China National Accord Medicines Corporation Ltd. First Quarterly Report 2018 April 2018 1 Section I. Important Notes Board of Directors and the Supervisory Committee of China National Accord Medicines Corporation Ltd. (hereinafter referred to as the Company) and its directors, supervisors and senior executives should guarantee the reality, accuracy and completion of the quarterly report, there are no any fictitious statements, misleading statements or important omissions carried in this report, and shall take legal responsibilities, individual and/or joint. All Directors are attended the Board Meeting for Quarterly Report deliberation. Lin Zhaoxiong person in charge of the Company, Wei Pingxiao, person in charge of accounting works and Wang Ying, person in charge of accounting organ (accounting officer) hereby confirm that the Financial Report of this Quarterly Report is authentic, accurate and complete. 2 Section II. Company profile I. Main accounting data and financial indexes Whether it has retroactive adjustment or re-statement on previous accounting data □ Yes √No Changes of this period over Current Period Same period of last year same period of last year Operating income (RMB) 10,256,566,731.51 10,222,459,812.55 0.33% Net profit attributable to shareholders of 292,731,685.33 272,564,318.71 7.40% the listed company (RMB) Net profit attributable to shareholders of the listed company after deducting 284,982,162.39 271,249,398.43 5.06% non-recurring gains and losses (RMB) Net cash flow arising from operating -864,716,289.96 -502,263,276.11 -72.16% activities (RMB) Basic earnings per share (RMB/Share) 0.68 0.64 6.25% Diluted earnings per share (RMB/Share) 0.68 0.64 6.25% Weighted average ROE 3.07% 3.17% -0.10% Changes of this period-end At the end of the reporting At the end of last year over same period-end of last period year Total assets (RMB) 23,760,905,981.51 22,343,643,527.77 6.34% Net assets attributable to shareholder of 9,689,304,031.21 9,396,572,345.88 3.12% listed company (RMB) Items of non-recurring gains and losses √ Applicable □ Not applicable In RMB Amount from year-begin to Item Note period-end Revenue from intangible assets Gains/losses from the disposal of non-current asset (including the disposal by subsidiary – 3,830,300.39 write-off that accrued for impairment of assets) Sinopharm Holding Guangxi Logistic Co., Ltd. Governmental subsidy reckoned into current gains/losses (not Mainly due to the various special including the subsidy enjoyed in quota or ration according to 2,094,366.02 grants received in the current national standards, which are closely relevant to enterprise’s period. business) 3 The bad debt of receivables Reversal of impairment reserve for account receivable with 3,740,941.40 accrual independently previous separate impairment testing year has collected in the period Other non-operating income and expenditure except for the 60,814.75 aforementioned items Less: impact on income tax 1,942,073.91 Impact on minority shareholders’ equity (post-tax) 34,825.71 Total 7,749,522.94 -- 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 II. Total number of shareholders at the end of this report period and top ten shareholders 1. Total number of common shareholders at the end of this report period and top ten common shareholders In shares Total preference shareholders Total common shareholders with voting rights recovered at 17,838 0 at the end of report period end of reporting period (if applicable) Top ten shareholders Amount of Shareholder’s Nature of Proportion of Amount of shares Number of share pledged/frozen restricted shares name shareholder shares held held State of share Amount held Sinopharm Group State-owned legal 56.06% 239,999,991 55,057,700 Co., Ltd. person HTHK/CMG FSGUFP-CMG Foreign FIRST STATE 2.37% 10,141,182 0 Corporation CHINA GROWTH FD China Life Domestic non Insurance Co., state-owned legal 2.05% 8,777,292 0 Ltd. – tradition – person general insurance 4 products - 005L-CT001 Shen China United Property Insurance Domestic non Company state-owned legal 1.42% 6,092,905 0 Limited - Traditional person insurance products China National Pharmaceutical State-owned legal 1.24% 5,323,043 5,323,043 Foreign Trade person Corporation GUOTAI JUNAN Foreign SECURITIES(H 1.23% 5,268,100 0 Corporation ONGKONG) LIMITED TARGET Foreign 1.01% 4,321,860 0 VALUE FUND Corporation New China Life Insurance Co., Domestic non Ltd. – Bonus – Individual state-owned legal 0.99% 4,229,772 0 bonuses - person -018L-FH002 Shen # Beijing Haoqing Fortune Investment Domestic non Management Co., state-owned legal 0.95% 4,048,216 0 Ltd. – Haoqing person Value Stable No.8 Investment Fund Central Huijin State-owned