liability 2018.10.15-
19 Sept. 2018 9,000 15 Oct. 2018 2,935.26 N N
Co., Ltd assurance 2019.10.14
Sinopharm Holding Liuzhou Joint liability 2018.6.21-
22 Mar. 2018 5,000 21 Jun. 2018 4,559.55 N N
Co., Ltd assurance 2019.6.20
Sinopharm Holding Liuzhou Joint liability 2018.3.14-
19 Apr. 2017 6,000 14 Mar. 2018 5,845.69 N N
Co., Ltd assurance 2019.1.2
Sinopharm Holding Liuzhou Joint liability 2018.11.12-
19 Sept. 2018 5,000 12 Nov. 2018 4,999.57 N N
Co., Ltd assurance 2019.4.18
Sinopharm Holding Liuzhou Joint liability 2018.9.7-
22 Mar. 2018 9,000 7 Sept. 2018 N N
Co., Ltd assurance 2019.9.5
Sinopharm Holding Shenzhen Joint liability 2018.10.15-
19 Sept. 2018 9,000 15 Oct. 2018 1,600 N N
Yanfeng Co., Ltd assurance 2019.10.14
Sinopharm Holding Shenzhen Joint liability 2018.12.03-
19 Sept. 2018 5,000 3 Dec. 2018 2,700 N N
Yanfeng Co., Ltd assurance 2019.11.27
Sinopharm Holding Shenzhen Joint liability 2018.06.13-
22 Mar. 2018 7,000 13 Jun. 2018 4,500 N N
Yanfeng Co., Ltd assurance 2019.06.12
Total amount of actual
Total amount of approving guarantee for occurred guarantee for
833,500 1,110,735.72
subsidiaries in report period (B1) subsidiaries in report period
(B2)
Total balance of actual
Total amount of approved guarantee for
guarantee for subsidiaries at
subsidiaries at the end of reporting period 844,500 366,402.11
the end of reporting period
(B3)
(B4)
Guarantee between the subsidiaries and the subsidiaries
Guarant
Related Imple
Actual ee for
Name of the Company Announcemen Guarantee Actual date of Guarantee mente
guarantee Guarantee type related
guaranteed t disclosure limit happening term d
limit party
date (Y/N)
(Y/N)
Fujian Guoda Drugstore Joint liability 2018.4.20-
22 Mar.2018 2,275 20 Apr. 2018 350.51 N N
Chain Co., Ltd assurance 2019.4.19
Sinopharm Holding Guoda
Joint liability 2018.10.10-
Drugstore Guangdong Co., 19 Sept.2018 8,000 10 Oct. 2018 6,541.44 N N
assurance 2019.10.9
Ltd
Sinopharm Holding Guoda
Joint liability 2018.12.20-
Drugstore Guangdong Co., 19 Sept.2018 2,400 20 Dec. 2018 N N
assurance 2019.12.19
Ltd
Sinopharm Holding Guoda
Joint liability 2018.10.10-
Drugstore Guangxi Chain 19 Sept. 2018 3,000 10 Oct. 2018 2,064.44 N N
assurance 2019.10.9
Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.10.10-
Drugstore Jiangmen Chain 19 Sept. 2018 3,000 10 Oct. 2018 157.63 N N
assurance 2019.10.9
Co., Ltd
60
Sinopharm Holding Guoda
Joint liability 2018.7.3-
Drugstore Inner Mongolia 22 Mar. 2018 3,000 3 Jul. 2018 1,189.94 N N
assurance 2019.7.2
Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.4.25-
Drugstore Inner Mongolia 22 Mar. 2018 3,000 25 Apr. 2018 12.00 N N
assurance 2019.4.24
Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.10.10-
Drugstore Inner Mongolia 19 Sept. 2018 8,000 10 Oct. 2018 6,699.92 N N
assurance 2019.10.9
Co., Ltd
Shanxi Guoda Wanmin Joint liability 2018.10.16-
19 Sept. 2018 5,000 16 Oct. 2018 4,025.00 N N
Drugstore Chain Co.,Ltd assurance 2019.10.15
Shanxi Guoda Wanmin Joint liability 2018.5.16-
22 Mar. 2018 5,000 16 May 2018 3,500.00 N N
Drugstore Chain Co.,Ltd assurance 2019.5.15
Shanxi Guoda Wanmin Joint liability 2018.6.28-
22 Mar. 2018 3,000 28 Jun. 2018 N N
Drugstore Chain Co.,Ltd assurance 2019.6.27
Sinopharm Holding Guoda
Joint liability 2018.11.28-
Drugstore Shenyang Chain 19 Sept. 2018 5,000 28 Nov. 2018 2,684.93 N N
assurance 2019.11.27
Co., ltd
Sinopharm Holding Guoda
Joint liability 2018.4.23-
Drugstore Shenyang Chain 22 Mar. 2018 10,000 23 Apr. 2018 9,040.50 N N
assurance 2019.4.22
Co., ltd
Sinopharm Holding Guoda
Joint liability 2018.10.15-
Drugstore Shenyang Chain 19 Sept. 2018 6,000 15 Oct. 2018 579.44 N N
assurance 2019.10.14
Co., ltd
Sinopharm Holding Guoda
Joint liability 2018.11.17-
Drugstore Shenyang Chain 19 Sept. 2018 6,000 17 Oct. 2018 5,434.44 N N
assurance 2019.11.16
Co., ltd
Sinopharm Holding Guoda
Joint liability 2018.10.10-
Drugstore Shenyang Chain 19 Sept. 2018 15,000 10 Oct. 2018 12,942.75 N N
assurance 2019.10.9
Co., ltd
Sinopharm Holding Guoda
Drugstore Shanxi Yiyuan Joint liability 2018.5.21-
22 Mar. 2018 6,000 21 May 2018 5,272.74 N N
Chain Co., ltd assurance 2019.5.20
Sinopharm Holding Guoda
Drugstore Shanxi Yiyuan Joint liability 2017.8.30-
19 Apr. 2017 4,000 30 Aug. 2017 471.8 N N
Chain Co., ltd assurance 2018.8.29
Sinopharm Holding Guoda
Joint liability 2018.11.21-
Drugstore Shanxi Yiyuan 19 Sept. 2018 4,900 21 Nov. 2018 2,531.06 N N
assurance 2019.11.20
Chain Co., ltd
Sinopharm Holding Guoda
Joint liability 2018.2.5-
Drugstore Shanxi Yiyuan 19 Apr. 2017 2,800 5 Feb. 2018 2,161.57 N N
assurance 2019.2.4
Chain Co., ltd
61
Sinopharm Holding Guoda
Joint liability 2018.6.28-
Drugstore Shanxi Yiyuan 22 Mar. 2018 4,000 28 Jun. 2018 3,995.20 N N
assurance 2019.6.27
Chain Co., ltd
Hunan Guoda Minshengtang Joint liability 2018.10.10-
22 Mar. 2018 3,000 10 Oct. 2018 2,094.22 N N
Drugstore Chain Co., Ltd assurance 2019.10.9
Ningxia Guoda Drugstore Joint liability 2018.10.16-
22 Mar. 2018 4,000 16 Oct. 2018 2,034.00 N N
Chain Co., Ltd assurance 2019.10.16
Sinopharm Holding Guoda
Joint liability 2018.10.10-
Drugstore Yangzhou 19 Sept. 2018 2,000 10 Oct. 2018 1,897.96 N N
assurance 2019.10.9
Dadengsheng Chain Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.4.1-
Drugstore Jiangmen Chain 22 Mar. 2018 2,000 1 Apr. 2018 1,671.88 N N
assurance 2019.4.1
Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.4.1-
Drugstore Shanghai Chain 22 Mar. 2018 4,000 1 Apr. 2018 2,890.56 N N
assurance 2019.4.1
Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.5.11-
Drugstore Henan Chain Co., 22 Mar. 2018 3,000 11 May 2018 20.45 N N
assurance 2019.5.10
Ltd
Shanxi Guoda Wanmin Joint liability 2018.4.28-
22 Mar. 2018 5,000 28 Apr. 2018 3,650.40 N N
Drugstore Chain Co.,Ltd assurance 2019.4.27
Sinopharm Holding Guoda
Joint liability 2018.4.23-
Drugstore Shanxi Yiyuan 22 Mar. 2018 3,000 23 Apr. 2018 3,000.00 N N
assurance 2019.4.22
Chain Co., ltd
Sinopharm Holding Guoda
Joint liability 2018.4.24-
Drugstore Inner Mongolia 22 Mar. 2018 2,000 24 Apr. 2018 1,041.84 N N
assurance 2019.4.23
Co., Ltd
China National Hebei
Joint liability 2018.10.10-
LeRenTang Medicine Chain 19 Sept. 2018 3,000 10 Oct. 2018 1,969.11 N N
assurance 2019.10.9
Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.5.18-
Drugstore Guangdong Co., 22 Mar. 2018 3,000 18 May 2018 2,376.80 N N
assurance 2019.5.17
Ltd
Fujian Guoda Drugstore Joint liability 2018.5.18-
22 Mar. 2018 5,000 18 May 2018 1,724.30 N N
Chain Co., Ltd assurance 2019.5.17
Fujian Guoda Drugstore Joint liability 2018.6.25-
22 Mar. 2018 2,000 25 Jun. 2018 99.04 N N
Chain Co., Ltd assurance 2019.6.24
Sinopharm Holding Guoda
Joint liability 2018.6.24-
Drugstore Henan Chain Co., 22 Mar. 2018 3,000 24 Jun. 2018 443.56 N N
assurance 2019.6.23
Ltd
Sinopharm Holding Guoda
Drugstore Xinjiang New Joint liability 2018.10.11-
22 Mar. 2018 3,000 11 Oct. 2018 1,882.11 N N
Special Medicine Chain Co., assurance 2019.10.10
Ltd
62
Beijing Jinxiang Drugstore Joint liability 2018.9.28-
22 Mar. 2018 4,000 28 Sept. 2018 2,623.48 N N
Medicine Chain Co., Ltd assurance 2019.9.27
Sinopharm Holding Guoda
Joint liability 2018.9.28-
Drugstore Nanjing Chain Co., 22 Mar. 2018 1,000 28 Sept. 2018 665.40 N N
assurance 2019.9.27
Ltd
Sinopharm Holding Guoda
Joint liability 2018.10.10-
Drugstore Shanxi Yiyuan 19 Sept. 2018 5,000 10 Oct. 2018 5,000.00 N N
assurance 2019.10.9
Chain Co., ltd
Sinopharm Holding Guoda
Joint liability 2018.10.10-
Drugstore Shanghai Chain 19 Sept. 2018 4,000 10 Oct. 2018 59.90 N N
assurance 2019.10.9
Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.9.28-
Drugstore Guangdong Co., 19 Sept. 2018 3,000 28 Sept. 2018 1,032.80 N N
assurance 2019.9.27
Ltd
Sinopharm Holding Guoda Joint liability 2018.11.28-
19 Sept. 2018 4,000 28 Nov. 2018 1,480.06 N N
Drugstore Shandong Co., Ltd assurance 2019.11.27
Sinopharm Holding Guoda
Joint liability 2018.11.15-
Drugstore Shanxi Yiyuan 19 Sept. 2018 3,000 15 Nov. 2018 3,000.00 N N
assurance 2019.11.14
Chain Co., ltd
Taishan China National
Joint liability 2018.6.2-
Guoda Qunkang Drustore 22 Mar. 2018 500 2 Jun. 2018 178.13 N N
assurance 2019.6.1
Chain Co., Ltd
Sinopharm Holding Guoda
Joint liability 2018.9.28-
Drugstore Jiangmen Chain 19 Sept. 2018 2,000 28 Sept. 2018 940.62 N N
assurance 2019.9.27
Co., Ltd
Total amount of approving guarantee Total amount of actual occurred guarantee for
176,075 87,203.3987
for subsidiaries in report period (C1) subsidiaries in report period (C2)
Total amount of approved guarantee
Total balance of actual guarantee for subsidiaries
for subsidiaries at the end of 182,875 111,431.93
at the end of reporting period (C4)
reporting period (C3)
Total amount of guarantee of the Company ( total of three above mentioned guarantee)
Total amount of approving guarantee Total amount of actual occurred guarantee
1,009,575 1,197,939.11
in report period (A1+B1+C1) in report period (A2+B2+C2)
Total amount of approved guarantee
Total balance of actual guarantee at the
at the end of report period 1,027,375 477,834.04
end of report period (A4+B4+C4)
(A3+B3+C3)
The proportion of the total amount
of actually guarantee in the net
41.13%
assets of the Company (that is A4+
B4+C4)
63
(2) Guarantee outside against the regulation
□ Applicable √ Not applicable
No guarantee outside against the regulation in Period.
3. Entrust others to cash asset management
(1) Trust financing
□ Applicable √ Not applicable
The Company had no trust financing in the reporting period.
(2) Entrusted loans
□ Applicable √ Not applicable
The company had no entrusted loans in the reporting period.
4. Other material contracts
□ Applicable √ Not applicable
No other material contracts for the Company in reporting period.
XVIII. Social responsibility
1. Execution of social responsibility
“Social Responsibility Report of Sinopharm Accord in 2018” can be seen in Juchao website released on the same date
(http://www.cninfo.com.cn)
2. Execution of social responsibility of targeted poverty alleviation
The Company has not carried out targeted poverty alleviation in the reporting period and has no follow-up plan of targeted poverty
alleviation
3. Environment protection
The listed Company and its subsidiary whether belongs to the key sewage units released from environmental protection department
Voluntary disclosure
Name of
Major Distribution Executed
Quantity of Emission Approved
Pollutants Emission of Pollutant Total Excessive
Company Discharge Concentrat Total
/subsidiary and Method Discharge Discharge Emissions Discharge
Outlet ion Emissions
Particular Outlet Standards
Pollutants
64
Discharge
China
Tube Outlet of 1.21 6.64
National COD 1 19.3mg/l N
Discharge Waste ton/year ton/year
Zhijun
Water
Discharge
China
Ammonia Tube Outlet of 0.09
National 1 1.43mg/l 0.7 ton/year N
Nitrogen Discharge Waste ton/year
Zhijun
Water
DB44/26-
Discharge
China 2001 Level 1
Tube Outlet of 0.00188 0.0369
National Phosphate 1 0.03mg/l standard for N
Discharge Waste ton/year ton/year
Zhijun the second
Water
period
Discharge
China
Tube Outlet of 0.19 1.476
National BOD 1 3.01mg/l N
Discharge Waste ton/year ton/year
Zhijun
Water
Discharge
China
Tube Outlet of 0.14 4.428
National SS 1 2.24mg/l N
Discharge Waste ton/year ton/year
Zhijun
Water
Discharge The Class IV
Zhijun Tube Outlet of water 0.7657 2.16
C0D 1 11.91mg/L N
Pingshan Discharge Waste (Ammonia ton/year ton/year
Water Nitrogen up
Discharge to Class V)
Zhijun Ammonia Tube Outlet of Standard in 0.008 0.144
1 0.13mg/L N
Pingshan Nitrogen Discharge Waste “Discharge ton/year ton/year
Water standard of
Discharge water
Zhijun Total Tube Outlet of pollutants in 0.005 0.0216
1 0.08mg/L mixed N
Pingshan phosphorus Discharge Waste ton/year ton/year
Water pharmaceutic
Discharge al
Zhijun Tube Outlet of industry”(G 0.1858 0.432
BOD 1 2.89mg/L B21908- N
Pingshan Discharge Waste ton/year ton/year
Water 2008) and
“Standard of
Surface
Discharge water
Zhijun Suspended Tube Outlet of 1.0171 2.16
1 15.82mg/L enviornment N
Pingshan solids Discharge Waste al ton/year ton/year
Water quality”(GB
3838-2002)
Discharge
Main Luck
Tube Outlet of 0.015 0.09
Pharmaceuti COD 1 15mg/L N
Discharge Waste ton/year ton/year
cals
Water
Discharge
Main Luck
Ammonia Tube Outlet of 0.001 0.01
Pharmaceuti 1 1mg/L N
Nitrogen Discharge Waste ton/year ton/year
cals
Water
DB44/26-
Discharge
Main Luck 2001 Level 1
Tube Outlet of 0.00005 0.0005
Pharmaceuti Phosphate 1 0.05mg/l standard for N
Discharge Waste ton/year ton/year
cals the second
Water
period
Discharge
Main Luck
Tube Outlet of 0.005 0.02
Pharmaceuti BOD 1 5mg/L N
Discharge Waste ton/year ton/year
cals
Water
Discharge
Main Luck
Tube Outlet of 0.008 0.06
Pharmaceuti SS 1 8mg/L N
Discharge Waste ton/year ton/year
cals
Water
Construction and operation of pollution prevention and control facilities
65
At present, the above-mentioned environmental pollution key monitoring units in which the Company has a shareholding have
established pollution prevention and control facilities for waste water. In the daily management process, enterprises establish
management procedures and operating instructions for environmental protection facilities, and ensure the normal and compliant
operation of anti-pollution facilities through system implementation and responsibility implementation. All enterprises are
continuously investing funds and stepping up the transformation and improvement of pollution prevention and control facilities to
ensure the stable operation of pollution prevention facilities and improve the disposal capacity of environmental protection facilities.
