深圳一致药业股份有限公司
Shenzhen Accord Pharmaceutical Co., Ltd.
二○○九年半年度报告
Semi-Annual Report 2009
August, 2009SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 1
Contents
SECTION I. IMPORTANT NOTES------------------------------------------------------------------------------2
SECTION II. COMPANY PROFILE-----------------------------------------------------------------------------3
SECTION III. CHANGES IN SHARE CAPITAL AND PARTICULARS ABOUT SHARES HELD BY MAIN SHAREHOLDERS------------------------------------------------------------------------------------5
SECTION IV. PARTICULARS ABOUT DIRECTORS, SUPERVISORS AND SENIOR EXECUTIVES-------------------------------------------------------------------------------------------------------7
SECTION V. DISCUSSION AND ANALYSIS OF THE MANAGEMENT------------------------------7
SECTION VI. SIGNIFICANT EVENTS----------------------------------------------------------------------15
SECTION VII. FINANCIAL REPORT-------------------------------------------------------------------------22
SECTION VIII. DOCUMENTS AVAILABLE FOR REFERENCE--------------------------------------108SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 2
SECTION I. IMPORTANT NOTES
1. Board of Directors and the Supervisory Committee of Shenzhen Accord Pharmaceutical Co., Ltd. (hereinafter referred to as the Company) and its directors, supervisors and senior executives, hereby assures that there are no false records, misleading statements or significant omissions in this report, and it would shoulder any individual as well as joint responsibility concerning to the authenticity, accuracy and completeness of the contents.
2. This report has been compiled in both Chinese and English. Should be any ambiguity arise about the contents of the two versions, the Chinese version shall prevail.
3. No director, supervisor and senior executive would claim that he or she could not guarantee the authenticity, accuracy or completeness of the semi-annual report’s contents or that he or she holds different opinions.
4. Director Mr. Wu Aimin did not attend the 10th meeting of 5th
Board of Directors on auditing the semi-annual report but entrusted Director Ms. Fu Mingzhong to vote on his behalf.
5. The semi-annual financial report of the Company has not been audited.
6. Chairman of the Company Mr. Shi Jinming, General Manager Mr. Yan Zhigang, Chief Financial Officer Mr. Wei Pingxiao and Financial Manager Mr. Chi Guoguang hereby declare that they would assure the authenticity and completeness of the financial accounting report in this semi-annual report.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 3
SECTION II. COMPANY PROFILE
I. Company information
(1) Legal Name of the Company
In Chinese: 深圳一致药业股份有限公司 In English: Shenzhen Accord Pharmaceutical Co., Ltd.
Abbr. of English name: Accord Pharm.
(2) Stock Exchange Listed with: Shenzhen Stock Exchange
Short Form of the Stock: Accord Pharm. /Accord Pharm. B
Stock Code: 000028/200028
(3) Registered Address: Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong
Office Address: Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong Province
Post Code: 518029
The Company’s Internet Website: http://www.szaccord.com.cn
E-mail: 0028@szaccord.com.cn
(4)Legal Representative: Shi Jinming
General Manager: Yan Zhigang
(5) Secretary of the Board: Chen Changbing
Contact Address: Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong Province
Tel.: +(86) 755 25875195
Fax: +(86) 755 25875147
E-mail: investor@szaccord.com.cn
(6)Newspapers Chosen for Disclosing the Information of the Company: Securities Times and Hong Kong Wen Wei Po
Internet Website Appointed by CSRC: http://www.szse.cn
http://www.cninfo.com.cn
The Place Where the Semi-Annual Report Is Prepared: Secretariat of the Board of DirectorsSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 4
II. Major financial data and indexes
(I) Major accounting data and financial indexes
Unit: RMB
At the end of this report period
At the period-end
of last year
Increase/decrease at the end of this report period compared with that in period-end of last year (%)
Before adjustment
After adjustment
After adjustment
Total assets
4,502,173,841.30
3,683,974,196.77
3,923,236,768.25
14.76%
Owners’ equity attributable to shareholders of the listed company
736,047,832.87
627,986,713.06
658,006,016.89
11.86%
Share capital
288,149,400.00
288,149,400.00
288,149,400.00
0.00%
Net assets per share attributable to shareholders of the listed company(RMB/Share)
2.55
2.18
2.28
11.84%
This report period
(Jan. to Jun.)
The same period of last year
Increase/decrease in this report period year-on-year (%)
Before adjustment
After adjustment
After adjustment
Total operating income
5,038,480,670.21
3,900,391,093.08
4,083,732,248.79
23.38%
Operating profit
135,395,010.28
92,941,493.54
94,741,446.57
42.91%
Total profit
137,410,012.64
101,732,833.65
104,206,465.96
31.86%
Net profit attributable to shareholders of the listed company
98,783,895.04
76,733,229.75
78,894,314.37
25.21%
Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses
95,269,012.77
68,838,495.26
73,276,147.19
30.01%
Basic earnings per share (RMB/Share)
0.343
0.27
0.274
25.18%
Diluted earnings per share (RMB/Share)
0.343
0.27
0.274
25.18%
Return on equity (%)
13.42%
13.68%
13.30%
Increased0.12 percentage points
Net cash flow arising from operating activities
151,069,889.91
92,784,647.71
105,830,818.76
42.75%
Net cash flow per share arising from operating activities (RMB/Share)
0.524
0.32
0.367
42.78%
【Note】Items of non-recurring gains and losses and the relevant amount:
Unit: RMB
Items of non-recurring gains and losses
Amount
Note( If applicable)
Gains and losses from the disposal of non-current asset
-137,017.06
Governmental subsidy calculated into current gains and losses, while closely related with the business of the Company, excluding the fixed-amount or fixed-proportion governmental subsidy according to the unified national
1,126,000.00SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 5
standard
Current net losses of subsidiaries from period-begin to consolidated date occurred by enterprise merger under the same control
2,483,497.55
Net profit as of Jan.-June from purchasing enterprise--Sinopharm Medicine Holding Nanning Co., Ltd. under the same control
Other non-operating income and expenditure beside for the aforementioned items
328,704.81
Influenced amount of minority shareholders’ gains/losses
-74,948.29
Impact on income tax
-211,354.74
Total
3,514,882.27
-
(II) Explanation on the differences in the net profit and net asset stated in domestic financial statement and overseas financial statement
Unit: RMB
Items
CAS
IAS
Net profit attributable to the owners of parent company
98,783,895.04
98,783,895.04
Equities attributable to the owners of parent company
736,047,832.87
736,047,832.87
【Note】: There remained no differences in net profit attributable to the owners of parent company in this period and equities attributable to the owners of parent company at the end of this period calculated based on the Accounting System for Business Enterprises and the International Accounting Standards.
(III) Supplemental statement of profit
【Note】The data of profit listed in supplemental statement of profit are calculated according to the requirements of No. 9---- Return on Equity and Earnings per Share (Revision in 2007) of Regulations on the Information Disclosure of Companies Publicly Issuing Shares released by CSRC.
SECTION III. CHANGES IN SHARE CAPITAL AND PARTICULARS ABOUT SHARES HELD BY MAIN SHAREHOLDERS
I. Particulars about change in share capital
Profit in the report period
Return on equity (%)
Earnings per share (RMB)
Fully diluted
Weighted average
Basic earnings per share
Diluted earnings per share
Net profit attributable to the owners of parent company
13.42%
13.96%
0.343
0.343
Net profit attributable to the owners of parent company after deducting non-recurring gains and losses
12.94%
13.47%
0.331
0.331SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 6
1. In the report period, the Company’s total shares remained unchanged.
2. Statement of change in share capital
Unit: Share
Before the change
Increase/decrease in this time (+, -)
After the change
Amount
Proportion
New shares offering
Bonus share
Capitalization of Public reserve
Other
Sub-total
Amount
Proportion
I. Restricted shares
83,979,827
29.14%
-83,973,541
-83,973,541
6,286
0.00%
1. State-owned shares
2. State-owned legal person’s shares
83,971,446
29.14%
-83,971,446
-83,971,446
0
0.00%
3. Other domestic shares
Including: Domestic non-state-owned legal person’s shares
Domestic natural person’s shares
4. Foreign shares
Including: Foreign legal person’s shares
Foreign natural person’s shares
5. Senior executives’ shares
8,381
0.00%
-2,095
-2,095
6,286
0.00%
II. Unrestricted shares
204,169,573
70.86%
83,973,541
83,973,541
288,143,114
100.00%
1. RMB Ordinary shares
149,283,973
51.81%
83,973,541
83,973,541
233,257,514
80.95%
2. Domestically listed foreign shares
54,885,600
19.05%
54,885,600
19.05%
3. Overseas listed foreign shares
4. Others
III. Total shares
288,149,400
100.00%
288,149,400
100.00%
Explanation on the change of share capital: In the report period, the change was brought by the performance of Share Merger Reform of the Company on releasing the restrictions of tradable shares with restricted conditions, the actual released restricted shares of the tradable shares with restricted conditions which was formally released on May 18, 2009.
II. About shareholders
1. Ended June 30, 2009, the Company had totally 19,586 shareholders, including 12,019 shareholders of A-share and 7,567 shareholders of B-share.
2. Particulars about shares held by the top ten shareholders (ended as June 30, 2009)
Unit: Share
Total shareholder
19,586
Particulars about shares held by the top ten shareholders
Full Name of shareholder
Nature of shareholders
Proportion of shares held
Total amount of shares held
Amount of restricted shares held
Amount of shares pledged or frozen
SINOPHARM MEDICINE HOLDING CO., LTD.
State-owned legal person
38.33%
110,459,748
0
0
BANK OF CHINA－FRANKLIN TEMPLETON SEALAND POTENTIAL COMBINATION FUND
Domestic non-state-owned legal person
3.95%
11,387,141
0
BANK OF CHINA－AIG-HUATAI PROSPEROUS CHINA EQUITY FUND
Domestic non-state-owned legal person
1.77%
5,092,630
0
CHINA CONSTRUCTION BANK－HUAAN HONGLI STOCK FUND
Domestic non-state-owned legal person
1.74%
5,000,000
0
Agricultural Bank
Domestic of China－
1.73%
4,977,902
0SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 7
Greatwall Anxin Return Mixed
non-state-owned legal person
Fund
CHINA INDUSTRIAL AND COMMERCIAL BANK－BOSHI SELECTIVE STOCK FUND
Domestic non-state-owned legal person
1.72%
4,963,365
0
CHINA INDUSTRIAL AND COMMERCIAL BANK－GUANGFA JUFENG STOCK FUND
Domestic non-state-owned legal person
1.62%
4,670,215
0
BANK OF CHINA－Harvest
Domestic non-state-owned legal person Theme Selected Mixed Fund
1.57%
4,521,288
0
Agricultural Bank of China－Franklin TEMPLETON SEALAND Flex Cap
Domestic non-state-owned legal person
Fund
1.51%
4,345,607
0
CHINA INDUSTRIAL AND COMMERCIAL BANK－BOC CONTINUOUS GROWTH FUND
Domestic non-state-owned legal person
1.48%
4,275,188
0
Particulars about the shares held by the top ten unrestricted shareholders
Full Name of shareholder
Amount of unrestricted shares held
Type of shares
SINOPHARM MEDICINE HOLDING CO., LTD.
110,459,748
RMB common share
BANK OF CHINA－FRANKLIN TEMPLETON SEALAND POTENTIAL COMBINATION FUND
11,387,141
RMB common share
BANK OF CHINA－AIG-HUATAI PROSPEROUS CHINA EQUITY FUND
5,092,630
RMB common share
CHINA CONSTRUCTION BANK－HUAAN HONGLI STOCK FUND
5,000,000
RMB common share
Agricultural Bank of China－Greatwall Anxin Return Mixed
4,977,902
Fund
RMB common share
CHINA INDUSTRIAL AND COMMERCIAL BANK－BOSHI SELECTIVE STOCK FUND
4,963,365
RMB common share
CHINA INDUSTRIAL AND COMMERCIAL BANK－GUANGFA JUFENG STOCK FUND
4,670,215
RMB common share
BANK OF CHINA－Harvest
4,521,288 Theme Selected Mixed Fund
RMB common share
Agricultural Bank of China－Franklin TEMPLETON SEALAND Flex Cap
4,345,607
Fund
RMB common share
CHINA INDUSTRIAL AND COMMERCIAL BANK－BOC CONTINUOUS GROWTH FUND
4,275,188
RMB common share
Explanation on associated relationship or accordant action among the aforesaid shareholders
BANK OF CHINA－FRANKLIN TEMPLETON SEALAND POTENTIAL COMBINATION FUND and Agricultural Bank of China－Franklin TEMPLETON SEALAND Flex Cap Fund belong to Franklin Templeton Sealand Fund Management Co., Ltd., it is unknown that there exists no associated relationship or belongs to the consistent actionist among the other tradable shareholders regulated by the Management Measure of Information Disclosure on Change of Shareholding for Listed Companies.
3. In the report period, the controlling shareholder of the Company remained unchanged.
The Company’s controlling shareholder is Sinopharm Medicine Holding Co., Ltd., while the actual controller is China National Pharmaceutical Group Corporation.
SECTION IV. PARTICULARS ABOUT DIRECTORS, SUPERVISORS AND SENIOR EXECUTIVESSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 8
I. In the report period, Mr. Chen Changbing, Secretary of the Board, legitimately sold 2,095 shares of the Company held by him (accounting for 25% total shares that he held). This change in share-holding of the Company was listed in Declaration for Changing Share-holding, a column in website of Shenzhen Stock Exchange.
II. Alteration in directors, supervisors and senior executives of the Company in the report period:
During the report period, the Company had not newly engaged or dismissed directors, supervisors and senior executives.
SECTION V. DISCUSSION AND ANALYSIS OF THE MANAGEMENT
I. Overall operation and management of the Company in the report period
In the first half year of 2009, with the guidance of main theme-integrated operation, and the annual operation target-main business income exceeds RMB 10 billion, the Company overcame influence of global financial crisis, grasped the core of new medical reform policy, held firm confidence, concentrated power and hearts, practiced key works and well accomplished the various operation indexes, taking the followings as main topic: Integration, Focus, Risk and Harmony.
In the first half year, the Company realized main business income of RMB 5.004 billion, total profit of RMB 0.137 billion and basic earning per share of RMB 0.343. Here come the tasks accomplished by various departments in the first half year ended Jun. 30th
: pharmaceutical business department realized sales income (external) of RMB 0.555 billion, profit of RMB 63.39 million and operational net cash flow of RMB 64.39 million; distribution business department realized sales income (external) of RMB 4.295 billion, total profit of RMB 83.91 million and operational net cash flow of RMB 94.22 million; and logistic business department realized main business income (external) of RMB 31.22 million, and total profit of RMB -2.8 million
The various key works accomplished in the first half year:
(I) Construction for four center management and control systems and platform had been almost finished
Works were successively accomplished, including the 2nd
First, improved management & control mode in operation and optimized operation management elements: (1) devoted in the annual rolling adjustment of the 3-years strategy program of the Company, and in establishment of IT and logistics matching to the program. Periodic appraisal and inspection on implementation of the strategic program was made according to the budget reaching and performance of various industries and departments; (2) unified procedure management, carried out and organized management & control and procedure optimization project; (3) realized link of distribution business based on CMS system and realized unified management over business platform; (4) Promoted optimization of OA system, NC financial system and BI marketing database, advanced management efficiency. organization structure adjustment at year-begin which held improvement of integrated operation of distribution as mainline, and construction for operation management & control mode, finance control system, human resource system and administrative service support platform for integration. The integration management & control groped for development, which provided good guarantee and support for business development.
Secondly, strengthened construction of financial control system, and promoted integrated operation: (1) improved budget control system, performed good in close link among finance budget, operation budget and capital budget, reinforced analysis on budget implementation, offered solution scheme and suggestions, promoted successful realization of operation plan and finance budget in business; (2)optimized platform of finance management, strengthened management in statement, strengthened data analysis, to form the entire finance analysis system in overall and diversified point of view.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 9
(3)Established risk-control system, reinforced management in daily risks, established effective risk-analysis system; (4) Promoted construction of finance information system, initialization of account book and optimization of system for the newly-purchased company was completed, function of financial NC system was applied and optimized, accomplished development of commercial intellectual system, and basically realized window inquiry for visual data and any-time inquiry for key management index; (5) built platform for managing capital, and strengthened operation effect of capital integration.
Thirdly, established human resource system, and provided professional and high efficient support: (1) improved internal responsibility system, and defined responsibility for various level and post. According to the adjustment in organization structure, the Company re-ensured position of four management & control centers, smoothed responsibilities for the centers and business departments, emended and perfected explanation for duty of department and post; (2) unified management system and mode for performance, to realize overall cover with performance-related management; (3)unified management system for remuneration, to realize unified management in remuneration for Guangdong and Guangxi; (4) planned as whole and programmed the internal training lesson system, paid attention to accumulation of knowledge and transfer of ability, and emphasized on effect evaluation and resource share.
Fourthly, improved administrative service support platform, enhanced efficiency and quality of administrative service: (1) integrated OA office system, realized the cooperative operation of other centers and business department except for the pharmaceutical department on OA platform; (2) unified plan management system. Plan management instruments already covered all area and industries from the original status-covering single area and industry; (3) unified brand management spirit; (4) unified platform for capital management.
(II)Management type transfer of distribution department from region to line was realized stably
Type transfer of management mode of distribution was an emphasis for 2009 in work of integration. Distribution department has set two important ideas that New EVA Performance View and Detailing Independent Calculation Unit; taking Integration, Innovation, Risk and Efficiency as four themes, the Company insisted on exploration through practice, advance through adjustment. The new mode operation has already paced into a normal orbit and obtained initial effect.
Firstly, it got rid off regional limitation, jumped out from selfish departmentalism, changed thought habit of the Management and employees with spirit of integration, advanced business development of distribution from lines to across regions.
Secondly, it built system and mechanism for supporting integrated operation of distribution.
Thirdly, according to the principle of unified programming, inventory, information as well as management, the Company integrated purchasing resources, and established common management & control and operation platform in aspects of variety programming and product development.
Fourthly, the Company promoted unified service system for customers of hospital, offering balanced service for customers.
Fifthly, it promoted strategic layout for distribution network in south area, furthered networks to strengthen terminal control.
(III)Asset sales and purchase were accomplished as scheduled
(1)Accomplished equity sales of Guangdong Accord Pharmacy;
(2) Accomplished equity purchase of Sinopharm Holdings Nanning Co., Ltd;
(3) Accomplished equity purchase of Dongguan Dongfeng Chinese Traditional Medicine Co., Ltd;
(4) Accomplished 75% equities purchase of Suzhou Wanqing Pharmaceutical Co., Ltd.
(IV)Successfully promoted link between Zhijun Pharmaceutical and Zhijun Wanqing for integrated industry chain
To integrate industry chain integration between Zhijun Pharmaceutical and Zhijun Wanqing, was one of the significant measures to accelerate construction of industry base of raw materials, conformSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 10
resource in this industry, power itself with complementary advantages, realize rapid and sustainable development of the Company. In the first half year, the Company arranged special team to conform link, successively output administration experience to Zhijun Wanqing, which made Zhijun Wanqing get rapid improvement in terms of establishment of management system, construction of information system and forging of cultural atmosphere.
(V)Operated Guangzhou Logistic Center on high starting point
Supported by Manhattan system, an advanced system in managing storage with information-based, and owing to the most advanced modern medicine logistic center in south China which possessed solid storage, plane storage and refrigeratory at the same time, and was functioned with storage, classification of disperse and integration, deliver as well as service for big customers, Guangzhou Logistic Center has already become the only one enterprise in Guangdong province obtaining approval from Guangdong Food and Drug Administration to carry out modern medicine logistic center as the third party.
(VI) Established general prevention mechanism, to low down the risks of the Company in aspects of market, talents, capital as well as cost.
Firstly, the Company implemented capital risk prevention with emphasis on daily management, capital operation and capital match.
Secondly, the Company implemented market risk prevention with emphasis on business strategy adjustment. The operation management center, distribution and various lines, Zhijun Pharmaceutical and Zhijun Wanqing all made information analysis in their competition rivals and markets, to promptly and actively hold market tendency.
Thirdly, the Company implemented cost risk prevention with emphasis on general plan of capital, inventory management, and logistic programming operation and saving energy and reducing ejection.
Fourthly, the Company implemented system of managing jackaroo strengthened lessons and tutorship, carried out post shifting and communication, to ensure human resource demand for developing new business n the first half year.
II. Analysis on the main operating results and financial status
(I)The scope of main operations was R&D and production of pharmaceuticals, wholesales of Chinese and western patent medicine, Chinese traditional medicine, biological products, bio-chemical medicine, health care products and medical apparatus and instruments.
(II) Formation of income from main operations
1. Main operations classified according to industries and products
Unit: RMB’0000
Main operations classified according to industries
Classified according to industries or products
Operating income
Operating cost
Gross profit ratio (%)
Increase/decrease in operating income year-on-year (%)
Increase/decrease in operating cost year-on-year (%)
Increase/decrease in gross profit ratio year-on-year (%)
Industry－medicine
56,581.05
42,122.64
25.55%
47.32%
47.45%
-0.07%
Commerce－medicine wholesales
482,941.34
461,198.43
4.50%
26.44%
27.45%
-0.76%
Commerce－medicine
24,919.55
retail
20,443.11
17.96%
10.17%
14.84%
-3.34%
Non-medicine trade
3,217.78
2,845.28
11.58%
186.87%
282.63%
-22.12%
Lease
687.55
225.09
67.26%
211.35%
153.42%
7.48%
Subtotal
568,347.27
526,834.55
7.30%
27.92%
28.79%
-0.63%
Counteracting
67,984.54
67,786.34
0.29%
79.58%
82.18%
-1.43%SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 11
between internal business departments of the Company
Total
500,362.73
459,048.21
8.26%
23.10%
23.45%
-0.25%
Including: the amount of related transaction
37,040.28
33,361.26
9.93%
20.67%
18.88%
1.36%
Main operations classified according to products
Respiratory antitussive medicines
7,375.48
1,360.62
81.55%
-6.72%
8.43%
-2.58%
Cef- series products
39,476.90
32,952.58
16.53%
34.23%
22.80%
22.80%
Including: the amount of related transaction
4,107.26
2,099.73
48.88%
8.48%
-13.16%
-13.16%
Of which: In the report period, the total related transaction amount which the listed Company sold products and provided labor forces to the controlling shareholders and its subsidiaries totaled RMB 370,402,819.73.
2. Income from main operations classified according to areas
Unit: RMB’0000
Area
operating income
Increase/decrease in operating income year-on-year (%)
499,872.44
Domestic sales
23.09%
490.29
Oversea sales
38.99%
(III)Operation of the main wholly-owned subsidiaries of the Company
1. Shenzhen Zhijun Pharmaceutical Co., Ltd.: wholly-owned subsidiary of the Company with registered capital amounting to RMB 69 million, and it mainly deals with the manufacturing, R & D and operation of chemical medicine. It mainly produced respiratory medicines and anti-infection medicines, possessing main products such as respiratory antitussive medicines and cef- series products, etc. Ended June 30, 2009, the total assets of the company amounted to RMB 673.71 million. It realized main business income of RMB 476.52 million and net profit of RMB 31.52 million in the first half year of 2009.