legal 0.89% 3,804,400 0 Investment Ltd. person Top ten shareholders with unrestricted shares held Type of shares Shareholder’s name Amount of unrestricted shares held Type Amount RMB ordinary Sinopharm Holding Co., Ltd. 184,942,291 184,942,291 shares HTHK/CMG FSGUFP-CMG FIRST Domestic listed 10,141,182 10,141,182 STATE CHINA GROWTH FD foreign shares China Life Insurance Co., Ltd. – 8,777,292 RMB ordinary 8,777,292 tradition –general insurance products shares 5 -005L-CT001 Shen China United Property Insurance RMB ordinary Company Limited - Traditional 6,092,905 6,092,905 shares insurance products GUOTAI JUNAN Domestic listed SECURITIES(HONGKONG) 5,268,100 5,268,100 foreign shares LIMITED Domestic listed TARGET VALUE FUND 4,321,860 4,321,860 foreign shares New China Life Insurance Co., Ltd. RMB ordinary – Bonus – Individual bonuses - 4,229,772 4,229,772 shares -018L-FH002 Shen # Beijing Haoqing Fortune Investment Management Co., Ltd. – RMB ordinary 4,048,216 4,048,216 Haoqing Value Stable No.8 shares Investment Fund RMB ordinary Central Huijin Investment Ltd. 3,804,400 3,804,400 shares Domestic listed UBS AG LONDON BRANCH 3,564,877 3,564,877 foreign shares Sinopharm Group Co., Ltd. and China National Pharmaceutical Foreign Trade Corporation Explanation on associated have the same actual controller, which is China National Pharmaceutical Group Corporation. relationship among the aforesaid It is unknown that there exists no associated relationship or belongs to the consistent actionist among the other tradable shareholders regulated by the Management Measure of Information shareholders Disclosure on Change of Shareholding for Listed Companies. Explanation on shareholders Beijing Haoqing Fortune Investment Management Co., Ltd. – Haoqing Value Stable No.8 involving margin business about top Investment Fund holds shares of the Company through margin trading and negotiable ten common stock shareholders (if applicable) securities account Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have a buy-back agreement dealing in reporting period □ Yes √ No The top ten common shareholders or top ten common shareholders with un-restrict shares held of the Company have no buy-back agreement dealing in reporting period. 2. Total shareholders with preferred stock held at Period-end and shares held by top ten shareholders with preferred stock held □ Applicable √ Not applicable 6 Section III. Significant Events I. Particulars about material changes in items of main accounting statement and financial index and explanations of reasons √Applicable □Not applicable 1. Wages payable: a decrease of 70.9527 million Yuan compared with the beginning of the period, with a growth rate of -32.90%, mainly because employee’s wages accrual last year are provided in the Period; 2. Asseets impairment loss: a decrease of 1.6439 million Yuan on a year-on-year basis, with a growth rate of -600.23%, mainly because the bad debt of receivables accrual independently previous year has collected in the period, bad debt provision are switch back; 3. Income from assets disposal: an increase of 3.7979 million Yuan on a year-on-year basis, with a growth rate of 11,709.29%, mainly due to the account from property levied by the government in the period; 4. Other income: an increase of 331,500 Yuan on a year-on-year basis, with a growth rate of 30.46%, mainly because government grant received in the period increased from a year earlier; 5. Non-operation revenue: a decrease of 868,300 Yuan on a year-on-year basis, with a growth rate of -38.96%, mainly because the payable without payment has written down at same period of last year while no such changes in the period; 6. Non-operation expenditure: a decrease of 1.854 million Yuan on a year-on-year basis, with a growth rate of -74.80%, mainly due to the arbitration penalty at same period of last year while no such changes in the period; 7. Refunds of taxes: a decrease of 98,200 Yuan on a year-on-year basis, with a growth rate of -99.61%, mainly because tax refunds received in the period declined from a year earlier; 8. Net cash flow from operating activities: a decrease of 362 million Yuan on a year-on-year basis, with a growth rate of -72.16%, mainly because the cash received from good sale and providing labor service declined from a year earlier; 9. Cash received from investment income: an increase of 332,500 Yuan on a year-on-year basis with a growth rate of 78.33%, mainly because the interest for entrusted loans from affiliated enterprise in the period increased from a year earlier; 10. Net cash received from disposal of fixed assets, intangible assets and other long-term assets: an increase of 5.556 million Yuan on a