Environmental impact assessment of construction projects and other environmental protection administrative licenses
At present, the projects of all key monitoring units have carried out environmental impact assessments and obtained approvals. The
projects to be built also carry out the relevant administrative review procedures according to the “three simultaneous” requirements
of the environmental protection facilities of the construction project.
Emergency plan for environmental emergencies
At present, the above-mentioned environmental pollution key monitoring units in which the Company has a shareholding have
formulated the Emergency Plan for Environmental Emergencies and reported them according to the regulatory requirements of the
local regulatory authorities. According to the management requirements of the emergency plan, the key units regularly carry out
emergency plan drills to further provide the enterprises’ emergency response capability.
Environmental self-monitoring scheme
At present, the above-mentioned environmental pollution key monitoring units in which the Company has a shareholding have
established environmental self-detection scheme and plan, and implemented self-inspection, third-party detection and other
monitoring methods according to the government requirements. Relevant monitoring data and reports have been archived and saved.
Other environmental information that should be disclosed
The above two companies are joint stock companies of the Company. The Company and its holding subsidiaries are not listed as key
pollutant discharge units announced by the environmental protection department.
Relevant information on environment protection
Nil
XIX. Explanation on other significant events
√Applicable □ Not applicable
The proposal on the wholly-owned subsidiary Sinopharm Holding Guoda Drugstore Co.,Ltd., Bringing in
Strategic Investors by Means of Capital Increase and Share Expansion was deliberated and approved on the 25th
meeting of the 7th session of Board of Directors On Sep. 4th, 2017, and the wholly-owned subsidiary Sinopharm
Holding Guoda Drugstore Co., Ltd (hereinafter referred to as “Guoda Drugstore”) has got the approval of bringing
in one strategic investor by means of capital increase and share expansion, taking assets assessment report as the
reference of pricing. The Company was publicly listed on the Shanghai United Assets and Equity Exchange on
September 20, 2017, and collected an intentional investor, Walgreens Boots Alliance (NASDAQ Code: WBA), as
the actual controller, it subscribed for the equity of Guoda Drugstore by taking its wholly-owned subsidiary
established in Hong Kong, Walgreens Boots Alliance (Hong Kong) Investments Limited (hereinafter referred to
as “WBAHKIL”), as the capital increase entity to subscribe the equity of Guoda Drugstore with the capital
increase amount of RMB 2,766,700,000. It holds 40% equity of Guoda Drugstore after the capital increase. At the
beginning of December 2017, in accordance with the equity transaction rules, the Company, Guoda Drugstore and
WBAHKIL jointly signed the Registration Capital Increase and Subscription Agreement.
66
On March 23, 2018, the Company received the Written Decision on Nonperformance of Further Review
(SFLCSH [2018] No. 104) issued by the Ministry of Commerce of the People’s Republic of China, which was
transferred from Walgreens Boots Alliance Investment Luxembourg Co., Ltd.
At the end of June 2018, Guoda Drugstore obtained the registration receipt for the establishment of a foreign-
invested enterprise from the Commerce Commission of Jing’an District, Shanghai Municipality, and completed
the industrial and commercial registration on June 28, 2018.
XX. Significant event of subsidiary of the Company
√Applicable □ Not applicable
See “XIX. Explanation on other significant events
67
Section VI. Changes in Shares and Particulars about Shareholders
I. Changes in Share Capital
1. Changes in Share Capital
In Share
Before the Change Increase/Decrease in the Change (+, -) After the Change
Capitaliza
New
Proportio Bonus tion of Subtota Proportio
Amount shares Others Amount
n shares public l n
issued
reserve
I. Restricted shares 65,497,028 15.30% 65,497,028 15.30%
2. State-owned legal
60,380,743 14.10% 60,380,743 14.10%
person’s shares
3. Other domestic
5,116,285 1.20% 5,116,285 1.20%
shareholding
Including: Domestic
5,114,297 1.19% 5,114,297 1.19%
legal person’s shares
Domestic nature
1,988 0.00% 1,988 0.00%
person shares
II. Unrestricted shares 362,629,955 84.70% 362,629,955 84.70%
1. RMB Ordinary shares 307,744,355 71.88% 307,744,355 71.88%
2. Domestically listed
54,885,600 12.82% 54,885,600 12.82%
foreign shares
III. Total shares 428,126,983 100.00% 428,126,983 100.00%
Reasons for share changed
□Applicable √Not applicable
Approval of share changed
□Applicable √Not applicable
Ownership transfer of share changed
□ Applicable √ Not applicable
Progress of shares buy-back
□Applicable √Not applicable
Implementation progress of the reduction of repurchases shares by centralized bidding
□Applicable √Not applicable
Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common
shareholders of Company in latest year and period
□ Applicable √ Not applicable
Other information necessary to disclose for the Company or need to disclosed under requirement from security regulators
□ Applicable √ Not applicable
2. Changes of restricted shares
□ Applicable √ Not applicable
68
II. Securities issuance and listing
1. Security offering (without preferred stock) in Reporting Period
□Applicable √Not applicable
2. Changes of total shares and shareholders structure as well as explanation on changes of assets and
liability structure
□Applicable √Not applicable
3. Current internal staff shares
□ Applicable √ Not applicable
III. Particulars about shareholder and actual controller of the Company
1. Amount of shareholders of the Company and particulars about shares holding
In Share
Total preference
shareholders
Total preference
Total common with voting
Total common shareholders with
stock rights recovered
stock voting rights
shareholders at at end of last
shareholders in 18,101 17,550 recovered at end of 0 0
end of last month month before
reporting reporting period (if
before annual annual report
period-end applicable) (found
report disclosed disclosed (if
in note 8)
applicable)
(found in note 8)
Particulars about shares held above 5% by shareholders or top ten shareholders
Total Number of share pledged/frozen
Amount Amount
Proportio sharehold
Changes of of un-
Full name of Nature of n of ers at the
in report restricted restricted
Shareholders shareholder shares end of State of share Amount
period shares shares
held report
held held
period
Sinopharm Group State-owned 239,999,9 55,057,70 184,942,2
56.06%
Co., Ltd Corporation 91 0 91
HTHK/CMG
FSGUFP-CMG
Foreign 11,469,64 11,469,64
FIRST STATE 2.68% 0
Corporation 4 4
CHINA GROWTH
FD
69
China United
Property Insurance Domestic non
Company Limited state-owned 1.73% 7,400,422 0 7,400,422
- Traditional Corporation
insurance products
China National
Pharmaceutical State-owned
1.24% 5,323,043 5,323,043 0
Foreign Trade Corporation
Corp.
China Life
Insurance Co., Ltd. Domestic non
– tradition –general state-owned 1.17% 5,013,800 0 5,013,800
insurance products Corporation
-005L-CT001 Shen
GUOTAI JUNAN
SECURITIES(HO Foreign
0.99% 4,245,498 0 4,245,498
NGKONG) Corporation
LIMITED
New China Life
Insurance Co., Ltd.
Domestic non
– Bonus –
state-owned 0.98% 4,199,772 0 4,199,772
Individual bonuses
Corporation
- -018L-FH002
Shen
#Beijing Haoqing
Fortune Investment
Management Co., Domestic nature
0.96% 4,118,716 0 4,118,716
Ltd. – Haoqing person
Value Stable No.8
Investment Fund
Central Huijin State-owned
0.89% 3,804,400 0 3,804,400
Investment Ltd. Corporation
Bank of China-
Harvest Shanghai- Domestic non
H.K.-Shenzhen state-owned 0.83% 3,554,700 0 3,554,700
Selected Securities Corporation
Investment Fund
Sinopharm Group Co., Ltd. and China National Pharmaceutical Foreign Trade Corporation
have the same actual controller, which is China National Pharmaceutical Group
Explanation on associated relationship Corporation. It is unknown that there exists no associated relationship or belongs to the
among the aforesaid shareholders consistent person acting in concert among the other tradable shareholders regulated by the
Management Measure of Information Disclosure on Change of Shareholding for Listed
Companies.
Particular about top ten shareholders with un-restrict shares held
70
Type of shares
Shareholders’ name Amount of un-restrict shares held at Period-end
Type Amount
RMB ordinary
Sinopharm Group Co., Ltd 184,942,291 184,942,291
shares
HTHK/CMG FSGUFP-CMG FIRST Domestic listed
11,469,644 11,469,644
STATE CHINA GROWTH FD foreign shares
China United Property Insurance
RMB ordinary
Company Limited - Traditional 7,400,422 7,400,422
shares
insurance products
China Life Insurance Co., Ltd. –
RMB ordinary
tradition –general insurance products - 5,013,800 5,013,800
shares
005L-CT001 Shen
GUOTAI JUNAN
Domestic listed
SECURITIES(HONGKONG) 4,245,498 4,245,498
foreign shares
LIMITED
New China Life Insurance Co., Ltd. –
RMB ordinary
Bonus – Individual bonuses - -018L- 4,199,772 4,199,772
shares
FH002 Shen
#Beijing Haoqing Fortune Investment
RMB ordinary
Management Co., Ltd. – Haoqing 4,118,716 4,118,716
shares
Value Stable No.8 Investment Fund
RMB ordinary
Central Huijin Investment Ltd. 3,804,400 3,804,400
shares
Bank of China- Harvest Shanghai-
RMB ordinary
H.K.-Shenzhen Selected Securities 3,554,700 3,554,700
shares
Investment Fund
Hong Kong Securities Clearing RMB ordinary
3,416,987 3,416,987
Company Ltd shares
Expiation on associated relationship or
consistent actors within the top 10 un- It is unknown that there exists no associated relationship or belongs to the consistent person
restrict shareholders and between top acting in concert among the other tradable shareholders regulated by the Management
10 un-restrict shareholders and top 10 Measure of Information Disclosure on Change of Shareholding for Listed Companies.
shareholders
Explanation on shareholders involving
Beijing Haoqing Fortune Investment Management Co., Ltd. – Haoqing Value Stable No.8
margin business about top ten common
Investment Fund holds shares of the Company through margin trading and negotiable
stock shareholders with un-restrict
securities account that is 4,118,716 shares in total.
shares held (if applicable) (see note 4)
Whether top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held have a buy-back
agreement dealing in reporting period
□Yes √ No
The top ten common stock shareholders or top ten common stock shareholders with un-restrict shares held of the Company have no
buy-back agreement dealing in reporting period.
71
2. Controlling shareholder of the Company
Nature of controlling shareholders: central state-owned holding
Type of controlling shareholders: legal person
Legal
person/person Organization
Controlling shareholders Date of foundation Main operation business
in charge of code
the unit
Industrial investment holding; management and
assets reorganization entrusted by pharmaceutical
enterprise; Chinese medicine, Chinese medicine
tablets, chemical medicine preparations, chemical
raw materials, antibiotics, biochemical drugs,
biological products, narcotic drugs, psychotropic
substances, toxic drugs for medical use
(compatible with the business scope), medicine
IVD Reagents, vaccine, anabolic agents, Peptide
hormone and medical equipment. III: injection
puncture instruments, hygienic materials &
Sinopharm Group Co., dressings, medical polymer materials and products,
Li Zhiming 2003-01-08 74618434-4
Ltd categories II: medical X-ray ancillary equipment
and components; food marketing management
(non-physical way), and domestic trade (other than
special licensing), logistics and other consulting
services, cosmetics, stationeries and related
consulting services, operating various types of
goods and import and export of technology (not
attached directory of import and export
commodities), but excluded the import and export
of goods and technology the State limits or
prohibit the company. [In right of exequatur to run
if refers to permission operation].
Equity of other
domestic/oversea listed
company control by Sinopharm Group Co., Ltd. hold 55.29 percent equity of China National Medicines Corporation Ltd
controlling shareholder (Stock code: 600511) up to the end of Period.
as well as stock-joint in
report period
Changes of controlling shareholders in reporting period
□ Applicable √ Not applicable
The Company had no changes of controlling shareholders in reporting period.
72
3. Actual controller of the Company and persons acting in concert
Nature of actual controller: central state-owned assets management
Type of actual controller: legal person
Legal
Actual controlling shareholders person/person in Date of foundation Organization code Main operation business
charge of the unit
Chinese patent drug, traditional
Chinese medicines prepared in
ready-to-use forms, traditional
Chinese medicinal materials,
chemical API, chemical
medicine preparation,
antibiotics, biochemical drug
and biologic pharmacy (License
for pharmaceutical trading runs
until 12 May 2020); mandatory
for pharmaceutical enterprise,
China National Pharmaceutical asset reorganization; consulting
She Lulin 1987-03-26 10000588-8
Group Corporation service of medicine industrial
investment; exhibition of
medical devices; consulting
services with main business
concerned. (the enterprise has
independent choices on
operation items for business; in
right of exequatur to run if refers
to permission operation ;
operation activity that prohibited
or restricted by the City
Government are not allowed)
Name of listed Total shareholders
Proportion of
Name company with held (10 thousand
shares held
shares held shares)
SINOPHARM Jianmin Group 132.35 0.86%
Equity of domestic/oversea
listed company control by Sinopharm
SINOPHARM 20,728.95 6.98%
actual controller in report period Holding
Sinopharm
Holding
Sinopharm
Industrial 157,155.60 52.88%
Holding
Investment
Co., Ltd.
73
Sinopharm Sinopharm
42,261.77 55.29%
Holding Holding
Sinopharm Sinopharm
24,000.00 56.06%
Holding Accord
Sinopharm Lianhuan
375.21 1.31%
Holding Pharmaceutical
Shyndec
SIPS 23,951.26 22.68%
Pharmaceutical
China National
Pharmaceutical Hengrui
16,310.11 4.43%
Investment Medicine
Co., Ltd.
China National
Biotec Group BTBP 43,523.36 49.96%
Co., Ltd.
SINOPHARM
China TCM 161,431.36 32.06%
H.K. Co., Ltd.
Changes of actual controller in reporting period
□ Applicable √ Not applicable
No changes of actual controllers for the Company in reporting period.
Property right and controlling relationship between the actual controller and the Company is as follow:
Actual controller controlling the Company by entrust or other assets management
74
□ Applicable √ Not applicable
4. Particulars about other legal person shareholders with over 10% shares held
□ Applicable √ Not applicable
5. Limitation and reducing the holdings of shares of controlling shareholders, actual controllers,
restructuring side and other commitment subjects
□ Applicable √ Not applicable
75
Section VII. Preferred Stock
□ Applicable √ Not applicable
The Company had no preferred stock in the Period.
76
Section VIII. Particulars about Directors, Supervisors, Senior
Executives and Employees
I. Changes of shares held by directors, supervisors and senior executives
Amount Amount
Shares Shares
End of shares of shares
Start dated held at Other held at
Working date of increased decreased
Title Sex Age of office period- changes period-
Name status office in this in this
term begin (share) end
term period period
(Share) (Share)
(Share) (Share)
Chen Deputy GM,
Currently in
Changbi Secretary of M 51 13 Jan. 2015 2,651 0 0 2,651
office
n the Board
Total -- -- -- -- -- -- 2,651 0 0 2,651
II. Changes of directors, supervisors and senior executives
√Applicable □ Not applicable
Name Title Type Date Reasons
Office
Independent leaving
Xiong Chuxiong 17 Apr. 2018 Expiration of term of 7th BOD
Director while term is
due
Office
Independent leaving
Xiao Shengfang 17 Apr. 2018 Expiration of term of 7th BOD
Director while term is
due
Office
leaving
Wang Huaiqin Staff supervisor 17 Apr. 2018 Expiration of term of 7th Supervisory Committee
while term is
due
Appointment
Lian Wanyong Director 17 Apr. 2018 New Director of 8th BOD
and removal
Appointment
Li Dongjiu Director 17 Apr. 2018 New Director of 8th BOD
and removal
Independent Appointment
Ou Yongliang 17 Apr. 2018 New Independent Director of 8th BOD
Director and removal
Independent Appointment
Chen Shengqun 17 Apr. 2018 New Independent Director of 8th BOD
Director and removal
Appointment
Lang Baochun Staff supervisor 17 Apr. 2018 New Staff supervisor of 8th Supervisory Committee
and removal
Lang Baochun Staff supervisor Office 8 Aug. 2018 Resign from staff supervisor for job arrangement
77
leaving
Appointment
Lang Baochun General counsel 22 Aug. 2018 New General counsel
and removal
Appointment
Chen Guojing Staff supervisor 8 Aug. 2018 New Staff supervisor of 8th Supervisory Committee
and removal
Appointment
Liu Tianrao Deputy GM 11 Jan. 2019 New Deputy GM
and removal
Appointment
Ma Zhanjun Director 24 Jan.2019 New Director of 8th BOD
and removal
Deputy Appointment
Ma Zhanjun 31 Jan.2019 New Deputy Chairman of 8th BOD
Chairman and removal
Independent Appointment
Su Weiwei 24 Jan.2019 New Independent Director of 8th BOD
Director and removal
III. Post-holding
Professional background, major working experience and present main responsibilities in Company of directors,
supervisors and senior executive at the present
1. Members of the Board
Mr. Liu Yong, joined Sinopharm Group Co., Ltd in January 2003 and serves as executive director and president
of Sinopharm Holding since November 2017 and acts as deputy party secretary of Sinopharm Holding since
January 2018; Mr. Liu own over 26 years of working experience, among which, over 23 years are related to
management experience in medicine and health care products industry. He is a pharmacist-in-charge and licensed
pharmacist. During the period from July 1992 to July 1999, Mr. Liu worked in the Shanghai Pharma, and
successively served as deputy general manager of the marketing department of Shanghai Branch of China
National Pharmaceutical Group Corporation and Shanghai Guoda Drugstore Chain Company Limited from July
1999 to April 2003. Mr. Liu served as GM and party secretary of the Sinopharm Holding Shenyang Co., Ltd from
April 2003 to November 2009; a deputy president of Sinopharm Holding from January 2009 to November 2017;
the Secretary of the Board of Sinopharm Holding from October 2016 to November 2017 and General Counsel of
Sinopharm Holding from January 2014 to December 2017. Currently, he also acts as the Director of
SINOPHARM, Sinopharm Holding Guoda Drugstore Co., Ltd., China National Scientific Instruments &
Materials Co., Ltd and China National Medical Equipment Co., Ltd.; and Director and GM of Sinopharm Holding
H.K. Co., Ltd. Mr. Liu serves as Director of the 7th BOD of the Company since January 2017 and Chairman of the
7th and 8th BOD of the Company since October 2017.