2. SINOPHARM Medicine Holding (Guangzhou) Co., Ltd.: wholly-owned subsidiary of the Company with registered capital amounting to RMB 50 million. It mainly deals with operation of Chinese patent medicine, chemical preparation, antibiotics, biochemical medicines, biological products, diagnosis drug, as well as therapy and diagnosis biological products. Ended June 30, 2009, the total assets of the company amounted to RMB 2,308.21 million. It realized main business income of RMB 2,754.05 million and net profit of RMB 107.28 million in the first half year of 2009.
(IV)Operation of share-join company
Unit: RMB’0000
Name
Operation scope
Net profit of share-join company
Investment income distributed from share-join company in this period
Proportion of investment income in net profit of listed company
Shenzhen Main Luck Pharmaceutical Co., Ltd.
Mainly engaged in the development, research and production of anticancer agent and famotidine
2,661.85
injection, etc.
936.70
9.48%SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 12
SINOPHARM Medicine Holding Shenzhen Chinese Tradition Medicine Co., Ltd.
Mainly engaged in production of granules, lotion, tablet, capsule, liquid and mixture andsyrup; production and sales of shampoo and haircare, bath liquid cosmetics, hygiene products (antibacterial
-170.22
lotion); and the production of plastic bottle.
-80.67
-0.82%
(V) Brief analysis on financial status
1. Changes of main financial indexes in the report period
Unit: RMB
Items
Amount in the period
Amount in the same period of last year
Increase/decrease (%)
Income from main operations
5,003,627,291.72
4,064,547,840.97
23.10%
Profit from main operations
407,158,378.01
341,486,300.40
19.23%
Net profit attributable to owners of parent company
98,783,895.04
78,894,314.37
25.21%
Net increase in cash and cash equivalents
117,052,132.53
97,598,919.69
19.93%
Items
Amount at period-end
Amount at year-begin
Increase/decrease (%)
Total assets
4,502,173,841.30
3,923,236,768.25
14.76%
Owners’ equity attributable to parent company
736,047,832.87
658,006,016.89
11.86%
Notes:
(1)Income from main operations: increased by RMB 939.08 million and 23.10% year-on-year, mainly due to the obvious effect of integrated operation, realization of resource share in Guangdong and Guangxi Provinces, and further expansion of sales scale.
(2)Profit from main operations: increased by RMB 65.67 million and 19.23% year-on-year, mainly due to the great increase of sales income year-on-year.
(3)Net profit attributable to owners of parent company: increased by RMB 19.89 million and 25.21% year-on-year, mainly due to that: at one side, the Company did good in sales and controlled cost reasonably, which enhanced entire benefit; at the other side, the investment income of RMB 14.2 million obtained from transferring equity of Guangdong Accord Drugstore Co., Ltd. and Guangxi Accord Pharmaceutical Chains Co., Ltd. made a comparatively big contribution for growth of profit.
(4)Total assets: increased by RMB 0.579 billion at period-end, 14.76% up compared to that of year-begin. Main reasons accounting for the increase: firstly, the Company performed well in making profit; secondly, expansion of assets scale was brought from purchasing equity of Zhijun Wanqing and Sinopharm Holdings Nanning Co., Ltd.
(5) Owners’ equity attributable to parent company: increased by RMB 78.04 million at period-end, 11.86% up compared to that of year-begin. Main reasons accounting for the increase: owners’ equity attributable to parent company increased by RMB 98.78 million due to the profit the Company made; decreased by RMB 28.83 million due to dividend distribution for owners (or shareholders); increased by RMB 39.66 million due to that investment loss had not been confirmed before execution of new accounting principle since the Company transferred Shenzhen Accord and Guangzhou Accord Chains; decreased by RMB 1.53 million due to offset of undistributed profit since the Company purchased equity of Sinopharm Holdings Nanning Co., Ltd., the enterprise under the same control with the Company, with premium at period-end; meanwhile, offset owners’ equity of RMB 30.02 million which was increasingly adjusted at period-begin.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 13
2. Change in profit constitution year-on-year
Unit: RMB
Item
Amount of this period
Amount for the same period of last year
Change in proportion taken in total profit(%)
Amount (RMB)
Proportion taken in total profit (%)
Amount (RMB)
Proportion taken in total profit (%)
Main business profit
407,158,378.01
296.31%
341,486,300.40
327.70%
-31.39%
Other business profit
21,826,957.61
15.88%
16,286,338.55
15.63%
0.25%
Period expense
-310,903,764.85
-226.26%
-273,725,970.23
-262.68%
36.42%
Assets devaluation loss
-5,442,381.41
-3.96%
4,063,290.82
3.90%
-7.86%
Investment income
22,755,820.92
16.56%
6,631,487.03
6.36%
10.20%
Net non-operating income and expenditure
2,015,002.36
1.47%
9,465,019.39
9.08%
-7.61%
Total profit
137,410,012.64
-
104,206,465.96
-
-
*items which help to increase total profit were listed with positive numbers, and items which help to decrease total profit were listed with negative numbers.
Note:
1. Period expense: total expense for this period was RMB 310.9 million, increasing by RMB 37.18 million year-on-year, and its proportion taken in total profit climbed 36.42 percentage points year-on-year. Main reasons accounting for the increase: expense for human resources increased by RMB 11.03 million year-on-year due to increase of staffs; expense for logistics increased by RMB 5.54 million due to expansion of sales scale; expense for market development and promotion increased by RMB 11.06 million year-on-year; expense for amortization for fair value of fixed assets and intangible assets of Zhijun Wanqing increased by RMB 6.61 million; expense of RMB 2.99 million was increased for CMS information service.
2. Assets devaluation loss: in this report period, assets devaluation loss was totally withdrew with RMB 5.44 million. In the same period of last year, totally RMB 4.06 million assets devaluation loss was switched back. Its proportion taken in total profit decreased by 7.86 percentage points year-on-year.
3. Investment income: increased by RMB 16.12 million year-on-year, and its proportion taken in total profit increased by 10.2 percentage points year-on-year. Main reasons accounting for the change: the Company obtained disposal income of RMB 14.2 million for transferring equity of Guangdong Accord Drugstore Co., Ltd. and Guangxi Accord Pharmaceutical Chains Co., Ltd in the report period; meanwhile, Shenzhen Main Luck Pharmaceutical Co., Ltd. which the Company invested received a great ascend in operation performance and profit.
4. Net non-operating income and expenditure: decreased by RMB 7.45 million year-on-year, and its proportion taken in total profit decreased by 7.61 percentage points year-on-year. Main reasons accounting for the change: the Company received governmental subsidy for special reserve drugs and scientific research expense amounting to RMB 5.44 million, and Zhijun Pharmaceutical, an underlying subsidiary of the Company, obtained income of RMB 4.52 million for selling old properties in the same period of last year; while as for this report period, the aforesaid subsidy only amounted to RMB 1.7 million.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 14
(VI)There was no other operation business which influenced greatly upon net profit in the report period
(VII)Main working plan for the later half year
For the later half year of 2009, Integration is still the main theme for all works. With the target of “main business income exceeds RMB 10 billion annually”, the Company is going to actively grasp the opportunity originated from industry integration and national medical system reform, adjust layout of strategic development, held firmly the tow main topics Management and Operation, fully function integrated operation as core advantage, realize cross development among the three industries-pharmaceuticals industry, medicine distribution and medicine logistics. The Company continues to perform well in the following main works;
1. Target and measures for management
Firstly, make overall estimation on efficiency of integrated operation, and make prospect research for development strategy and industry policy: (1) accomplishes annual rolling adjustment for the 3-years strategy programming, mainly promotes programming for business departments of pharmaceuticals and logistics, and forms programming scheme with finance, human resources and IT matched; (2) fully carries out research on new medical reform policy and affiliated measures, extends upstream and downstream further to search for new point of profit-yielding; (3) fully carries out collection and selection for information of medical investment projects, preparing well for investment projects.
Secondly, perfects management and control platform for integrated operation: (1) on the basis of unifying operation management system, information management platform and quality management system, the operation management center should pay attention to prospect analysis for operation management, to fully advance efficiency of management and control for operation; (2) the finance management center should be a leader to organize construction for internal control system of the Company, improve budget & risk management system, promote the management pattern of expense budget, and realize the target of Standardization, High Efficiency, Risk and Control; (3) the human resource center should further optimize organization design, optimize and perfect performance and remuneration system, establish incentive mechanism for selecting, training, remaining and encouraging talents, t hus to offer high efficient support for integrated operation; (4) the administrative center should further promote establishment and perfection of administrative service platform, and perform well in works relating to various administrative management and service.
Thirdly, strengthens the management factors such as brand, capital and human resources: (1) enhances influence of brand: with guidance from the brand target that: “to be the No.1 medicine brand in South China, and to be an excellent medicine listed company”, the Company tries to figure out its brand characteristics in different industries and regional markets; (2) promotes capital integrated operation: plays the advantage of strategic cooperation with banks, establishes cross-region financing platform to expand its financing resources advantage to Zhijun Wanqing, located outside Shenzhen and Guangzhou, and to companies in Guangxi region; digs for variety financing breeds and cut down capital cost; (3) matches well capital, and enhances effect of input and output; (4)optimizes human resources incentive mechanism, to make good reserve with talented persons.
Fourthly, strives for solution for prominent problems restricting business development: (1) carries out responsibility-asking system in the four centers, strengthens service awareness of centers, enhances special service skill and improves service efficiency; (2) various management level pay attention to development procedure of business, and promptly solves problems existed in the procedure.
Fifthly, strengthens construction of internal control system and social responsibility system: (1) strengthens construction of internal control system, enhances the Company in operation management and fighting against risks, strives for sustainable development; (2) strengthens construction of social responsibility system of the Company, advances soft strength and boost up competitiveness.
2. Target and measures for operation
Takes the chance of industry integration and new medical policy reform, breaks through barriers forSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 15
increasing sales, breaks through obstacles for developing market, to strive for realization of sales and market share growth which are higher than average level and rivals.
Firstly, promotes integration of industry chain, and seeks for breakthrough in aspects of industry chain, product line, product technique and quality management, and enhances core competitiveness of pharmaceutical industry.
Secondly, implements the enterprising strategy “Growth, Strive and Develop” in full round, cultivates and develops new business-growth points in terms of tender bidding, community hospitals, the third terminals and agencies, to realize new breakthrough in market expansion and network downstream.
Thirdly, accelerates promotion for programming logistics integration, perfects platform for integration operation, effectively integrates the upstream and downstream resources in medicine marketing channels depending on the advanced logistics establishments, equipments, information technique and purchasing-sales-stock management system, optimizes taches for medicine supply, sales and deliver, and realizes automatization, information, scale and benefit of medicine deliver.
III. Investment of the Company
(I)Main equity investment
1. The Company signed Equity Transfer Contract with Chen Zhongqi and Chen Zhongyao concerning purchasing 100% equities of Dongguan Accord Pharmaceutical Co., Ltd. dated Jan. 5th
2. The Company signed Equity Transfer Contract with Yang Qiaoming concerning purchasing 75% equities of Suzhou Zhijun Wanqing Pharmaceutical Co., Ltd. dated Feb 18 of 2009. The transaction price was confirmed as RMB 2.742 million. The equity transfer was accomplished in June of year 2009.
th
3. The Company signed Equity Transfer Contract with Sinopharm Holdings Co., Ltd. and Sinopharm Medicine Holdings Shanghai Co., Ltd. concerning purchasing 100% equities of Sinopharm Holdings Nanning Co., Ltd. dated May 25 of 2009. The transaction price was confirmed as RMB 103.5 million. The equity transfer was accomplished in March of year 2009.
th
4. The Company signed Equity Transfer Contract with Sinopharm Holdings Co., Ltd. concerning selling 100% equities of Guangdong Accord Drugstore Co., Ltd. dated May 20th of 2009. The transaction price was confirmed as RMB65,613,100. The equity transfer was accomplished in June of year 2009. of 2009. The transaction price was confirmed as RMB 30,431,700. The equity transfer was accomplished in June of year 2009.
5. The Company signed Equity Transfer Contract with its subsidiary Sinopharm Medicine Holdings Liuzhou Co., Ltd. concerning selling 100% equities of Guangxi Accord Drugstore Chains Co., Ltd. dated May 22nd of 2009. The transaction price was confirmed as RMB 9,960,900. The equity transfer was accomplished in June of year 2009.
(II)Application of raised proceeds
1. In the report period, the Company neither raised proceeds, nor did proceeds which were raised in previous periods last to use in this report period
2. Actual progress of projects invested with material non-raised proceeds
Naught.
SECTION VI. SIGNIFICANT EVENTS
I. Corporation governance
In the report period, according to the requirements of Company Law, Securities Law and Governing Structure Principle of Listed Company and other relevant laws and regulations, the Company continuously perfected the governance structure, strengthened management work of informationSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 16
disclosure, standardizes operation, and established modern enterprise system. At present, each governance system of the Company is basically perfect, operation is standard, and legal person governance structure is perfect, which accorded with the requirement of normal document on listed company issued by CSRC. In the report period, the Company made a completed and deep self-inspection of financial system according to the requirement of Notice on Filling Inquiry Questionnaire on Basic Works of Financial Accounting of Listed Company in Shenzhen (SZJGSZ [2008] No.30). Through the self-inspection, the Company completely arranged financial institution setting, system establishment and usage of information system. The result showed that, the Company established a standard and perfect accounting calculation system according to national laws and relevant regulations.
II. Profit Distribution Plan and Its Implementation
Profit distribution plan 2008 was approved in the Shareholders’ General Meeting of 2008 held on Apr. 13, 2009: calculated based on the total shares of 288,149,400, the Company gave cash dividend RMB 1.00 each 10 shares to all shareholders (before tax, and B shares would not deduct tax temporarily). On June 12, 2009, the profit distribution was accomplished and cash dividends of RMB 28,828,019.86 were actually distributed.
III. Material Lawsuits and Arbitrations
In the report period, there existed neither significant lawsuits, arbitrations involved with the Company nor any material lawsuits, arbitrations occurred in previous periods and lasted into the report period.
IV. Daily related transactions
The related transaction occurred when the Company purchases and sells goods:
1. As to the subsidiaries where existed controlling relationship and which were brought into consolidated scope pf accounting statements of the Company, the transactions between them and the ones occurred between parent company and subsidiary have been offset.
2. Purchasing goods from the related parties:
Unit: RMB
Name of related parties
Amount in this period
Amount in the same period of last year
Sinopharm Holding Co., Ltd
265,826,487.48 .
-620.26
Shanghai Sinopharm Wai Gaoqiao Medicine Co., Ltd.
217,185,865.82
475,856,945.20
China National Medicines Corporation Ltd.
53,010,106.57
54,560,198.67
Guangdong South Pharmaceutical Foreign Trade Corporation
29,424,950.56
17,729,497.75
China Medicine Foreign Trade Corporation
11,822,212.14
8,230,670.82
Sinopharm Medicine Guoda Pharmacy Co., Ltd.
7,513,429.43
6,189,818.91
Guangdong Dong Fang Uptodate & Special Medicines Co. Ltd.
6,678,974.80
5,211,228.25
Sinopharm Medicine Group United Medical Equipment Co., Ltd.
2,506,758.77
1,544,615.93
Shenzhen Main Luck Pharmaceutical Inc.
1,806,047.49
---
Sinopharm Medicine Holding Suzhou Co., Ltd.
474,645.81
---SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 17
Name of related parties
Amount in this period
Amount in the same period of last year
Sinopharm Medicine Holding Hunan Co., Ltd.
469,476.92
---
China Medical Materials Group Corporation
417,809.22
1,027,165.18
Sinopharm Medicine Holding Shanghai Co., Ltd.
152,759.53
6,478,850.82
China Medicine Industry Co., Ltd.
129,015.37
---
Sinopharm Medicine Group Shanghai Medical Equipment Co., Ltd.
97,531.81
83,825.76
Sinopharm Group Chemistry Reagent Co., Ltd.
93,777.77
119,145.29
Sinopharm Group Chemistry Reagent Suzhou Co., Ltd.
25,692.89
---
Beijing Zhongxin Medical Operation Company
21,162.82
---
Sinopharm Group Southwest Medicine Co., Ltd.
13,530.47
2,041,846.19
Sinopharm Holding Co., Ltd
30.35 . Shanghai Branch
309,936.18
Guangdong Tianliang Medicine Co., Ltd.
---
-41.02
Hubei Yibao International Medicine Co., Ltd.
---
14,010.00
China Medicine Industry Co., Ltd.
---
33,511.11
Sinopharm Medicine Holding Hunan Tianjian Co., Ltd.
---
188,295.73
China Medicine Foreign Trade Corporation Sales Branch
---
645,286.67
Sinopharm Traditional Chinese Medicine (Shenzhen) Co. Ltd
-231.92
1,159,668.58
Sinopharm Medicine Holding Tianjin Co., Ltd.
-8,838.42
7,496,898.31
Total
597,661,195.68
588,920,754.07
Note: The purchasing price is confirmed according to the market price. Till Jun. 30, 2009, the total amount that the Company purchased from its related parties took 45.97% of the limits granted by the shareholders’ general meeting held at year begin.
3. Goods sold to related parties:
Unit: RMB
Name of related parties
Amount in this period
Amount in the same period of last year
Sinopharm Medicine Holding Shenyang Co.,Ltd.
128,254,395.95
112,178,235.64
Sinopharm Medicine Holding Hubei Co., Ltd.
43,925,158.98
44,003,218.39
Sinopharm Medicine Holding Hunan Co., Ltd.
39,167,791.58
441,128.21
Sinopharm Medicine Holding Tianjin Co., Ltd.
34,448,422.73
28,760,352.32
Sinopharm Medicine Holding Tianjin Co., Ltd. Inner Mongolia Branch
223,220.51
496,820.51
Sinopharm Medicine Holding Tianjin Co., Ltd.Tongliao Dongmeng Branch
-24,384.62
---
Sinopharm Medicine Southwest Medicine Co., Ltd.
33,667,452.39
29,641,958.74SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 18
Name of related parties
Amount in this period
Amount in the same period of last year
Sinopharm Medicine Holding Beijing Co., Ltd.
23,830,112.15
15,223,096.16
Hubei Yibao International Medicine Co., Ltd.
13,605,968.75
19,637,697.90
Sinopharm Medicine Holding Ningxia Co., Ltd.
8,019,553.91
---
Sinopharm Medicine Holding Beijing Huahong Co., Ltd.
7,894,944.68
3,395,463.61
Sinopharm Medicine Holding Henan Co., Ltd.
6,109,133.55
---
Tianjin East Bokang Medical Trade Co., Ltd.
5,924,107.52
3,810,580.75
Sinopharm Medicine Holding Co., Ltd.
5,809,967.15
2,046,077.70
Guangxi Guoda Pharmacy Chain Co., Ltd.
5,201,274.94
5,518,954.54
Guangdong Tianliang Medicine Co., Ltd.
3,539,682.74
49,706.84
Sinopharm Medicine Holding Jiangsu Co., Ltd.
3,134,522.69
3,111,625.80
Sinopharm Medicine Holding Shanxi Co., Ltd.
2,750,136.22
1,689,533.92
Sinopharm Group Northwest Medicine Co., Ltd.
1,517,425.64
-570.26
Guotou Medicines Anhui Co., Ltd.
1,346,222.52
---
China National Medicines Corporation Ltd.
1,277,393.29
1,768,348.17
Guangdong Dong Fang Uptodate & Special Medicines Co. Ltd.
1,256,350.10
1,275,485.23
Sinopharm Medicine Holding Zhejiang Co., Ltd.
494,443.74
55,823.58
Sinopharm Medicine Holding Guoda Pharmacy Co., Ltd.
180,403.69
2,157.54
Ningxia Guoda Pharmacy Chain Co., Ltd.
98,787.31
---
Guangxi Wuzhou Huawu Medicinal Materials Co., Ltd
73,990.31
114,260.93
Sinopharm Medicine Holding Shenzhen Chinese Traditional Medicine Co., Ltd.
955.75
---
Sinopharm Medicine Holding Suzhou Co., Ltd.
-7,402.14
190,068.38
Shanghai Sinopharm Wai Gaoqiao Medicine Co., Ltd.
-1,317,212.30
---
Sinopharm Medicine Holding Hunan Tianjian Co., Ltd.
---
30,911,000.93
Sinopharm Medicine Holding Hubei Xinlong Co., Ltd. (Note)
---
2,593,198.24
Guangdong Renbo Medical Equipment Co., Ltd.
---
29,204.00
Guangdong South Pharmaceutical Foreign Trade Corporation
---
2,374.78
Total
370,402,819.73
306,945,802.55
Note: The selling price is confirmed according to the market price. Till Jun. 30, 2009, the total amount that the Company sold to its related parties took 38.99% of the limits granted by the shareholders’ general meeting held at year begin.
V. Significant contract and its implementation
(I) Entrustments, contracts and leases
In the report period, the Company has no significant custody, contract or lease of other companies,SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 19
nor occurred in the report period or occurred in previous period and lasted in the report period.
(II) Significant Guarantees
Unit: RMB’0000
Particulars about the external guarantee of the Company (Barring the guarantee for the controlling subsidiaries)
Name of the Company guaranteed
Date of happening (date of signing agreement)
Amount of guarantee
Guarantee type
Guarantee term
Complete
Implementation or not
Guarantee for related parts (Yes or No)
Total amount of guarantee in the report period
Total balance of guarantee at the end of the report period
Guarantee of the Company for the controlling subsidiaries
Total amount of guarantee for controlling subsidiaries in the report period
67,500.00
Total balance of guarantee for controlling subsidiaries at the end of the report period
95,500.00
Particulars about the total guarantee of the Company (Including the guarantee for the controlling subsidiaries)
Total amount of guarantee
95,500.00
The proportion of the total amount of guarantee in the net assets of the Company
129.75%
Including:
Amount of guarantee for shareholders, actual controller and its related parties
The debts guarantee amount provided for the guarantee of which the assets-liability ratio exceeded 70% directly or indirectly
95,500.00
Proportion of total amount of guarantee in net assets of the Company exceeded 50%
58,697.61
Total amount of the aforesaid three guarantees
95,500.00
(III) Related financial claims and liabilities
Unit: RMB’0000
Affiliated parties
Funds offered to related parties
Funds offered to the listed company by related parties
Amount occurred
Balance
Amount occurred
Balance
Notes receivable from affiliated units (debtor)
17,369.90
5,004.04
--
--
Accounts receivable from affiliated units (debtor)
58,347.68
15,302.92
--
--
Other accounts receivable from affiliated units (debtor)
61.70
--
--
--
Accounts paid in advance by affiliated units (debtor)
4,805.97
602.15
--
--
Notes payable to affiliated units (lender)
--
--
67,279.06
36,566.35
Accounts payable to affiliated units (lender)
--
--
78,460.10
12,518.68
Other accounts payable to affiliated units (lender)
--
--
24,233.49
17,441.70
Accounts received in advance from affiliated units (lender)
--
--
376.47
--SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 20
Total
80,585.25
20,909.11
170,349.12
66,526.73
(IV) Entrustment of cash assets management
In the report period, the Company did not entrust others with cash assets management, nor had it done so in previous periods and lasted into the report period.