year-on-year basis with a growth rate of 4,305.69%, mainly because the revenue from intangible assets disposal increased from a year earlier; 11. Other cash received relating to investment activities: a decrease of 41.8152 million Yuan on a year-on-year basis, with a growth rate of -48.73%, mainly because the margin for restructure projects are collected at same period of last year while no such account in the period; 12. Sub-total of cash inflows from investment activities: a decrease of 35.9267 million Yuan on a year-on-year basis, with a growth rate of -41.60%, mainly because the margin for restructure projects are collected at same period of last year while no such account in the period; 13. Cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets: an increase of 13.2185 million Yuan on a year-on-year basis, with a growth rate of 35.18%, mainly because expenditure for decoration purchasement increased from a year earlier for more new stores open in retail section in the period; 14. Cash paid for investment: a decrease of 60 million Yuan on a year-on-year basis with a growth rate of -100%, mainly because medical industry fund are subscribe at same period of last year while no such account in the period; 15. Net cash paid for obtaining subsidiary and other operation units: a decrease of 10 million Yuan on a year-on-year basis with a growth rate of -100%, mainly because subscribed subsidiary’s equity at same period of last year while no such account in the period; 7 16. Other cash paid relating to investment activities: a decrease of 155 million Yuan on a year-on-year basis, with a growth rate of -77.88%, mainly because account for equity restructuring are paid at same period of last year while no such account in the period; 17. Sub-total of cash outflows from investment activities: a decrease of 212 million Yuan on a year-on-year basis, with a growth rate of -69.07%, mainly because account for equity restructuring are paid at same period of last year while no such account in the period; 18. Net cash flow from investment activities: an increase of 176 million Yuan on a year-on-year basis, with a growth rate of 79.86%, mainly because account for equity restructuring are paid at same period of last year while no such account in the period; 19. Cash received by absorbing investments: an increase of 11.4932 million Yuan on a year-on-year basis, mainly because investment from minority shareholders in the period increased from a year earlier while no such account at same period of last year; 20. Cash received from debts: a decrease of 74.8513 million Yuan on a year-on-year basis, with a growth rate of -84.56%, mainly because the loan for current funds received from bank declined from a year earlier; 21. Other cash received relating to financing activities: an increase of 79.0805 million Yuan on a year-on-year basis, with a growth rate of 347.71%, mainly because factoring financing in the period increased from a year earlier; 22. Cash paid for distribution of dividend, profit or interest payment: an increase of 10.2266 million Yuan on a year-on-year basis, with a growth rate of 49.65%, mainly because the payment of buyer notes discount interest and interest of factoring financing are increased from a year earlier; 23. Other cash paid relating to financing activities: an increase of 774,700 Yuan on a year-on-year basis, with a growth rate of 32.92%, mainly because factoring fee and financing lease interest expenditure increased from a year earlier; 24. Net cash flow from financing activities: an increase of 11.1249 million Yuan on a year-on-year basis, with a growth rate of 50.77%, mainly because factoring financing increased from a year earlier in the period II. Analysis and explanation of significant events and their influence and solutions √Applicable □Not applicable The proposal on the wholly-owned subsidiary Sinopharm Group Guoda Drugstore Co.,Ltd., Bringing in Strategic Investors by Means of Capital Increase and Share Expansion was deliberated and approved on the 25th meeting of the 7th session of Board of Directors On Sep. 4th, 2017, and the wholly-owned subsidiary Sinopharm Group Guoda Drugstore Co., Ltd (hereinafter referred to as “Guoda Drugstore”) has got the approval of bringing in one strategic investor by means of capital increase and share expansion, taking assets assessment report as the reference of pricing. The Company has been listed on stock exchanges at Shanghai United Assets and Equity Exchange on Sep. 20th , 2017, has amassed an interested investor, as the actual controller, Walgreens Boots Alliance (NASDAQ: WBA, hereinafter referred as “Walgreens” or “WBA”) has subscribed the stock rights of Guoda