Mr. Ma Zhanjun served as president of Wuhan Ruipu Pharmaceutical Co., Ltd. from December 2000 to December
2003, from January 2004 to April 2005, he served as general manager of Sinopharm Group Pharmaceutical
Holding Wuhan Co., Ltd., from April 2005 to December 2005, he served as executive deputy general manager of
Sinopharm Holding Hubei Co., Ltd., and he served as general manager of Sinopharm Group Hubei Co., Ltd. from
January 2006 to December 2014, from January 2015 to October 2018, he served as president of Sinopharm
78
Holding Hubei Co., Ltd., since November 2018, he has concurrently been serving as vice president of Sinopharm
Holding Hubei Co., Ltd. Since January 2019, he has been serving as vice president of the eighth board of directors
of the Company.
Mr. Li Zhiming, chairman of the board and the deputy Party Secretary of Sinopharm Group Co., Ltd, he joined the
Sinopharm Holding in May 2010 as deputy president, served as executive director and president of Sinopharm
Holding from November 2013 to March 2017; He serves as chairman of Sinopharm Holding since November
2017 and he is the deputy party secretary of Sinopharm Holding since November 2018. Mr. Li held the position
of General counsel, Secretary of Committee for Discipline Inspection, chairman of the labor union, deputy Party
Secretary and party secretary of Sinopharm Holding from October 2012 to March 2017. He owns more than 36
years of working experience, among which, 32 years are related to management experience in medicine and health
care products industry. He is a senior economist and pharmacist-in-charge. During the period from July 1985 to
July 1996, Mr. Li successively served as deputy director of the financing department of Xinjiang Xinte
Nationality Pharmacy Company Limited, deputy general manager and chief accountant of Xinjiang
Pharmaceutical Industry and Trading Corporation, deputy general manager and chief accountant of Xinjiang Xinte
Nationality Pharmacy Corporation, and deputy director of the preparation office of Xinjiang Autonomous Region
Medicine Administration Bureau. From July 1996 to February 2016, Mr. Li worked in Xinjiang Xinte Nationality
Pharmacy Corporation as general manager, chairman of the board and party secretary, and worked in Xinjiang
Pharmaceutical Group Corporation (currently known as Sinopharm Group (Xinjiang) Co., Ltd.) as its general
manager, Deputy Chairman of the board, chairman of the board and party secretary. Currently, he also serves as
Director of China National Xinjiang Medicine Co., Ltd, Sinpharm Holding Senyi Tech. (Shanghai) Co., Ltd,
China National Pharmaceutical Co., Ltd and Sinopharm Holding Guoda Drugstore Co., Ltd.; the deputy chairman
of Shanghai Shyndec Pharmaceutical Co., Ltd and Chairman of Sinopharm Holding H.K. Co., Ltd, Sinopharm
Holding (China) Finance Leasing Co., Ltd, China National Zhongjin (Shanghai) Medical Health Investment
Management Co., Ltd and Sinopharm Holding Medicine Investment Co., Ltd; He served as Chairman of the
Company from February 2014 to August 2016 and acts as Director of the 7th and 8th BOD of the Company since
August 2016.
Mr. Jiang Xiuchang, entered into Sinopharm Holding as the CFO in May 2010, and he has also acted as vice
president of Sinopharm Holding since July 2013. Mr. Jiang owns over 31 years of working experiences, among
which, 20 years of management experiences are related to medicine and health-care industries. He is a senior
economist and senior accountant. Mr. Jiang has worked as deputy director of information department, deputy
director of restructuring office, deputy director of financial department as well as deputy director of
pharmaceutical department in China National Pharmaceutical Group Corporation from July 1986 to March 2002;
he has also served as deputy director, director of financial department and chief financial officer of China National
Medicines Corporation Ltd. in succession from March 2002 to May 2010. Currently, Mr. Jiang serves as
Chairman of Sinopharm Holding Jiangxi Co., Ltd, Sinopharm Holding Shanxi Co., ltd, Sinopharm Holding Inner
Mongolia Co., ltd, Sinopharm Holding Tianjin Co., ltd, SINOPHARM Shanxi Co., ltd and China National
79
Medicines Corporation Ltd; Director of Sinopharm Holding H.K. Co., ltd and China National Finance
Corporation Ltd; and executive Director of Beijing Sinopharm Taiyuan Property Management Co., Ltd and
SINOPHARM Shanghai Co., Ltd; he serves as Director of the 6th ,7th and 8th BOD of the Company since March
2011.
Mr. Lian Wanyong is vice president of Sinopharm Group Co., Ltd. He joined China National
Pharmaceutical Group Corporation Guangzhou Company in 1996 and successively served as product
director of Yuexing Pharmaceutical Co., Ltd. and senior product manager of Hong Kong Tianjian
International Co., Ltd. From August 2002 to January 2004, he served as deputy manager of the
financial department of Barr laboratories, Inc., USA. From January 2004 to April 2014, he was
appointed as manager of operational audit department, deputy director of financial asset
management department and director of investment management department of China Medicinal
Materials Group Company. From December 2010 to February 2014, he served as deputy general
manager of Beijing Sinopharm Asset Management Center, from April 2014 to January 2018, he
served as deputy director of the Policy Research Office of China National Pharmaceutical Group Corporation.
Since January 2018, he has been serving as vice president of Sinopharm Group Co., Ltd., and Mr. Lian is
concurrently serving as director of China National Medicines Corporation Ltd., director of China National
Zhongjin (Shanghai) Medical Health Investment Management Co., Ltd, and director of West China Dental Co.,
Ltd. He serves as Director of 8th BOD of the Company since April 2018.
Mr. Li Dongjiu is vice president and general counsel of Sinopharm Group Co., Ltd. From April 1997 to January
2002, he served as deputy general manager of North China Pharmaceutical Huasheng Co., Ltd., from January
2002 to December 2009, he served as deputy general manager of North China Pharmaceutical Co., Ltd., and
concurrently served as general manager of North China Pharmaceutical Group Sales Company, and property
representative of North China Pharmaceutical Group Southern Company (concurrently), from December 2009 to
June 2010, he served as executive president of Shanghai Fosun Pharmaceutical Industry Development Co., Ltd.,
and from June 2010 to September 2011, he was appointed as vice president of Shanghai Fosun Pharmaceutical
(Group) Limited and director of the Pharmaceutical Management Committee, and president of Shanghai Fosun
Pharmaceutical Industry Development Co., Ltd., from September 2011 to January 2018, he served as senior vice
president of Shanghai Fosun Pharmaceutical (Group) Limited, and concurrently served as director of
pharmaceutical business and consumer goods management committee and chairman, president of Shanghai Fosun
Pharmaceutical Industry Development Co., Ltd. and concurrently vice-president of pharmaceutical industry
management committee, responsible for strategy, investment, operation and management of pharmaceutical
business and consumer product. Since January 2018, he has been serving as vice president of Sinopharm Group
Co., Ltd. Mr. Li is concurrently director of China National Medicines Corporation Ltd. and Sinopharm Chemical
Reagent Co., Ltd., and president of Sinopharm Holding Fujian Co., Ltd., Sinopharm Holding Fuzhou Co., Ltd.,
Sinopharm Holding Guizhou Co., Ltd. Sinopharm Holding Yunnan Co., Ltd., Sinopharm Xingsha
80
Pharmaceuticals (Xiamen) Co., Ltd., Sinopharm Holding Hainan Co., Ltd., China National Health Online Co.,
Ltd., Sinopharm Chemical Reagent Co., Ltd. And Sinopharm Holding Hutchison Whampoa Medicine Co., Ltd.
He serves as Director of 8th BOD of the Company since April 2018.
Mr. Lin Zhaoxiong: Director and GM of Sinopharm Accord. Has served as deputy manager and manger of
pharmaceutical department, manger of Pharmaceutical corporations and director of operation and management
department during his work in China Pharmaceutical (Group) Guangzhou Co.,Ltd from January 1999 to
December 2003 in succession; He has acted as the deputy general manger of Sinopharm Holding Guangzhou
Co.,Ltd; the general manager of Sinopharm Holding Guangzhou Co.,Ltd from December 2006 to December 2008;
He has served as the deputy general manger of the Company from December 2008 to March 2016; Mr Lin serves
as the chairman of Sinopharm Holding Guoda Drugstore Co.,Ltd since October 2017; and GM of the Company
since March 2016, Director of the 7th and 8th BOD of the Company since April 2016.
Mr. Chen Honghui, professor of Lingnan (University) College of Sun Yat-Sen University, a doctoral supervisor of
management. He worked in school of management, Wuhan University of Science & Technology from July 1993
to June 2003 and successively acted as a tutor and instructor; he works in Lingnan (University) College of Sun
Yat-Sen University since July 2003 and also served as deputy professor and professor; vice president of the
Lingnan (University) College of Sun Yat-Sen University from 2007 to 2012; the director of department of
business administration in Lingnan College since 2008, currently Mr. Chen serves as deputy chairman of the
GDISR, independent director of Cabbeen Fashion Co., Ltd and Guangzhou Grandbuy Co., Ltd. He serves as
independent director of the 7th and 8th BOD of the Company since March 2017.
Mr. Ou Yongliang is a Chinese practicing lawyer, vice chairman of All China Lawyers Association, vice
chairman of Guangdong Province Law Society, president of the 9th and 10th Session of Guangdong Lawyers
Association, director of Guangdong Hopesun Law Firm, member of the 12th Session of Guangdong Provincial
Committee of the CPPCC, expert advisor of the 11th Party Congress of Guangdong Provincial Party Committee of
the Communist Party of China, legislative consultant of the 12th Session of Standing Committee of Guangdong
Provincial People’s Congress, specially invited member of the 11th Session of Guangdong Provincial Committee
of the CPPCC, member of the Guangdong Provincial Judge and Prosecutor Selection Committee, legal adviser of
Hunan Provincial Party Committee and Provincial Government, representative of the 9th Congress of Guangzhou
Municipality of the Communist Party of China, legal adviser of Guangzhou Municipal People’s Government,
supervisory judicial behavior supervisor of Guangdong Provincial Procuratorate, supervisor of service window of
Guangdong Higher People’s Court, legal adviser of the Criminal Investigation Bureau of Guangdong Provincial
Public Security Department, arbitrator of China International Economic and Trade Arbitration Commission,
arbitrator of South China International Arbitration Commission, arbitrator of Shanghai International Arbitration
Commission, and arbitrator of Guangzhou Arbitration Commission. He serves as independent director of the 8th
BOD of the Company since April 2018.
81
Mr. Chen Shengqun is an associate researcher and senior accountant, he has been teaching at the Shanghai
National Accounting Institute since 2013. Mr. Chen came out of the postdoctoral research station of Shanghai
University of Finance and Economics in 1998 as the first postdoctoral fellow in management accounting. He was
employed as a senior researcher at the CAFR Center of the Hong Kong Polytechnic University and is currently a
visiting professor of EDP curriculum at the Xiamen University. Since 1998, Mr. Chen has served as director of
the finance division of China Pacific Insurance Co., Ltd., in 2002, he was transferred to serve as deputy general
manager of the financing plan department of China Pacific Insurance Co., Ltd. (presiding work), at the end of
2003, he joined China Reinsurance Group and successively served as general manager of the fund application
department of China Continent Insurance (concurrently general manager of the strategic development department,
and general manager assistant of China Re Asset Management Company. He serves as independent director of the
8th BOD of the Company since April 2018.
Ms. Su Weiwei: Doctor of pharmacy, professor of School of Life Sciences of Sun Yat-Sen University and a
doctoral supervisor. She worked in Guangdong pharmaceutical University from July 1987 to April 2000, and
successively served as a teaching assistant, lecturers, associate professor and professor, she serves as a professor
in Sun Yat-Sen University since May 2000. Ms. Su Weiwei have devoted herself to the research and development
of innovative drugs for many years, and achieved two chemical clinical permission for first-type new drugs and
one clinical permission for the fifth-type new drugs of TCM (traditional Chinese medicine) which have
independent intellectual property rights.
2. Members of supervisors:
Mr. Wu Yijian: Director and Secretary of the Board of Sinopharm Group Co., Ltd. He worked in Sanjiu
Enterprise Group since July 1993, and successively served as the sales director of Sanjiu Medical Trading Co.,
Ltd., COO of Sanjiu Medical Chain Co., Ltd. and deputy GM of Shanghai Sanjiu Technology Development Co.,
Ltd. He also works in Fosun Pharma Group since June 2004 and successively took post of Gm of the Shanghai
Fosun Pharmaceutical Investment Co., Ltd., GM of Shanghai Fosun Pharmaceutical Co., Ltd. and GM of
Shanghai Fumei Drugstore Co., Ltd. Wu served as deputy president of the Shanghai Yuyuan Tourist Mart Co.,
Ltd. from 2014 to 2015. He served as non-executive director of Sinopharm Holding from June 2016 to September
2017; and serves as non-executive director of Sinopharm Holding again since March 2018; Acts as secretary of
the Board of Sinopharm Holding since January 2019. Currently, Mr. Wu serves as the assistant president, director
of Business Administration Committee and joint GM of human resources department of Fosun Pharma, and
Director of Sinopharm Industry Investment Co., Ltd. He serves as Chairman of the 7th and 8th supervisory
committee of the Company since September 2016.
Ms. Liu Jingyun, postgraduate background. Currently she serves as the director of financial and asset management
and director of assets and credit management dept. in Sinopharm Group Co., Ltd. and he successively hold a
teaching post in Nanjing Radio and Television University, works in Sinopharm Group Co., Ltd. since November
2003 and serves as deputy director of assets management department, director of the financial & assets
82
management dept. and Director of ministry of finance and credit management. She serves as supervisor of the 7th
and 8th supervisory committee of the Company since September 2016.
Ms. Chen Guojing: she worked in Shenzhen Accord Medicinal Materials Company in December 1999, now she
serves as the office director and director of security department in the Company. Ms. Chen served as the financial
manager and deputy chief of Finance and Funds Department of the Company from June 2005 to December 2013,
she is the member of trade union federations of the Company and chairman of the first trade union since March
2009; she served as chief (part-time) of the auditing department of the Company from January 2013 to August
2017, and chief (part-time) of the risk and operation management of the Company from January 2014 to May
2016. She serves as staff supervisor of the 8th supervisory committee of the Company since August 2018
3. Senior executive
Mr. Lin Zhaoxiong, found in aforesaid previous work experience
Mr. Lin Min: Deputy GM of the Company. worked in China Pharmaceutical (Group) Guangzhou Co.,Ltd with
successively taking the posts of assistant to manager, deputy general manger of Pharmacy Department and deputy
general manger of purchasing in Pharmaceutical Company from Jan. 2001 to Nov. 2003; the city medical sales
director of Sinopharm Holding Guangzhou Co., Ltd. From November 2003 to January 2005; took deputy general
manager of Sinopharm Holding Guangzhou Co., Ltd from Jan. 2005 to Dec. 2008; he also acting as the GM of
distribution business dept. of the Sinopharm Accord and Sinopharm Holding Guangzhou Co., Ltd. he serves as
deputy GM of the Company since December 2008.
Mr. Zhao Xiaochuan: Deputy GM of the Company. He has served as the general manager of Liaoning Accord
Chain Co., Ltd from December 2001 to April 2008; served as the general manger of Sinopharm Holding Guoda
Tian Yi Tang Drugstore Chain (Shenyang) Co., Ltd and Sinopharm Holding Guoda Shenyang Chain Co., Ltd
from May 2008 to June 2015; he has acted as general manager of Sinopharm Holding Guoda Drugstore Co., Ltd
since June 2015; He has worked as the deputy general mange of the Company since July 2017.