(V) Implementation of Commitments
Special commitments by the former shareholders of non-tradable shares in Share Merger Reform and the implementation
Shareholders
Special Commitments
Contract implementation
Commitment implementation
SINOPHARM MEDICINE HOLDING CO., LTD.
(1) Not selling original non-tradable equities through stock exchange in 24 months from the day they become tradable. (2) Original non-tradable equities sold after the 24 months through stock exchange take up no more than 10% of the Company’s total shares in the following 12 months, and the price is no lower than 110% of the stock weighted average price of the 30 trading days before Accord Pharmaceutical’s Board of Directors publish the reform plan (from the day of implementing Non-tradable Shares Reform to the day when Sinopharm Medicine Holding sells equities, Ex Warrant/Ex Dividend on the price will be implemented if dividend, allotment or transferring of public capital to equity and so on happens ).
It reached the requirements of implementation.
The commitment was accomplished implementation on May 18, 2009.
(VI) Other important contracts
In the report period, there were no other significant contracts.
VI. Certified Public Accountants engaged by the Company
On March 17, 2009, the Company held the 8th meeting of the 5th
board of directors, which decided to continue to engage ShuLun Pan Certified Public Accountants Co., Ltd. as the auditing institutions for the year 2009, and was then approved in the 2008 Shareholders’ General Meeting on April 13, 2009.
VII. Registration form for receiving research, communication and interview in the report period.
During the report period, the Company has never received interview from media.
VIII. The financial report of the semi-annual report of the Company is not audited.
IX. In the report period, neither the Company nor the Board or its directors have been inspected by the CSRC, nor have received any administrative punishments or circulating criticism, nor have them been publicly criticized by Shenzhen Stock Exchange.
X. Special explanation and independent opinion on capital occupation of related parties and external guarantee of the Company issued by independent directors
According to the Notice on Standardizing Current Account Between Listed Company and Related Parties and External Guarantee of Listed Company (ZJF No. 56 (2003)) issued by the CSRC, as the independent directors of Shenzhen Accord Pharmaceutical Co., Ltd., we made careful inspection on the Company’s capital occupied by the controlling shareholders and related parties and the Company’s external guarantee. There comes the following explanation:SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 21
Till now, no controlling shareholders or related parties occupied capital of the Company; the Company has not provided any guarantee for controlling shareholder and its related parties, joint stock company which the Company holds less than 50% equities and any non-legal person unit or individual; controlling shareholder and other related parties also have not forced the Company to offer guarantee for others.
XI. Particular about the shareholders who hold higher than 5% equities of the Company adding restricted shares commitment in 2009
There is no shareholder who hold higher than 5% equities of the Company adding restricted shares commitment in 2009
XII. Index for information notice on significant events
In the report period, notices were disclosed on Securities Times, Hong Kong Wen Wei Po and the website http://www.cninfo.com.cn.:
1. On Jan. 10, 2009, Notice on Holding the 1st
2. On Jan. 23, 2009, Notice on Reduction of Shares Holding was disclosed; Extraordinary Shareholders’ General Meeting of 2009 and Supplement Notice on Purchase Proceedings were disclosed;
3. On Feb. 11, 2009, Resolution Notice on the 1st Extraordinary Shareholders’ General Meeting of 2009 and Legal Opinion Letter of the 1st
4. On Feb. 11, Resolution Notice on the 8 Extraordinary Shareholders’ General Meeting of 2009 were disclosed;
th Meeting of the 5th Board of Directors, Resolution Notice on the 7th Meeting of the 5th
5. On Apr. 14, 2009, Resolution Notice on Shareholders’ General Meeting 2008, Legal Opinion Letter of Shareholders’ General Meeting 2008 and Articles of Association were disclosed; Supervisory Committee, Annual Report 2008 and Summary (Chinese and English Version), Social Responsibility Report in 2008, Audit Report of Financial Report in 2008, Auditing Report of Capital Intercourse of Related Parties, Self-estimation Report of Internal Control in 2008, Work Report of Independent Directors in 2008, Notice on Independent Directors’ Opinions, Notice on Daily Related Transaction Plan of 2009, Notice on Applying for Comprehensive Credit Line and Providing Guarantee for Subsidiary Company and Notice Holding Shareholders’ General Meeting 2008 were disclosed;
6. On Apr. 28, 2009, the First Quarterly Report 2009 was disclosed;
7. On Apr. 30, 2009, Notice on Reduction of Shares Holding was disclosed;
8. On May 15, 2009, Suggestive Notice on Releasing Sale Restriction;
9. On Jun. 3, 2009, Notice on Implementation of Assets Purchase and Sales;
10. On Jun. 4, 2009, Notice on Implementation of Dividend Distribution in 2008.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 22
Section VII. Financial Report (Un-audited)
Balance sheet
Prepared by Shenzhen Accord Pharmaceutical Co., Ltd. June 30, 2009 Unit: RMB
Items
Amount at period-end
Amount at year-begin
Merger
Parent Company
Merger
Parent Company
Current assets:
Monetary funds
498,715,551.46
83,065,822.65
381,663,418.93
62,369,583.65
Settlement provisions
Capital lent
Transaction finance asset
Notes receivable
222,735,411.70
1,434,252.43
213,830,030.45
254,500.00
Accounts receivable
2,215,551,730.88
293,554,734.42
1,871,252,754.52
243,301,803.10
Accounts paid in advance
39,673,822.95
5,310,666.26
43,142,735.93
4,919,683.46
Insurance receivable
Reinsurance receivables
Contract reserve of reinsurance receivable
Interest receivable
Dividend receivable
Other receivables
44,599,760.98
389,862,542.16
54,701,481.63
242,415,823.08
Purchase restituted finance asset
Inventories
724,388,680.96
89,476,945.41
752,146,181.21
94,249,578.90
Non-current asset due within one year
Other current assets
Total current assets
3,745,664,958.93
862,704,963.33
3,316,736,602.67
647,510,972.19
Non-current assets:
Granted loans and advances
Finance asset available for sales
Held-to-maturity investment
Long-term account receivable
Long-term equity investment
78,139,321.30
643,372,731.64
69,578,981.80
323,756,562.92SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 23
Investment property
26,469,993.04
2,065,026.09
22,848,031.69
2,140,353.75
Fixed assets
431,014,017.94
35,407,159.27
376,881,334.49
36,732,350.96
Construction in progress
24,915,628.27
253,886.24
18,766,355.77
253,886.24
Engineering material
Disposal of fixed asset
Productive biological asset
Oil and gas asset
Intangible assets
104,094,202.25
30,108,035.11
57,607,282.99
30,622,772.31
Expense on Research and Development
235,375.01
Goodwill
39,668,174.87
Long-term expenses to be apportioned
7,744,547.20
113,871.83
17,061,272.11
276,057.82
Deferred income tax asset
7,676,353.07
10,716,504.87
Other non-current asset
36,551,269.42
33,040,401.86
Total non-current asset
756,508,882.37
711,320,710.18
606,500,165.58
393,781,984.00
Total assets
4,502,173,841.30
1,574,025,673.51
3,923,236,768.25
1,041,292,956.19
Current liabilities:
Short-term loans
612,015,561.36
179,688,039.50
393,660,380.07
80,171,729.25
Loan from central bank
Absorbing deposit and interbank deposit
Capital borrowed
Transaction financial liabilities
Notes payable
918,567,079.04
241,912,987.84
838,537,721.27
129,298,292.87
Accounts payable
1,591,875,830.78
291,960,078.44
1,432,873,603.58
268,335,731.42
Accounts received in advance
23,884,264.57
6,615,558.14
18,771,893.29
4,626,342.73
Selling financial asset of repurchase
Commission charge and commission payable
Wage payable
50,433,473.22
11,778,608.92
86,764,697.85
14,678,407.64
Taxes payable
36,998,224.28
1,264,044.52
15,121,308.90
-963,780.92
Interest payable
295,942.50
742,393.70
39,700.00
Dividend payable
2,000,000.00
6,646,096.98
Other accounts payable
355,765,667.14
275,764,992.13
308,422,007.24
119,209,791.88
Reinsurance payables
Insurance contract reserve
Security trading of agency
Security sales of agency
Non-current liabilities due within 1 year
57,720,000.00
Other current liabilities
Total current liabilities
3,591,836,042.89
1,008,984,309.49
3,159,260,102.88
615,396,214.87
Non-current liabilities:
Long-term loans
60,000,000.00
30,000,000.00
Bonds payable
Long-term account payable
48,640.20
51,261.00
Special accounts payable
800,000.00
800,000.00
800,000.00
800,000.00
Projected liabilities
Deferred income tax liabilities
18,557,360.12
12,174,180.87
Other non-current liabilities
41,561,743.31
41,561,743.31
Total non-current liabilities
120,967,743.63
800,000.00
84,587,185.18
800,000.00
Total liabilities
3,712,803,786.52
1,009,784,309.49
3,243,847,288.06
616,196,214.87
Owner’s equity (or shareholders’ equity):
Paid-in capital (or share capital)
288,149,400.00
288,149,400.00
288,149,400.00
288,149,400.00SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 24
Capital public reserve
5,030,338.57
2,508,769.94
34,555,838.57
2,508,769.94
Less: Inventory shares
Reasonable reserve
Surplus public reserve
9,303,064.31
9,761,340.26
12,781,301.82
Provision of general risk
Retained profit
433,565,029.99
273,583,194.08
325,539,438.06
121,657,269.56
Balance difference of foreign currency translation
Total owner’s equity attributable to parent company
736,047,832.87
564,241,364.02
658,006,016.89
425,096,741.32
Minority interests
53,322,221.91
21,383,463.30
Total owner’s equity
789,370,054.78
564,241,364.02
679,389,480.19
425,096,741.32
Total liabilities and owner’s equity
4,502,173,841.30
1,574,025,673.51
3,923,236,768.25
1,041,292,956.19
Profit statement
Prepared by Shenzhen Accord Pharmaceutical Co., Ltd. June 30, 2009 Unit: RMB
Items
Amount in this period
Amount in last period
Merger
Parent
Company
Merger
Parent
Company
I. Total operating income
5,038,480,670.21
757,466,776.66
4,083,732,248.79
653,420,790.55
Including: Operating income
5,038,480,670.21
757,466,776.66
4,083,732,248.79
653,420,790.55
Interest income
Insurance gained
Commission charge and commission income
II. Total operating cost
4,925,841,480.85
762,308,233.99
3,995,622,289.25
657,722,145.01
Including: Operating cost
4,603,508,542.38
718,827,487.61
3,721,514,466.21
618,493,823.24
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
5,986,792.21
435,425.94
4,445,143.63
209,531.50
Sales expenses
179,496,362.34
22,428,701.92
136,628,326.51
18,948,664.75
Administration expenses
110,439,263.11
19,227,720.11
108,899,757.28
19,887,757.92
Financial expenses
20,968,139.40
615,973.65
28,197,886.44
795,087.66
Losses of devaluation of asset
5,442,381.41
772,924.76
-4,063,290.82
-612,720.06
Add: Changing income of fair value(Loss is listed with “-”)
Investment income (Loss is listed with “-”)
22,755,820.92
195,834,991.30
6,631,487.03
65,120,670.10
Including: Investment income on affiliated company and joint
8,560,339.50
2,933,485.09
6,631,486.03
400,955.15SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 25
venture
Exchange income (Loss is listed with “-”)
III. Operating profit (Loss is listed with “-”)
135,395,010.28
190,993,533.97
94,741,446.57
60,819,315.64
Add: Non-operating income
2,262,026.08
25,372.99
10,163,605.46
2,944,073.40
Less: Non-operating expense
247,023.72
16,696.85
698,586.07
13,489.41
Including: Disposal loss of non-current asset
178,127.36
6,568.35
113,180.23
13,489.41
IV. Total Profit (Loss is listed with “-”)
137,410,012.64
191,002,210.11
104,206,465.96
63,749,899.63
Less: Income tax expense
34,022,824.94
19,962,495.37
V. Net profit (Net loss is listed with “-”)
103,387,187.70
191,002,210.11
84,243,970.59
63,749,899.63
Net profit attributable to owner’s of parent company
98,783,895.04
191,002,210.11
78,894,314.37
63,749,899.63
Minority shareholders’ gains and losses
4,603,292.66
5,349,656.22
VI. Earnings per share
i. Basic earnings per share
0.343
0.274
ii. Diluted earnings per share
0.343
0.274
Cash Flow Statement
Prepared by Shenzhen Accord Pharmaceutical Co., Ltd. June 30, 2009 Unit: RMB
Items
Amount in this period
Amount in last period
Merger
Parent Company
Merger
Parent Company
I. Cash flows arising from operating activities:
Cash received from selling commodities and providing labor services
5,057,723,400.99
851,316,918.82
4,051,696,658.39
692,142,290.60
Net increase of customer deposit and interbank deposit
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 disposal of transaction financial asset
Cash received from interest, commission charge and commission
Net increase of capital borrowed
Net increase of returned business capital
Write-back of tax received
318,538.52
740,041.89SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 26
Other cash received concerning operating activities
80,939,109.98
9,309,029.97
56,083,934.22
11,259,249.84
Subtotal of cash inflow arising from operating activities
5,138,981,049.49
860,625,948.79
4,108,520,634.50
703,401,540.44
Cash paid for purchasing commodities and receiving labor service
4,500,362,856.95
721,175,411.43
3,578,784,668.06
620,749,669.09
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
176,986,108.70
18,350,407.15
161,477,007.24
23,071,987.96
Taxes paid
94,689,690.57
11,009,193.46
83,841,393.69
6,371,863.74
Other cash paid concerning operating activities
215,872,503.36
23,749,786.02
178,586,746.75
26,311,670.45
Subtotal of cash outflow arising from operating activities
4,987,911,159.58
774,284,798.06
4,002,689,815.74
676,505,191.24
Net cash flows arising from operating activities
151,069,889.91
86,341,150.73
105,830,818.76
26,896,349.20
II. Cash flows arising from investing activities:
Cash received from recovering investment
Cash received from investment income
77,532,274.50
4,530,614.03
75,738,455.79
Net cash received from disposal of fixed, intangible and other long-term assets
5,370,470.44
5,172,565.12
9,893,967.63
3,500.00
Net cash received from disposal of subsidiaries and other units
59,957,664.50
65,613,100.00
1.00
Other cash received concerning investing activities
Subtotal of cash inflow from investing activities
65,328,134.94
148,317,939.62
14,424,582.66
75,741,955.79
Cash paid for purchasing fixed, intangible and other long-term assets
39,008,045.04
1,956,908.40
37,960,227.04
395,150.00
Cash paid for investment
Net increase of mortgaged loans
Net cash received from subsidiaries and other units
105,629,510.42
171,581,650.00
Other cash paid concerning investing activities
2,067,342.50
17,877,392.31
Subtotal of cash outflow from investing activities
146,704,897.96
191,415,950.71
37,960,227.04
395,150.00
Net cash flows arising from investing activities
-81,376,763.02
-43,098,011.09
-23,535,644.38
75,346,805.79
III. Cash flows arising fromSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 27
financing activities
Cash received from absorbing investment
Including: Cash received from absorbing minority shareholders’ investment by subsidiaries
Cash received from loans
334,449,691.57
140,000,000.00
210,000,000.00
80,000,000.00
Cash received from issuing bonds
Other cash received concerning financing activities
219,141,489.35
503,689,875.93
6,807,575.33
118,100,000.00
Subtotal of cash inflow from financing activities
553,591,180.92
643,689,875.93
216,807,575.33
198,100,000.00
Cash paid for settling debts
344,381,770.26
70,000,000.00
180,022,037.95
50,000,000.00
Cash paid for dividend and profit distributing or interest paying
62,586,461.96
30,950,376.85
20,469,660.29
1,277,548.03
Including: Dividend and profit of minority shareholder paid by subsidiaries
Other cash paid concerning financing activities
99,263,914.42
565,286,399.72
1,011,938.91
199,945,029.95
Subtotal of cash outflow from financing activities
506,232,146.64
666,236,776.57
201,503,637.15
251,222,577.98
Net cash flows arising from financing activities
47,359,034.28
-22,546,900.64
15,303,938.18
-53,122,577.98
IV. Influence on cash and cash equivalents due to fluctuation in exchange rate
-28.64
-192.87
-192.87
V. Net increase of cash and cash equivalents
117,052,132.53
20,696,239.00
97,598,919.69
49,120,384.14
Add: Balance of cash and cash equivalents at the period -begin
381,663,418.93
62,369,583.65
279,938,259.46
54,841,676.10
VI. Balance of cash and cash equivalents at the period -end
498,715,551.46
83,065,822.65
377,537,179.15
103,962,060.24SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 28
Statement on Changes of Owners' Equity (Consolidated)
Prepared by Shenzhen Accord Pharmaceutical Co., Ltd. June 30, 2009 Unit: RMB
Items
Amount in this report period
Amount in last year
Owners' equity attributable to the parent company
Minority’s equity
Total owners’ equity
Owners' equity attributable to the parent company
Minority’s equity
Total owners’ equity
Paid-up capital (Share capital)
Capital reserves
Less: Treasury Stock
Reasonable reserve
Surplus reserves
General risk provision
Retained profit
Others
Paid-up capital (Share capital)
Capital reserves
Less: Treasury Stock
Reasonable reserve
Surplus reserves
General risk provision
Retained profit
Others
I. Balance at the end of last year
288,149,400.00
34,555,838.57
9,761,340.26
325,539,438.06
21,383,463.30
679,389,480.19
288,149,400.00
39,301,131.71
7,255,352.54
184,363,233.02
33,683,450.71
552,752,567.98
Add: Changes of accounting policy
Error correction of the last period
Others
II. Balance at the beginning of this year
288,149,400.00
34,555,838.57
9,761,340.26
325,539,438.06
21,383,463.30
679,389,480.19
288,149,400.00
39,301,131.71
7,255,352.54
184,363,233.02
33,683,450.71
552,752,567.98
III. Increase/ Decrease in this year (Decrease is listed with "-")
-29,525,500.00
-458,275.95
108,025,591.93
31,938,758.61
109,980,574.59
-4,745,293.14
2,505,987.72
141,176,205.04
-12,299,987.41
126,636,912.21
(I) Net profit
98,783,895.04
4,603,292.66
103,387,187.70
157,774,171.95
7,645,205.00
165,419,376.95
(II) Profits and losses calculating into owners' equity
39,664,537.80
39,664,537.80
254,706.86
-7,101,952.36
-4,090,199.90
-10,937,445.40
1. Net changing amount of fair value of financial assets available for sale
2. Effect of changes of other owners' equity of invested units under equity method
3. Effect of income tax related to owners' equity
4. Others
39,664,537.80
39,664,537.80
254,706.86
-7,101,952.36
-4,090,199.90
-10,937,445.40
Subtotal of (I) and (II)
138,448,432.84
4,603,292.66
143,051,725.50
254,706.86
-7,101,952.36
153,683,972.05
7,645,205.00
154,481,931.55
(III) Owners' devoted and decreased capital
-25,500.00
-1,533,793.17
32,235,465.95
30,676,172.78
-5,000,000.00
-5,000,000.00SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 29
1. Owners' devoted capital
32,259,965.95
32,259,965.95
2. Amount calculated into owners' equity paid in shares
3. Others
-25,500.00
-1,533,793.17
-24,500.00
-1,583,793.17
-5,000,000.00
-5,000,000.00
(IV) Profit distribution
-28,828,019.86
-4,900,000.00
-33,728,019.86
9,607,940.08
-12,507,767.01
-218,559.32
-3,118,386.25
1. Withdrawal of surplus reserves
9,607,940.08
-9,607,940.08
2. Withdrawal of general risk provisions
-2,899,826.93
-218,559.32
-3,118,386.25
3. Distribution for owners (shareholders)
-28,828,019.86
-4,900,000.00
-33,728,019.86
4. Others
(V) Carrying forward internal owners' equity
-29,500,000.00
-458,275.95
-61,027.88
-30,019,303.83
-19,726,633.09
-19,726,633.09
1. Capital reserves conversed to capital (share capital)
2. Surplus reserves conversed to capital (share capital)
3. Remedying loss with surplus reserve
4. Others
-29,500,000.00
-458,275.95
-61,027.88
-30,019,303.83
-19,726,633.09
-19,726,633.09
IV. Balance at the end of the report period
288,149,400.00
5,030,338.57
9,303,064.31
433,565,029.99
53,322,221.91
789,370,054.78
288,149,400.00
34,555,838.57
9,761,340.26
325,539,438.06
21,383,463.30
679,389,480.19SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 30
Statement on Changes of Owners’ Equity(Parent Company)
Prepared by Shenzhen Accord Pharmaceutical Co., Ltd. June 30, 2009 Unit: RMB
Items
Amount in this report period
Amount in last year
Paid-up capital (Share capital)
Capital reserves
Less: Treasury Stock
Reasonable reserve
Surplus reserves
Retained profit
Total owners’ equity
Paid-up capital (Share capital)
Capital reserves
Less: Treasury Stock
Reasonable reserve
Surplus reserves
Retained profit
Total owners’ equity
I. Balance at the end of last year
288,149,400.00
2,508,769.94
12,781,301.82
121,657,269.56
425,096,741.32
288,149,400.00
2,508,769.94
7,092,488.00
37,929,690.77
335,680,348.71
Add: Changes of accounting policy
Error correction of the last period
Others
II. Balance at the beginning of this year
288,149,400.00
2,508,769.94
12,781,301.82
121,657,269.56
425,096,741.32
288,149,400.00
2,508,769.94
7,092,488.00
37,929,690.77
335,680,348.71
III. Increase/ Decrease in this year (Decrease is listed with "-")
-12,781,301.82
151,925,924.52
139,144,622.70
5,688,813.82
83,727,578.79
89,416,392.61
(I) Net profit
191,002,210.11
191,002,210.11
93,030,643.10
93,030,643.10
(II) Profits and losses calculating into owners' equity
-3,614,250.49
-3,614,250.49
1. Net changing amount of fair value of financial assets available for sale
2. Effect of changes of other owners' equity of invested units under equity method
3. Effect of income tax related to owners' equity
4. Others
-3,614,250.