Drugstore through taking its wholly-owned subsidiary Walgreens Boots Alliance (Hong Kong) Investments Limited (hereinafter referred to as “WBAHKIL”) that is based in Hong Kong as the subject of capital increase, with capital increase by 2766.70 million Yuan, it holds a 40 percent of stake of Guoda Drugstore. At beginning of the December in 2017, the Company, Sinopharm Group Guoda Drugstore Co.,Ltd. and WBAHKIL, had signed up the Registered Capital Increase and Subscription Agreement. On 23 March 2018, the Company received the “Decision on Non Implementation of Further Review ” (S Anti-Monopoly CSH [2018] No.104) issued by MOFCOM transferred from Walgreens Boots Alliance Investment Luxemburg Co., Ltd. By the end of date of disclosure, the project needs to acquired approval of foreign investment from MOFCOM. The Company will continue to fulfill the obligation of information disclosure according to the progress of this project. Interim report disclosure website query Overview of important matters Date of disclosure index 8 Notice on Progress of the wholly-owned subsidiary Guoda Drugstore Bringing in Juchao Website 2018-03-24 Strategic Investors by Means of Capital (http://www.cninfo.com.cn) Increase and Share Expansion III. Commitments completed in Period and those without completed till end of the Period from actual controller, shareholders, related parties, purchaser and companies □ Applicable √ Not applicable The Company has no commitments completed in Period and those without completed till end of the Period from actual controller, shareholders, related parties, purchaser and companies. IV. Predict of the business performance from January to June 2018 Warnings and reasons of the predict that the cumulative net profit from the begin of the year to the end of next report period may be loss or have great changes comparing with the same period of last year □Applicable √Not applicable V. Securities Investment □ Applicable √ Not applicable No security investment in the Period. VI. Derivative investment □ Applicable √ Not applicable No derivative investment in the Period. VII. Registration form for receiving research, communication and interview in the report period □Applicable √Not applicable The Company had no receiving research, communication or interview in the report period. VIII. Guarantee outside against the regulation □Applicable √Not applicable The Company had no guarantee outside against the regulation in the period. IX. Non-operational fund occupation from controlling shareholders and its related party □ Applicable √ Not applicable The Company had no non-operational fund occupation form controlling shareholders and its related party in the period. 9 Section IV. Financial Statement I. Financial statement 1. Consolidate balance sheet Prepared by China National Accord Medicines Corporation Ltd. 2018-03-31 In RMB Item Balance at period-end Balance at period-begin Current assets: Monetary funds 3,262,283,179.59 4,191,655,438.51 Settlement provisions Capital lent Financial assets measured by fair value and with variation reckoned into current gains/losses Derivative financial assets Notes receivable 1,276,377,993.69 1,504,194,764.08 Accounts receivable 9,865,484,747.44 7,589,412,679.88 Accounts paid in advance 417,629,112.14 516,778,117.47 Insurance receivable Reinsurance receivables Contract reserve of reinsurance receivable Interest receivable 57,285.56 61,441.11 Dividend receivable Other receivables 633,837,464.61 657,871,058.54 Purchase restituted finance asset Inventories 4,130,751,774.97 3,781,858,238.12 Assets held for sale Non-current asset due within one year Other current assets 81,277,860.94 78,947,644.62 Total current assets 19,667,699,418.94 18,320,779,382.33 Non-current assets: 10 Loans and payments on behalf Finance asset available for sales 13,685,760.00 13,685,760.00 Held-to-maturity investment Long-term account receivable Long-term equity investment 1,733,234,745.09 1,650,619,373.09 Investment property 152,101,534.88 153,678,339.11 Fixed assets 554,170,016.26 551,710,434.02 Construction in progress 27,686,516.27 22,947,258.99 Engineering material Disposal of fixed asset Productive biological asset Oil and gas asset Intangible assets 322,922,263.94 325,751,430.88 Expense on Research and Development Goodwill 830,729,152.75 830,729,152.75 Long-term expenses to be 251,971,852.91 252,247,050.79 apportioned Deferred income tax asset 80,898,126.88 79,472,883.06 Other non-current asset 125,806,593.59 142,022,462.75 Total non-current asset 4,093,206,562.57 4,022,864,145.44 Total assets 23,760,905,981.51 22,343,643,527.77 Current liabilities: Short-term loans 1,724,641,669.82 1,561,354,521.64 Loan from central bank