Mr. Liu Tianyao is deputy general manager of the Company. From August 2002 to April 2009, he served as senior
director of human resources department of China National Pharmaceutical Group Corporation. From April 2009
to May 2017, he successively served as deputy director of human resources department, director of talent
development department, director of human resources department, and director of retail medical business
development department of Sinopharm Group Co., Ltd., from December 2013 to July 2016, he concurrently
served as general manager of Shanghai Management Consulting Branch, from July 2016 to May 2017, he
concurrently served as general manager of Sinopharm Holding Medical Management (Shanghai) Co., Ltd., since
May 2017, he has been serving as director of human resources and director of human resources department of
Sinopharm Group Co., Ltd and he serves as Deputy GM of the Company since January 2019.
Mr. Lin Xinyang: Deputy GM of the Company.He took the turns of deputy GM of Nanfang Pharm. Co., deputy
GM of China Pharmaceutical (Group) Guangzhou Company Yuexing Company, general supervisor of PD of
83
Sinopharm Holding Guangzhou Company successively since January 1996; took the post of deputy GM of
Sinopharm Holding Guangzhou Company from Jan. to Dec. 2004; serves as deputy GM of the Company since
January 2005.
Mr. Lang Baochun is deputy secretary of the party committee, secretary of the disciplinary committee, chairman
of the labor union and general counsel of the Company. From September 2007 to March 2008, he served as
deputy director of general office of Sinopharm Group Co., Ltd., from March 2008 to December 2009, he served as
general manager of Shanghai Chuanghui Investment Co., Ltd., from January 2010 to May 2010, he served as
director of the research office of Shanghai Shibei Hi-Tech (Group) Co., Ltd., from June 2010 to September 2011,
he served as deputy director of the president’s office of Sinopharm Group Co., Ltd., from October 2011 to
December 2015, he served as director of the strategic planning department of Sinopharm Group Co., Ltd., from
January 2016 to June 2017, he served as secretary of the party committee of Sinopharm Guoda Drugstore Co.,
Ltd., from March 2016 to February 2018, he served as deputy secretary of the party committee and secretary of
the disciplinary committee of the Company. Since March 2018, he has been serving as deputy secretary of the
party committee, secretary of the disciplinary committee, and chairman of the labor union of the Company. He
serves as General Counsel of the Company since August 2018
Mr. Wei Pingxiao: CFO of the Company. He took the turns of deputy section chief of financial department of
China Electronic Information Industry Group, financial director of AMOI, section chief of planning financial
department of China Electronic Finance Leasing Company, Deputy GM of AMOI Beijing branch, financial
charger of AMOI and director of its subsidiary since April 1993; and he hold the post of CFO of the Company
since December 2004.
Mr. Chen Changbin: Deputy GM of the Company, and Secretary of the Board. He has served as secretary of board
of directors of the Company since December 2000; he has also worked as the director of planning investment
management department of the Company as well as assistant general manager, in charge of strategic planning,
investment and mergers and acquisitions, capital operation and affairs related to three major meetings. He has
acted as the deputy general manger of the Company since April 2017.
Post-holding in shareholder’s unit
√ Applicable □ Not applicable
Position in shareholder’s Start dated of office
Name Name of shareholder’s unit
unit n term
Executive Director ,
Liu Yong Sinopharm Group Co., Ltd 2017-11-21
President
Liu Yong Sinopharm Group Co., Ltd Deputy party secretary 2018-01-02
Li Zhiming Sinopharm Group Co., Ltd Chairman 2017-11-21
Li Zhiming Sinopharm Group Co., Ltd Deputy party secretary 2018-11-02
Jiang Xiuchang Sinopharm Group Co., Ltd CFO 2010-05-09
Jiang Xiuchang Sinopharm Group Co., Ltd Deputy President 2013-07-10
Lian Wanyong Sinopharm Group Co., Ltd Deputy President 2018-01-26
84
Li Dongjiu Sinopharm Group Co., Ltd Deputy President 2018-01-26
Li Dongjiu Sinopharm Group Co., Ltd General counsel 2018-01-26
Director of ministry of
finance and credit
Liu Jingyun Sinopharm Group Co., Ltd management, director of the 2016-07-01
financial & assets
management dept.
Post-holding in other unit
√ Applicable □ Not applicable
Position in other unit Start dated of office
Name Name of other units
n term
China National Medicines
Liu Yong Director 3 Nov. 2017
Corporation Ltd
Sinopharm Holding Guoda
Liu Yong Director 10 Oct. 2017
Drugstore Co., Ltd.
China National Scientific
Liu Yong Instruments & Materials Director 10 Dec. 2018
Co., Ltd
China National Medical
Liu Yong Equipment Co., Ltd. Director 10 Dec. 2018
Sinopharm Holding H.K. Co.,
Liu Yong Director, GM 10 May 2018
ltd
Sinpharm Holding Senyi
Li Zhiming Director
Tech. (Shanghai) Co., Ltd
China National Xinjiang
Li Zhiming Director 5 Jun. 2017
Medicine Co., Ltd
China National Medicines
Li Zhiming Director 1 May 2016
Corporation Ltd
Sinopharm Holding Guoda
Li Zhiming Director 1 Jul. 2014
Drugstore Co., Ltd.
Shanghai Shyndec
Li Zhiming Deputy Chairman 1 Nov. 2016
Pharmaceutical Co., Ltd
Sinopharm Holding H.K. Co.,
Li Zhiming Chairman 1 Apr. 2017
ltd
Sinopharm Holding
Li Zhiming (China) Finance Leasing Chairman 1 Nov. 2014
Co., Ltd
China National Zhongjin
(Shanghai) Medical
Li Zhiming Chairman 1 Sept. 2016
Health Investment
Management Co., Ltd
Sinopharm Holding
Li Zhiming Medicine Investment Co., Chairman 15 Oct. 2017
Ltd
Sinopharm Holding Jiangxi
Jiang Xiuchang Chairman 1 Jun. 2013
Co., Ltd
Sinopharm Holding Shanxi
Jiang Xiuchang Chairman 1 Dec. 2013
Co., ltd
Sinopharm Holding Inner
Jiang Xiuchang Chairman 1 Dec. 2013
Mongolia Co., ltd
Sinopharm Holding Tianjin
Jiang Xiuchang Chairman 1 Dec. 2013
Co., ltd
Jiang Xiuchang SINOPHARM Shanxi Co., ltd Chairman 1 Jul. 2014
China National Medicines
Jiang Xiuchang Chairman 1 Nov. 2017
Corporation Ltd
Sinopharm Holding H.K.
Jiang Xiuchang Director 1 Nov. 2011
Co., ltd
China National Finance
Jiang Xiuchang Director 1 Nov. 2011
Corporation Ltd
85
Beijing Sinopharm Taiyuan
Jiang Xiuchang Executive Director 1 Dec. 2017
Property Management Co., Ltd
SINOPHARM Shanghai
Jiang Xiuchang Executive Director 1 Nov. 2017
Co., Ltd
Sinopharm Holding Hubei Co.,
Ma Zhanjun Deputy Chairman 1 Nov. 2018
Ltd.
China National Medicines
Lian Wanyong Director 1 Dec. 2017
Corporation Ltd
China National Zhongjin
(Shanghai) Medical Health
Lian Wanyong Director 1 July 2018
Investment Management Co.,
Ltd
Lian Wanyong West China Dental Co., Ltd Director 3 Jan. 2019
China National Medicines
Li Dongjiu Director 5 Dec. 2016
Corporation Ltd
Sinopharm Holding Fujian
Li Dongjiu Chairman 1 Feb. 2018
Co., Ltd
Sinopharm Holding Fuzhou
Li Dongjiu Chairman 1 Feb. 2018
Co., Ltd
Sinopharm Holding Guizhou
Li Dongjiu Chairman 1 Feb. 2018
Co., Ltd
Sinopharm Holding Yuannan
Li Dongjiu Chairman 1 Feb. 2018
Co., Ltd
Sinopharm Xingsha
Li Dongjiu Pharmaceuticals (Xiamen) Chairman 1 Feb. 2018
Co., Ltd.
Sinopharm Holding Hainan
Li Dongjiu Chairman 1 Feb. 2018
Co., Ltd.
China National Health Online
Li Dongjiu Chairman 1 Feb. 2018
Co., Ltd.
SINOPHARM Chemical
Li Dongjiu Chairman 1 Dec. 2018
Reagent Co., Ltd.
Sinopharm Holding Hutchison
Li Dongjiu Chairman 1 Dec. 2018
Whampoa Medicine Co., Ltd
Punishment of securities regulatory authority in recent three years to the company’s current and outgoing directors, supervisors and
senior management during the reporting period
□ Applicable √ Not applicable
IV. Remuneration for directors, supervisors and senior executives
Decision-making procedures, recognition basis and payment for directors, supervisors and senior executives
(i) Remuneration decision procedure of directors, supervisors, senior management:
The Company implemented the annual salary system for senior executives based on the 2018 annual performance
appraisal (scheme) on management staff, paid annual salary remuneration according to the appraisal results.
Remuneration and appraisal committee of the company's board of directors is responsible for the formulation and
examination of salary plan and program as well as formulation and examination of salary plan and assessment
standards of directors (not including the independent directors), supervisors and senior executives. They also
evaluate the performance assessment of directors, supervisors and senior officers in accordance with the
assessment criteria, compensation scheme.
(ii) Remuneration determining basis
The main principles of making standard of compensation are: (1) the company's overall business and the profit
level; (2) the overall salary level and dynamic index over past years; (3) difference in position and duty; (4)
86
relative importance and risks of position; (5) related post salary level in the same industry; (6) individual
professional ability.
(iii) Actual payment
Executives get monthly basic salary and annual salary after the issuance of annual examination.
Remuneration for directors, supervisors and senior executives in reporting period
In 10 thousand Yuan
Total Received
remuneration remuneration
Post-holding
Name Title Sex (F/M) Age before tax from related party
status
obtained from the of the Company
Company (Y/N)
Currently in
Liu Yong Chairman M 49 Y
office
Currently in
Ma Zhanjun Deputy Chairman M 58 37.5 Y
office
Currently in
Li Zhiming Director M 55 Y
office
Currently in
Jiang Xiuchang Director M 55 Y
office
Currently in
Lian Wanyong Director M 48 Y
office
Currently in
Li Dongjiu Director M 53 Y
office
Currently in
Lin Zhaoxiong Director, GM M 51 225 N
office
Independent Currently in
Chen Honghui M 47 12 N
Director office
Independent Currently in
Ou Yongliang M 49 8.46 N
Director office
Independent Currently in
Chen Shengqun M 56 8.46 N
Director office
Independent Currently in
Su Weiwei F 59 N
Director office
Independent
Xiong Chuxiong M 63 Office leaving 3.55 N
Director
Independent
Xiao Shengfang M 49 Office leaving 3.55 N
Director
Chairman of
Currently in
Wu Yijian supervisory M 48 Y
office
committee
Currently in
Liu Jingyun Supervisor F 42 Y
office
Currently in
Chen Guojing Staff supervisor F 48 62.9 N
office
Wang Huaiqin Staff supervisor M 61 Office leaving 8.02 N
Party secretary, Currently in
Lin Min M 54 202.5 N
Deputy GM office
Currently in
Zhao Xiaochuan Deputy GM M 55 180 N
office
Currently in
Liu Tianrao Deputy GM M 39 N
office
Currently in
Lin Xinyang Deputy GM M 54 157.5 N
office
Deputy party
secretary,
Secretary of
Currently in
Lang Baochun Committee for M 55 135 N
office
Discipline
Inspection,
General counsel
Wei Pingxiao CFO M 55 Currently in 157.5 N
87
office
Deputy GM,
Currently in
Chen Changbin Secretary of the M 51 135 N
office
Board
Total -- -- -- -- 1,336.94 --
Delegated equity incentive for directors and senior executives in reporting period
□ Applicable √ Not applicable
V. Particulars of workforce
1. Number of staff, professional composition and education background
The number of current employees of parent company (people) 117
The number of current employees of main subsidiaries (people) 24,704
Total number of current employees (people) 24,821
The total number of employees in payroll (people) 24,821
The total number of retired staff and workers that the parent
2,012
company and main subsidiaries need to bear the costs (people)
Professional composition
Category of professional composition Number of professional composition (people)
Production staff 35
Salesman 17,539
Technical staff 161
Financial staff 572
Administrative staff 156
Other 6,358
Total 24,821
Education background
Category of education Number (people)
Post-graduate qualification and above 155
Undergraduate 3,458
Junior college 9,153
Junior college below 12,055
Total 24,821
2. Remuneration policy
Sinopharm Accord and the subordinate enterprises provide perfect compensation and benefits for the staff, the
compensation level is closely combined with organization (total amount of labor, compensation strategy, job
value), staff (capacity development, performance results), and market (market level, talent competition). The
company adjusts the remuneration for staff having abilities and contributions every year by the responsibility
sorting, position evaluation, target remuneration range positioning, and the staff annual work performance and
ability assessment; at the same time, performance bonuses and performance closely link together, and realize win-
88
win of the interests of company and the interests of employees. Pay attention to the income growth requirements
of low-income groups, develop annual wage growth program, and implement after the deliberation and approval
of the workers' congress.
3. Training programs
Sinopharm Accord and its subsidiaries have put great emphasis on the development and cultivation of employee’s
career, built and improved training management system of the Company so as to cultivate the employee in a more
efficient way. The first, a training system has been built and the management system for employee training,
employee continuing education, interns and intern trainers have been promoted and conducted. The second, the
leadership of the Company has made a plan on the organization of training, and a specific position posted in
human resources department was dedicated for assisting the management at all levels to conduct employee
training. The third, regarding the category and curriculum of the training, the category included new employee
training, employee on-post training and leadership development training; the curriculum consisted of management
curriculum, genetic competency curriculum as well as professional skills curriculum. In addition, one-to-one on-
post coaching from the management to employee was also included. The forth, As to the assessment of training,
assessment methods at all levels were made to ensure the effects of employee training. By the end of 2018, the
input in the training for the headquarter of Sinopharm Accord Corporation, distribution operation and Guoda
Drugstore was seen at 1.93 million Yuan, by conducting various training on generic competency, professional
quality and management, on-post skills and continuing education of vocational qualification. A total number of
22,394 person-times of training and continuing education have been conducted, covering the middle and senior
management, junior management, specialty technical staffs as well as operators, with average learning time up to
more than 50 hours.
4. Labor outsourcing
√ Applicable □ Not applicable
Total number of working hours of labor outsourcing (Hour) 540,792
Total remuneration paid of labor outsourcing (RMB) 26,521,871.34
89
Section IX. Corporate Governance
I. Corporate governance of the Company
Articles of Association are formulated at governance level. In compliance with requirements of Articles, rules of
procedures for shareholders’ meeting, board and board of supervisors, working system of strategy committee,
nomination committee, internal risk control and audit committee, remuneration and evaluation committee, legal
compliance committee, general manager and secretary of the board, corporate governance system regarding
information disclosure, connected transactions, fund raising, performance of social responsibilities, inside
information and informant management, investor relation management, engagement of accounting firm and
prevention of occupation by major shareholders and connected parties of capital of listing companies are also
established.
During the reporting period, the “Articles of Association” and “Rules of Procedures of the Board of Directors”
were revised in accordance with regulatory requirements and governance needs. At the same time, in order to
promote the company’s legal construction and ensure the company’s standard operation, the company newly
established the Legal Compliance Committee of the Board of Directors and formulated the relevant working
system in accordance with laws and regulations and the relevant provisions of the Articles of Association and
combined with the actual situation of the company. The effective implementation of corporate governance system
ensures the effective performance of duties and responsibilities of respective committees, thereby facilitating the
board of supervisors to play a supervisory role and offering help for the board to make scientific decisions.
Is there any difference between the actual condition of corporate governance and relevant regulations about corporate governance for
listed company from CSRC?
□Yes √ No
There are no differences between the actual condition of corporate governance and relevant regulations about corporate governance
for listed company from CSRC.
II. Independence of the Company relative to controlling shareholders’ in aspect of businesses, personnel,
assets, organization and finance
The Company totally separates from the controlling shareholders in business, personnel, assets, institutions,
financial and other aspects, with independent and complete self-management ability.
1. The business: the Company was independent from controlling shareholders, having a complete business system
and self-managing ability; the company has independent procurement and sales system thus all procurement and
sales of drugs and raw materials is in charge of the purchasing department and subordinate subsidiary, branch and
90
production enterprises; production, supply, marketing and R & D separate from each other; the Company is a
legal market person with independent operation.
2. Personnel: procedures of the controlling shareholder nominating directors and general and deputy general
manager are legal; no intervene on the appointment and removal of personnel made by the board of directors and
shareholders’ meeting happened; the Company set up independent human resource department, responsible for
assessment, training and salary review on staff, making rules and regulations and handbook the employees should
abide by. Labor, personnel, wages and pension, medical insurance and other insurance are independently managed.
3. Institution: production and operation mechanism and administrative management is completely independent
from the controlling shareholder or actual controller; offices and sites of business operation separate from the
controlling shareholder; the Company established corporate governance structure where the board of directors,
board of supervisors and managers carry out their duties and exercise their respective duties in accordance with
relevant provisions of the articles of association.