-3,614,250.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 31
49
49
Subtotal of (I) and (II)
191,002,210.11
191,002,210.11
-3,614,250.49
93,030,643.10
89,416,392.61
(III) Owners' devoted and decreased capital
-12,781,301.82
-10,248,265.73
-23,029,567.55
1. Owners' devoted capital
2. Amount calculated into owners' equity paid in shares
3. Others
-12,781,301.82
-10,248,265.73
-23,029,567.55
(IV) Profit distribution
-28,828,019.86
-28,828,019.86
9,303,064.31
-9,303,064.31
1. Withdrawal of surplus reserves
9,303,064.31
-9,303,064.31
2. Distribution for owners (shareholders)
-28,828,019.86
-28,828,019.86
3. Others
(V) Carrying forward internal owners' equity
1. Capital reserves conversed to capital (share capital)
2. Surplus reserves conversed to capital (share capital)
3. Remedying loss with surplus reserves
4. Others
IV. Balance at the end of the report period
288,149,400.00
2,508,769.94
273,583,194.08
564,241,364.02
288,149,400.00
2,508,769.94
12,781,301.82
121,657,269.56
425,096,741.32SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 32
Statement of Provision for Devaluation of Assets
Prepared by Shenzhen Accord Pharmaceutical Co., Ltd. June 30, 2009 Unit: RMB
Item
Balance at year-begin
Withdrawing amount in this period
Decrease in this period
Book balance at period-end
Switching back
Transferring out
I. Total of provision for bad debts
16,559,034.40
9,092,318.50
231,253.74
25,420,099.16
II. Provision for falling price of inventory
4,352,678.70
5,118,256.43
3,507,016.90
5,963,918.23
III. Provision for devaluation of financial asset available for sales
IV. Provision for devaluation of held-to-maturity investment
V. Provision for devaluation of long-term equity investment
8,556,892.37
396,638.32
8,160,254.05
VI. Provision for devaluation of investing property
VII. provision for devaluation of fixed assets
1,300,000.00
1,300,000.00
VIII. Provision for devaluation of engineering materials
IX. Provision for devaluation of construction in progress
X. Provision for devaluation of productive biological asset
Including: Provision for devaluation of mature productive biological asset
XI. Provision for devaluation of oil asset
XII. Provision for devaluation of intangible asset
XIII. Provision for devaluation of goodwill
XIV. Other
Total
30,768,605.47
14,210,574.93
4,134,908.96
40,844,271.44
Legal representative of the Company:Shi Jinming Person in charge of accounting works: Wei Pingxiao Person in charge of accounting institutes: Chi GuoguangSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 33
SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
NOTES TO THE FINANCIAL STATEMENTS
AS OF JAN.1, 2009-JUNE 30, 2009
1. Corporate information
1.1 History and evolutions of the Company
Shenzhen Accord Pharmaceutical Co., Ltd. (hereinafter referred to as ‘the Company’), formerly known as Shenzhen Health Mineral Water Co., Ltd., was approved by the People’s Government of Shenzhen with SFBF (1993) No.356 document to establish on February 1, 1993 through stock restructure as a company limited by shares. In March 1993, with the approval from the Shenzhen Branch of the People’s Bank of China, the Company issued 30 million A-shares (among which 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 CNY 105 million. Through transfer of capital surplus to share capital and bonus issues for years, the share capital of the Company increased to CNY 288,149,400 up to December 31, 2004. The employee shares, domestic public shares and foreign public shares have all been listed on the Shenzhen Stock Exchange.
In November 2000, the Company signed Assets Exchange Agreement with Shenzhen Investment Management Company, the original main shareholder of the Company, to exchange equivalently all the original assets and liabilities of the Company as of August 31, 2000 for 100% stock holding of 11 pharmaceutical companies, part of the properties and 51% stock holding in Shenzhen Tefa Modern Computer Co., Ltd., held by Shenzhen Investment Management Company. On December 29, 2000, the above assets exchange proposal was passed by shareholder’s voting in the second extraordinary general meeting in 2000. The transaction was completed on January 8, 2001. On June 18, 2001, the Company changed its name to Shenzhen Accord Pharmaceutical Co., Ltd., in the pharmaceutical manufacturing industry.
On February 18, 2004, the Company’s original main shareholder, Shenzhen Investment Management Company, signed a Stock Transfer Agreement with Sinopharm Holdings Co., Ltd. (formerly known as Sinopharm Group Medicine Holding Co., Ltd, hereinafter referred to as Sinopharm Medicine Holding ) to transfer all the 43.33% stock holdings in the Company to Sinopharm Medicine Holding. The legal procedures of the above stock transfer were completed on December 9, 2004. At the same time, as approved by GZCQ (2004) No.525 document from the State-owned Assets Supervision and Administration Commission of the State Council and ZJGSZ (2004) No.94 document from the China Securities Regulatory Commission, the nature of these shares was transferred from state-owned stock to state-owned legal entity stock and Sinopharm Holdings Co., Ltd. became the top shareholder of the Company.
On April 14, 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 April 27, 2006, the Company issued bonus shares on April 28, 2006 at the ratio of 3 shares to every 10 A-shares to liquidated A-share holders 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 share holdings. Ended as June 30, 2009, the total shares amounted to 288,149,400, the tradable shares with restricted condition occurred by share merger reform have been released restriction and went into the market for trade.
The Company is registered with Shenzhen Administration for Industry & Commerce with business license number 440301103040048, and the serial number of the license is N24657. The operation period of the Company is from August 2, 1986 to August 2, 2036. The registered capital of the Company is CNY 288,149,400. The legal representative of the Company was changed from Chen Weigang to Fu Mingzhong on May 13, 2008, who was later replaced by Shi Jinming on January 8, 2009.
1.2 Business scope of the CompanySHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 34
The scope of business of the Company is: wholesale of Chinese patent drugs, raw materials for chemical medicine, chemical material drugs, antibiotics, bio-chemical drugs, wholesale of biological products (including vaccines) (its Pharmaceutical Trade License is valid until December 14, 2009); trade of health food (its Hygiene License is valid until March 24, 2009); research, development and consultation services of pharmaceutical packaging materials and pharmaceutical industry products; investment on setting up entities (application on projects separately); domestic trading and supplies (excluding solely licensed, solely controlled or monopolized products); category III disposable bacterial-free medical treatment instruments; equipments and instruments for operation units, emergency units and diagnosis units, medical macromolecule materials and products, clinical check up and analysis apparatus and diagnosis reagents, medical sutures and bonds, oral section materials, medical assay and basic equipments and instruments; category II medical electronic equipment, medical X-ray appurtenances and parts, medical ultrasonic instruments and relevant equipments, antisepsis and antibacterial equipments and instruments, medical sanitation materials and dressings; import and export business (excluding the items banned by laws, administrative regulations, or the State Council. The restricted items can only be traded after obtaining a license).
2 Basis for the preparation of financial statements and statement of complying with Accounting Standards for Business Enterprises
On the basis of continuity and obeying substance of transactions and events, the Company makes accounting comfirmation and measurement in accordance with ‘the Accounting Standard of P.R.C for Business Enterprise—Basic Standard’ and other accounting standards, and the financial statements are prepared on this basis.
The financial statements prepared by the Company meet the requirements of the enterprise accounting standards, and exactly and completely reflect the financial status, operation result, changes in owner’s equity and cash flow, etc of the Company.
3 Principal accounting policies, estimates and errors of previous period
3.1 Fiscal year
The fiscal year of the Company is the solar calendar year, which is from January 1 to December 31.
3.2 Recording currency
Recording currency is CNY.
3.3 Calculation natures and statement items with the changes of calculation natures in the report period
In calculating the accounting factors, the Company adopts the historical cost method; in case the determined accounting factor amount can be obtained or reliably calculated, the replacement cost, net realizable value, current value or fair value of the individual accounting factor may be adopted.
There is no change in the calculation nature of statement items during current reporting period.
3.4 Confirmation standard for cash equivalent
In preparing the cash flow statement, the cash equivalents of the Company include the investments with short period (it usually expires within three months from the purchase date), characteristics of high liquidity, easy conversion to certain amount of cash and little risk of value change.
3.5 Transactions of foreign currencies
Foreign currency transactions are converted into CNY for recording purpose at the exchange rate on the first day of the period when the transaction occurs.
The balance of foreign currency accounts is converted in accordance with the exchange rate prevailing on the balance sheet date. The conversion differences arising from those specific borrowings are to be capitalized as part of the cost of the construction in progress in the period before the fixed assets being acquired and constructed has not yet reached working condition for its intended use. Conversion differences arising from other accounts are accounted into current profit or loss.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 35
Value of non currency item recorded at historical cost by foreign currency is adjusted in accordance with the exchange rate prevailing on the date of transaction, without changes in the value of its recorded currency. Value of non currency item recorded at fair value by foreign currency is adjusted in accordance with the exchange rate prevailing on fair value confirm date, with the conversion differences accounted into current profit or loss, or capital surplus.
3.6 Accounting method of financial assets or financial liabilities
(a) Classification of financial assets or financial liabilities
Based on the purpose of obtaining the financial assets and assuming the liabilities, financial assets or financial liabilities may be classified into: the financial assets or financial liabilities that are calculated in the fair values and whose changes are accrued to current profit and loss, including the trading financial assets or financial liabilities; the held-to-maturity investments; receivables; available-for-sale financial assets; and other financial liabilities, etc.
(b) Confirmation and measurement of financial assets or financial liabilities
(1) The financial assets or financial liabilities that are calculated in the fair values and whose changes are accrued to current profit and loss
The fair values (excluding cash dividends that have been declared but have not been distributed and bond interests that have exceeded the expiry dates but have not been drawn) are deemed as the initial confirmation amount on acquisition. Relevant transaction expenses are charged to profit and loss of the period.
The interests or cash dividends obtained during the holding period are recognized as investment income. Change of fair values is charged to profit and loss of the period at the year end.
Difference between the fair value and initial book value is recognized as investment income upon disposal. Adjustment is made to gain or loss from changes in fair values.
(2) Held-to-maturity investments
The sum of fair values (excluding bond interests that have exceeded the expiry dates and have not been drawn) and relevant transaction expenses are deemed as the initial confirmation amount.
During the holding period, interest income is recognized as investment income based on the amortized cost and actual interest rate (if the difference between the actual interest rate and the nominal interest rate, calculation is based on the nominal interest rate). The actual interest rates are determined upon acquisition and remain unchanged during the expected holding period or a shorter period applicable.
Difference between the amount received and book value of the investment is charged to profit and loss of the period upon disposal.
(3) Receivables:
For the receivables from sales of goods or rendering of services and other debt instruments of other corporations except for those quoted in active market held by the Company, including: accounts receivable, notes receivable, advances to suppliers, other receivables, etc, the prices specified in the contracts or agreements with the purchasers are deemed as the initial confirmation amount.
Difference between the amount received and book value of the receivables is charged to profit or loss of the period upon recovery or disposal.
(4) Available-for-sale financial assets
The sum of fair values (excluding cash dividends that have been declared but have not been distributed and bond interests that have exceeded the expiry dates but have not been drawn) and relevant transaction expenses is deemed as the initial confirmation amount.
The interests and cash dividends generated during the holding period are accrued to investment income. At year end, available-for-sale financial assets are calculated in the fair values and the changes in fair values are accrued to the capital reserves (other capital reserves).SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 36
Difference between the amount received and the book value of the financial assets is recognized as investment gain or loss upon disposal. At the same time, the accumulated changes in fair value previously recognized in the owner’s equity are transferred into investment gain or loss.
(5) Other financial liabilities
The sum of fair values and relevant transaction expenses to get them is deemed as the initial confirmation amount. The subsequent calculation adopts the amortized cost method.
(c) Confirmation and measurement of transform of financial assets
The Company should terminate recognizing these financial assets when the transform occurs and almost all risk and return of the financial assets ownership have been transferred to the transferee; The Company should not terminate recognizing this financial assets if almost all risk and return of the financial assets ownership have been remained.
Essence is more important than form when judging whether the transform meets the requirements of the financial assets termination recognition conditions mentioned above. The Company divides the transform of financial assets into entire transfer and partial transfer.
If the transfer of an entire financial asset satisfies the conditions for stopping recognition, the difference between the amounts of the following two items shall be recorded in the profit and loss of the current year:
(1) The book value of the transferred financial asset;
(2) The sum of consideration received from the transfer, and the accumulative amount of the changes in the fair values originally recorded in the owner's equities (in the case that the financial asset involved in the transfer is an available-for-sale financial asset).
For partial transfers of financial assets that meet the recognition conditions of termination in recognition, the book value of the whole financial assets are split into the terminated portion and the exterminated portion according to their respective relative fair values (under this situation, the retained service assets are deemed as a part of the exterminated financial assets), and the difference between the following two items shall be recorded in the profit and loss of the current year:
(1) Book value of the terminated portion
(2) The sum of the consideration of the terminated portion and the accumulated changes in fair value previously recognized in the owner’s equity related to the terminated portion (in the case that the assets transferred are available-for-sale financial assets)
For transfers of financial assets that do not meet the conditions of termination in recognition, the financial assets remain recognition and the consideration received is recognized as financial liabilities.
(d) Confirmation of fair values of main financial assets and financial liabilities
For the active financial assets or financial liabilities in the market, the Company will use the quotations as their fair values.
(e) Impairment loss on financial assets
(1) Impairment of available-for-sale financial assets:
If at the year end the fair values of the available-for-sale financial assets decline significantly, or the trend of the decline is expected to be non-temporary after consideration of all relevant factors, the assets are deemed impaired and impairment loss is recognized together with the amount transferred from the accumulated decreases in fair values previously recognized in the owner’s equity.
(2) Impairment of held-to-maturity financial assets:
The treatment of impairment loss on held-to-maturity investments is in line with the impairment loss of the receivables.
3.7 Recognition standard and provision method of provision for bad and doubtful debts of accounts receivable
If there is objective evidence at the year end to indicate that impairment exists in accounts receivable, their carrying amount should be decreasingly recorded as recoverable amount. The decreased amountSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 37
should be recognized as impairment loss of assets and be recorded into profit and loss of the current year. Recoverable amount is recognized through discounting original actual rate of its future cash flow(excluding credit loss that has not occurred) with consideration of the value of related guarantee (deducting estimated disposal expenses and etc.).
Original actual rate is actual rate calculated when recognizing the accounts receivable at first.
Since there is tiny difference between estimated future cash flow and present value of short-term accounts receivable, the estimated future cash flow will not be discounted when recognizing related impairment loss.
Conduct impairment testing separately on accounts receivable with relatively higher individual price at the end of the period. If there is objective evidence to indicate that impairment exists, recognize impairment loss and provide for bad and doubtful debts in accordance with the difference between its future cash flow and carrying amount.
Individual material receivables are receivables that amount to 5,000,000 or above.
In general, no bad debts are provided for receivables from related companies and internal of the Company.
For individual receivables not material as of December 31, 2008, the Company conducts individual impairment tests. The receivables which are tested unimpaired(including material and non-material receivables) will be re-tested in group of receivables with similar credit risk features.
In addition to the receivables provided for impairment loss separately, the Company appropriates bad debt reserve on the basis of the actual loss ratio of previous same or similar receivables that have similar credit risk features in aging analysis, with the actual financial status taken into consideration
Aging of accounts receivable
Appropriation proportion
Within 1 year
---
1 to 2 years
5%
2 to 3 years
10%
More than 3 years
20%
3.8 Accounting method of inventory:
(a) Inventory classification
Inventory is classified into raw materials, low cost and short-lived articles, merchandise inventories, finished goods and delivered goods etc.
(b) The pricing method of acquiring and sending
Inventories of industry enterprises are valued at actual cost on acquisition and are calculated using one-off weighted average method at the end of the month when issued.
Inventories of commercial enterprises are valued at actual cost on acquisition and are calculated using one-off weighted average method at the end of the month when issued.
The low cost and short-lived articles adopt the one-off amortization method.
(c) System of stock inventories
Perpetual inventory method is adopted.
(d) Recording method of provision for inventory devaluation
At the end of the year, after overall check of the inventory, draw or adjust provision for inventory devaluation according to the lower of the cost of inventory and net realizable values of inventory.
In normal operation process, net realizable values of commodities inventories for direct sales including finished goods, commodities and materials for sales are determined by the estimated selling prices minus the estimated selling expenses and relevant taxes and fees; In normal operation process, net realizable values of materials that need further processing are determined by the estimated selling prices of the finished goods minus estimated cost to completion, estimated selling expenses and relevant taxes. For the inventory held to implement sales contract or work contract, its net realizableSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 38
value is calculated on the basis of contract price. For the balance of inventory beyond the amount of the sales contract, its net realizable value is calculated on the basis of general selling price.
Provision for inventory devaluation is provided for based on individual inventory item at end of the year. For inventory that has large quantity and low unit price, the provision for inventory devaluation is provided for based on categories of the inventory. For inventory related to the products manufactured and sold in the same district, with same or similar use or purpose, and difficult to account for separately from other items, the provision for inventory devaluation is provided for on an combined basis.
When the factors that influence the decreased bookkeeping of inventory value have disappeared, switch back from the provision for inventory devaluation amount that previously appropriated and the amount that switched back is charged to profit and loss of current year.
3.9 Long-term Equity Investment
(a) Initial Calculation
(1) Long-term equity investment caused by the enterprise merger
In case the long-term equity investment are made to obtain the equities of the enterprises under the same control and the Company pays the cash, transfers the non-cash assets or bears the liabilities as the consideration for the merger, the book value share on the merging date to obtain the owners’ equities of the merging party will be deemed as the initial investment cost of long-term equity investment. The difference between the initial investment cost of long-term equity investment and paid cash, transferred non-cash assets and book values of liabilities will be supplemented by the capital reserve; in case the capital reserve is not enough, the remaining gains will be adjusted. All direct expenses related to the enterprise merger, including the auditing expense, evaluation expense, legal service expense, etc will be accrued to the current profit and loss.
In case the long-term equity investment are made to obtain the equities of the merging enterprises which are not under the same control, the merger cost will be the paid assets, existing liabilities and fair values of the issued equity securities on the purchasing date to purchase the control right of such enterprises., and all the direct expenses related to the enterprise merger. In case the enterprise merger is realized through several steps of exchanges and transactions, the merger cost will be the sum total of the merger cost of every single transaction. In case the future events which may affecting the merger cost are agreed on in the merger agreement, the future events on the purchasing date, which will probably occur and whose influences on merger cost can reliably measured in value, shall be accrued to the enterprise merger cost.
(2) Other types of long-term equity investment
In case the cash investment is made to obtain the long-term equity, the actual payment amount will be deemed as the initial investment cost.
The initial investment cost also includes the direct expenses related to the long-term equity investment, taxes and other necessary expenses.
In case the long-term equity investment is made by issuing the equity securities, the fair values of issued equity securities will be deemed as the initial investment cost.
For the long-term equity investment made by the investors, the values agreed in the investment contracts or agreements( with the already announced but not distributed cash dividend or profits deducted) will be deemed as the initial investment cost, except that the contracts or agreements provide that the values are not fair.
In case the long-term equity investment is made by exchanging the non-currency assets, and this exchange has the commercial substance and the fair values of said assets can be reliably calculated, the fair values of the out-coming assets will be deemed as the initial investment cost, unless there are solid evidences indicating the fair values of the incoming assets are more reliable; in case the non-currency asset exchange does not meet the above two premises, the book values of the assets and relevant taxes will be deemed as the initial investment cost of the incoming long-term equity investment.
In case the long-term equity investment is made by the mode of liability restructure, the fair values ofSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 39
the obtained equities will be deemed as the initial investment cost.
(b) Judgment criteria of joint control and significant influence in the invested companies
If, in accordance with provisions in the contracts, the Company enjoys joint control over certain economic activities only when taking part in significant financial and operational decisions with investors in need of share of control who unanimously agree, the Company is deemed to enjoy joint control with other parties over the invested companies. If the Company is authorized to take part in decision making with regard to the financial and operational policies, but is unable to control or control jointly with other parties over the invested company, the Company is deemed to be able to exercise significant influence over the invested companies.
(c) Subsequent measurement and income recognition
When the Company is able to exercise significant influence or joint control, the difference of cost of initial investment in excess of the proportion of the fair value of the net identifiable assets in the invested companies is not adjusted against the initial cost of long-term equity investment. The difference of cost of initial investment in short of the proportion of the fair value of the net identifiable assets in the invested companies is charged into the current profit and loss statement. .
The Company’s long-term equity investments in subsidiaries are accounted for by the cost method and adjusted according to the equity method when preparing consolidated financial statements.
Long-term equity investment when the Company has neither joint control nor significant influence in the invested companies and there is no quotation available on the active market, and the fair value of which cannot be reliably measured are accounted for under the cost method.
Long-term equity investment when the Company has joint control or significant influence over the invested companies is accounted for under the equity method.
Investment income recognized under the cost method is limited to the proportion of the accumulated profit of the invested companies after the investment. Any excess of profit or cash dividend received over the above amount is recognized as withdrawals of initial investments.
Recognition of share of losses of the invested companies under the equity method is treated in the following steps: First, reduce the book value of the long-term equity investment. Second, when the book value is insufficient to cover the share of losses, investment losses are recognized up to a limit of book values of other long-term equity which form net investment in substance by reducing the book value of long term receivables, etc. Finally, after all the above treatments, if the Company is still responsible for any additional liabilities in accordance with the provisions stipulated in the investment contracts or agreements, estimated liabilities are recognized and charged into current investment loss according to the liabilities estimated.
If the invested company achieve profit in subsequent periods, the treatment is in the reversed steps described above after deduction of any unrecognized investment losses, i.e., reduce book value of estimated liabilities recognized, restore book values of other long-term equity which form net investment in substance, and in long-term equity investment, and recognize investment income at the same time.
Treatment of other equity changes except for net profit or loss in the invested companies: For other equity changes except for net profit or loss in the invested companies, if the proportion of investments remain unchanged, the Company calculates the proportion it shall enjoy or bear and adjust book value of long-term equity investment, and increase or decrease capital surplus – other capital surplus at the same time.
3.10 Classification and measurement of investment real estate
Investment real estate is defined as the real estate with the purpose to earn rent or capital appreciation or both, including rented land use rights, land use rights which are held and prepared for transfer after appreciation and rented buildings.
The Company adopts the cost model to value investment real estate. For investment real estate for lease accounted for under the cost model, the same depreciation policies as those of the Company’sSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 40
fixed assets are adopted. For land use right for lease, the same amortization policies as those of the intangibles are adopted. For those suffer impairment losses, the Company estimates their recoverable value. If the recoverable value is lower than its book value, relevant impairment loss is recognized.
3.11 Valuation and depreciation methods of fixed assets
(a) Recognition standard of fixed assets:
Fixed assets are tangible assets that are held for use in the production or supply of services, for rental to others, or for administrative purposes; they have useful lives over one fiscal year. And they shall be recognized only when both of the following conditions are satisfied:
(1) It is probable that economic benefits associated with the assets will flow to the enterprise; and
(2) The cost of the fixed assets can be measured reliably.
(b) Classification of fixed assets:
The Company’s fixed assets are classified into buildings and constructions, machinery equipment, transportation equipment, other equipment and fixed assets fitment.
(c) Initial measurement of fixed assets
Fixed assets are recorded at the actual cost on acquisition.
The cost of fixed assets purchased includes purchase price, related tax, transportation expenses, loading and uploading expenses, installment expenses and specialist service expenses attributable to the assets that arise before the assets are completed and put into use.
Where payment for the purchase price of a fixed asset is deferred beyond normal credit terms, such that the arrangement is in substance of a financing nature, the cost of the fixed asset shall be determined based on the present value of the purchase price.
The cost of a self-constructed fixed asset comprises those expenditures necessarily incurred for bringing the asset to working condition for its intended use.
For fixed assets formed through obtaining them by the debtor paying for debt in debt restructure, recognize its recording value as fair value of the fixed assets, and record the difference between the carrying amounts of debt restructure and the fixed assets used for paying debt into profit and loss of the current year.