Absorbing deposit and interbank deposit Capital borrowed Financial liability measured by fair value and with variation reckoned into current gains/losses Derivative financial liability Notes payable 2,588,298,964.51 2,732,437,828.42 Accounts payable 7,189,784,129.58 6,144,221,000.10 Accounts received in advance 167,703,871.35 216,938,239.32 Selling financial asset of repurchase Commission charge and 11 commission payable Wage payable 144,703,827.72 215,656,526.54 Taxes payable 199,482,915.87 223,752,900.24 Interest payable 6,898,654.14 7,311,819.65 Dividend payable 11,889,443.11 11,889,443.11 Other accounts payable 1,182,977,735.01 1,011,128,397.26 Reinsurance payables Insurance contract reserve Security trading of agency Security sales of agency Liability held for sale Non-current liabilities due within 1 5,531,891.01 5,434,770.70 year Other current liabilities 112,277.17 112,817.65 Total current liabilities 13,222,025,379.29 12,130,238,264.63 Non-current liabilities: Long-term loans 31,600,000.00 31,600,000.00 Bonds payable Including: preferred stock Perpetual capital securities Long-term account payable 8,185,314.17 9,332,537.14 Long-term wages payable 1,777,000.00 1,777,000.00 Special accounts payable 800,000.00 800,000.00 Accrual liabilities Deferred income 123,626,993.27 125,082,372.53 Deferred income tax liabilities 70,687,700.19 71,883,253.02 Other non-current liabilities 45,427,343.31 45,427,343.31 Total non-current liabilities 282,104,350.94 285,902,506.00 Total liabilities 13,504,129,730.23 12,416,140,770.63 Owner’s equity: Share capital 428,126,983.00 428,126,983.00 Other equity instrument Including: preferred stock Perpetual capital securities 12 Capital public reserve 3,181,429,064.99 3,181,429,064.99 Less: Inventory shares Other comprehensive income Reasonable reserve Surplus public reserve 214,063,491.50 214,063,491.50 Provision of general risk Retained profit 5,865,684,491.72 5,572,952,806.39 Total owner’s equity attributable to 9,689,304,031.21 9,396,572,345.88 parent company Minority interests 567,472,220.07 530,930,411.26 Total owner’s equity 10,256,776,251.28 9,927,502,757.14 Total liabilities and owner’s equity 23,760,905,981.51 22,343,643,527.77 Legal Representative: Lin Zhaoxiong Person in charge of accounting works: Wei Pingxiao Person in charge of accounting institute: Wang Ying 2. Balance Sheet of Parent Company In RMB Item Closing balance Opening balance Current assets: Monetary funds 1,164,288,622.01 1,776,696,342.87 Financial assets measured by fair value and with variation reckoned into current gains/losses Derivative financial liability Notes receivable 9,612,441.57 64,799,618.07 Accounts receivable 704,186,741.40 480,467,760.92 Account paid in advance 629,345.64 1,138,312.26 Interest receivable 1,837,134.16 1,844,294.10 Dividends receivable Other receivables 1,487,703,176.87 1,516,037,945.71 Inventories 189,362,652.93 172,022,676.96 Assets held for sale Non-current assets maturing within 13 one year Other current assets 530,332.42 788,964.90 Total current assets 3,558,150,447.00 4,013,795,915.79 Non-current assets: Available-for-sale financial assets Held-to-maturity investments Long-term receivables Long-term equity investments 7,266,721,592.63 7,180,306,084.56 Investment property 2,561,837.54 2,763,831.92 Fixed assets 17,743,826.41 13,831,103.54 Construction in progress Project materials Disposal of fixed assets Productive biological assets Oil and natural gas assets Intangible assets 1,129,078.57 1,287,775.78 Research and development costs Goodwill Long-term deferred expenses 5,219,800.75 5,543,217.86 Deferred income tax assets 2,899,092.11 2,764,724.75 Other non-current assets 67,141,840.00 71,808,611.00 Total non-current assets 7,363,417,068.01 7,278,305,349.41 Total assets 10,921,567,515.01 11,292,101,265.20 Current liabilities: Short-term borrowings 641,424,900.71 707,000,000.00 Financial liability measured by fair value and with variation reckoned into current gains/losses Derivative financial liability Notes payable 224,521,924.73 239,563,961.30 Accounts payable 472,847,339.30 434,886,685.35 Accounts received in advance 1,283,646.71 1,912,503.90 Wage payable 23,537,311.43 33,592,851.93 Taxes payable 42,254,243.37 42,386,907.00 Interest payable 379,939.40 669,533.78 14 Dividend payable Other accounts payable 1,000,331,066.20 1,415,053,655.18 Liability held for sale Non-current liabilities due within 1 year Other current liabilities 112,277.17 112,817.65 Total current liabilities 2,406,692,649.02 2,875,178,916.09 Non-current liabilities: Long-term loans 31,600,000.00 31,600,000.00 Bonds payable Including: preferred stock Perpetual capital securities Long-term account payable