4. Asset: property and rights relationship between the Company and the controlling shareholder is clear, with
independent operations; the company has independent production system, auxiliary production system and
supporting system; industrial property rights, trademarks, non-patented technology and other intangible assets
owned by the Company and its subsidiary.
5. Financial aspects: the Company established independent financial departments and independent financial
accounting system; the Company opened a bank account independently; the financial staff is independent without
taking part-time and receiving remuneration in the controlling shareholder; the Company pays tax independently.
III. Horizontal competition
√ Applicable □ Not applicable
Work
Name of Nature of
schedule and
Type controlling controlling Reason Solution measure
follow-up
shareholder shareholder
plan
In March 2016, Sinopharm
Distribution subsidiary of
Holding issued a commitment
Sinopharm Holding
letter of avoiding horizontal
established some social retail
competition with Sinopharm
pharmacy, which might has
Horizontal Sinopharm Accord, and promise to solve the Normally
SASAC horizontal competition with
competition Holding horizontal competition in respect implementing
the Guoda Drugstore, the
of pharmaceutical retail business
subordinate enterprise of the
in an appropriate way within five
listed company after
years since the date when
restructuring
reorganization completed
In March 2016, SINOPHARM
Distribution subsidiary of
issued a commitment letter of
Sinopharm Holding
avoiding horizontal competition
established some social retail
with Sinopharm Accord, and
pharmacy, which might has
Horizontal promise to solve the horizontal Normally
SINOPHARM SASAC horizontal competition with
competition competition in respect of implementing
the Guoda Drugstore, the
pharmaceutical retail business in
subordinate enterprise of the
an appropriate way within five
listed company after
years since the date when
restructuring
reorganization completed
91
IV. AGM (Annual General Meeting) and extraordinary shareholders’ general meeting held in
the Period
1. AGM
Ratio of investor
Session of meeting Type Date Date of disclosure Index of disclosure
participation
Juchao Website—
(http://www.cninfo.c
om.cn) “ Notice of
Annual General
AGM 63.00% 17 Apr. 2018 18 April 2018 Resolution of AGM
Meeting of 2017
of 2017” No.: 2018-
22
Juchao Website—
(http://www.cninfo.c
First extraordinary om.cn) “ Notice of
Extraordinary
general meeting of 62.98% 15 June 2018 16 June 2018 Resolution of First
general meeting
2018 extraordinary
general meeting of
2018” No.: 2018-29
Juchao Website—
(http://www.cninfo.c
Second om.cn) “ Notice of
extraordinary Extraordinary Resolution of
61.88% 19 Oct. 2018 20 Oct. 2018
general meeting of general meeting Second
2018 extraordinary
general meeting of
2018” No.: 2018-45
Juchao Website—
(http://www.cninfo.c
Third extraordinary om.cn) “ Notice of
Extraordinary
general meeting of 62.19% 26 Nov. 2018 27 Nov. 2018 Resolution of Third
general meeting
2018 extraordinary
general meeting of
2018” No.: 2018-49
2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore
□ Applicable √ Not applicable
V. Responsibility performance of independent directors
1. The attending of independent directors to Board meetings and shareholders general meeting
The attending of independent directors to Board Meeting & shareholders general meeting
Times of Absent the Times
Times of
Name of Board meeting Times of Meeting for attending the
Times of attending by Times of
independent supposed to entrusted the second shareholders
Presence communicatio Absence
director attend in the presence time in a row general
n
report period (Y/N) meeting
Chen Honghui 11 1 10 0 N 1
Ou Yongliang 8 0 8 0 N 0
Chen Shengqun 8 1 7 0 N 1
Xiong Chuxiong 3 1 2 0 N 1
Xiao Shengfang 3 0 2 1 N 0
Explanation of absent the Board Meeting for the second time in a row
92
2. Objection for relevant events from independent directors
Independent directors come up with objection about Company’s relevant matters
□Yes √No
Independent directors has no objections for relevant events in reporting period
3. Other explanation about responsibility performance of independent directors
The opinions from independent directors have been adopted
√ Yes □ No
Explanation on advice that accepted/not accepted from independent directors
During the reporting period, the independent directors performed their duties in a careful, diligent, dedicated
attitude in accordance with requirements of the "Working System of Independent Director", offered some useful
suggestions and opinions on business decision-making, legal affairs, financial management and other aspects;
carefully examined important matters those needed opinions of independent directors, made independent
judgments and issued a written independent opinion on major related transactions, daily related transactions,
accountancy hiring and other matters, playing a positive role in safeguarding the legitimate rights and interests of
small shareholders. Besides, independent directors played an important role in operation of special committee. At
the same time, the Company can guarantee independent directors and other directors of the same right to know.
During the reporting period, the independent directors have no objection on the related issues of the Company.
VI. Duty performance of the special committees under the board during the reporting period
(i) Duties fulfillment of the board of directors and audit committee on internal control over risk
Internal control on risk and Audit Committee of the board of directors of the company comprises three
independent directors and three directors, including the convener (professional accountant) is an independent
director. In accordance with relevant provisions of China Securities Regulatory Commission and Shenzhen Stock
Exchange and working system, Internal control on risk and Audit Committee of the board of directors seriously
performed duties in a dedicated attitude. In the annual financial report audit, they acted as supervisors, maintained
individuality of audit and issued a series of notices such as the Written Opinion on Financial Accounting
Statements Issued by the Company before CPA of Annual Examination Entered, the Written Opinion on Financial
Accounting Statements after Preliminary Audit Issued by CPA of Annual Examination, the Summary Report of
Internal Risk Control and Audit Committee on the Annual Audit Work of CPA as well as the Resolution on
Rehire the Audit Institution. Its main duties comprise the following:
1. Risk internal control and audit committee is responsible for determining the audit work schedule, negotiating
with CPA who engages in audit;
2. Before CPA enters, audit committee should review the financial statements prepared by the Company and issue
written opinions;
93
3. Strengthen communication with the CPA, and urge them to submit audit report within stipulated time with
urgency letter;
4. Review again the financial statements after the CPA issues preliminary opinion, and issue written opinions;
5. The Committee held annual work conference 2018, approved proposal of financial accounting report, summary
report of annual audit work of CPA and rehiring Ernst & Young CPA (Special General Partnership) as the audit
institution, and then formed a resolution to submit to board of directors for approval.
(ii) Duties fulfillment of Remuneration and Appraisal Committee
As special working mechanism of the board of directors, the remuneration and appraisal committee is responsible
for approving the assessment standard of directors and senior executives, formulating and reviewing
compensation policies and programs of directors and executive. And they take charge in examining according to
the standard and policies. The remuneration and appraisal committee is composed of three independent directors;
convener is Chen Honghui, an independent director.
During the reporting period, remuneration and assessment committee actively performed duty; clearly defined
their responsibilities; did serious research and appraisal on the remuneration and appraisal system, especially
salary, assessment system and program over directors, supervisors and senior executive. According to working
rules of the remuneration and appraisal committee, they have rights to check regular reports, meetings records,
business planning and other materials by telephone, interviews and other methods to learn the performance of
directors, executives. And they’re required to submit problems existing in implementation of system to the Board
of Directors and raise up suggestion on them. Their contents are as follows:
1. In 2018, the remuneration and appraisal committee carried out the performance evaluation of executives
according to the 2017 Annual operation standard and performance.
2. It proposed the "2019 Evaluation Scheme of Operating Performance", and submitted it to the board of directors
for approval.
3. The remuneration and appraisal committee approved salary of directors, supervisors and senior executives
disclosed in 2018 annual report. And it issued the following opinions:
Compensation decision procedures of directors, supervisors and senior management personnel was in accordance
with the provisions; the standard was in accordance with the remuneration system; the disclosure of 2018 annual
report about personnel salary of the directors, supervisors and senior management is real and accurate.
VII. Works from Supervisory Committee
The Company has risks in reporting period that found in supervisory activity from supervisory committee
□ Yes √ No
Supervisory committee has no objection about supervision events in reporting period
94
VIII. Examination and incentives of senior management
Senior executives of the Company took responsibility for the board of directors, in the reporting period, the board
of directors implemented the performance checking mechanism that the remuneration of senior executives related
with their performance checking, with achievement as direction, and made relevant reward and punishment
according to target completion. The Company’s relevant incentive and restriction mechanism gradually in order to
further exert the enthusiasm and creativity of senior executives, urge the senior executives to perform the
obligations of being honest and diligent. The Company had no incentive mechanism for senior executives such as
stock option, purchase of management team and equity held by owner.
IX. Internal Control
1. Details of major defects in IC appraisal report that found in reporting period
□Yes √ No
2. Appraisal Report of Internal Control
Disclosure date of full internal
25 April 2019
control evaluation report
Disclosure index of full internal ”Self-evaluation report of internal control for 2018” in Juchao website (www.cninfo.com.cn)
control evaluation report appointed by Shenzhen Stock Exchange
The ratio of the total assets of units
included in the scope of evaluation
accounting for the total assets on the 98.94%
company's consolidated financial
statements
The ratio of the operating income of
units included in the scope of
evaluation accounting for the 99.13%
operating income on the company's
consolidated financial statements
Defects Evaluation Standards
Category Financial Reports Non-financial Reports
Financial report defects are mainly judged Non-financial report defects are mainly judged
and decided by the degree of influence and and decided by the degree of influence and the
the likelihood of occurrence to the likelihood of occurrence of defects to the
misstatements of financial reports caused by validity of business process. (1) Significant
Qualitative criteria defects. (1) Significant defects: a combination defects: a combination of one or multiple
of one or multiple internal control defects that internal control defects that may cause the
exists in internal control and may cause the enterprise’s serious deviation to internal
material misstatements in financial statements control objectives; (2) Major defects: a
cannot be prevented, found or corrected in combination of one or multiple internal control
95
time; (2) Major defects: a combination of one defects whose severity level and economic
or multiple internal control defects that exists consequences are lower than significant
in internal control and has lower severity level defects but still may cause the enterprise’s
than significant defects but still should be deviation to internal control objectives; (3)
concerned by the superintendents of Common defects: other defects except for
enterprise financial reports; (3) Common significant and major defects.
defects: other defects except for significant
and major defects.
A quantitative criterion determines the degree
of importance of the company’s defects based
on the amount of direct loss and the degree of
significant influence to the company. (1)
Significant defects: the amount of direct
property loss is or more than 10 million Yuan,
or has been officially disclosed and caused
A quantitative criterion determines the degree negative effects to periodic report disclosure of
of importance of misstatements (including the joint-stock companies; (2) Major defects:
missing reports) in the consolidated the amount of direct property loss is between 5
Quantitative standard statements of listed companies based on the million and 10 million Yuan, or has been
consolidated statement data. (1) Significant punished by the national government
defects: equal to or greater than 5% of profit departments but has not caused negative
before tax effects to periodic report disclosure of the
joint-stock companies;(3) Common defects:
the amount of direct property loss is between
0.1 million and 5 million Yuan, or has been
punished by the provincial or sub-provincial
government departments but has not caused
negative effects to periodic report disclosure of
the joint-stock companies.
Amount of significant defects in
0
financial reports
Amount of significant defects in
0
non-financial reports
Amount of important defects in
0
financial reports
Amount of important defects in
0
non-financial reports
X. Auditing report of internal control
√ Applicable □ Not applicable
Deliberations in Internal Control Audit Report
According to relevant regulations and “Basic Rules of Internal Control for Enterprises”, China National Accord
Medicines Corporation Ltd. in all major aspects, keeps an efficiency of internal control of financial report dated
31 December 2018
96
Disclosure details of audit
Disclosed
report of internal control
Disclosure date of audit report
25 April 2019
of internal control (full-text)
Audit Report of Internal Control under the name of China National Accord
Index of audit report of
Medicines Corporation Ltd. released on Juchao Website
internal control (full-text)
(http://www.cninfo.com.cn)
Opinion type of auditing
Standard unqualified
report of IC
Whether the non-financial
No
report had major defects
Carried out modified opinion for internal control audit report from CPA
□Yes √ No
The internal control audit report, issued by CPA, has concerted opinion with self-evaluation report, issued from the Board
√ Yes □ No
97
Section X. Corporate Bond
Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when
annual report approved for released or fail to cash in full on due
No
98
Section XI. Financial Report
98
AUDITOR’S REPORT
Ernst & Young Hua Ming (2019) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
To the shareholders of China National Accord Medicines Corporation Ltd.
(I) Opinion
We have audited the financial statements of China National Accord Medicines Corporation Ltd. (the
“Company”), which comprise the consolidated and the Company’s balance sheets as at 31 December 2018,
and the consolidated and the Company’s income statements, the consolidated and the Company’s
statements of changes in equity and the consolidated and the Company’s statements of cash flows for the
year then ended, and notes to the financial statements.
In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated
and the Company’s financial position as at 31 December 2018, and the consolidated and the Company’s
financial performance and cash flows for the year then ended in accordance with Accounting Standards for
Business Enterprises (“ASBEs”).
(II) Basis for opinion
We conducted our audit in accordance with China Standards on Auditing (“CSAs”). Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial statements
section of our report. We are independent of the Company in accordance with China Code of Ethics for
Certified Public Accountants (the “Code”), and we have fulfilled our other ethical responsibilities in accordance
with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
(III) Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit
of the financial statements of the current period. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial
statements section of our report, including in relation to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our assessment of the risks of material misstatement of
the financial statements. The results of our audit procedures, including the procedures performed to address
the matters below, provide the basis for our audit opinion on the accompanying financial statements.
100
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2019) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
(III) Key audit matters (continued)
Key audit matter How our audit addressed the key audit
matter
Impairment of goodwill
The carrying value of goodwill amounted to The procedures performed in order to address
RMB833,547,800.60 as at 31 December 2018 this matter are as follows:
and was allocated to the Company’s cash- 1) We invited internal evaluation experts to
generating units (“CGUs”) of pharmaceutical assist in evaluating the goodwill impairment
distribution and retail pharmacy. method used and forecasted figures used in
Under ASBEs, the Company is required to the impairment test, especially the discount
annually perform the impairment test for rate and perpetual growth rate.
goodwill. The impairment test is based on the 2) We assessed the rationality of the forecasts
recoverable amount of the respective CGUs to used with respect to future revenues and
which the goodwill is allocated. The operating results, also compared the forecasts
recoverable amount of the CGUs is with the historical performance of the
determined by the higher of the present value respective CGUs and the industry trends. In
of the forecasted future cash flow and the fair particular, we re-examined the future revenue
value of the asset net of its disposal cost. growth rate, projected gross rate, related
Assumptions such as the forecasted future expenses and so on.
cash flows and discount rate are set up by 3) We also re-examined the sufficiency of
applying estimates and significant judgements disclosure regarding goodwill.
by management. Therefore, we consider this
to be a key audit matter.
The Company’s disclosures about impairment
of goodwill are included in note III (18, 34) and
note V (15) to the financial statements.
101
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2019) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
(III) Key audit matters (continued)
Key audit matter How our audit addressed the key audit
matter
Impairment of trade receivables
Major clients of the Company are medical The procedures performed in order to address
establishments, pharmacy chain stores, this matter are as follows:
monomer drugstores, community medical 1) We re-examined management’s internal
service centers, downstream distribution control that relates to impairment of trade
companies, etc. As at 31 December 2018, the receivables.
Company had net trade receivables of 2) We discussed the bad debt policy with
RMB9,336,861,647.92, 32.27% of the Group’s management and evaluated the sufficiency of
total assets. bad debt provision including the adequacy of
According to ASBE 22 – Recognition and the bad debt provision assessment method.
measurement of Financial Instruments, 3) We discussed with management regarding
management utilizes the expected credit loss the recoverability of individually significant
model to measure the impairment of financial trade receivables for which provision for bad
assets. Management’s estimation of the debt is recognized separately.
expected credit loss model is based on the 4) We tested the aging of trade receivables,
historical default rate of the Group and other including a test of information system
specific factors including types of client, aging automatic controls related to information
of the ending balance, collection history, write- system automatically generated aging
offs, the migration rate and estimated weighted analysis, carrying out analytical reviewing
financing cost. At the same time, management procedures for the aging analysis in order to
also takes into consideration forward-looking confirm the accuracy of basic data used by
information including whether disputes exist, management for trade receivable bad debt
expected macro-economic environment, etc. provision.
During the year, significant management 5) We reviewed the credit profile and carried
judgement and estimates were involved during out background check for significant clients.
the classification of the credit exposure 6) We reviewed and evaluated the sufficiency
portfolio and assessment of the expected of the Group’s disclosure related to trade
credit loss and therefore we consider this to be receivables.
a key audit matter.
The Company’s disclosures about impairment
of trade receivables are included in note III (8,
34) and note V (2) to the financial statements.
102
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2019) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
(IV) Other information
The management of the Company is responsible for the other information. The other information comprises
the information included in the annual report, other than the financial statements and our auditor’s report
thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
(V) Responsibilities of the management and those charged with governance for the financial
statements
The management of the Company is responsible for the preparation and fair presentation of the financial
statements in accordance with ASBEs, and for designing, implementing and maintaining such internal control
as the management determines is necessary to enable the preparation of financial statements to be free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting, unless management either intends to liquidate the Company or to cease
operations or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
103
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2019) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
(VI) Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with CSAs will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are generally considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with CSAs, we exercise professional judgement and maintain professional
scepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the management.