In the circumstance of the non monetary assets exchange has commercial nature and fair value of surrendered or received assets can be measured reliably, recording value of received assets should be recognized as fair value of surrendered assets unless there is clear evidence to indicate that fair value of received assets is more reliable; for non monetary assets exchange which doesn’t meet the requirement of premise mentioned above, cost of received assets should be recognized as carrying amount and related tax expenses payable of surrendered assets and should not be recognized as profit and loss.
Recording value of fixed assets obtained by absorbing and consolidated by enterprise under the same control should be recognized as carrying amount of the consolidated party; recording value of fixed assets obtained by absorbing and consolidated by enterprise under different control should be recognized as fair value.
Recording value of financing leasehold should be recognized as fair value of leasing assets and present value of lowest leasing payment when leasing occurs whichever is lower.
(d) Depreciation method of fixed assets
Depreciation of fixed assets is provided for on a straight-line basis, the depreciation rate is recognized in accordance with category, estimated useful life and estimated residual rate of fixed assets.
Fixed assets renovations expenses that meet the criteria of capitalization are depreciated on an individual basis over the interval of two renovations or remaining useful life of the fixed assets, whichever is shorter.
Estimated useful life and annual depreciation rate of fixed assets by categories are as follows:
Category
Estimated
Estimated net
AnnualSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 41
useful life (year)
residual value rate (%)
depreciation rate(％)
Buildings and constructions
20-35
5
2.71-4.75
Machinery equipment
10-14
5
6.79-9.5
Transportation equipment
5-10
5
9.5-19
Other equipment
5-10
5
9.5-19
Fixed assets fitment
Within 5
---
Above 20%
3.12 Calculation method of construction in progress
(a) Classification of construction in progress
The Construction in progress will be calculated based on the classification of proposed projects.
(b) Transfer standard and time of construction in progress to fixed assets
For the construction in progress, all expenses occurring before they are ready for the use will be the book values as the fixed assets. In case the construction in progress has been ready for use but the final accounts for completion have not been handled, from the date when such projects has been ready for use, the Company will evaluate the values and determine the costs based on the project budgets, prices or actual costs of projects, etc, and transfer them into fixed assets. The depreciation amount will also be withdrawn in accordance with the Company’s depreciation policy of fixed assets. When the final accounts for completion are handled, the Company will adjust the originally evaluated values subject to the actual costs, but will not adjust the withdrawn depreciation amount
3.13 Accounting method of intangible assets
(a) Calculation method of intangible assets
Intangible assets are recorded at the actual cost on acquisition.
The cost of intangible assets purchased includes purchase price, related tax, other expenses attributable to the assets that arise before the assets are completed and put into use. For those the price of intangible assets deferred paid exceed normal credit condition so substantively has financing character, the cost of intangible assets is confirmed on the basis of present value of purchasing price.
For intangible assets formed through obtaining them by the debtor paying for debt in debt restructure, recognize its recording value as fair value of the intangible assets, and record the difference between the carrying amounts of debt restructure and the intangible assets used for paying debt into profit and loss of the current year.
In the circumstance of the non monetary assets exchange has commercial nature and fair value of surrendered or received assets can be measured reliably, recording value of received assets should be recognized as fair value of surrendered assets unless there is clear evidence to indicate that fair value of received assets is more reliable; for non monetary assets exchange which doesn’t meet the requirement of premise mentioned above, cost of received assets should be recognized as carrying amount and related tax expenses payable of surrendered assets and should not be recognized as profit and loss.
The book values of intangible assets to be obtained by the absorption merger from the enterprises which are under the same control will be determined based on the book values of merging party; the book values of intangible assets to be obtained by the absorption merger from the enterprises which are not under the same control will be determined based on their fair values.
(b) Usage life and amortization of intangible assets
(1) Estimation of useful life for intangible assets with finite useful life：
Software is amortized within five years; patents are amortized over beneficial period; land use rights are amortized over the useful period stipulated in the certificate.
At the end of each year, the Company will recheck the usage life of intangible assets with the limitedSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 42
usage life and amortization method will be rechecked.
After the rechecking, no changes have occurred to the usage life of intangible assets and amortization method.
(2) The Company has no intangible assets with uncertain useful life.
(3) Amortization of intangible assets
In case their usage life is limited, the Company will amortize the intangible assets on a straight line basis within the period during which they can bring economic benefits to enterprises; in case it’s impossible to evaluate the period during which the intangible assets can bring economic benefits to enterprises, it will be deemed that the usage life of such intangible assets is uncertain and amortization is unavailable.
(c) Research phase expenses and classification standard of development phase expenses of R&D projects
The development phase expenses of internal R&D projects are confirmed as intangible assets unless they can meet following conditions:
(1) Completing the intangible assets to make it can be used or sold has technical feasibility;
(2) Have intention of completing the intangible assets and use or sell;
(3) The manners of intangible assets producing economic interest including it can be verified that the products produced with the intangible assets have market or the intangible assets itself has market, for the intangible assets that for internal using, should verify its feasibility;
(4) Have essential technique, financial resource and other resources to support completing the development of intangible assets, and have ability to use or sell the intangible assets;
(5) The expense that belongs to development phase of the intangible assets can be dependably calculated.
3.14 Amortization method and period of long-term deferred expenses
Long-term deferred expenses are amortized evenly over the beneficial period, among which:
(a) Prepaid rental of leasehold improvement for operation is amortized evenly over the period stipulated in the leasing contract;
(b) Leasehold improvement for operation on leased property is amortized evenly over the remaining leasing period or the remaining useful life whichever is shorter.
3.15 Impairment on other main assets except for inventories, investment real estate and financial assets
(a) Long-term equity investment
In case the cost method is used to calculate the long-term equity investments which are not quoted in the active market or whose fair values cannot be reliably calculated, the depreciation loss will be determined based on the difference between the book values and current values determined by the discounting of future cash flow in line with the current market return rate of similar financial assets.
For the other long-term equity investments, in case the calculation results of receivable amounts indicate that the receivable amount of this long-term equity investment is less than their book values, the difference will be confirmed as the asset depreciation losses. Once the depreciation loss of long-term equity investment is confirmed, they will not be reversed.
(b) Long-term non-financial assets such as fixed assets, construction in progress, intangibles and good will
For long-term non-financial assets such as fixed assets, construction in progress, intangibles, etc, the Company assesses whether signs of possible impairment exist at end of each year.
Impairment tests are performed on goodwill arises from business combinations and intangibles with uncertain useful life regardless of whether signs of possible impairment exist.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 43
For assets with signs of impairment, recoverable amounts are estimated. Recoverable amounts are determined as the fair value of the assets after netting off costs of disposal, and the current value of projected future cash flows generated by the assets, whichever is higher.
When the recoverable amount of an asset is lower than the book value of the asset, the book value of the asset is reduced to its recoverable amount. The amount reduced is recognized as impairment loss on assets in the current profit and loss statement, and provision for impairment loss on assets is recorded at the same time.
Future depreciation or amortization of assets is adjusted after recognition of impairment loss so that the adjusted book value of the assets (after the deduction of estimated residual value) is amortized systematically over their remaining useful life.
Impairment loss on long-term non-financial assets such as fixed assets, construction in progress, intangibles, etc shall not be reversed once recognized.
When there are signs of possible impairment on assets, the Company estimates the recoverable amount of the assets on an individual basis.
3.16 Capitalization of loan expenses
(a) Confirmation principle of capitalization of loan expenses
In case the loan expenses occurring in the Company may directly be attributable to the construction and productions of assets complying with the capitalization conditions , they will be capitalized and accrued to the relevant capital costs; other loan expenses will be confirmed as the expenses based on the actual amount in the time of occurrence and accrued to the current profit and loss.
The assets complying with the capitalization conditions mean the assets such as fixed assets, real estates for investment and inventory, etc that need a long time of construction and production activities before being ready for use or for sales.
The loan expenses begin to be capitalized under the following circumstances:
（1）The asset payments that have been made include the payments such as the paid cashes, transferred non-currency assets or borne liabilities with the interests to construct or produce the assets complying with the capitalization conditions;
（2） The loan expenses have occurred;
（3）The necessary construction or production activities to make the assets ready for use or sales have been launched.
In case during the construction or production period the assets complying with the capitalization conditions are abnormally suspended and the suspension period exceeds 3 months continuously, the capitalization of loan expenses will also be suspended.
The capitalization of loan expenses for the assets that have been constructed or produced and are ready for use or sales will be stopped.
In case some of the projects for the assets complying with the capitalization conditions have been completed and are ready for use separately, the capitalization of loan expenses for these projects will be stopped.
(b) Capitalization period of loan expenses
The capitalization period refers to the time from the starting of the capitalization of loan expenses to the ending of the capitalization, excluding the time of suspension of capitalization.
(c) Calculation method of capitalization amount of loan expenses
The interest expenses for special loans (after the deduction of interest income generated by the unused loan capitals or the investment return obtained from the temporary investments) and auxiliary expenses will be capitalized before the assets complying with the capitalization conditions are ready for the expected use or sales.
The interest amount of general loans to be capitalized will be determined by multiplying the weighed average amount of the asset payments by which the accumulated assets exceed the special loans withSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 44
the capitalization rate of general loans. The capitalization rate will be determined based on the weighed average interest rate of general loans.
In case the loans have the discounts or premiums, the Company will adjust the interest amount in each period based on the amortized discount and premium amount in each accounting period in accordance with the actual interest rate method.
3.17 Recognition of Income
(a) Sale of goods:
Revenue from the sale of goods is recognized when the enterprise has transferred to the buyer the significant risks and rewards of ownership of the goods; the enterprise retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; the amount of revenue can be reliably measured; it is probable that the economic benefits associated with the transaction will flow to the enterprise; and the relevant costs that have already occurred or are going to occur can be measured reliably.
(b) Rendering of service
In case on the preparation date of balance sheet the results about service transaction can be reliably evaluated, the labor income will be confirmed by the completion percentage method.
In case the service transaction results on the preparation date of balance sheet cannot be reliably evaluated, they will be determined in the following methods:
(1) In case the service costs that have occurred can be compensated, the service income will be confirmed based on such service costs and the same amounts will be settled as the service costs.
(2) In case the service costs that have occurred cannot be compensated, such service costs will be accrued to the current profit and loss and will not be confirmed as the service costs.
(c) Use right of transferred assets
In case the economic benefits related to the transaction will probably flow into the enterprise and the income amounts can be reliably calculated, the Company will determine the income amount about use right of transferred assets by the following means:
(1) The interest income amount will be calculated and determined based on the use time of currency capital from the Company by others and actual interest rate.
(2) The income amount of use expenses will be calculated and determined subject to the charging time and method agreed in the relevant contracts and agreements.
(3) Rental income from lease of properties
a. Lease contracts, agreements or other notice of settlement
b. Have executed liabilities as stipulated in the contract, issued rental invoices and the proceeds have been or will be received with certainty.
c. Cost can be reliably measured
d. Ascertain through calculations in accordance with provisions stipulated in the relevant contracts or agreements.
3.18 Confirmation of deferred income tax assets
The Company uses the profit before income tax to offset the variance of temporary difference as a limit to confirm the deferred tax assets that produced by the variance of temporary differences which can be offset.
3.19 Accounting policies, accounting evaluation changes and correction of accounting errors and relative effects
There is no significant accounting evaluation changes and correction of accounting errors in 2008.
4 Taxation
4.1 Main taxes and tax rates
Taxable items or tax basis
Tax applicable
Tax rateSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 45
Sales revenue of the products
Value added tax
17%，13%，6%，0%
Leasing income, storage income etc.
Business tax
5%
Transportation and conveyance incomes
Business tax
3%
Amount of turnover tax
Urban maintenance and construction tax
1% or 7%
Amount of turnover tax
Education surcharge
3% or 4%
Taxable income
Corporate Income tax
10%, 15%、20% or 25%
4.2 Tax reduction
In accordance with SKX [2008] No. 325 document, Shenzhen Zhijun Pharmaceutical Co., Ltd, a subsidiary of the Company, enjoys beneficial state tax policy of a reduced corporate income tax rate of 15%, for being granted the title of High-tech Company.
In accordance with TGQX[2009] No. 2 document, Suzhou Zhijun Wanqing Pharmaceutical Co., Ltd, a subsidiary of the Company, enjoys beneficial tax policy in Jiangsu Province of a reduced corporate income tax rate of 15%, for being granted the title of High-tech Company.
In accordance with GF [2007] No. 39 document, since January 1, 2008, enterprises which enjoy beneficial low tax policies shall be subject to the statutory tax rate five years after the implementation of the new tax law, among which: enterprises that enjoy a tax rate of 15% will be subject to 20% in 2009. Therefore, the Company and its subsidiaries, Shenzhen Zhijun Pharmaceutical Trade Co., Ltd, Shenzhen Accord Pharmaceutical Materials Co., Ltd, Shenzhen Jianmin Pharmaceutical Co., Ltd, Shenzhen Accord Pharmaceutical Logistics Co., Ltd, are subject to a tax rate of 20%.
Guangdong Accord Pharmaceutical Vocational Skills Training Center belongs to the education industry and is therefore subject to a tax rate of 10%.
5 Business combination and the consolidated financial statements
The Company adopts the Accounting Policies for Business Enterprises No.33 – Consolidated Financial Statements issued in February of 2006. All subsidiaries under the Company’s control are included in the scope of consolidation.
The consolidated financial statements are prepared by the parent company based on the individual financial statements of the parent company as well as the subsidiaries included in the scope of consolidation, with reference made to other relevant information and after adjustment to the investments in subsidiaries under equity method. During consolidation, internal equity investments and subsidiaries’ owner’s equity, internal investment income and subsidiaries’ profit distribution, internal transactions, internal debts and credits are eliminated.
The balance that the combination cost exceeds the fair value of identifiable assets of the party who was purchased is goodwill. The balance that the fair value of identifiable assets of the party who was purchased exceeds the combination cost is calculated into profit and loss in that period.
Subsidiaries adopt the same accounting policy with the parent company.
Figures in this section are in RMB ’0000 unless otherwise stated.
5.1 Subsidiaries acquired through business combination under the same control
Full name of the invested company
Place of registration
Nature
Registered capital
Scope of business
Actual investment as at end of the year
Net investment in subsidiary in substance
Equity holding percentage
(%)
Voting power
Totally enjoyed of the Company (%)
Combined statement or not
RemarksSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 46
Shenzhen Zhijun Pharmaceutical Co., Ltd. (Hereinafter refer to as Zhijun Pharmaceutical)
Shenzhen
Industry
6,900
Original chemical medicine manufacture, Chinese patent medicine processing, chemical raw material of medicine, the imports and exports business which transacted according to examined and approved certificate
10,606.17
10,606.17
100
100
Yes
Shenzhen Jianmin Pharmaceutical Co., Ltd. (Hereinafter refer to as Jianmin Pharmaceutical)
Shenzhen
Commercial industry
500
Wholesale of chemical agent, antibiotics agent, chemical and biological agent, blood products, raw material of chemical product, Chinese medicine and diagnosis products
5,348.29
5,348.29
100
100
Yes
Note 1
Shenzhen Medicine Trade Company (Hereinafter refer to as Shenzhen Medicine Trade)
Shenzhen
Commercial industry
188
Wholesale and retail of drugs and textiles
847.85
847.85
100
100
No
Note 2
Shenzhen Accord Medical Materials Co., Ltd. (Hereinafter refer to as Accord Medicine Material)
Shenzhen
Commercial industry
600
Chinese patent medicine, western medicine, medicine treatment apparatus
816.74
816.74
100
100
Yes
Note 3
Shenzhen Accord Drugstore Chain Co., Ltd. (Hereinafter refer to as Accord Chain)
Shenzhen
Commercial industry
1,080
Chinese patent medicine, western medicine, medicine treatment apparatus
---
---
---
---
No
Note 4SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 47
Shenzhen Zhijun Medicine Trade Co., Ltd. (Hereinafter refer to as Zhijun Medicine Trade)
Shenzhen
Commercial industry
189
Purchase and sale of Chinese traditional
medicinal materials, Chinese patent medicine,
chemical raw material for medical treatment,
antibiotic preparation, chemical medicine
preparation etc.
373.4
373.4
100
100
Yes
Note 5
Guangdong Accord Drugstore
Co., Ltd. (Hereinafter refer to as Accord Drugstore)
Shenzhen
Commercial industry
5,000
Chinese patent medicine, chemical raw material medicine, chemical medicine preparation, antibiotics, biochemical medicine, diagnosis drugs, biological products of treatment and diagnosi
---
---
---
---
No
Note 6
Shenzhen Accord Pharmaceutical Logistics Co., Ltd. (Hereinafter refer to as Accord logistics)
Shenzhen
Service industry
100
Storage service, convey, liquidation of cargo external package and common transportation of road
101.91
101.91
100
100
Yes
Note 7
Guangzhou Accord Medical Business Skills Training Center (Hereinafter refer to as Training Center)
Shenzhen
Service industry
3
Training
3
3
100
100
YesSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 48
Sinopharm Medicine Holding
Guangzhou Co., Ltd. (Hereinafter refer to as Sinopharm Guangzhou)
Guangzhou
Commercial industry
5,000
Chinese patent medicine, chemical medicine preparation, antibiotics, biochemical medicine, biological products, diagnosis medicine, treatment diagnosis biological products, finalized packing food, chemical products, self-support and surrogate the imports and exports of various merchandise and skills.
13,388.83
13,388.83
100
100
Yes
Note 8
Sinopharm Medicine Holding
Xinlong (Guangdong) Co., Ltd. (Hereinafter refer to as Guangdong Xinlong)
Guangzhou
Commercial industry
2,000
Drugs, medical apparatus sales
980
980
49
49
Yes
Guangxi Accord Medicine Co., Ltd.(hereinafter refer to as Guangxi Accord )
Nanning
Commercial industry
500
Drug sales
498.79
498.79
100
100
YesSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 49
Sinopharm Medicine Holding
Liuzhou Co., Ltd. (Hereinafter refer to as Sinopharm Liuzhou)
Liuzhou
Commercial industry
2,053.06
Chinese traditional medicinal materials, Chinese patent medicine, Chinese traditional medicine in pieces, chemical raw material, chemical medicine preparation, antibiotics, biochemical drugs, psychotropic drugs, chemical raw material drug and its preparation. (that involving specific
examination and approve should be operated based on the scope that checked and ratified by the license)
2,220.58
2,220.58
51
51
Yes
Note 9
Guangxi Accord Drugstore Chain Co., Ltd. (Hereinafter refer to as Guangxi Chain)
Liuzhou
Commercial industry
200
Sales of Chinese patent medicine, western medicine, medical equipment, daily general
merchandise, alcohol, beverage, costume etc.
---
---
---
---
No
Note 10
Guangxi Accord Chinese Herbal
Pieces Co., Ltd. (Hereinafter refer to as Guangxi Chinese Herbal
Pieces)
Liuzhou
Industry
200
Chinese herbal pieces
---
---
---
---
Yes
Note 11
Guangdong Huixin Investment Co., Ltd. (Hereinafter refer to as Huixin Investment)
Guangzhou
Commercial industry
5,000
Project investment, property management and leasing, medical information consultancy, car park management
12,965.01
12,965.01
100
100
Yes
Note 12SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 50
Sinopharm Medicine Holding
Foshan Co., Ltd. (Hereinafter refer to as Sinopharm Foshan)
Guangzhou
Commercial industry
200
Drug sales
704.50
704.50
100
100
Yes
Note 13
Guangzhou Accord Drugstore Chain Co., Ltd. (Hereinafter refer to as Guangzhou Chain)
Guangzhou
Commercial industry
200
Drug retail and medicine information consultancy
---
---
---
---
No
Note 14
Guangdong Yuexing Medicine
Co., Ltd. (Hereinafter refer to as Yuexing Medicine)
Guangzhou
Commercial industry
300
Sales of medicine and medical treatment apparatus
1,943.67
1,943.67
100
100
Yes
Note 15
Guangdong Hengchang Logistics Co., Ltd. (Hereinafter refer to as Hengchang Logistics)
Guangzhou
Service industry
54
Storage loading and unloading
126.95
126.95
100
100
Yes
Note 16
Sinopharm Medicine Holding
Nanning Co., Ltd. (Hereinafter refer to as Sinopharm Nanning)
Nanning
Commercial industry
2,900
Chinese patent medicine, chemical medicine preparation, antibiotics, biochemical medicine, biological products, diagnosis medicine, treatment diagnosis biological products, finalized packing food, chemical products, self-support and surrogate the imports and exports of various merchandise and skills.
3,250.28
3,250.28
100
100
Yes
Note 17
Note 1: This company was previously a subordinate enterprise of this company that owned by the whole people, whose former name was Shenzhen Medicine Co., Ltd. In Aug. of 2007, this company changed its system into individual proprietorship limited company, and changed its name into Shenzhen Pharmaceutical Co., Ltd, the registered capital alternated into RMB 5,000,000. In Jan. of 2008, this company changed its name into Shenzhen Jianmin Pharmaceutical Co., Ltd.
Note 2: This company ceased operation since 2003 and is not consolidated.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 51
Note 3: In 2008, the Company purchased 10% equity held by Zhijun Pharmaceutical, and this company became the wholly-owned subsidiary of the Company.
Note 4: This company was respectively held by the Company with 75% shares and subordinate subsidiary Shenzhen Zhijun Pharmaceutical Co., Ltd. with 25% shares before. In May 2007, the shareholders of the Company alternated to 10% shares are held by the Company and 90% shares are held by subordinate subsidiary Guangdong Accord Drugstore Co., Ltd. In 2008, the Company transferred 10% equity to Accord Drugstore, and then this company became the wholly-owned subsidiary of Accord Drugstore, and was sold in June of 2009.
Note 5: This company was respectively held by the Company with 47.09% shares and subordinate subsidiary Shenzhen Zhijun Pharmaceutical Co., Ltd. with 52.91% shares. In 2008, the Company purchased 52.91% equity held by Zhijun Pharmaceutical, and then this company became the wholly-owned subsidiary of the Company.
Note 6: In 2008, the Company purchased 10% equity held by Sino Pharmaceutical Guangzhou, and this company became the wholly-owned subsidiary of the Company. In June of 2009, the Company sold 100% equity of Guangdong Accord to Sino Pharmaceutical Holding Co., Ltd.
Note 7: This company was respectively held by the Company with 90% shares and subordinate subsidiary Shenzhen Zhijun Pharmaceutical Co., Ltd. with 10% shares. In 2008, the Company purchased 10% equity held by Zhijun Pharmaceutical, and then this company became the wholly-owned subsidiary of the Company.
Note 8: In 2008, the Company purchased 10% equity held by China Pharmaceutical Group Shanghai Company
Note 9: 51% equity of this company was held by subordinate subsidiary of the Company – Sino Pharmaceutical Guangzhou. The Company purchased 51% equity from Sino Pharmaceutical Guangzhou, and the other equity was held by other unrelated parties. , and then this company became the wholly-owned subsidiary of the Company.
Note 10: This company was the wholly-owned subsidiary of Sino Pharmaceutical Liuzhou – the subordinate subsidiary of the Company. In June of 2009, Sino pharmaceutical Liuzhou sold 100% equity of the Guangxi Accord Chain to Sino Pharmaceutical Holding Co., Ltd.