Long-term wages payable Special accounts payable 800,000.00 800,000.00 Projected liabilities Deferred income 2,007,000.00 2,054,250.00 Deferred income tax liabilities 3,773,319.00 3,773,319.00 Other non-current liabilities Total non-current liabilities 38,180,319.00 38,227,569.00 Total liabilities 2,444,872,968.02 2,913,406,485.09 Owners’ equity: Share capita 428,126,983.00 428,126,983.00 Other equity instrument Including: preferred stock Perpetual capital securities Capital public reserve 4,407,091,484.13 4,407,091,484.13 Less: Inventory shares Other comprehensive income Reasonable reserve Surplus reserve 214,063,491.50 214,063,491.50 Retained profit 3,427,412,588.36 3,329,412,821.48 Total owner’s equity 8,476,694,546.99 8,378,694,780.11 15 Total liabilities and owner’s equity 10,921,567,515.01 11,292,101,265.20 3. Consolidated Profit Statement In RMB Item Current Period Last Period I. Total operating income 10,256,566,731.51 10,222,459,812.55 Including: Operating income 10,256,566,731.51 10,222,459,812.55 Interest income Insurance gained Commission charge and commission income II. Total operating cost 9,962,364,535.96 9,929,024,160.13 Including: Operating cost 9,138,308,909.43 9,158,010,239.31 Interest expense Commission charge and commission expense Cash surrender value Net amount of expense of compensation Net amount of withdrawal of insurance contract reserve Bonus expense of guarantee slip Reinsurance expense Operating tax and extras 26,770,236.12 29,737,745.69 Sales expenses 606,866,589.59 548,629,093.08 Administration expenses 169,516,240.49 170,428,020.23 Financial expenses 22,272,552.43 21,945,189.25 Losses of devaluation of asset -1,369,992.10 273,872.57 Add: Changing income of fair value(Loss is listed with “-”) Investment income (Loss is listed 82,615,372.00 70,987,332.61 with “-”) Including: Investment income on 82,615,372.00 70,987,332.61 affiliated company and joint venture Exchange income (Loss is listed with “-”) 16 Assets disposal income (Loss is 3,830,300.39 32,434.63 listed with “-”) Other income 1,419,763.88 1,088,241.07 III. Operating profit (Loss is listed with 382,067,631.82 365,543,660.73 “-”) Add: Non-operating income 1,360,096.85 2,228,376.43 Less: Non-operating expense 624,679.96 2,478,659.30 IV. Total Profit (Loss is listed with “-”) 382,803,048.71 365,293,377.86 Less: Income tax expense 69,964,333.16 70,280,239.83 V. Net profit (Net loss is listed with “-”) 312,838,715.55 295,013,138.03 (I) Continuous operation net profit 312,838,715.55 295,013,138.03 (Net loss is listed with “-”) (II) Discontinued operation net profit (Net loss is listed with “-”) Net profit attributable to owner’s of 292,731,685.33 272,564,318.71 parent company Minority shareholders’ gains and 20,107,030.22 22,448,819.32 losses VI. Net after-tax of other comprehensive income Net after-tax of other comprehensive income attributable to owners of parent company (I) Other comprehensive income items which will not be reclassified subsequently to profit of loss 1. Changes as a result of re-measurement of net defined benefit plan liability or asset 2. Share of the other comprehensive income of the investee accounted for using equity method which will not be reclassified subsequently to profit and loss (II) Other comprehensive income items which will be reclassified subsequently to profit or loss 1. Share of the other comprehensive income of the investee 17 accounted for using equity method which will be reclassified subsequently to profit or loss 2. Gains or losses arising from changes in fair value of available-for-sale financial assets 3. Gains or losses arising from reclassification of held-to-maturity investment as available-for-sale financial assets 4. The effect hedging portion of gains or losses arising from cash flow hedging instruments 5. Translation differences arising on translation of foreign currency financial statements 6. Other Net after-tax of other comprehensive income attributable to minority shareholders VII. Total comprehensive income 312,838,715.55 295,013,138.03 Total comprehensive income 292,731,685.33 272,564,318.71 attributable to owners of parent Company Total comprehensive income 20,107,030.22 22,448,819.32 attributable to minority shareholders VIII. Earnings per share: (i) Basic earnings per share 0.68 0.64 (ii) Diluted earnings per share 0.68 0.64 Enterprise combine under the same control in the Period, the combined party realized net profit of 0 Yuan before combination, and realized -1,096.00 Yuan at last period for combined party Legal Representative: Lin Zhaoxiong Person in charge of accounting works: Wei Pingxiao Person in charge of accounting institute: Wang Ying 4. Profit Statement of Parent