(4) Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify
our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Company to cease to continue as a going
concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the financial statements. We are
responsible for the direction, supervision and performance of the group audit. We remain solely
responsible for our audit opinion.
104
AUDITOR’S REPORT (Continued)
Ernst & Young Hua Ming (2019) Shen Zi No. 61295118_H01
China National Accord Medicines Corporation Ltd.
(VI) Auditor’s responsibilities for the audit of the financial statements (continued)
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence and to communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were
of most significance in the audit of the financial statements of the current period and are therefore the key
audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Ernst & Young Hua Ming LLP Chinese Certified Public Accountant: Li Jian Guang
(Engagement partner)
Chinese Certified Public Accountant: Yan Ping
Beijing, the People’s Republic of China 23 April 2019
Important Notice
This auditor’s report is an English translation of the auditor’s report for the audit engagements which adopt CSAs.
In case the English version does not conform to the Chinese version, the Chinese version prevails.
105
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET
As at 31 December 2018
(Expressed in Renminbi Yuan)
ASSETS Note V 31 December 2018 31 December 2017
Current assets
Cash and bank balances 1 8,089,781,304.56 4,191,655,438.51
Notes receivable and trade 2
receivables 10,694,173,577.55 9,093,607,443.96
Advances to suppliers 3 583,484,515.95 516,778,117.47
Other receivables 4 643,493,359.32 657,932,499.65
Inventories 5 4,389,335,942.19 3,781,858,238.12
Other current assets 6 95,347,629.18 78,947,644.62
Total current assets 24,495,616,328.75 18,320,779,382.33
Non-current assets
Financial assets available-for-sale 7 - 13,685,760.00
Long-term equity investments 8 1,880,393,786.10 1,650,619,373.09
Other equity instrument
investment 9 13,685,760.00 -
Other non-current financial assets 10 140,000,000.00 -
Investment properties 11 144,894,495.97 153,678,339.11
Fixed assets 12 607,933,827.67 551,710,434.02
Construction in progress 13 36,412,614.61 22,947,258.99
Intangible assets 14 319,207,126.15 325,751,430.88
Goodwill 15 833,547,800.60 830,729,152.75
Long-term prepaid expenses 16 311,328,706.46 252,247,050.79
Deferred tax assets 17 74,914,209.95 79,472,883.06
Other non-current assets 18 72,365,863.71 142,022,462.75
Total non-current assets 4,434,684,191.22 4,022,864,145.44
Total assets 28,930,300,519.97 22,343,643,527.77
The accompanying notes form an integral part of these financial statements.
106
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET (Continued)
As at 31 December 2018
(Expressed in Renminbi Yuan)
LIABILITIES AND SHAREHOLDERS’
Note V 31 December 2018 31 December 2017
EQUITY
Current liabilities
Short-term borrowings 20 2,597,652,702.43 1,561,354,521.64
Notes payable and trade payables 21 9,885,291,642.97 8,876,658,828.52
Advances from customers 22 - 216,938,239.32
Contract liabilities 23 255,590,612.37 -
Employee benefits payable 24 231,866,407.40 215,656,526.54
Tax payable 25 241,980,412.72 223,752,900.24
Other payables 26 1,539,436,971.93 1,030,329,660.02
Non-current liabilities due within one year 27 5,861,324.37 5,434,770.70
Other current liabilities 28 292,465.75 112,817.65
Total current liabilities 14,757,972,539.94 12,130,238,264.63
Non-current liabilities
Long-term borrowings 29 31,600,000.00 31,600,000.00
Long-term payables 30 4,563,978.52 10,132,537.14
Long-term employee benefits payable 31 2,050,000.00 1,777,000.00
Deferred income 32 91,491,170.40 125,082,372.53
Deferred tax liabilities 17 67,605,161.88 71,883,253.02
Other non-current liabilities 33 69,241,176.18 45,427,343.31
Total non-current liabilities 266,551,486.98 285,902,506.00
Total liabilities 15,024,524,026.92 12,416,140,770.63
The accompanying notes form an integral part of these financial statements.
107
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED BALANCE SHEET (Continued)
As at 31 December 2018
(Expressed in Renminbi Yuan)
LIABILITIES AND Note V 31 December 2018 31 December 2017
SHAREHOLDERS’ EQUITY
Shareholders’ equity
Share capital 34 428,126,983.00 428,126,983.00
Capital surplus 35 4,320,984,981.51 3,181,429,064.99
Surplus reserve 36 214,063,491.50 214,063,491.50
Retained earnings 37 6,655,257,147.27 5,572,952,806.39
Shareholders’ equity attributable to
shareholders of the parent 11,618,432,603.28 9,396,572,345.88
Non-controlling interests 2,287,343,889.77 530,930,411.26
Total shareholders’ equity 13,905,776,493.05 9,927,502,757.14
Total liabilities and shareholders’
equity 28,930,300,519.97 22,343,643,527.77
The accompanying notes form an integral part of these financial statements.
The financial statements have been signed by:
Legal representative: Financial controller: Head of Accounting Department:
108
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED INCOME STATEMENT
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
Note V 2018 2017
Operating revenue 38 43,122,385,521.23 41,263,393,427.41
Less: Operating costs 38 38,024,108,631.15 36,819,552,915.80
Tax and surcharges 39 121,012,139.02 119,920,418.18
Selling expenses 40 2,762,789,885.77 2,305,909,071.71
Administrative expenses 41 783,338,308.19 735,953,967.13
Finance costs 42 112,862,739.12 110,360,539.56
- Interest expense 195,256,226.47 135,832,879.33
- Interest income 81,119,506.63 35,012,199.48
Impairment loss 43 2,744,605.36 (2,470,696.74)
Impairment losses on financial
assets 44 298,479.55 -
Add: Other incomes 45 28,458,401.31 24,391,309.91
Investment income 46 319,897,172.23 264,540,020.24
Incl: Investment income from
associates 319,903,890.47 263,825,834.56
Gain on disposal of assets 47 7,392,547.56 792,138.38
Operating profits 1,670,978,854.17 1,463,890,680.30
Add: Non-operating income 48 12,715,353.51 11,412,488.21
Less: Non-operating expenses 49 4,764,850.15 9,274,194.70
Total profit 1,678,929,357.53 1,466,028,973.81
Less: Income taxes 51 330,498,245.68 309,290,127.72
Net profit 1,348,431,111.85 1,156,738,846.09
Incl: Net profit of an acquiree before
business combinations involving
enterprises under common control - (1,096.00)
Profit or loss from continuing operation 1,348,431,111.85 1,156,738,846.09
Attributable to:
Owners of the parent 1,210,742,435.78 1,057,791,930.67
Non-controlling interests 137,688,676.07 98,946,915.42
Total comprehensive income 1,348,431,111.85 1,156,738,846.09
Incl: Total comprehensive income for the year
attributable to shareholders of the parent 1,210,742,435.78 1,057,791,930.67
Total comprehensive income for the year
attributable to non-controlling interests 137,688,676.07 98,946,915.42
Earnings per share 52
Basic earnings per share 2.83 2.47
Diluted earnings per share 2.83 2.47
The accompanying notes form an integral part of these financial statements.
109
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
Shareholders’ equity attributable to shareholders of the parent
2018
Share capital Capital surplus Surplus reserve Retained earnings Subtotal Non-controlling interests Total equity
Opening balance of the current
year
428,126,983.00 3,181,429,064.99 214,063,491.50 5,572,952,806.39 9,396,572,345.88 530,930,411.26 9,927,502,757.14
Movements in the current year - 1,139,555,916.52 - 1,082,304,340.88 2,221,860,257.40 1,756,413,478.51 3,978,273,735.91
(1) Total comprehensive income - - - 1,210,742,435.78 1,210,742,435.78 137,688,676.07 1,348,431,111.85
(2) Capital paid and reduced by
owners - 1,139,555,916.52 - - 1,139,555,916.52 1,679,926,889.17 2,819,482,805.69
1.Capital injection by owners - 1,120,284,623.39 - - 1,120,284,623.39 2,793,191,200.00 3,913,475,823.39
2.Others - 19,271,293.13 - - 19,271,293.13 (1,113,264,310.83) (1,093,993,017.70)
(3) Profit distribution - - - (128,438,094.90) (128,438,094.90) (61,202,086.73) (189,640,181.63)
1.Distribution to equity owners - - - (128,438,094.90) (128,438,094.90) (61,202,086.73) (189,640,181.63)
Closing balance of the current year 428,126,983.00 4,320,984,981.51 214,063,491.50 6,655,257,147.27 11,618,432,603.28 2,287,343,889.77 13,905,776,493.05
The accompanying notes form an integral part of these financial statements.
110
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
Shareholders’ equity attributable to shareholders of the parent
2017 Non-controlling interests Total equity
Other equity
Share capital instruments Capital surplus Surplus reserve Retained earnings Subtotal
Closing balance of the preceding year 362,631,943.00 65,495,040.00 3,151,518,024.92 181,315,971.50 4,689,189,642.51 8,450,150,621.93 463,832,912.18 8,913,983,534.11
Business combination involving enterprises
under common control - - 1,200,000.00 - 1,076,241.59 2,276,241.59 1,517,494.39 3,793,735.98
Opening balance of the current year 362,631,943.00 65,495,040.00 3,152,718,024.92 181,315,971.50 4,690,265,884.10 8,452,426,863.52 465,350,406.57 8,917,777,270.09
Movements in the current year 65,495,040.00 (65,495,040.00) 28,711,040.07 32,747,520.00 882,686,922.29 944,145,482.36 65,580,004.69 1,009,725,487.05
(1) Total comprehensive income - - - - 1,057,791,930.67 1,057,791,930.67 98,946,915.42 1,156,738,846.09
(2) Capital paid and reduced by owners 65,495,040.00 (65,495,040.00) 28,711,040.07 - (1,075,583.99) 27,635,456.08 20,214,810.63 47,850,266.71
1.Capital injection by owners 5,114,297.00 (5,114,297.00) - - - - 14,873,000.00 14,873,000.00
2.Significant reorganization 60,380,743.00 (60,380,743.00) (3,430,029.00) - - (3,430,029.00) - (3,430,029.00)
3.Business combination involving
enterprises under common control - - (1,200,000.00) - (1,075,583.99) (2,275,583.99) (1,517,055.99) (3,792,639.98)
4.Business combination not involving
enterprises under common control - - - - - - 6,858,866.62 6,858,866.62
5.Others - - 33,341,069.07 - - 33,341,069.07 - 33,341,069.07
(3) Profit distribution
- - - 32,747,520.00 (174,029,424.39) (141,281,904.39) (53,581,721.36) (194,863,625.75)
1. Transferred from surplus reserve - - - 32,747,520.00 (32,747,520.00) - - -
2. Distribution to equity owners - - - - (141,281,904.39) (141,281,904.39) (53,581,721.36) (194,863,625.75)
Closing balance of the current year 428,126,983.00 - 3,181,429,064.99 214,063,491.50 5,572,952,806.39 9,396,572,345.88 530,930,411.26 9,927,502,757.14
The accompanying notes form an integral part of these financial statements.
111
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED CASH FLOW STATEMENT
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
Note V 31 December 2018 31 December 2017
1.CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of goods or rendering
of services 46,794,007,122.39 46,403,001,555.00
Tax refunds 1,777,623.17 7,687,909.30
Cash receipts related to other operating activities 53 679,596,722.04 340,666,056.90
Sub-total of cash inflows from operating activities 47,475,381,467.60 46,751,355,521.20
Cash paid for goods and services 41,436,895,750.53 41,242,898,835.78
Cash paid to and on behalf of employees 1,893,939,719.20 1,684,046,853.72
Cash paid for all types of taxes 1,096,228,714.78 1,092,685,949.27
Cash payments related to other operating
activities 53 1,725,710,930.82 1,446,431,970.61
Sub-total of cash outflows from operating
activities 46,152,775,115.33 45,466,063,609.38
Net cash flows from operating activities 54 1,322,606,352.27 1,285,291,911.82
2.CASH FLOWS FROM INVESTING ACTIVITIES
Cash received from returns on investments 131,401,264.72 61,204,993.30
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets 5,978,720.99 1,811,126.55
Cash received from recovery of investments 54 2,468,522.33 -
Cash receipts related to other investing activities 98,793,085.40 75,259,200.00
53
Sub-total of cash inflows from investing activities 238,641,593.44 138,275,319.85
The accompanying notes form an integral part of these financial statements.
112
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
CONSOLIDATED CASH FLOW STATEMENT (Continued)
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
Note V 2018 2017
2.CASH FLOWS FROM INVESTING ACTIVITIES (Continued)
Cash paid for acquisition of fixed assets
intangible assets and other long-term assets 255,481,604.79 204,345,540.74
Cash paid for acquisition of investments 124,575,351.00 73,950,980.00
Net cash paid for acquisition of subsidiaries and
54
other business units - 53,356,516.15
Cash payments related to other investing activities 53 81,042,904.53 92,803,476.90
Sub-total of cash outflows from investing activities 461,099,860.32 424,456,513.79
Net cash flows from investing activities (222,458,266.88) (286,181,193.94)
3.CASH FLOWS FROM FINANCING ACTIVITIES
Cash proceeds from investments by others 2,793,191,200.00 14,873,000.00
Incl: Cash proceeds from subsidiary investments by non-
controlling shareholders 2,793,191,200.00 14,873,000.00
Cash received from borrowings 86,231,834.83 261,571,499.94
Cash receipts related to other financing activities 53 484,038,819.20 238,476,708.52
Sub-total of cash inflows from financing activities 3,363,461,854.03 514,921,208.46
Cash repayments for debts 79,670,200.30 445,758,196.23
Cash payments for distribution of dividends or profit and
interest expenses 340,534,805.52 295,787,225.16
Incl: Profit and dividends paid to non-controlling
shareholders of subsidiaries 66,702,208.88 49,621,410.48
Cash payments related to other financing activities 53 84,475,782.06 250,398,903.79
Sub-total of cash outflows from financing activities 504,680,787.88 991,944,325.18
Net cash flows from financing activities 2,858,781,066.15 (477,023,116.72)
4.EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON
CASH AND CASH EQUIVALENTS (310,822.25) 495,664.83
5.NET INCREASE IN CASH AND CASH EQUIVALENTS 3,958,618,329.29 522,583,265.99
Add: Cash and cash equivalents at beginning of the year 3,673,498,691.48 3,150,915,425.49
6.CASH AND CASH EQUIVALENTS AT END OF YEAR 54
7,632,117,020.77 3,673,498,691.48
The accompanying notes form an integral part of these financial statements.
113
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY BALANCE SHEET
As at 31 December 2018
(Expressed in Renminbi Yuan)
ASSETS Note XIV 31 December 2018 31 December 2017
Current assets
Cash and bank balances 1,817,654,598.01 1,776,696,342.87
Notes receivable and trade
1
receivables 695,107,574.33 545,267,378.99
Advances to suppliers 4,760,182.00 1,138,312.26
Other receivables 2 1,541,980,883.50 1,517,882,239.81
Inventories 158,166,185.65 172,022,676.96
Other current assets 39,482.38 788,964.90
Total current assets 4,217,708,905.87 4,013,795,915.79
Non-current assets
Long-term equity investments 3 7,432,906,692.24 7,180,306,084.56
Debt investments at fair value through
current year profit or loss 140,000,000.00 -
Investment properties 1,955,854.46 2,763,831.92
Fixed assets 21,362,422.03 13,831,103.54
Intangible assets 2,452,222.51 1,287,775.78
Long-term deferred expenses 7,481,809.53 5,543,217.86
Deferred tax assets - 2,764,724.75
Other non-current assets 7,000,000.00 71,808,611.00
Total non-current assets 7,613,159,000.77 7,278,305,349.41
Total assets 11,830,867,906.64 11,292,101,265.20
The accompanying notes form an integral part of these financial statements.
114
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY BALANCE SHEET (Continued)
As at 31 December 2018
(Expressed in Renminbi Yuan)
LIABILITIES AND SHAREHOLDERS’
31 December 2018 31 December 2017
EQUITY
Current liabilities
Short-term borrowings 539,000,000.00 707,000,000.00
Notes payable and trade payables 694,367,042.00 674,450,646.65
Advances from customers - 1,912,503.90
Contract liabilities 4,182,083.40 -
Employee benefits payable 36,233,563.12 33,592,851.93
Tax payables 13,426,601.90 42,386,907.00
Other payables 1,481,817,856.56 1,415,723,188.96
Other current liabilities 226,427.99 112,817.65
Total current liabilities 2,769,253,574.97 2,875,178,916.09
Non-current liabilities
Long-term borrowings 31,600,000.00 31,600,000.00
Payables for specific projects 800,000.00 800,000.00
Long-term employee benefits payable 118,000.00 -
Deferred income 1,687,899.50 2,054,250.00
Deferred tax liabilities 2,298,426.39 3,773,319.00
Total non-current liabilities 36,504,325.89 38,227,569.00
Total liabilities 2,805,757,900.86 2,913,406,485.09
The accompanying notes form an integral part of these financial statements.