Note 11: This company was the wholly-owned subsidiary of Sino Pharmaceutical Liuzhou – the subordinate subsidiary of the Company.
Note 12: This company was the wholly-owned subsidiary of Sino Pharmaceutical Guangzhou – the subordinate subsidiary of the Company. In Jan., 2009, the Company purchased 100% equity held by Sino Pharmaceutical Guangzhou, and this company became the wholly-owned subsidiary of the Company.
Note 13: This company was the wholly-owned subsidiary of Huixin Investment. in 2008, it changed its nature into limited liability company invested solely by legal person and changed its name into Guangdong Guoxing Medicine Co., Ltd., and later changed its name into Sino Pharmaceutical Foshan Co., Ltd. in Feb., 2009, the Company purchased 100% equity held by Huixin Investment - the subordinate subsidiary of the Company, and this company became the wholly-owned subsidiary of the Company.
Note 14: This company was the wholly-owned subsidiary of Huixin Investment. In 2008, Accord Drugstore purchased 100% equity, and it became the wholly-owned subsidiary of Accord Drugstore, which was sold in Jun of 2009.
Note 15: This company was the wholly-owned subsidiary of Sino Pharmaceutical Guangzhou – the subordinate subsidiary of the Company. In Jan., 2009, the Company purchased 100% equity held by Sino Pharmaceutical Guangzhou, and this company became the wholly-owned subsidiary of the Company.
Note 16: This company was the wholly-owned subsidiary of Huixin Investment. In Jan., 2009, the Company purchased 100% equity held by Huixin Investment, and this company became the wholly-owned subsidiary of the Company.
Note 17: This company was together invested and found by Sino Pharmaceutical Holding Co., Ltd and Nanning Medicine Wholesale House of Guangxi Zhuang Autonomous Region in Mar., 2004, with registered capital of RMB 29 million. In Feb. 2007, Nanning Medicine Wholesale House of GuangxiSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 52
Zhuang Autonomous Region transferred totally 40% equity to Sinopharm Medicine Holding Shanghai Co., Ltd. In June of 2009, the Company purchased 60% equity held by Sino Pharmaceutical Holding Co., Ltd. and 40% equity held by Sinopharm Medicine Holding Shanghai Co., Ltd., and then this company became the wholly-owned subsidiary of the Company.
1. Judgment criteria of Enterprise Mergers Under the Same Control
Enterprise mergers under the same control means corporations taken into consolidation were under the same ultimate control before and after consolidation, and the control is not temporary.
2. Actual controlling party of the Same Controller
To the subsidiaries acquired through business combination under the same control, the actual controller of the same control is Sinopharm Medicine Holding Co., Ltd.
5.2 Subsidiaries acquired through business combination under different control
Note 1: In Jan., 2009, the Company purchased 90% equity held by Chen Zhongqi and 10% equity of Dongguan Dongfeng Chinese Traditional Medicine Co., Ltd. held by Chen Zhongyao, which was
Full name of the invested company
Place of registration
Nature
Registered capital
Scope of business
Actual investment as at end of the year
Net investment in subsidiary in substance
Equity holding percentage
(%)
Voting power
Totally enjoyed of the Company (%)
Voting power consolidated
(%)
Combined statement or not
Remarks
Dongguan Accord Medicine Co., Ltd. (Hereinafter refer to as Dongguan Accord)
Wholly-owned subsidiary
Dongguan
Commercial
280
Wholesales of Chinese traditional medicinal materials, Chinese patent medicine, Chinese traditional medicine in pieces, chemical raw material; sales of daily general merchandise and heath protection food
274.20
274.20
100％
100％
Yes
Note 1
Suzhou Zhijun Wanqing Pharmaceutical Co., Ltd. (Hereinafter refer to as Zhijun Wanqing)
Controlling subsidiary
Taicang
Industry
8,000
Production and sales of general raw materials of medicine, raw medicine and preparation of cephalosporin; do export business of production and technology of the Company
13,644.81
13,644.81
75％
75%
Yes
Note 2SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 53
changed its name into Dongguan Accord Pharmaceutical Co., Ltd.
Note 2: In Mar., 2009, the Company purchased 75% equity of Suzhou Wanqing Pharmaceutical Co., Ltd. held by Yang Qiaoming, and the other 25% equity was still held by Yang Qiaoming. In Mar., 2009, the Company increased investment of RMB 30.75 million to this company, and Yang Qiaoming increased investment of RMB 10.25 million to this company, after which, the registered capital of this company changed into RMB 80 million from RMB 39 million. In Mar., 2009, this Company changed its name into Suzhou Zhijun Wanqing Pharmaceutical Co., Ltd.
1. Judgment criteria of Enterprise Mergers Under Different Control
Enterprise mergers under different control means corporations taken into consolidation were not under ultimate control of the same party or parties before and after consolidation.
2. Actual controlling party of Different Controller
To the subsidiaries acquired through business combination under different control, the purchase date was the date when purchaser gained the control right of the part purchased, that was the date happened control right transfer in the process of combination transaction.
5.3 Subsidiaries increased/decreased in this period
1. Subsidiaries increased in enteprise merger under the same control
(1) Book value of assets and debt of consolidated party on balance sheet date in last accounting period and on consolidation day, judgment criteria of Enterprise mergers Under the Same Control and actual controller
Book value of total assets
Names of subsidiaries
Book value of total debt
Judgment criteria of enterprise mergers Under the Same Control
Actual controller under the same control
On balance sheet date in last accounting period
On Consolidation date
On balance sheet date in last accounting period
On Consolidation date
Sino Pharmaceutical Nanning
252,747,966.31
299,475,232.94
222,728,662.48
266,972,431.56
Corporations taken into consolidation were under the same ultimate control before and after consolidation, and the control is not temporary.
Sino Pharmaceutical Holding Co., Ltd.
(2) Income, net profit and cash flow of consolidated party from the period-begin to the consolidation date:
Names of subsidiaries
From the period-begin to the consolidation date
Consolidation date
Operating income
Net profit
Net cash flow
Operating net cash flow
Sino Pharmaceutical Nanning
Jun.30, 2009
292,638,124.01
2,483,497.55
8,551,046.21
13,958,903.13
2. Subsidiaries increased in equity purchase under different controlSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 54
Names of subsidiaries
Purchase date
Confirmation method of purchase date
Consolidation cost
Fair value of identifiable assets of the party purchased
Amount of goodwill
Confirmation method of fair value
Dongguan Accord
Jan.31, 2009
According to qualification of Accounting Standard for Enterprises
2,742,000.00
2,727,240.53
---
Evaluation
Zhijun Wanqing
Mar.31, 2009
According to qualification of Accounting Standard for Enterprises
136,448,072.71
129,039,863.79
39,668,174.87
Evaluation
Book value and fair value of assets and debt of the purchased party on purchase date, confirmation method and process of goodwill of corporations consolidation under different control:
Names of Subsidiaries
Items
On purchase date
Book value
Fair value
Zhijun Wanqing
Total assets
273,629,519.80
323,830,501.15
Total liabilties
190,410,490.16
194,790,637.36
Net asset
83,219,029.64
129,039,863.79
The Company accomplished to purchase 75 percent equities of Zhijun Wanqing on March 31, 2009, consolidated cost included the investment amount of RMB 134,250,000.00 (additional investment amount of RMB 30,750,000) and gains/losses attributable to original shareholders from evaluation base date to equity transfer date of RMB 2,198,072.71 which totaled up to RMB 136,448,072.71. The fair value of identifiable net assets of Zhijun Wanqing on purchase date was RMB 129,039,863.79. The amount enjoyable was RMB 96,779,897.84 calculated based on shareholding propotion of 75%. Goodwill was the balance between the consolidation cost and fair value of identifiable net assets of Zhijun Wanqing on purchase date amounted to RMB 39,668,174.87.
5.4 Changes of the range of consolidation statement in the report period
1. Three consolidated units were increased this year, and the reasons were as follows:
The Company purchased Dongguan Accord Pharmaceutical Co., Ltd., Suzhou Zhijun Wanqing Pharmaceutical Co., Ltd. and Sinopharm Medicine Holding Nanning Co., Ltd. in the first half year of 2009.
The Company sold the underling subsidiary-- Guangdong Accord Drugstore Co., Ltd. and its underling subsidiaries-- Shenzhen Accord Pharmaceutical Chains Co., Ltd. and Guangzhou Accord Drugstore Chains Co., Ltd. in June of year 2009.
2. Four consolidated units were decreased in statement of gains/losses of this report period, and the reasons were as follows:
The underling subsidiary of the Company-- Sinopharm Medicine Holding Liuzhou Co., Ltd
. sold its subsidiary Guangxi Accord Drugstore Chains Co., Ltd. in June of year 2009.
3. Companies newly brought into the range of consolidation in the report periodSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 55
Names of subsidiaries
Total proportion of holding shares
Net assets on purchase date
Net assets at period-end
Sino Pharmaceutical Nanning
Net profit from the purchase date to the period-end
100%
32,502,801.38
32,502,801.38
---
Dongguan Accord
100%
2,727,240.53
2,198,824.85
-528,415.68
Zhijun Wanqing
75%
129,039,863.79
129,595,735.70
555,871.91
4. Companies not brought into the range of consolidation in the report period
Names of subsidiaries
Original total proportion of holding shares
Net assets at year-begin
Net assets on disposal date
Net profit from the disposal date to the period-end
Guangdong Accord Drugstore Co., Ltd.
100%
50,076,261.47
50,042,608.68
-6,563.96
Shenzhen Accord Drugstore Chains Co., Ltd.
---
-24,434,416.21
-24,547,509.37
-113,093.16
Guangzhou Accord Drugstore Chains Co., Ltd.
---
-7,827,018.23
-7,951,883.46
-124,865.23
Guangxi Accord Drugstore Chains Co., Ltd.
---
3,702,520.18
4,062,961.32
360,441.14
5.5 Rights and Interests, profit and loss of minority shareholders
Rights and Interests of minority shareholders
Amount at period-begin
Minority shareholders in this period
Other increase or decrease
Amount at period-end
Increase or decrease
Profit distribution
Other equity change
Sino Pharmaceutical Liuzhou Co., Ltd.
21,383,463.30
4,464,324.68
-4,900,000.00
-24,500.00
20,923,287.98
Zhijun Wanqing
---
138,967.98
---
32,259,965.95
32,398,933.93
Total
21,383,463.30
4,603,292.66
-4,900,000.00
32,235,465.95
53,322,221.91
Note: other equity change was the increase of minority shareholders’ rights and interests due to the Company purchasing 75% equity of Zhijun Wanqing.
6 Notes to the main items of financial statements
(Monetary unit is RMB and the amount is the year-begin balance unless otherwise stated.)
6.1 Monetary fund
Item
Amount in period-end
Cash in stock
Amount in year-begin
504,282.83
479,324.68
Deposit in bank
444,554,871.09
314,467,210.06
Other monetary funds
53,656,397.54
66,716,884.19
Total
498,715,551.46
381,663,418.93SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 56
Details of classification of other monetary funds:
Amount in period-end
Security deposit for bank acceptance bills
Amount in year-begin
53,479,381.24
66,684,177.00
Other security deposit
177,016.30
32,707.19
Total
53,656,397.54
66,716,884.19
6.2 Notes receivable
Category
Amount in period-end
Bank acceptance bills
Amount in year-begin
127,221,241.47
74,014,588.18
Commercial acceptance bills
95,514,170.23
139,815,442.27
Total
222,735,411.70
213,830,030.45
(a) Discounted and undue commercial acceptance bills amounted to 120,051,252.52.
(b) Discounted and undue bank acceptance bills amounted to 113,009,771.01
(c) Endorsed and undue notes receivable in period-end amounted to 35,654,8602.08.
(d) There are no notes which belong to the shareholders that hold over 5% (inclusive) of the voting shares of the Company in this period-end.
(e) Notes receivable to associated parties in period-end amount was RMB 50,040,425.09 with accounting for 22.47% of notes receivable in period-end amount. Please seee Note 8 for details.
6.3 Accounts receivable
(a) Composing of receivable account
Account age
Amount in period-end
Amount in year-begin
Proportion in total amount
Book balance
Provision for bad debt
Proportion of provision for bad debt
Proportion in total amount
Book balance
Provision for bad debt
Proportion of provision for bad debt
Within one year (inclusive)
2,219,157,914.94
99.95%
4,523,326.40
0.20%
1,874,623,069.56
100%
3,370,315.04
0.18%
1-2 years(2 years inclusive)
1,146,656.21
0.05%
229,513.87
20.02%
---
---
---
---
2-3 years(3 years inclusive)
---
---
---
---
---
---
---
---SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 57
Over 3 years
---
---
---
---
---
---
---
---
Total
2,220,304,571.15
100.00%
4,752,840.27
1,874,623,069.56
100.00%
3,370,315.04
Category
Amount in period-end
Amount in year-begin
Proportion in total amount
Book balance
Provision for bad debt
Provision rate for bad debt
Proportion in total amount
Book balance
Provision for bad debt
Provision rate for bad debt
1) Significant individual amount with separate provision for impairment loss
15,272,178.37
0.69%
2,056,330.33
13.46%
25,245,382.74
1.35%
408,783.47
1.62%
2) Insignificant individual amount with separate provision for impairment loss
4,782,135.72
0.22%
2,311,979.91
48.35%
3,836,743.82
0.20%
1,481,596.90
38.62%
3) Other amounts which are classified into the same group with similar credit risk features
2,200,250,257.06
99.09%
384,530.03
0.02%
1,845,540,943.00
98.45%
1,479,934.67
0.08%
Among which: significant individual amount
284,501,154.21
12.81%
---
---
721,227,555.67
38.47%
---
---
Insignificant individual amount
1,915,749,102.85
86.28%
384,530.03
0.02%
1,124,313,387.33
59.98%
1,479,934.67
0.13%
Among which: Insignificant individual amounts which have high risk after classified into the same group with similar credit risk features
---
---
---
---
---
---
---
---
Total
2,220,304,571.15
100.00%
4,752,840.27
1,874,623,069.56
100.00%
3,370,315.04
(b) Changes in the provision for bad debts in accounts receivable
Year
Book balance in year-begin
Amount decreased in this period
Provision in current period
Book balance in period-end
Switch back
Written off
2009
3,370,315.04
1,406,525.23
24,000.00
4,752,840.27SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 58
(c) Accounts receivable actually written off in this year amounted to 0.
(d) Among the accounts receivable in period-end, the accounts, which are attributed to the shareholders that hold over 5 % (inclusive) voting share of the Company, amount to RMB 2,697,797.44.
(e) Accounts receivable of related parties amount to RMB 153,029,211.70 in period-end, which accounts for 6.89％of the balance in period-end in the accounts receivable. For particulars see Note 8.
(f) Top five of accounts receivable in period-end:
Rank of creditor
Amount
Account age
No. 1 Hospital Affiliated to Guangxi Medical University
Proportion of total accounts receivable
45,276,223.20
Within 1 year
2.04%
No. 3 Hospital Affiliated to Sun Yat-sen University
32,112,013.16
Within 1 year
1.45%
Guangdong People’s Hospital
29,741,666.36
Within 1 year
1.34%
The People’ s Hospital of Guangxi Zhuang Autonomous Region
26,659,184.91
Within 1 year
1.20%
No. 2 Hospital Affiliated to Sun Yat-sen University
25,521,844.35
Within 1 year
1.15%
6.4 Accounts paid in advance
(a) Analysis of account age
Account age
Amount in period-end
Amount in year-begin
Amount
Proportion in total amount
Amount
Proportion in total amount
Within one year (inclusive)
38,630,514.14
97.37%
40,854,624.37
94.70%
1-2 years(2 years inclusive)
663,318.81
1.67%
2,288,111.56
5.30%
2-3 years(3 years inclusive)
100,400.00
0.26%
--
--
Over 3 years
279,590.00
0.70%
--
--
Total
39,673,822.95
100.00%
43,142,735.93
100%
(b) There is no shareholders’ amount with more than 5% (including 5%) voting shares of the Company in accounts paid in advance in period-end.
(c) Account paid in advance to associated parties in perio-end was RMB 6,021,515.24 with accounting for 15.18% in account paid in advance in period-end amount. Please see Notes 8 for details.
(d) Top five of accounts paid in advance in period-end:
Rank of creditor
Amount
Account age
Shanghai Sinopharm Wai Gao Qiao Co.,
Proportion of total accounts paid in advance
5,861,406.43
Within 1 year
14.77%SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 59
Ltd.
Finance Branch Bureau of Shuangfeng Town, Taicang City
2,000,000.00
Within 1 year
5.04%
Suzhou Jinyao Colour Steel Plate Purifying Co
1,967,507.00 ., Ltd.
Within 1 year
4.96%
Shanghai Simcere Pharmaceutical Co., Ltd.
1,952,003.20
Within 1 year
4.92%
Shanghai Hongbao Medical Device Co
1,937,440.00 ,Ltd
Within 1 year
4.88%
6.5 Other receivables
(a) Structure of other receivables
Account age
Amount in period-end
Amount in year-begin
Book balance
Provision for bad debt
Proportion in total amount
Provision rate for bad debt
Book balance
Provision for bad debt
Proportion in total amount
Provision rate for bad debt
Within one year (inclusive)
37,909,283.80
58.08%
899,411.38
2.37%
33,557,178.25
49.43%
433,632.83
1.29%
1-2 years(2 years inclusive)
5,456,191.95
8.36%
204,969.57
3.76%
2,149,297.65
3.17%
302,092.21
14.06%
2-3 years(3 years inclusive)
751,396.38
1.15%
393,295.07
52.34%
308,232.54
0.45%
93,370.86
30.29%
Over 3 years
21,150,147.74
32.41%
19,169,582.87
90.64%
31,875,492.55
46.95%
12,359,623.46
38.77%
Total
65,267,019.87
100.00%
20,667,258.89
--
67,890,200.99
100.00%
13,188,719.36
---
Item
Amount in period-end
Amount in year-begin
Book balance
Provision for bad debt
Proportion in total amount
Provision rate for bad debt
Book balance
Provision for bad debt
Proportion in total amount
Provision rate for bad debt
1) Significant individual amount with separate provision for impairment loss
13,374,579.90
20.49%
13,374,579.90
100%
35,517,343.29
52.31%
12,036,747.94
33.89%SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 60
2) Insignificant individual amount with separate provision for impairment loss
2,869,244.86
4.40%
2,791,866.67
97.30%
989,284.27
1.46%
989,284.27
100%
3) Other amounts which are classified into the same group with similar credit risk features
49,023,195.11
75.11%
4,500,812.32
9.18%
31,383,573.43
46.23%
162,687.15
0.52%
Among which: significant individual amount
---
---
---
---
---
---
---
---
Insignificant individual amount
49,023,195.11
75.11%
4,500,812.32
9.18%
31,383,573.43
46.23%
162,687.15
0.52%
Among which: Insignificant indiviudal amounts which have high risk after classified into the same group with similar credit risk features
---
---
---
---
---
---
---
---
Total
65,267,019.87
100.00%
20,667,258.89
67,890,200.99
100.00%
13,188,719.36
(b) Changes in the provision for bad debt in other receivables
Year
Book balance in year-begin
Amount decreased in current period
Provision in current period
Book balance in period-end
Switch back
Written off
2009
13,188,719.36
7,685,793.27
207,253.74
---
20,667,258.89
In this period, increases of RMB 6,264,588.15 in the provision for bad debt in other receivables mainly resulted form merging Zhijun Wanqing Pharm.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 61
(c) Other receivables actually written off in this period amounted to 0.
(d) There is no shareholders’ amount with more than 5% (including 5%) voting shares of the Company in other receivables in period-end.
(e) There are no other accounts receivable of related parties in period-end.
(f) Top five debtors in other accounts receivable in period-end:
Rank of debtor
Nature/Content
Amount
Account age
Proportion of total amount
Sino-American Shanghai Squibb Pharmaceuticals Ltd.
Allowance on sales
9,801,682.72
Within 1 year
15.02%
Shenzhen Yinghai Technology Investment Co., Ltd.
Receivables from
equity transaction
8,980,000.00
Over 3 years
13.76%
Shenzhen Medicines and Health Products I/E Co., Ltd..
Current account
4,394,579.90
Over 3 years
6.73%
Korean Yuhan Corporation
Payment for patent
cooperation
3,529,434.95
1-2 years
5.41%
Suzhou Xinda Pharmaceutical Ltd.
Current account
3,275,000.00
Over 3 years
5.02%
6.6 Inventories and provision for inventory devaluation
Item
Amount in period-end
Amount in year-begin
Book balance
Devaluation provision
Book balance
Devaluation provision
Raw materials
143,671,067.98
580,776.65
68,775,616.60
1,626,979.60
Low cost and short-lived articles
453,429.03
---
828,925.46
---
Merchandise inventory
583,654,538.21
5,366,227.34
680,917,977.05
2,666,172.10
Sent out merchandise
2,573,563.97
16,914.24
5,976,340.80
59,527.00
Total
730,352,599.19
5,963,918.23
756,498,859.91
4,352,678.70
(a) Provision for inventory devaluation
Category of inventory
Book balance in year-begin
Amount increased in current period
Amount decreased in current period
Book balance in period-end
Switch back
Written off
Raw materials
1,626,979.60
580,776.65
1,626,979.60
---
580,776.65
Low cost and short-lived articles
---
---
---
---
---SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 62
Merchandise inventory
2,666,172.10
4,520,565.54
1,820,510.30
---
5,366,227.34
Sent out merchandise
59,527.00
16,914.24
59,527.00
---
16,914.24
Total
4,352,678.70
5,118,256.43
3,507,016.90
---
5,963,918.23
(b) Inventories actually written off in this year amounted to 0.
6.7 Long-term equity investments
Amount in period-end
Amount in year-begin
Book balance
Devaluation provision
Book balance
Devaluation provision
Long-term equity investments recognized by equity method
75,960,247.60
---
67,399,908.10
---
Long-term equity investments recognized by cost method
10,339,327.75
8,160,254.05
10,735,966.07
8,556,892.37
Total
86,299,575.35
8,160,254.05
78,135,874.17
8,556,892.37
(a) Main information of invested units
Name of invested unit
Registry
Business
Character
Shares in the registered capital
of the invested unit（%）
the Company’s voting share in invested unit of
Total amount of net assets in period-end
Total sales amount of
current period
Associated enterprises
Net profit of current year
China Associate Co., Ltd.
Shenzhen
---
0.17%
---
---
---
---
Shenzhen Futian Pharmaceutical Co., Ltd.
Shenzhen
---
40.00%
---
---
---
---
Liaoning & Accord Pharm Chain Store Co., Ltd.
Liaoning
Commerce
30.00%
0.00%
---
---
---
SinoPharm Holdings Shenzhen Chinese Medicine Co., Ltd.
Shenzhen
Industry
47.39%
47.39%
44,642,643.82
21,142,539.04
-1,702,234.33
Shenzhen Wanle Pharmaceutical Co., Ltd.
Shenzhen
Industry
35.19%
35.19%
153,687,905.33
186,444,512.28
26,618,450.30
Explanation of the difference between voting shares and proportion of shareholding:SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 63
Name of invested unit
Proportion of shareholding
Voting share
Liaoning & Accord Pharm. Chain Store Co., Ltd.