Company In RMB Item Current Period Last Period 18 I. Operating income 838,120,017.53 802,057,016.78 Less: Operating cost 799,779,364.60 769,324,785.10 Operating tax and extras 835,459.34 1,519,528.19 Sales expenses 12,616,898.48 12,395,531.55 Administration expenses 17,050,142.14 13,154,355.35 Financial expenses -8,050,984.45 -18,888,226.18 Losses of devaluation of asset 615,777.60 -110,682.96 Add: Changing income of fair value(Loss is listed with “-”) Investment income (Loss is 86,415,508.07 76,265,472.96 listed with “-”) Including: Investment income 86,415,508.07 76,265,472.96 on affiliated company and joint venture Assets disposal income (Loss is 1,087.38 listed with “-”) Other income 326,108.76 641,300.00 II. Operating profit (Loss is listed with 102,014,976.65 101,569,586.07 “-”) Add: Non-operating income 1.36 6,429.22 Less: Non-operating expense 127,688.63 1,011,760.15 III. Total Profit (Loss is listed with “-”) 101,887,289.38 100,564,255.14 Less: Income tax expense 3,887,522.50 6,181,603.71 IV. Net profit (Net loss is listed with 97,999,766.88 94,382,651.43 “-”) (I) Continuous operation net profit 97,999,766.88 94,382,651.43 (Net loss is listed with “-”) (II) Discontinued operation net profit (Net loss is listed with “-”) V. Net after-tax of other comprehensive income (I) Other comprehensive income items which will not be reclassified subsequently to profit of loss 1. Changes as a result of re-measurement of net defined benefit plan liability or asset 2. Share of the other comprehensive income of the investee 19 accounted for using equity method which will not be reclassified subsequently to profit and loss (II) Other comprehensive income items which will be reclassified subsequently to profit or loss 1. Share of the other comprehensive income of the investee accounted for using equity method which will be reclassified subsequently to profit or loss 2. Gains or losses arising from changes in fair value of available-for-sale financial assets 3. Gains or losses arising from reclassification of held-to-maturity investment as available-for-sale financial assets 4. The effect hedging portion of gains or losses arising from cash flow hedging instruments 5. Translation differences arising on translation of foreign currency financial statements 6. Other VI. Total comprehensive income 97,999,766.88 94,382,651.43 VII. Earnings per share: (i) Basic earnings per share (ii) Diluted earnings per share 5. Consolidated Cash Flow Statement In RMB Item Current Period Last Period I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 9,559,665,373.83 10,328,284,481.94 services Net increase of customer deposit and interbank deposit 20 Net increase of loan from central bank Net increase of capital borrowed from other financial institution Cash received from original insurance contract fee Net cash received from reinsurance business Net increase of insured savings and investment Net increase of amount from disposal financial assets that measured by fair value and with variation reckoned into current gains/losses Cash received from interest, commission charge and commission Net increase of capital borrowed Net increase of returned business capital Write-back of tax received 389.03 98,628.11 Other cash received concerning 148,125,927.35 207,536,266.55 operating activities Subtotal of cash inflow arising from 9,707,791,690.21 10,535,919,376.60 operating activities Cash paid for purchasing commodities and receiving labor 9,484,567,939.67 9,820,844,639.93 service Net increase of customer loans and advances Net increase of deposits in central bank and interbank Cash paid for original insurance contract compensation Cash paid for interest, commission charge and commission Cash paid for bonus of guarantee slip Cash paid to/for staff and workers 506,267,191.33 479,482,361.89 Taxes paid 263,785,194.50 295,430,548.56 21 Other cash paid concerning 317,887,654.67 442,425,102.33 operating activities Subtotal of cash outflow arising from 10,572,507,980.17 11,038,182,652.71 operating activities Net cash flows arising from operating -864,716,289.96 -502,263,276.11 activities II. Cash flows arising from investing activities: Cash received from recovering investment Cash received from investment 757,007.78 424,502.22 income Net cash received from disposal of fixed, intangible and other long-term 5,685,052.04 129,038.95 assets Net cash received from disposal of subsidiaries and other units Other cash received concerning 44,000,000.00 85,815,179.38 investing activities Subtotal of cash inflow from investing 50,442,059.82 86,368,720.55 activities Cash paid for purchasing fixed, 50,791,078.84 37,572,554.85 intangible and other long-term assets Cash paid for