115
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY BALANCE SHEET (Continued)
As at 31 December 2018
(Expressed in Renminbi Yuan)
LIABILITIES AND SHAREHOLDERS’
31 December 2018 31 December 2017
EQUITY
Shareholders’ equity
Share capital 428,126,983.00 428,126,983.00
Capital surplus 4,426,362,777.26 4,407,091,484.13
Surplus reserves 214,063,491.50 214,063,491.50
Retained earnings 3,956,556,754.02 3,329,412,821.48
Total shareholders’ equity 9,025,110,005.78 8,378,694,780.11
Total liabilities and shareholders’ equity 11,830,867,906.64 11,292,101,265.20
The accompanying notes form an integral part of these financial statements.
116
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY INCOME STATEMENT
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
Note XIV 2018 2017
Operating revenue 4 3,481,446,876.93 3,346,827,141.08
Less: Operating costs 4 3,317,568,640.99 3,211,668,647.02
Tax and surcharge 4,618,925.42 10,375,051.96
Selling expenses 61,120,258.01 51,050,354.52
Administrative expenses 77,784,120.97 70,636,774.06
Finance costs (42,814,941.43) (54,129,294.66)
Incl: Interest expense 42,706,716.57 16,422,254.07
Incl: Interest income 86,569,728.06 71,381,149.52
Impairment loss 466,647.08 (72,116.23)
Impairment losses on financial assets (983,688.72) -
Add: Other income 4,916,458.17 4,184,607.04
Investment income 5 704,244,539.45 640,957,400.23
Incl: Investment income from
associates 342,730,085.14 286,535,212.21
Gain on disposal of assets 11,116.50 884.46
Operating profits 772,859,028.73 702,440,616.14
Add: Non-operating income 46,446.88 39,253.56
Less: Non-operating expenses 183,374.99 1,861,760.18
Total profit 772,722,100.62 700,618,109.52
Less: Income taxes 17,140,073.18 26,999,590.73
Net profit 755,582,027.44 673,618,518.79
Profit or loss from continuing operations 755,582,027.44 673,618,518.79
Total comprehensive income 755,582,027.44 673,618,518.79
The accompanying notes form an integral part of these financial statements.
117
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
2018 Share capital Capital surplus Surplus reserve Retained earnings Total equity
Opening balance of the current year 428,126,983.00 4,407,091,484.13 214,063,491.50 3,329,412,821.48 8,378,694,780.11
Movements in the current year - 19,271,293.13 - 627,143,932.54 646,415,225.67
(1) Total comprehensive income - - - 755,582,027.44 755,582,027.44
(2) Capital paid and reduced by owners - 19,271,293.13 - - 19,271,293.13
1.Others - 19,271,293.13 - - 19,271,293.13
(3) Profit distribution - - - (128,438,094.90) (128,438,094.90)
1. 1.Distribution to equity owners - - - (128,438,094.90) (128,438,094.90)
Closing balance of the current year 428,126,983.00 4,426,362,777.26 214,063,491.50 3,956,556,754.02 9,025,110,005.78
The accompanying notes form an integral part of these financial statements.
118
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
Other equity
2017 Share capital Capital surplus Surplus reserve Retained earnings Total equity
instruments
Opening balance of the current year 362,631,943.00 65,495,040.00 4,381,845,619.03 181,315,971.50 2,829,823,727.08 7,821,112,300.61
Movements in the current year 65,495,040.00 (65,495,040.00) 25,245,865.10 32,747,520.00 499,589,094.40 557,582,479.50
(1) Total comprehensive income - - - - 673,618,518.79 673,618,518.79
(2) Capital paid and reduced by owners 65,495,040.00 (65,495,040.00) 25,245,865.10 - - 25,245,865.10
1.Capital injection by owners 5,114,297.00 (5,114,297.00) - - - -
2.Significant reorganization 60,380,743.00 (60,380,743.00) (3,430,029.00) - - (3,430,029.00)
3.Others - - 28,675,894.10 - - 28,675,894.10
(3) Profit distribution - - - 32,747,520.00 (174,029,424.39) (141,281,904.39)
1.Distribution to equity owners - - - - (141,281,904.39) (141,281,904.39)
2. Transferred from surplus reserve - - - 32,747,520.00 (32,747,520.00) -
Closing balance of the current year 428,126,983.00 - 4,407,091,484.13 214,063,491.50 3,329,412,821.48 8,378,694,780.11
The accompanying notes form an integral part of these financial statements.
119
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY CASH FLOW STATEMENT
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
2018 2017
1.CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from sales of goods or rendering
of services 3,650,605,970.28 3,618,686,142.56
Cash receipts related to other operating
activities 107,373,506.99 42,311,981.52
Sub-total of cash inflows from operating
activities 3,757,979,477.27 3,660,998,124.08
Cash paid for goods and services 3,406,447,268.87 3,317,975,162.52
Cash paid to and on behalf of employees 79,402,008.01 74,008,955.58
Cash paid for all types of taxes 36,195,123.57 45,705,409.43
Cash payments related to other operating
activities 55,863,168.11 45,906,623.45
Sub-total of cash outflows from operating
activities 3,577,907,568.56 3,483,596,150.98
Net cash flows from operating activities 180,071,908.71 177,401,973.10
2. CASH FLOWS FROM INVESTING ACTIVITIES
Cash received from returns of investments 525,074,396.36 456,706,957.70
Net cash received from disposal of fixed assets,
intangible assets and other long-term assets 44,700.00 -
Cash receipts related to other investing activities 1,574,115,586.01 2,219,069,200.00
Sub-total of cash inflows from investing activities 2,099,234,682.37 2,675,776,157.70
Cash paid for acquisition of fixed assets,
intangible assets and other long-term assets 11,649,093.77 37,669,557.28
Cash paid for investment 90,000,000.00 1,046,650,980.00
Net cash paid for purchasing subsidiaries and
other business - 17,549,020.00
Cash payments related to other investing
activities 1,749,321,606.82 2,067,489,918.90
Sub-total of cash outflows from investing
activities 1,850,970,700.59 3,169,359,476.18
Net cash flows from investing activities 248,263,981.78 (493,583,318.48)
The accompanying notes form an integral part of these financial statements.
120
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
COMPANY CASH FLOW STATEMENT (Continued)
For the Year ended 31 December 2018
(Expressed in Renminbi Yuan)
2018 2017
3. CASH FLOWS FROM FINANCING ACTIVITIES
Cash received from borrowings 10,000,000.00 41,600,000.00
Cash receipts related to other financing
activities 17,388,748,779.90 16,514,221,231.02
Sub-total of cash inflows from financing
activities 17,398,748,779.90 16,555,821,231.02
Cash repayments for debts 10,000,000.00 41,600,000.00
Cash payments for distribution of dividends,
profit or interest expenses 161,361,930.89 150,643,594.49
Cash payments related to other financing
activities 17,614,453,662.11 15,613,029,417.64
Sub-total cash outflows from financing activities 17,785,815,593.00 15,805,273,012.13
Net cash flows from financing activities (387,066,813.10) 750,548,218.89
4.EFFECT OF FOREIGN EXCHANGE RATE
CHANGES ON CASH AND CASH
EQUIVALENTS (310,822.25) 288,059.50
5. NET INCREASE IN CASH AND CASH
EQUIVALENTS 40,958,255.14 434,654,933.01
Add: Cash and cash equivalents at beginning of
the year 1,776,696,342.87 1,342,041,409.86
6. CASH AND CASH EQUIVALENTS
AT END OF YEAR 1,817,654,598.01 1,776,696,342.87
The accompanying notes form an integral part of these financial statements.
121
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
I Profile of the Company
As approved by the People’s Government of Shenzhen (SFBF (1993) No.356), China National
Accord Medicines Corporation Ltd. (hereinafter referred to as the “the Company”), formerly
known as Shenzhen Health Mineral Water Corp., Ltd., was registered as a joint stock liability
limited company on 1 February 1993 through stock transformation. In March 1993, with the
approval from the Shenzhen Branch of the People’s Bank of China, the Company issued 30
million A shares (including 16.5 million public shares, 3.5 million employee shares and 10 million
corporation shares) and 20 million B shares. After this issuance, the Company’s share capital
was RMB105 million. Through converting capital surplus into share capital, bonus issues and
issuance of shares for years, the share capital of the Company increased to 428.13 million as at
31 December 2018.
In November 2000, the Company entered into an Asset Exchange Agreement with Shenzhen
Investment Management Company, the original major shareholder of the Company, to exchange
all the assets and liabilities of the Company as of 31 August 2000 for Shenzhen Investment
Management Company’s 100% equity interests in 11 pharmaceutical companies and certain
properties as well as 51% equity interests in Shenzhen Tefa Modern Computer Co., Ltd. The
above asset exchange proposal was approved by shareholders in the Second Extraordinary
General Meeting on 29 December 2000. The transaction was completed on 8 January 2001.
On 18 February 2004, the Company’s original major shareholder, Shenzhen Investment
Management Company, entered into a Stock Transfer Agreement with Sinopharm Group Co.,
Ltd. (hereinafter referred to as “Sinopharm Group”) to transfer its 43.33% shares in the Company
to Sinopharm Group. The legal procedures of the above equity transfer were completed on 9
December 2004. At the same time, as approved by the State-owned Assets Supervision and
Administration Commission of the State Council (GZCQ (2004) No.525) and the China
Securities Regulatory Commission (ZJGSZ (2004) No.94), the nature of these shares changed
from state-owned stock to state-owned legal entity stock and Sinopharm Group became the
largest shareholder of the Company.
On 14 April 2006, the Company’s proposal on reformation of segregated stocks was approved.
To gain liquidity for the restricted stocks of the Company, the holders of the restricted stocks of
the Company agreed to pay the following consideration: based on the stock registration as of 27
April 2006, the Company issued bonus shares on 28 April 2006 at the ratio of 3 shares to every
10 A shares to liquidated A-shareholders which went public on the same day. After this bonus
issue, the total number of shares of the Company remained unchanged with corresponding
changes in the composition of shareholdings.
On 14 March 2014, the Company issued 74,482,543 ordinary shares (A shares) through the
non-public offering. Par value per share is RMB1 yuan. The shares shall not be transferred
within 36 months since the issue date. The total number of shares of the Company was
362,631,943 since the date of issue.
122
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
I Profile of the Company (Continued)
The Company acquired the companies under common control, including Sinopharm Holding
Guoda Pharmacy Co., Ltd. (“Guoda Pharmacy”), Foshan Nanhai Medicine Group Co., Ltd.
(“Foshan Nanhai”), Guangdong South Pharmaceutical Foreign Trade Co., Ltd. (“South Pharma
& Trade”) and Guangdong Dong Fang Uptodate & Special Medicines Co., Ltd. (“Guangdong
Uptodate & Special Medicines”) by issuing shares and raised supporting funds by issuing shares
to Ping An Asset Management Co., Ltd. to acquire the non-controlling interest of South Pharma
& Trade. The relevant shares were successfully issued and listed on 5 January 2017. Afterwards,
the total number of shares of the Company increased to 428,126,983.
As of 31 December 2018, the total share capital was 428,126,983.
The Company is registered with Shenzhen Administration for Industry & Commerce. Its Uniform
Social Credit Code is 91440300192186267U. The operation period of the Company is from 2
August 1986 to the long term. The registered capital of the Company is RMB428.13 million. The
legal representative of the Company is Lin Zhaoxiong.
The approved scope of business of the Company and its subsidiaries (together “the Group”)
includes: the wholesale of Chinese herbal slices, traditional Chinese medicine preparations, bulk
pharmaceutical drugs, chemical preparations, bulk antibiotic drugs, antibiotic preparations,
biochemical drugs, biological products (including vaccines and in vitro diagnostic reagents
psychotropic drugs and preparations, narcotic drugs, toxic drugs for medical use, protein
assimilation preparation and peptide hormones; trade of dietary supplements; industrial
investment holding; domestic trade; material supply and the marketing industry (other than
special licensing); sale of ambulances; trading of second-class and third-class medical
equipment; project investment; property management and leasing of self-owned properties;
pharmacovigilance and medical information consulting; parking operation; logistics and related
services; the package agency business; logistic design; import and export services (excluding
projects that are prohibited by the country; limited projects have to be approved before
operating).
Subsidiaries consolidated in the financial statements for the current year and change in the
consolidation scope are shown in Note VI.
The Group’s parent and ultimate parent companies are Sinopharm Group and China National
Pharmaceutical Group Corporation (“CNPGC”) , respectively.
These financial statements were authorized for issue by the board of directors of the Company
on 23 April 2019.
123
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
II Basis of preparation
The financial statements were prepared in accordance with the Basic Standard and specific
standards of Accounting Standards for Business Enterprises issued by the Ministry of Finance
and the specific accounting standards, application guidance, interpretation and other relevant
regulations issued or amended thereafter (hereafter collectively referred to as “Accounting
Standards for Business Enterprises” or “CAS”).
These financial statements are prepared on a going concern basis.
Except for certain financial instruments, the financial statements have been prepared using the
historical cost as the principle of measurement. Where assets are impaired, provisions for asset
impairment are made in accordance with the relevant requirements.
124
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates
1.Statement of compliance with Accounting Standards for Business Enterprises
The financial statements of the Company for the year ended 31 December 2018 are in
compliance with Accounting Standards for Business Enterprises, and truly and completely
present the financial position of the Group and the Company as of 31 December 2018 and the
operating results, cash flows and other information of the Group and the Company for the year
then ended.
2.Accounting year
The Group’s accounting year begins on 1 January and ends on 31 December.
3.Functional currency
The functional currency is Renminbi (RMB).
4.Business combinations
(a)Business combinations involving entities under common control
Assets and liabilities (including goodwill arising from the ultimate controlling shareholder’s
acquisition of the party being absorbed) that are obtained by the absorbing party in a business
combination shall be measured at their carrying amounts at the combination date as recorded by
the party being absorbed. The difference between the carrying amount of the net assets
obtained and the carrying amount of the consideration paid for the combination (or the
aggregate face value of shares issued as consideration) shall be adjusted to share premium
under capital surplus. If the capital surplus is not sufficient to absorb the difference, any excess
shall be adjusted against retained earnings. The transaction costs of issuing equity securities or
debt securities for a business combination are recognized at the initial recognition amount of
equity securities or debt securities.
125
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
4.Business combinations (Continued)
(b)Business combinations involving enterprises not under common control
The cost of combination and identifiable net assets obtained by the acquirer in a business
combination are measured at fair value at the acquisition date. Where the cost of the
combination exceeds the acquirer’s interest in the fair value of the acquirer’s identifiable net
assets, the difference is recognized as goodwill; where the cost of combination is lower than the
acquirer’s interest in the fair value of the acquirer’s identifiable net assets, the difference is
recognized in profit or loss for the current period. Costs directly attributable to the combination
are included in profit or loss in the period in which they are incurred. Transaction costs
associated with the issue of equity or debt securities for the business combination are included
in the initially recognized amounts of the equity or debt securities.Where the business
combination not involving enterprises under common control which is achieved in stages, the
acquirer’s previously held equity interests in the acquiree are remeasured at the fair value on the
acquisition date, with the difference between the fair value and carrying amount recognized as
investment income for the current period. If the acquirer’s previously held equity interests of the
acquiree involve other comprehensive income (“OCI”) under the equity method, the accounting
treatment is conducted on the same basis as would have been required if the investee had
directly disposed of the related assets or liabilities, and the changes in shareholders’ equity other
than net profit or loss, OCI and profit distributions are charged to profit or loss for the current
period on the acquisition date. For financial assets at fair value through OCI held before the
acquisition date, changes in fair value that was accumulated through OCI will transfer to retained
earnings.
126
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
5.Preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all
of its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-
consolidated from the date that such control ceases. For a subsidiary that is acquired in a
business combination involving enterprises under common control, it is included in the
consolidated financial statements from the date when it, together with the Company, comes
under common control of the ultimate controlling party. The portion of the net profits realized
before the combination date is presented separately in the consolidated income statement.
In preparing the consolidated financial statements, where the accounting policies and the
accounting periods of the Company and subsidiaries are inconsistent, the financial statements of
the subsidiaries are adjusted in accordance with the accounting policies and the accounting
period of the Company. For subsidiaries acquired from business combinations involving
enterprises not under common control, the individual financial statements of the subsidiaries are
adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant intra-group balances, transactions and unrealized profits are eliminated in the
consolidated financial statements. The portion of a subsidiary’s equity and the portion of a
subsidiary’s net profits, losses and comprehensive income for the period not attributable to the
Company are recognized as non-controlling interests and presented separately in the
consolidated financial statements within equity, net profits and total comprehensive income,
respectively. The unrealized gain or loss from selling assets to subsidiaries fully offsets the net
income attributable to equity holders of the Company. The unrealized gain or loss from
purchasing assets from subsidiaries offsets the net income attributable to equity holders of the
Company and attributable to the non-controlling interest by the distribution proportion regarding
the Company and the subsidiary. The unrealized gain or loss from a transaction between
subsidiaries offsets the net income attributable to equity holders of the Company and attributable
to the non-controlling interest by the distribution proportion regarding the Company and the
selling side of the subsidiaries. If different recognition perspectives for the same transaction
arise within different accounting identities which are set up, there is an adjustment for the
transaction from the Group’s perspective.