Reason
30.00%
0.00%
No actual control and intend to sell out
(b) Long-term equity investments recognized by equity method
Name of invested unit
Initial investment amount
Balance in year-begin
Increases/decreases
Balance in period-end
Total
Including: distributed cash dividends
Associated enterprises
Sinopharm Holdings Shenzhen Chinese Medicine Co., Ltd.
20,939,177.10
21,955,562.26
-806,693.16
---
21,148,869.10
Shenzhen Main Luck Pharmaceutical Co., Ltd.
37,209,101.02
45,444,345.84
9,367,032.66
---
54,811,378.50
Total
58,148,278.12
67,399,908.10
8,560,339.50
---
75,960,247.60
(c) Long-term equity investments recognized by cost method
Name of invested unit
Initial investment amount
Book balance in year-begin
Increases/decreases invested in current period
Book balance in period-end
China Associate Co., Ltd.
Provision for impairment loss
284,173.70
284,173.70
---
284,173.70
---
Shenzhen Futian Pharmaceutical Co., Ltd.
471,027.36
471,027.36
---
471,027.36
471,027.36
Dongyuan & Accord Pharm. Chain Store Co., Ltd.
2,250,000.00
396,638.32
-396,638.32
---
---
Liaoning & Accord Pharm. Chain Store Co., Ltd.
1,894,900.00
1,894,900.00
---
1,894,900.00
---
Shenzhen Medicine Trade Co., Ltd.
7,689,226.69
7,689,226.69
---
7,689,226.69
7,689,226.69
Total
12,589,327.75
10,735,966.07
-396,638.32
10,339,327.75
8,160,254.05
(d) Provision for impairment loss long-term equity investment
Name of invested unit
Amount in year-begin
Increase in
current period
Decrease in current
Amount in period-end
Reasons for withdrawalSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 64
period
Shenzhen Futian Pharmaceutical Co., Ltd.
471,027.36
---
---
471,027.36
Note 1
Dongyuan & Accord Pharm. Chain Store Co., Ltd.
396,638.32
---
396,638.32
---
Note 2
Shenzhen Medicine Trade Co., Ltd.
7,689,226.69
---
---
7,689,226.69
Note 3
Total
8,556,892.37
---
396,638.32
8,160,254.05
Note 1：The investment of Shenzhen Futian Pharmaceutical Co., Ltd provided 100% provision for impairment loss because the invested unit was operated poorly or could not be contacted for a long period and the Company had no information about their current situation
Note 2: Dongyuan & Accord Pharm. Chains Co., Ltd.was invested by Shenzhen Accord Pharmaceutical Chains Co., Ltd. which was a former subsidiary of the Company. In the report period, the equity of Shenzhen Accord Pharmaceutical Chains Co., Ltd. was transferred, so the provision for impairment loss long-term equity investmentfor Dongyuan Accord decreased.
Note 3：This invested unit has no operation for years, so 100% provision for impairment loss is provided.
6.8 Investment real estate
Item
Balance in year-begin
Increases
Decreases
Balance in year-end
Purchase
Real estate for self-use property or transferred from inventory
Disposal
Investment real estate transferred into real estate for self-use
1. Total original value
30,900,691.88
---
5,604,376.71
36,505,068.59
(1) Constructions rented out
27,818,331.63
---
5,109,434.95
32,927,766.58
(2) Land use right rented out
3,082,360.25
---
494,941.76
3,577,302.01
2. Total depreciation provided or accumulated amortization
8,052,660.19
---
1,982,415.36
10,035,075.55
(1) Constructions rented out
7,679,228.35
---
1,912,605.45
9,591,833.80
(2) Land use right rented out
373,431.84
---
69,809.91
443,241.75
3. Total depreciation or amortization of current year
1,633,823.15
---
763,333.12
2,397,156.27
(1) Constructions rented out
1,507,751.58
---
752,986.86
2,260,738.44
(2) Land use right rented out
126,071.57
---
10,346.26
136,417.83
4. Accumulated provision for
---SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 65
Item
Balance in year-begin
Increases
Decreases
Balance in year-end
Purchase
Real estate for self-use property or transferred from inventory
Disposal
Investment real estate transferred into real estate for self-use
impairment loss on investment real estate
(1) Constructions rented out
---
(2) Land use right rented out
---
5. Total book value of investment real estate
22,848,031.69
---
3,621,961.35
26,469,993.04
(1) Constructions rented out
20,139,103.28
---
3,196,829.50
23,335,932.78
(2) Land use right rented out
2,708,928.41
---
425,131.85
3,134,060.26
6.9 Original price of fixed assets and accumulated depreciation
(a) Original price of fixed assets
Original price in year-begin
Category
Increases
Decreases
Original price in period-end
Buildings and constructions
315,455,748.70
29,399,567.07
12,757,379.57
332,097,936.20
Machinery equipment
131,393,693.22
67,662,874.42
2,965,239.16
196,091,328.48
Transportation equipment
34,524,144.99
6,910,158.84
3,049,504.57
38,384,799.26
Other equipment
99,357,002.09
9,090,990.92
7,971,444.01
100,476,549.00
Fixed assets fitment
7,619,325.33
1,757,060.02
9,376,385.35
Total
588,349,914.33
114,820,651.27
26,743,567.31
676,426,998.29
Among which: transferred from Construction In Progress: RMB 6,411,940.34.
(b) Accumulated depreciation
Category
Amount in year-begin
Increases
Decreases
Buildings and constructions
Amount in period-end
93,671,390.88
9,290,599.03
1,290,791.18
101,671,198.73
Machinery equipment
54,575,221.35
23,188,347.81
1,508,020.72
76,255,548.44
Transportation equipment
17,170,593.21
2,060,657.72
1,106,844.52
18,124,406.41
Other equipment
40,684,221.73
7,750,851.66
5,407,260.38
43,027,813.01
Fixed assets fitment
4,067,152.67
966,861.09
---
5,034,013.76
Total
210,168,579.84
43,257,317.31
9,312,916.80
244,112,980.35SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 66
(c) Provision for impairment loss on fixed assets
Category
Amount in year-begin
Increases
Decreases
Amount in period-end
Buildings and constructions
1,300,000.00
---
---
1,300,000.00
(d) Book value of fixed assets
Category
Amount in year-begin
Buildings and constructions
Amount in period-end
220,484,357.82
229,126,737.47
Machinery equipment
76,818,471.87
119,835,780.04
Transportation equipment
17,353,551.78
20,260,392.85
Other equipment
58,672,780.36
57,448,735.99
Fixed assets fitment
3,552,172.66
4,342,371.59
Total
376,881,334.49
431,014,017.94
6.10 Construction in progress
Projects
Amount in period-end
Book balance
Amount in year-begin
Provision for impairment loss
Book value
Book balance
Provision for impairment loss
Book value
Chepuo Project
6,750,695.20
---
6,750,695.20
6,750,695.20
---
6,750,695.20
Renovation of old buildings
5,497,689.52
---
5,497,689.52
1,179,895.79
---
1,179,895.79
Planting of cassia and honeysuckle
253,886.24
---
253,886.24
253,886.24
---
253,886.24
No. 2 workshop of anti-infectious cef- series solid and No. 2 workshop of non-anti-infectious cef- series solid
456,232.55
---
456,232.55
---
---
---
Technical Innovation
11,947,751.96
---
11,947,751.96
10,572,505.74
---
10,572,505.74
Power supply project of tearing down power distribution house to box transformer substation
9,372.80
---
9,372.80
9,372.80
---
9,372.80
Total
24,915,628.27
---
24,915,628.27
18,766,355.77
---
18,766,355.77
Name of project
Budget
Increases
Amount in
Decreases
Fund resources
Amount in
ProportionSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 67
year-begin
Transfer into fixed assets
Other decrease
year-end
of project input in budget
Chepuo Project
Naught
6,750,695.20
---
---
---
6,750,695.20
Self funds
N/A
Renovation of old buildings
Naught
1,179,895.79
4,691,721.73
---
373,928.00
5,497,689.52
Self funds
N/A
Planting of cassia and honeysuckle
Naught
253,886.24
---
---
---
253,886.24
Fiscal appropriation
N/A
Technical Innovation
36,200,000
10,572,505.74
3,896,489.43
2,521,243.21
---
11,947,751.96
Self funds and loan from financial institution
99.91%
No. 2 workshop of anti-infectious cef- series solid and No. 2 workshop of non-anti-infectious cef- series solid
Naught
---
4,346,929.68
3,890,697.13
---
456,232.55
Self funds
N/A
Power supply project of tearing down power distribution house to box transformer substation
Naught
9,372.80
---
---
---
9,372.80
Self funds
N/A
Total
18,766,355.77
12,935,140.84
6,411,940.34
373,928.00
24,915,628.27
6.11 Intangible assets
(a) Original price of intangible assets
Item
Original price in year-begin
Increases
Decreases
Software
Original price in period-end
8,426,591.20
564,315.44
337,982.38
8,652,924.26
Land use right
58,158,136.89
12,048,659.31
---
70,206,796.20
Trade mark use right
156,050.00
24,000.00
---
180,050.00
Proprietary technology
---
49,000,000.00
---
49,000,000.00
Total
66,740,778.09
61,636,974.75
337,982.38
128,039,770.46SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 68
(b) Accumulated amortization
Item
Amount in year-begin
Increases
Amortization
Decreases
Software
Amount in period-end
5,181,456.85
---
1,780,278.06
216,074.00
6,745,660.91
Land use right
3,873,881.33
44,195.94
817,208.56
---
4,735,285.83
Trade mark use right
78,156.92
---
13,014.24
---
91,171.16
Proprietary technology
---
12,373,450.31
12,373,450.31
Total
9,133,495.10
44,195.94
14,983,951.17
216,074.00
23,945,568.21
(c) Book value of intangible assets
Item
Amount in year-begin
Amount in period-end
Software
Remained amortization Period
3,245,134.35
1,907,263.35
5-60 months
Land use right
54,284,255.56
65,471,510.37
37-50 years
Trade mark use right
77,893.08
88,878.84
10-43 months
Proprietary technology
---
36,626,549.69
2-52 months
Total
57,607,282.99
104,094,202.25
6.12 Long-term deferred expenses
Item
Original occurred amount
Amount in year-begin
Increases
Amortization
Decreases
Accumulated amortization
Amount in period-end
Leasehold improvement
Remained amortization Period
16,567,429.22
15,704,523.06
1,034,090.94
1,086,115.92
9,014,464.85
9,929,395.99
6,638,033.23
1-96 months
Management consulting expenses
1,325,273.60
114,557.01
---
114,557.01
---
1,325,273.60
---
---
Others
3,840,440.95
1,242,192.04
1,573,723.64
359,401.71
1,350,000.00
2,733,926.98
1,106,513.97
11-199 months
Total
21,733,143.77
17,061,272.11
2,607,814.58
1,560,074.64
10,364,464.85
13,988,596.57
7,744,547.20
6.13 Deferred income tax assets and liabilities
(a) Recognized deferred income tax assets
Item
Amount in period-end
Provision for bad debt on accounts receivable
Amount in year-begin
709,898.88
374,497.46
Provision for bad debt on other receivables
85,026.98
261,651.71SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 69
Item
Amount in period-end
Provision for inventory devaluation
Amount in year-begin
295,684.06
127,925.62
Provision for impairment loss on long-term equity investments
325,420.55
94,205.47
Provision for impairment loss on fixed assets
---
188,130.65
Loss brought forward
---
---
Employee benefits payable (unpaid)
233,500.00
2,965,250.00
Income tax paid accrued sales expenses
3,648,365.14
3,788,255.14
Compensation for retired employees
320,911.47
500,610.82
Estimated expenditure of early retirement staff
1,232,447.49
1,304,750.00
Make up to pay medical insurance of retired employees
533,750.00
533,750.00
Management expenses of socialization of retired employees
291,348.50
577,478.00
Total
7,676,353.07
10,716,504.87
(b) Recognized deferred income tax liabilities
Item
Amount in period-end
Difference for assets verification amortization
Amount in year-begin
18,557,360.12
12,174,180.87
6.14 Other non-current assets
Item
Amount in year-begin
Increases
Decreases
Specific reserved medicine
Amount in period-end
33,040,401.86
151,790,277.77
148,279,410.21
36,551,269.42
6.15 Provision for impairment loss of assets
Item
Book balance in year-begin
Provision
Decreases
Book balance in period-end
Switch back
Written-off
1)Provision for bad debt
16,559,034.40
9,092,318.50
231,253.74
---
25,420,099.16
2)Provision for inventory devaluation
4,352,678.70
5,118,256.43
3,507,016.90
---
5,963,918.23
3)Provision for impairment loss of long-term equity investment
8,556,892.37
---
396,638.32
---
8,160,254.05
4) Provision for impairment loss of fixed assets
1,300,000.00
---
---
---
1,300,000.00
Total
30,768,605.47
14,210,574.93
4,134,908.96
---
40,844,271.44
6.16 Short-term loan
Category
Amount in
Amount inSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 70
period-end
year-begin
Mortgage loan
3,000,000.00
8,212,078.69
Guaranteed loan
375,954,537.83
236,655,052.56
Discounted bank acceptance bills
113,009,771.01
41,409,595.83
Discounted commercial acceptance bills
120,051,252.52
107,383,652.99
Total
612,015,561.36
393,660,380.07
6.17 Notes payable
Category
Amount in period-end
Bank acceptance bills
Amount in year-begin
552,115,183.44
570,390,375.00
Commercial acceptance bills
366,451,895.60
268,147,346.27
Total
918,567,079.04
838,537,721.27
(a) Among balance in period-end, the bill payable, which are attributed to the shareholder SINOPHARM Medicine Holding Co., Ltd. that hold over 5 % (inclusive) voting share of the Company, amount to RMB 131,413,742.35.
(b) Among balance in period-end, the bill payable, which are attributed to related parties, amounted to RMB365,663,549.18 with accounting for 39.81% in notes payable in period-end amount. Please see Notes 8 for details.
6.18 Accounts payable
Amount in year-end
1,591,875,830.78
Amount in year-begin
1,432,873,603.58
(a) Among balance in period-end, the accounts payable, which are attributed to the shareholder SINOPHARM Medicine Holding Co., Ltd. that hold over 5 % (inclusive) voting share of the Company, amount to RMB 89,690,394.77.
(b) Among balance in period-end, the accounts payable, which are attributed to related parties, amounted to RMB 125,186,774.80 with accounting for 7.86% in account payable in period-end amount. For particulars see Note 8.
(c) Among balance in period-end, the accounts payable with the aging over 3 years amount to RMB 42,120,245.75, which include large number of enterprises with little amount of payables and hereby will not be specifically listed.
6.19 Accounts receive in advance
Amount in period-end
23,884,264.57
Amount in year-begin
18,771,893.29
(a) Among balance in period-end, there are no accounts receive in advance attributable to
shareholders which hold over 5% (inclusive) of the voting share of the Company.
(b) Among balance in period-end, the accounts receive in advance, which are attributed toSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 71
related parties, amounted to RMB 9. It is the owed amount of normal purchase and selling acitivities for Ningxia Guoda Pharmacy Chains Co., Ltd.
(c) Among balance in period-end, the accounts receive in advance with the aging over 1 year amounted to RMB 1,747,197.60
6.20 Employee benefits payable
Item
Amount in year-begin
Increases
Paid during current year
1. Salary, bonus and allowance
Amount in period-end
59,569,433.34
95,479,559.10
128,053,166.82
26,995,825.62
2. Welfare expenses for staff
461,938.00
11,194,955.02
11,315,436.32
341,456.70
3. Social insurance fees
816,782.13
13,818,697.15
13,626,075.49
1,009,403.79
including：(1) Medical insurance
6,149.83
3,576,803.67
3,494,872.66
88,080.84
(2) Basic old-age insurance
812,595.03
8,443,408.25
8,684,598.56
571,404.72
(3)Annuity payment
---
1,040,645.48
710,885.48
329,760.00
(4) Unemployment insurance
724.00
241,946.70
231,313.60
11,357.10
(5) Work injury insurance
19,577.28
250,599.17
265,972.35
4,204.10
(6) Maternity insurance
-22,264.01
265,293.88
238,432.84
4,597.03
4. Housing fund
486,079.58
3,755,620.61
3,520,830.96
720,869.23
5. Trade union expenses and staff education expenses
7,435,352.74
3,324,212.64
3,489,338.78
7,270,226.60
6. Non-monetary welfare
7. Compensation for the cancellation of work relationship
17,535,912.00
1,176,005.59
5,866,855.22
12,845,062.37
8. Worker bonus and benefits fund
---
9. Others
459,200.06
5,011,455.92
4,220,027.07
1,250,628.91
Including：Shares paid in cash
---
Total
86,764,697.85
133,760,506.03
170,091,730.66
50,433,473.22
6.21 Taxes payable
Item
Amount in period-end
VAT
Amount in year-begin
3,403,786.64
-2,892,250.53
Business tax
796,753.00
968,861.79
City maintenance & construction tax
241,402.69
238,286.04
Income tax
23,605,158.24
13,272,754.46
Real estate tax
286,343.82
282,980.01
Stamp duty
30,607.89
99,746.13
Land use tax
233,985.88
423,633.76SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 72
Item
Amount in period-end
Individual income tax
Amount in year-begin
5,786,876.59
810,138.20
Education surcharge
123,862.21
131,548.20
River maintenance expenses
---
2,254.20
Flood prevention and security fund
367,800.16
1,528,490.03
Others
2,121,647.16
254,866.61
Total
36,998,224.28
15,121,308.90
6.22 Interests payable
Item
Amount in period-end
Interests of bank loan
Amount in year-begin
168,367.50
742,393.70
Interests of share-holding company
127,575.00
---
Total
295,942.50
742,393.70
6.23 Dividends payable
Name of investor
Unpaid dividends in period-end
Zhou Fuying
Reason
2,000,000.00
Unpaid
6.24 Other payables
Item
Amount in period-end
Other payables
Amount in year-begin
355,765,667.14
308,422,007.24
(a) Among balance in period-end, the accounts attributable to the shareholders that hold more than 5%(including 5%) shares of the Company amounted to RMB 168,644,306.73.
(b) Among balance in period-end, the accounts attributable to related parties amounted to RMB 174,416,961.37 with accounting for 49.03% in other account payable in period-end amount. For particulars see Note 8.
(c)Significant other payables
Item
Nature/Content
Amount
Sinopharm Medicine Holding Co. Ltd
168,644,306.73
Loan of RMB 160,000,000, special funds of RMB 6,481,400 for disaster relief allocated by Sinopharm Medicine Holding Co., Ltd., RMB 2,162,900 profits payable to original shareholders from purchasing Nanning Company according to the agreement fromSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 73
evaluation base date to the date of completing equity transfer
Sales expenses (unpaid sales expenses)
132,240,104.43
Unpaid sales expenses
Yang Qiaoming
10,350,000.00
Unpaid amount of equity transfer
Sino-American Shanghai Squibb Pharmaceuticals Co., Ltd.
3,371,824.54
Sales discount
Shantou Chuangmei Pharmaceuticals Co., Ltd.
2,031,278.66
Sales discount
6.25 Non-current liabilities maturing within one year
Item
Amount in period-end
Long-term loan
Amount in year-begin
---
57,720,000.00
(a) Long-term loan maturing within one year
Category of loan
Amount in period-end
Guaranteed loan
Amount in year-begin
---
57,720,000.00
Name of loaner
Beginning date
Ending date
Amount in period-end
Amount in year-begin
Interest rate
Currency
Amount
Interest rate
Currency
Amount
China Merchants Bank, Anlian Branch
2006.8.24
2009.8.24
---
---
---
6.804%
RMB
57,720,000.00
6.26 Long-term loan
Loan units
Currency
Term of loan
Amount in period-end
China Merchants Bank, Anlian Branch
Amount in year-begin
RMB
Guaranteed
60,000,000.00
30,000,000.00
Name of loaner
Beginning date
Ending date
Amount in period-end
Amount in year-begin
Interest rate
Currency
Amount
Interest rate
Currency
Amount
China Merchants
2008.8.21
2011.8.21
4.86%
RMB
30,000,000.00
7.56%
RMB
30,000,000.0SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 74
Bank, Anlian Branch
0
China Merchants Bank, Anlian Branch
2009.4.30
2011.4.30
4.86%
RMB
30,000,000.00
---
---
---
Total
60,000,000.00
30,000,000.00
6.27 Long-term payables
Category
Amount in period-end
Financial compensation for employees
Amount in year-begin
48,640.20
51,261.00
6.28 Specific items payable
Project name of appropriation
Amount in year-begin
Increases
Carry-over
Specific funds appropriation from government
Amount in period-end
800,000.00
---
---
800,000.00
Total
800,000.00
---
---
800,000.00
6.29 Other non-current liabilities
Item
Amount in period-end
Central Medicine reserve fund
Amount in year-begin
35,061,743.31
35,061,743.31
Guangxi Public Finance Office（local medical reserve fund）
6,500,000.00
6,500,000.00
Total
41,561,743.31
41,561,743.31
6.30 Share capital
The share capital which has been registered, issued and obtained by the Company is as follows:
Amount in period-end
Amount in year-begin
Number of shares
Amount
Number of shares
Amount
A share ( Face value 1 CNY per share)
233,263,800
233,263,800.00
233,263,800
233,263,800.00SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 75
B share ( Face value 1 CNY per share)
54,885,600
54,885,600.00
54,885,600
54,885,600.00
Total
288,149,400
288,149,400.00
288,149,400
288,149,400.00
Changes in the share capital of the Company in current year are as follows:
Before this change
Increases（+）or Decreases（-）
After this change
Amount
Proportion
Issuance of new shares
Gift share
Shares transferred from public reserve fund
Other
Subtotal
Amount
Proportion
1．Shares with trading restriction
83,979,827
29.14%
-83,973,541
-83,973,541
6,286
0.00%
(1) State-owned shares
(2) State-owned legal entity shares
83,971,446
29.14%
-83,971,446
-83,971,446
0
0.00%
(3) Other domestic shares
including：Shares held by non-state-owned legal entity
Domestic natural person’s shares
(4) Foreign shares
including：Foreign legal entity shares
Foreign natural person’s shares
(5) Execusitive shares
8,381
0.00%
-2,095
-2,095
6,286
0.00%
2．Shares with no trade restriction
204,169,573
70.86%
83,973,541
83,973,541
288,143,114
100.00%
(1) CNY ordinary shares
149,283,973
51.81%
83,973,541
83,973,541
233,257,514
80.95%
(2) Domestically listed foreign shares
54,885,600
19.05%
54,885,600
19.05%
(3) Overseas listed foreign shares
(4) Others
Total shares with no trade restriction
288,149,400
100.00%
288,149,400
100.00%
Note: In accordance with the Notice of Implementation of the Share Merger Reform Prospectus of Shenzhen Accord Pharmaceutical Co., Ltd., the schedule of shares with trade restrictions is as follows: 39,977,088 shares can be listed for circulation 12 months after the date of obtaining listed circulation right (i.e., applied for listed circulation after April 28, 2007); 37,963,986 shares can be listed for circulation 24 months after the date of obtaining listed circulation right (i.e., applied for listed circulation after April 28, 2008); 83,971,446 shares can be listed for circulation 36 months after the date of obtaining listed circulation right (i.e., applied for listed circulation after April 28, 2009). As of June 30, 2009 ended, 161,912,520 shares with trade restrictions can be listed for circulation.