investment 60,000,000.00 Net increase of mortgaged loans Net cash received from 10,000,000.00 subsidiaries and other units obtained Other cash paid concerning 43,999,800.00 198,944,422.63 investing activities Subtotal of cash outflow from investing 94,790,878.84 306,516,977.48 activities Net cash flows arising from investing -44,348,819.02 -220,148,256.93 activities III. Cash flows arising from financing activities Cash received from absorbing 11,493,200.00 investment Including: Cash received from 11,493,200.00 absorbing minority shareholders’ 22 investment by subsidiaries Cash received from loans 13,671,657.79 88,522,962.94 Cash received from issuing bonds Other cash received concerning 101,823,564.80 22,743,050.43 financing activities Subtotal of cash inflow from financing 126,988,422.59 111,266,013.37 activities Cash paid for settling debts 60,000,000.00 66,403,745.30 Cash paid for dividend and profit 30,822,293.85 20,595,737.67 distributing or interest paying Including: Dividend and profit of minority shareholder paid by 2,581,864.12 508,903.35 subsidiaries Other cash paid concerning 3,127,895.57 2,353,233.82 financing activities Subtotal of cash outflow from 93,950,189.42 89,352,716.79 financing activities Net cash flows arising from financing 33,038,233.17 21,913,296.58 activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash -876,026,875.81 -700,498,236.46 equivalents Add: Balance of cash and cash 3,673,498,691.48 3,150,915,425.49 equivalents at the period -begin VI. Balance of cash and cash 2,797,471,815.67 2,450,417,189.03 equivalents at the period -end 6. Cash Flow Statement of Parent Company In RMB Item Current Period Last Period I. Cash flows arising from operating activities: Cash received from selling commodities and providing labor 762,534,474.46 742,518,400.20 services Write-back of tax received 23 Other cash received concerning 35,545,170.43 7,196,336.45 operating activities Subtotal of cash inflow arising from 798,079,644.89 749,714,736.65 operating activities Cash paid for purchasing commodities and receiving labor 809,539,295.55 802,517,675.95 service Cash paid to/for staff and workers 28,353,128.47 25,437,740.17 Taxes paid 9,359,247.21 31,457,445.98 Other cash paid concerning 5,064,967.04 5,269,455.38 operating activities Subtotal of cash outflow arising from 852,316,638.27 864,682,317.48 operating activities Net cash flows arising from operating -54,236,993.38 -114,967,580.83 activities II. Cash flows arising from investing activities: Cash received from recovering investment Cash received from investment 15,164,809.14 18,996,884.57 income Net cash received from disposal of fixed, intangible and other long-term assets Net cash received from disposal of subsidiaries and other units Other cash received concerning 567,200,000.00 628,959,200.00 investing activities Subtotal of cash inflow from investing 582,364,809.14 647,956,084.57 activities Cash paid for purchasing fixed, 3,475,188.15 2,112,339.07 intangible and other long-term assets Cash paid for investment 60,000,000.00 Net cash received from 10,000,000.00 subsidiaries and other units Other cash paid concerning 564,900,000.00 962,127,450.00 investing activities Subtotal of cash outflow from investing 568,375,188.15 1,034,239,789.07 24 activities Net cash flows arising from investing 13,989,620.99 -386,283,704.50 activities III. Cash flows arising from financing activities Cash received from absorbing investment Cash received from loans 10,000,000.00 10,000,000.00 Cash received from issuing bonds Other cash received concerning 3,631,131,894.36 2,494,200,152.44 financing activities Subtotal of cash inflow from financing 3,641,131,894.36 2,504,200,152.44 activities Cash paid for settling debts 10,000,000.00 10,000,000.00 Cash paid for dividend and profit 9,054,055.96 1,542,929.92 distributing or interest paying Other cash paid concerning 4,194,238,186.87 2,571,601,495.22 financing activities Subtotal of cash outflow from 4,213,292,242.83 2,583,144,425.14 financing activities Net cash flows arising from financing -572,160,348.47 -78,944,272.70 activities IV. Influence on cash and cash equivalents due to fluctuation in exchange rate V. Net increase of cash and cash -612,407,720.86 -580,195,558.03 equivalents Add: Balance of cash and cash 1,776,696,342.87 1,342,041,409.86 equivalents at the period -begin VI. Balance of cash and cash 1,164,288,622.01 761,845,851.83 equivalents at the period -end II. Audit report Whether the first quarterly report had been audited or not □ Yes √ No The first quarterly report of the Company had not been audited. China National Accord Medicines Corporation Ltd. 25 Legal representative: Lin Zhaoxiong 24 April 2018 26