When the Group loses control of a subsidiary in multiple transactions in which it disposes of its
long-term equity investment in the subsidiary in stages, if each of the multiple transactions does
not form part of a bundled transaction, the transactions conducted before the loss of control of
the subsidiary are accounted for in accordance with the accounting policy for partial disposal of
the equity investment in subsidiaries where control is retained. If each of the multiple
transactions forms part of a bundled transaction which eventually results in the loss of control in
the subsidiary, these multiple transactions are accounted for as a single transaction. In the
consolidated financial statements, the difference between the consideration received and the
corresponding proportion of the subsidiary’s net assets (calculated continuously from the
acquisition date) in each transaction prior to the loss of control shall be recognized in other
comprehensive income and transferred to profit or loss when the parent eventually loses control
of the subsidiary.
127
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
6. Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on
demand, and short-term and highly liquid investments that are readily convertible to known
amounts of cash and are subject to an insignificant risk of changes in value.
7. Foreign currency translation
Foreign currency transactions are translated into RMB using the exchange rates prevailing at the
dates of the transactions.
At the balance sheet date, monetary items denominated in foreign currencies are translated into
RMB using the spot exchange rates on the balance sheet date. Exchange differences arising
from these translations are recognized in profit or loss for the current period, except for those
attributable to foreign currency borrowings that have been taken out specifically for the
acquisition or construction of qualifying assets, which are capitalized as part of the cost of those
assets. Non-monetary items denominated in foreign currencies that are measured at historical
cost are translated at the balance sheet date using the spot exchange rates at the dates of the
transactions. The effect of exchange rate changes on cash is presented separately in the cash
flow statement.
8.Financial instruments (applicable from 1 January 2018)
Financial instruments are the contracts that formed the financial assets of one entity, and at the
same time formed the financial liabilities or equity instruments of other entities.
Recognition and derecognition of financial instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the instrument.
The Group derecognises a financial asset, part of a financial asset or group of financial assets,
i.e., offset from the accounts and statement of financial position, if either of the following
conditions is satisfied:
(1)The contractual rights to the cash flows from the financial asset expire; or
(2) The contractual rights to the cash flows from the financial asset are transferred out, or obligated
to transfer out all generated cash flows on receipt; and (a) substantially all the risks and rewards
of ownership of the financial asset are transferred to the transferee; or (b) the Group neither
transfers nor retains substantially all the risks and rewards of ownership of the financial asset,
but has not retained control of the financial asset.
128
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
8.Financial instruments (applicable from 1 January 2018) (Continued)
Recognition and derecognition of financial instruments (Continued)
The Group derecognises a financial liability only when the underlying present obligation is
settled, discharged or expired. An agreement to replace the original financial liability with a new
financial liability with substantially different terms, or to modify the original financial liability’s
terms substantially, is accounted for as an extinguishment of the original financial liability and the
recognition of a new financial liability. The difference between the carrying amount of the
financial liability Derecognized and the new financial liability should be recognised in profit or
loss for the current period.
All regular means of purchases or sales of financial assets are recognised and Derecognized on
a trade date basis. Regular means of purchases or sales are purchases or sales of financial
assets that require delivery of assets within the period generally established by regulation or
convention in the marketplace. Trade date is the date that the Group commits to purchase or sell
the financial asset.
Classification and measurement of financial assets
At initial recognition, the Group classifies its financial assets into: financial assets at fair value
through profit or loss, financial assets at amortised cost, or financial assets at fair value through
other comprehensive income, according to the Group’s business model for managing financial
assets and the contract cash flow characteristics of the financial assets. Financial assets are
measured at fair value at initial recognition, provided that trade receivables or bills receivable not
containing significant financing components or for which financing components of not more than
1 year are not taken into consideration shall be measured at their transaction prices at initial
recognition.
For financial assets at fair value through profit or loss, the relevant transaction costs are directly
recognised in profit or loss; for other financial assets, the relevant transaction costs are
recognised in their initial recognition amount.
Subsequent measurement depends on the classification of the financial assets:
Financial assets measured at amortised cost (debt instruments)
The Group measures financial assets at amortized cost if both of the following conditions are
met: The financial asset is held within a business model with the objective to hold financial
assets in order to collect contractual cash flows; The contractual terms of the financial asset give
rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding. Interest income of this kind of financial assets is recognized using
the effective interest method. Gains and losses are recognized in the income statement when
the asset is derecognized, modified or impaired. These financial assets mainly include cash and
cash equivalents, bills receivable and trade receivables, other receivables, debt investment and
long-term receivables. Debt investments and long-term receivables due within one year from the
balance sheet date are reported by the Group as current portion of non-current assets, and debt
investments due within one year from the original maturity date are reported as other current
assets.
129
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
8.Financial instruments (applicable from 1 January 2018) (Continued)
Classification and measurement of financial assets (Continued)
Financial assets at fair value through other comprehensive income (debt instruments)
The Group measures debt investments at fair value through other comprehensive income if both
of the following conditions are met: The financial asset is held within a business model with the
objective of both holding to collect contractual cash flows and selling; The contractual terms of
the financial asset give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding. Changes in fair values are recognized in other
comprehensive income except that interest income, impairment losses and exchange
differences are recognized in current profit or loss. Upon derecognition, the cumulative fair value
change recognised in other comprehensive income is transferred to profit or loss. Such financial
assets are reported as other debt investment. Other debt investment due within one year from
the balance sheet date is reported as a current portion of non-current assets and other debt
investment due within one year from the original maturity date is reported as an item of other
current assets.
Financial assets designated at fair value through other comprehensive income (equity
investments)
The Group irrevocably chooses to designate some non-tradable equity instrument investments
as financial assets at fair value through other comprehensive income. Only relevant dividend
income (excluding dividend income explicitly recovered as part of investment cost) is recognized
in profit or loss, and subsequent changes in fair value are included in other comprehensive
income without provision for impairment. When financial assets are derecognized, the
accumulated gains or losses previously recognized in other comprehensive gains are transferred
from other comprehensive income and recognized in retained earnings. Such financial assets
are reported as other equity investment.
If one of the following conditions is met, it is a held-for-trading financial asset: the acquisition of
the relevant financial asset is intended primarily for sale or repurchase in the near future; it is a
part of the portfolio of identifiable financial instruments under centralized management, and there
is objective evidence that the short-term profit model is adopted in the near future; it is a
derivative, except for a derivative that is designated as a valid hedging instrument, other than a
derivative that complies with a financial guarantee contract.
Financial assets at fair value through profit or loss
Financial assets other than the above-mentioned financial assets at amortised cost and financial
assets at fair value through other comprehensive income are classified as financial assets at fair
value through profit or loss. For such financial assets, fair value is used for subsequent
measurement, and all changes in fair value are recognised in profit or loss. Such financial assets
are presented as held-for-trading financial assets and are presented as other non-current
financial assets if they expire after more than one year from the balance sheet date or expected
to be held more than one year from the balance sheet date.
Only when an accounting mismatch is eliminated or significantly decreased, financial assets are
designated as financial assets at fair value through profit or loss at initial recognition.
130
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
8.Financial instruments (applicable from 1 January 2018) (Continued)
Classification and measurement of financial assets (Continued)
When an enterprise initially designates a financial asset as a financial asset at fair value through
profit or loss, it cannot be reclassified to other financial assets; other financial assets cannot be
re-designated after initial recognition as financial assets measured at fair value through profit or
loss.
When and only when the Group changes its business model of managing financial assets, it
reclassifies all relevant financial assets affected.
Classification and measurement of financial liabilities
On initial recognition of financial liabilities of the Group are classified as financial liabilities at fair
value through profit or loss, other financial liabilities and derivatives designated as effective
hedging instruments. For financial liabilities at fair value through profit or loss, the relevant
transaction costs are directly recognized in profit or loss, and the related transaction costs of
other financial liabilities are recognized in their initial amount.
Subsequent measurement of financial liabilities is determined by its classification:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss consist of held for trading financial liabilities
(including derivatives belonging to financial liabilities) and financial liabilities designated on initial
recognition as financial liabilities at fair value through profit or loss.
Financial liabilities are held-for-trading financial liabilities if one of the following conditions are
met: the purpose of assuming related financial liabilities is mainly to sell or repurchase in the
near future; they are part of a centrally managed identifiable portfolio of financial instruments,
and there is objective evidence that enterprises have adopted a short-term profitability model in
the near future; they are derivatives, excluding derivatives that are designated as effective
hedging instruments and derivatives that meet the financial guarantee contract. Held-for-trading
financial liabilities (including derivatives belonging to financial liabilities) are subsequently
measured at fair value. Except for hedging accounting, all changes in fair value are recognized
in profit or loss.
Only if one of the following conditions is met can financial liabilities be designated as financial
liabilities at fair value through profit or loss on initial recognition: (1) It can eliminate or
significantly reduce the accounting mismatch. (2) The formal written document of risk
management or investment strategy has stated that the portfolio of financial instruments is
managed, evaluated and reported to key managers on the basis of fair value. (3) The financial
liability is a hybrid instrument that contains one or more embedded derivatives, unless the
embedded derivatives have no significant change in the cash flows of the hybrid instrument, or
the embedded derivatives should obviously not be separated from the related hybrid instruments.
(4) Mixed instruments contain embedded derivatives that need to be split but cannot be
measured separately at the time of acquisition or on subsequent balance sheet days.
131
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
8.Financial instruments (applicable from 1 January 2018) (Continued)
Classification and measurement of financial liabilities (Continued)
For such financial liabilities, subsequent measurements are made at fair value. Changes in fair
value caused by changes in the Group’s own credit risk are recognized in other comprehensive
income, while other changes in fair value are recognized in profit or loss. Unless changes in fair
value caused by changes in the Group's own credit risk recognized in other comprehensive
income may result in or expand accounting mismatches in profit or loss, the Group shall
recognize all changes in fair value (including the amount of impact of changes in its own credit
risk) in profit or loss.When an enterprise designates a financial liability as a financial liability at
fair value through profit or loss, it cannot be reclassified as other financial liabilities; nor can
other financial liabilities be re-designated as financial liabilities at fair value through profit or loss
after initial recognition.
Other financial liabilities
For such financial liabilities, subsequent measurement is made at amortized cost using the
effective interest rate method.
Impairment of financial assets
Based on expected credit losses, the Group undertakes impairment treatment and confirms loss
provisions of financial assets at amortized cost, debt instrument investments at fair value
through other comprehensive income and financial guarantee contracts.
Credit loss refers to the difference between the cash flows of all contracts discounted at the
original effective interest rate and the expected cash flows of all contracts receivable, i.e. the
present value of all cash shortages. Among them, the financial assets purchased by or
originated from the Group to which credit impairment has occurred shall be discounted at the
effective interest rate adjusted by the credit of the financial assets.
For trade receivables and contractual assets that do not contain significant financing
components, the Group uses a simplified measurement method to measure loss provisions in
accordance with the amount of expected credit losses equivalent to the entire life cycle.
For trade receivables and contractual assets with significant financing components, the Group
uses a simplified measurement method to measure loss provisions in accordance with the
amount of the expected credit loss equivalent to the entire lifetime.
132
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
8.Financial instruments (applicable from 1 January 2018) (Continued)
Impairment of financial assets (Continued)
For financial assets other than those measured with simplified valuation methods, the Group
evaluates at each balance sheet date whether its credit risk has significantly increased since
initial recognition. The period during which credit risk has not significantly increased since initial
recognition is considered the first stage, at which the Group shall measure the loss provision
based on the amount of the expected credit loss for the next 12 months and shall compute
interest income according to the book balance and effective interest rate; the period during
which credit risk has significantly increased since initial recognition although no credit
impairment has occurred is considered the second stage, at which the Group shall measure the
loss provision based on the amount of the expected credit loss for the entire valid period and
shall compute interest income according to the book balance and effective interest rate; The
period during which credit impairment has occurred after initial recognition is considered the third
stage, at which the Group shall measure the loss provision based on the amount of the expected
credit loss for the entire period and shall compute interest income according to the amortised
cost and effective interest rate. For financial instruments with relatively low credit risk at the
balance sheet date, the Group assumes that its credit risk has not significantly increases since
initial recognition.
The Group evaluates the expected credit losses of financial instruments on a single and
combined basis. Taking into account the credit risk characteristics of different customers, the
Group evaluates the expected credit losses of trade receivables based on the aging portfolio.
In assessing expected credit losses, the Group takes into account reasonable and valid
information on past events, current conditions and future economic forecasts.
Refer to Notes VIII.3 for the disclosure of the Group's criteria for judging the significant increase
in credit risk, the definition of assets with impaired credit losses, and the assumption of
measuring expected credit losses.
When the Group no longer reasonably expects to be able to recover all or part of the contract
cash flows of the financial assets, the Group will write off the book value of the financial assets
directly.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the
statement of financial position if there is a currently enforceable legal right to offset the
recognised amounts and there is an intention to settle on a net basis, or to realize the financial
assets and settle the financial liabilities simultaneously.
133
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
8.Financial instruments (applicable from 1 January 2018) (Continued)
Modification of financial assets
Where the Group modifies or renegotiates the contract with its counterparty and does not result
in the derecognition of financial assets, but results in a change in the cash flow of the contract,
the Group recalculates the book value of the financial asset on the basis of the renegotiated or
modified contract cash flows at the discounted value of the original effective interest rate (or
credit-adjusted effective rate of interest) of the financial asset, and the related gains or losses
are recognized in profit or loss. The revised cost or expense of the financial assets adjust the
book value of the financial assets and are amortized within the remaining period of the modified
financial assets.
Transfer of financial assets
The Group derecognises a financial asset when it has transferred substantially all the risks and
rewards of ownership of the financial asset to the transferee; the Group does not derecognize
those financial assets when it retains substantially all the risks and rewards of the ownership.
If the Group neither transfers nor retains substantially all the risks and rewards of ownership of
financial assets, the related accounting treatments of such financial assets are as follows: the
Group derecognises financial assets when it retains no control on them, and associated assets
and liabilities are recognised at the same time. If the Group retains control of the financial asset,
it recognizes the financial asset to the extent of its continuing involvement in the transferred
financial asset and recognizes an associated liability.
Continuing involvement that takes the form of a financial guarantee over the transferred asset is
measured at the lower of the original carrying amount of the asset and the financial guarantee.
The amount of the financial guarantee is the maximum amount of consideration that the Group
could be required to repay.
9.Financial instruments (applicable in 2017)
Financial instruments are the contracts that formed the financial assets of one entity, and at the
same time formed the financial liabilities or equity instruments of other entities.
Recognition and derecognition of financial instruments
Financial assets and financial liabilities are recognised when the Group becomes a party to the
contractual provisions of the instrument.
134
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
9.Financial instruments (applicable in 2017) (Continued)
Recognition and derecognition of financial instruments (Continued)
The Group derecognises a financial asset, part of a financial asset or group of financial assets,
i.e., offset from the accounts and statement of financial position, if either of the following
conditions is satisfied:
(1) The contractual rights to the cash flows from the financial asset expire; or
(2) The contractual rights to the cash flows from the financial asset are transferred out, or obligated
to transfer out all generated cash flows on receipt; and (a) substantially all the risks and rewards
of ownership of the financial asset are transferred to the transferee; or (b) the Group neither
transfers nor retains substantially all the risks and rewards of ownership of the financial asset,
but has not retained control of the financial asset.
The Group derecognises a financial liability only when the underlying present obligation is
settled, discharged or expired. An agreement to replace the original financial liability with a new
financial liability with substantially different terms, or to modify the original financial liability’s
terms substantially, is accounted for as an extinguishment of the original financial liability and the
recognition of a new financial liability. The difference between the carrying amount of the
financial liability Derecognized and the new financial liability should be recognised in profit or
loss for the current period.
All regular means of purchases or sales of financial assets are recognised and Derecognized on
a trade date basis. Regular means of purchases or sales are purchases or sales of financial
assets that require delivery of assets within the period generally established by regulation or
convention in the marketplace. Trade date is the date that the Group commits to purchase or sell
the financial asset.
135
CHINA NATIONAL ACCORD MEDICINES CORPORATION LTD.
Notes to financial statements (Continued)
For the Year ended 31 December 2018
(All amounts in Renminbi “RMB” unless otherwise stated)
IIISummary of significant accounting policies and accounting estimates (Continued)
9.Financial instruments (applicable in 2017) (Continued)
Classification and measurement of financial assets
On initial recognition, the Group’s financial assets are classified into one of the categories
including: financial assets at fair value through profit or loss, held-to-maturity investments, loans
and receivables, available-for-sale investments, and derivatives designated as effective hedging
instruments. Financial assets are initially measured at fair value. For financial assets at fair value
through profit or loss, transaction costs are immediately recognised in profit or loss for the
current period. For other financial assets, transaction costs are included in their initial recognised
amounts.
Subsequent measurement of financial assets is determined by its classification:
Loans and receivables
Loans and receivables are non-deriva