The first batch of circulation share with trade restrictions amounting to 39,977,088 shares have been listed for circulation on May 10, 2007; the second batch of circulation share with trade restrictions amounting to 37,963,986 shares have been listed for circulation on May 16, 2008 Listed in circulation; the third batch of circulation share with trade restrictions amounting to 83,971,446 shares have been listed for circulation on May 18, 2009 Listed in circulation
6.31Capital reserves
Item
Amount in year-begin
Increases
Decreases
Amount in period-endSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 76
1. Capital premium（share premium）
---
---
---
---
（1）Influences of consolidation of enterprises under the same control
29,500,000.00
---
29,500,000.00
---
Subtotal
---
---
---
---
2. Other capital reserves
---
---
---
---
（1）Other changes in owner’s equity except net profit and loss in invested units
2,405,516.57
---
25,500.00
2,380,016.57
（2）Others
2,650,322.00
---
---
2,650,322.00
Subtotal
5,055,838.57
---
---
5,055,838.57
Total
34,555,838.57
---
29,525,500.00
5,030,338.57
6.32 Surplus reserves
Item
Amount in year-begin
Increases
Decreases
Statutory Surplus Reserves
Amount in period-end
9,761,340.26
---
458,275.95
9,303,064.31
The surplus reserves increased RMB 458,275.95 in year-begin and decreased RMB 458,275.95 in this period, which was mainly due to purchase enterprise Sinopharm Medicine Holding Nanning Co., Ltd. under the same control.
6.33 Undistributed profit
Item
Balance at the end of last year
Amount
325,539,438.06
Plus: Changes in accounting policies
----
Mistakes in last period rectified
----
Balance at the beginning of this year
325,539,438.06
Plus：Net profit attributable to the parent company of current year
98,783,895.04
Charge to the gains of the possessors’ equity directly
39,664,537.80
Minus：Extract for statutory surplus reserves
----
Extract for arbitrary surplus reserves
----
The possessors reduce the capital
1,533,793.17
Distribution to the possessors and shareholders
28,828,019.86
Equity of possessors inner carry foward
61,027.88
Plus：Others carry in
---
Plus：Surplus reserves cover the deficit
---
Balance at the end of this period
433,565,029.99
Note: Due to purchase enterprise Sinopharm Medicine Holding Nanning Co., Ltd. under the sameSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 77
control in the report period, the beginning balance of current year grew by RMB 61,027.88 than the ending balance of last year.
6.34 Operating revenue and cost
Item
Current period
The same period of previous year
Revenue
Cost
Revenue
Cost
Principal business
5,003,627,291.72
4,590,482,121.50
4,064,547,840.97
3,718,616,396.94
Other business
34,853,378.49
13,026,420.88
19,184,407.82
2,898,069.27
Total
5,038,480,670.21
4,603,508,542.38
4,083,732,248.79
3,721,514,466.21
(a) Operating revenue and cost listed by category of principal business
Item
Operating revenue
Operating cost
Current period
The same period of previous year
Current period
The same period of previous year
Industry — Medicine
565,810,519.21
384,067,534.64
421,226,367.16
285,681,530.15
Commerce - Medicine wholesale
4,829,413,399.00
3,819,436,674.30
4,611,984,347.96
3,618,671,820.74
Commerce - Medicine retail
249,195,475.02
226,193,642.34
204,431,144.67
178,016,550.26
Non-medicine trade
32,177,790.38
11,216,772.22
28,452,773.29
7,436,225.28
Leasehold
6,875,468.90
2,208,245.35
2,250,911.98
888,165.63
Subtotal
5,683,472,652.51
4,443,122,868.85
5,268,345,545.06
4,090,694,292.06
Writing-off in the Company
679,845,360.79
378,575,027.88
677,863,423.56
372,077,895.12
Total
5,003,627,291.72
4,064,547,840.97
4,590,482,121.50
3,718,616,396.94
(b) Top five clients in operating revenue of principal business of the Company
Name or rank of clients
Total revenue of principal business
Proportion in the total revenue of principal business of the the Company
Guangdong People’s Hospital
84,370,045.18
1.69%
No. 1 Hospital Affiliated to Sun Yat-sen University
52,295,647.94
1.05%
The First Affiliated Hospital of Guangxi Medical University
50,918,305.51
1.02%
Shantou Chuangmei Pharmaceutical Co., Ltd.
49,474,735.43
0.99%
Shenzhen No. 2 People’s Hospital
45,881,734.67
0.92%
6.35 Taxes and surcharges on operations
Current period
Item
The same period of previous year
Business tax
3,056,199.67
1,321,071.50SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 78
City maintenance & construction tax
980,411.50
1,592,219.98
Education surcharge
1,331,629.52
1,371,678.04
Others
618,551.52
160,174.11
Total
5,986,792.21
4,445,143.63
6.36 Financial expenses
Current period
Category
The same period of previous year
Interest expenses
18,713,836.03
27,829,480.09
Less: Interest income
882,829.53
2,060,341.11
Exchange loss
110,384.48
---
Less: Exchange gain
438,416.71
618,126.85
Others
3,465,165.13
3,046,874.31
Total
20,968,139.40
28,197,886.44
6.37 Impairment loss on assets
Current period
Item
The same period of previous year
Bad debt loss
2,079,999.10
-861,746.33
Impairment loss on inventory
3,362,382.31
-3,201,544.49
Impairment loss on long-term equity investments
---
---
Others
---
---
Total
5,442,381.41
-4,063,290.82
6.38 Investment income
Subject or name of
Current period
the invested unit
The same period of previous year
1、Investment income of financial assets
（1）Investment income from holding of financial assets available for sale
---
---
（2）Investment income from disposal of financial assets available for sale
---
---
2．Income from long-term equity investment
(1) Recognized with cost method
(1 company in total )
---
---
(2) Recognized with equity method
(2 companies in total )
8,560,339.50
6,631,487.03
(3) Investment income from disposal of long-term equity investment
14,195,481.42
---SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 79
Total
22,755,820.92
6,631,487.03
Among which
(a) Income from long-term equity investment recognized with cost method includes：
Name of invested unit
Current period
The same period of previous year
China Associate Co., Ltd.
---
---
(b) Income from long-term equity investment recognized with equity method includes：
Name of invested unit
Current period
The same period of previous year
Shenzhen Main Luck Pharmaceutical Co., Ltd.
9,367,032.66
6,230,530.88
Sinopharm Holdings Shenzhen Chinese Medicine Co., Ltd.
-806,693.16
400,955.15
Total
8,560,339.50
6,631,486.03
(c) Income from disposal of long-term equity investment
Name of invested unit
Current period
The same period of previous year
Guangdong Yizhi Pharmaceutical Co., Ltd.
8,247,542.74
----
Guangxi Yizhi Pharmaceutical Chain Co., Ltd.
5,947,938.68
----
Shenzhen Yizhi Pharmaceutical Chain Co., Ltd.
----
1.00
Total
14,195,481.42
1.00
The Company has no material restriction of receiving investment income above.
6.39 Non-operating profit
Current period
Item
The same period of previous year
1. Total income from disposal of non-current assets
41,110.30
4,630,453.03
Including：Income from disposal of fixed assets
41,110.30
4,630,453.03
Income from disposal of intangible assets
---
---
2. Subsidy from government
1,698,590.20
5,436,255.00
3. Others
522,325.58
96,897.43
Total
2,262,026.08
10,163,605.46SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 80
6.40 Non-operating expenses
Current period
Item
The same period of previous year
1. Total loss for disposal of non-current assets
178,127.36
113,433.04
including：Loss for disposal of fixed assets
178,127.36
113,433.04
2. Beneficent donation
---
371,311.93
3. Loss for inventory shortage
---
200.00
4. Others
68,896.36
213,641.10
Total
247,023.72
698,586.07
6.41 Income tax expenses
Current period
Item
The same period of previous year
Income tax expenses of the report period
32,025,221.22
20,363,801.03
Deferred income tax expenses
1,997,603.72
-401,305.66
Total
34,022,824.94
19,962,495.37
6.42 Government subsidies
Category and amount of subsidies from government
Current period
Category
The same period of previous year
Medicine reserve appropriation
572,590.20
2,926,500.00
Financial support to enterprises for R & D investment
---
469,755.00
Financial support to enterprise technical center
500,000.00
---
Subsidies for R&D
---
1,800,000.00
Medicine reserve appropriation
570,000.00
---
Others
56,000.00
240,000.00
Total
1,698,590.20
5,436,255.00
6.43 Notes to cash flow statement
(a) Other cash receipts related to operating activities
Current period
Item
Interest income
4,092,754.67
Government subsidies
1,698,590.20
Current account
54,277,251.10
Others
20,870,514.01SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 81
Total
80,939,109.98
(b) Other cash payments related to operating activities
Current period
Item
Transportation expenses
25,345,763.90
Rentals
22,973,830.11
R& D expenses
6,935,896.46
Advertisement expenses
8,155,583.30
Service charge
3,185,081.62
Other expenses
149,276,347.97
Total
215,872,503.36
(c) Other cash receipts related to financing activities
Current period
Item
Loan from Sinopharm Holdings
219,141,489.35
(d) Other cash payments related to financing activities
Current period
Item
Return loan from Sinopharm Holdings
99,263,914.42
(e) Supplementary information of cash flow statement
Current period
Item
The same period of previous year
1. Adjust net profit to the cash flow of operating activities
Net profit
103,387,187.70
84,243,970.59
Plus: Provision for asset impairment
5,442,381.41
-4,063,290.82
Depreciation of fixed assets, depletion of oil and natural gas assets and depreciation of bearer biological assets
14,787,584.97
21,190,400.68
Amortization of intangible assets
6,867,126.50
1,181,380.57
Amortization of long-term deferred expenses
3,784,007.44
2,883,431.61
Loss from disposals of fixed assets, intangible assets and other long-term assets (income is listed with “- ”)
137,017.06
-4,472,812.01
Loss on discarding of fixed assets (income is listed with “- ”)
---
71,766.24
Loss from changes in fair values (income is listed with “- ”)
---
Financial expenses (income is listed with “- ”)
18,713,836.03
30,195,661.30
Investment loss (income is listed with “- ”)
-22,755,820.92
-6,631,487.03
Decreases in deferred income tax assets (increase is listed with “- ”)
3,040,151.80
1,408,952.87SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 82
Increases in deferred income tax liabilities (decrease is listed with “- ”)
6,383,179.25
-146,969.13
Decreases in inventories (income is listed with “- ”)
26,146,260.72
-105,983,374.39
Decreases in operating receivables (increase is listed with “- ”)
-348,496,221.00
-280,836,210.02
Increases in operating payables (decrease is listed with “- ”)
333,633,198.95
366,789,398.30
Others
---
Net cash flows from operating activities
151,069,889.91
105,830,818.76
2. Significant investment and financing activities unrelated to cash income and payment
Debts transformed into assets
---
---
Convertible bonds of the Company which will be mature within one year
---
---
Financing of fixed assets on lease
---
---
3. Net changes in cash and cash equivalents
Ending balance of cash
498,715,551.46
377,513,385.06
Deduct: Beginning balance of cash
381,663,418.93
279,915,342.78
Plus: ending balance of cash equivalents
---
---
Deduct: beginning balance of cash equivalents
---
---
Net increases of cash and cash equivalents
117,052,132.53
97,598,042.28
7 Notes to the main items of financial statement of parent company
(Monetary unit is RMB and the amount is the ending balance unless otherwise stated.)
7.1 Accounts receivable
(a) Structure of accounts receivable
Amount in period-end
Account age
Amount in year-begin
Book balance
Proportion in total amoun
Provision for bad debts
Provision rate for bad debt
Book balance
Proportion in total amoun
Provision for bad debts
Provision rate for bad debt
Within one year (inclusive)
295,235,521.30
100%
1,680,786.88
0.57%
244,968,183.47
100.00%
1,666,380.37
0.68%
Amount in period-end
Category
Amount in year-begin
Book balance
Proportion in total amoun
Provision for bad debts
Provision rate for bad debt
Book balance
Proportion in total amoun
Provision for bad debts
Provision rate for bad debt
1) Significant individual amount with separate provision for impairment loss
---
---
---
---
25,245,382.74
10.30%
408,783.47
1.62%SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 83
2) Insignificant individual amount with separate provision for impairment loss
1,680,786.88
0.57%
1,680,786.88
100%
2,859,980.56
1.17%
1,257,596.90
43.97%
3) Other amounts which are classified into the same group with similar credit risk features
293,554,734.42
99.43%
---
---
216,862,820.17
88.53%
---
---
Among which: significant individual amount
153,072,146.78
51.85%
---
---
85,996,833.45
35.11%
---
---
Insignificant individual amount
140,482,587.64
47.58%
---
---
130,865,986.72
53.42%
---
---
Among which: Insignificant individual amounts which have high risk after classified into the same group with similar credit risk features
---
---
---
---
---
---
---
---
Total
295,235,521.30
---
1,680,786.88
---
244,968,183.47
100.00%
1,666,380.37
(b) Changes in the provision for bad debts in accounts receivable
Book balance in year-begin
Decreases
Provision in current period
Book balance in period-end
Returned
Written off
The year of 2008
1,314,112.28
363,845.97
---
11,577.88
1,666,380.37
The year of 2009
1,666,380.37
14,406.51
---
---
1,680,786.88
(c) There is no accounts receivable actually written off in this period.
(d) There is no shareholders’ amounts with more than 5% (including 5%) voting shares of the Company of accounts receivable.
(e) In the end of the period, accounts receivable due to related parties amount to RMB 29,321,101.96, which accounts for 9.93% of the year-end balance of accounts receivable.
(f) Top five of accounts receivable in the year-end
Rank of debtors
Amount
Account age
Shenzhen People’s Hospital
Proportion of total amount
18,237,880.90
Within one year
6.18%
Shenzhen No. 2 People’s Hospital
17,756,700.69
Within one year
6.01%
14,449,031.57
Shenzhen Accord Pharmaceutical Chains Co., Ltd.
Within one year
4.89%
Shenzhen Hospital Affiliated to Beijing University
11,753,724.52
Within one year
3.98%SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 84
10,223,154.75
Shenzhen Traditional Chinese Medicine Hospital
Within one year
3.46%
7.2 Other receivables
(a) Structure of other receivables
Amount in period-end
Account age
Amount in year-begin
Book balance
Proportion in total amoun
Provision for bad debts
Provision rate for bad debt
Book balance
Proportion in total amoun
Provision for bad debts
Provision rate for bad debt
Within one year (inclusive)
389,797,813.91
96.67%
---
---
240,313,262.87
94.44%
---
---
1-2 years(2 years inclusive)
68,135.00
0.01%
3,406.75
5.00%
68,135.00
0.03%
3,406.75
5.00%
2-3 years(3 years inclusive)
1,179.81
0.00%
1,179.81
100%
1,179.81
0.00%
1,179.81
100.00%
Over 3 years
13,374,579.90
3.32%
13,374,579.90
100%
14,074,579.90
5.53%
12,036,747.94
85.52%
Total
403,241,708.62
100%
13,379,166.46
----
254,457,157.58
100%
12,041,334.50
----
Amount in period-end
Category
Amount in year-begin
Book balance
Proportion in total amoun
Provision for bad debts
Provision rate for bad debt
Book balance
Proportion in total amoun
Provision for bad debts
Provision rate for bad debt
1) Significant individual amount with separate provision for impairment loss
13,374,579.90
3.32%
13,374,579.90
100.00%
14,074,579.90
5.53%
12,036,747.94
85.52%
2) Insignificant individual amount with separate provision for impairment loss
1,179.81
―――
1,179.81
100.00%
1,179.81
0.00%
1,179.81
100.00%
3) Other amounts which are classified into the same group with similar credit risk features
389,865,948.91
96.68%
3,406.75
0.00%
240,381,397.87
94.47%
3,406.75
0.00%
Among which: significant individual amount
387,221,191.02
96.00%
--
--
225,441,663.00
88.60%
---
---
Insignificant individual amount
2,644,757.89
0.68%
3,406.75
0.13%
14,939,734.87
5.87%
3,406.75
0.02%SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 85
Among which: Insignificant individual amounts which have high risk after classified into the same group with similar credit risk features
---
---
---
---
---
---
---
---
Total
403,241,708.62
100％
13,379,166.46
--
254,457,157.58
100％
12,041,334.50
(b) Changes in the provision for bad debts in other accounts receivable
Book balance in year-begin
Decreases
Provision in current period
Book balance in period-end
Returned
Written off
The year of 2008
14,634,222.45
---
2,592,887.95
---
12,041,334.50
The year of 2009
12,041,334.50
1,337,831.96
---
---
13,379,166.46
(c) Other accounts receivable which are significant or those insignificant but provided for impairment loss separately
Rank of significant individual accounts
Amount
Provision rate
Shenzhen Yinghai Technology Investment Co., Ltd.
Reason
8,980,000.00
100%
Uncertainty in recovery
Shenzhen Pharmaceutical Health Products Imp. & Exp. Co., Ltd.
4,394,579.90
100%
Uncertainty in recovery
1,179.81
Shenzhen Pharmaceutical Manufacture & Supply General Company
100%
Uncertainty in recovery
(d) No other accounts receivable are written off this year.
(e) Other accounts receivable which were provided for bad debt fully or in large proportion in previous periods and are recovered fully or partially in the report period
Name of company
Amount of recovery or claim
Way of recovery
Reason for previous provision proportion
Reasonableness for previous provision proportion
Shenzhen Pharmaceutical Health Products Import & Export Co., Ltd.
700,000.00
Cash
Unreturned for a long-term
Reasonable
(f) Among the ending balance of other accounts receivable in year-end, no accounts are attributed to the shareholders that hold over 5 % (inclusive) voting share of the Company.
(g) Other accounts receivable in year-end which are due to related parties amount to RMB 387,231,436.19, which accounts for 96.03％ of the ending balance of other accounts receivable.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 86
(h) Top five other receivables
Rank of creditor
Nature/Content
Amount
Aging
Sinapharm Medicine Holding (Guangzhou) Co., Ltd.
Proportion of total amount
Current account
235,139,079.00
Within one year
58.30%
Shenzhen Zhijun Pharmaceutical Co., Ltd.
Current account
57,074,252.63
Within one year
14.15%
Guangzhou Yuexing Pharmaceutical Co., Ltd.
Current account
22,000,000.00
Within one year
5.45%
Suzhou Zhijun Wanqing Pharmaceutical Co., Ltd.
Current account
17,000,000.00
Within one year
4.21%
Shenzhen Jianmin Medicine Co., Ltd.
Current account
15,694,550.85
Within one year
3.89%
7.3 Long-term equity investments
Amount in period-end
Amount in year-begin
Book balance
Provision for
impairment loss
Book balance
Provision for
impairment loss
Long-term equity investment in subsidiaries
578,816,997.83
---
299,906,100.66
---
Long-term equity investments calculated on an equity basis
62,660,833.81
---
21,955,562.26
---
Long-term equity investments calculated on a cost basis
9,584,126.69
7,689,226.69
9,584,126.69
7,689,226.69
Total
651,061,958.33
7,689,226.69
331,445,789.61
7,689,226.69
(a) Investment in subsidiaries
Name of subsidiaries
Initial amount
Balance in the year-begin
Increases
Decreases
Balance in the period-end
Zhijun Pharm.
73,903,284.87
73,903,284.87
---
---
73,903,284.87
Jianmin Medicine
45,054,911.04
45,054,911.04
---
---
45,054,911.04
Accord Medical Materials
5,400,000.00
6,450,875.93
---
---
6,450,875.93
Accord Logistics
900,000.00
1,019,062.68
---
---
1,019,062.68
Sinopharm Guangzhou
58,283,114.68
85,440,323.63
---
---
85,440,323.63
Accord Drugstore
45,135,253.97
50,183,346.51
---
50,183,346.51
---
Zhijun Medicine Trade
3,006,866.42
3,006,866.42
---
---
3,006,866.42SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 87
Guangdong Xinlong
8,421,544.08
8,421,544.08
---
---
8,421,544.08
Training Center
30,000.00
30,000.00
---
---
30,000.00
Guangxi Accord
4,987,919.71
4,987,919.71
---
---
4,987,919.71
Sinopharm Liuzhou
21,407,965.79
21,407,965.79
---
---
21,407,965.79
Huixin Investment
129,650,141.40
---
129,650,141.40
---
129,650,141.40
Hengchang Logistics
1,269,502.30
---
1,269,502.30
---
1,269,502.30
Yuexing Pharm.
19,436,738.82
---
19,436,738.82
---
19,436,738.82
Sinopharm Foshan
7,044,987.07
---
7,044,987.07
---
7,044,987.07
Dongguan Accord
2,742,000.00
---
2,742,000.00
---
2,742,000.00
Zhijun Wanqing Pharm.
136,448,072.71
---
136,448,072.71
---
136,448,072.71
Sinopharm Nanning
32,502,801.38
---
32,502,801.38
---
32,502,801.38
Total
595,625,104.24
299,906,100.66
329,094,243.68
50,183,346.51
578,816,997.83
(b) Long-term equity investments recognized by equity method
Name of invested unit
Initial investment amount
Balance in year-begin
Increases/decreases of equity
Balance in period-end
Total
Including: distributed cash dividends
Joint ventures:
Sinopharm Holdings Shenzhen Chinese Medicine Co., Ltd.
20,939,177.10
21,955,562.26
-806,693.16
---
21,148,869.10
Shenzhen Main Luck Pharmaceuticals Co., Ltd.
37,209,101.02
---
41,511,964.71
---
41,511,964.71
Total
58,148,278.12
21,955,562.26
40,705,271.55
---
62,660,833.81
(c) Long-term equity investments recognized by cost method
Name of invested unit
Initial investment amount
Book balance in year-begin
Increases or decreases
Book balance in period-end
Liaoning & Accord Pharm. Chain Store Co., Ltd.
Provision for impairment
1,894,900.00
1,894,900.00
---
1,894,900.00
---
Shenzhen Medicine Trade Co., Ltd.
7,689,226.69
7,689,226.69
---
7,689,226.69
7,689,226.69
Total
9,584,126.69
9,584,126.69
---
9,584,126.69
7,689,226.69SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 88
(d) Provision for impairment loss long-term equity investment
Name of invested unit
Amount in year-begin
Increases
Decreases
Shenzhen Medicine Trade Co.Ltd.
Amount in period-end
7,689,226.69
---
---
7,689,226.69
7.4 Operating revenue and cost
Amount in the period
Item
Amount in the same period of last year
Revenue
Cost
Revenue
Cost
Principal business
755,626,160.89
718,662,831.64
651,785,101.70
618,395,338.59
Other business
1,840,615.77
164,655.97
1,635,688.85
98,484.65
Total
757,466,776.66
718,827,487.61
653,420,790.55
618,493,823.24
(a) Operating revenue and cost listed by category of principal business
Revenue of principal business
Item
Cost of principal business
Amount in the period
Amount in the same period of last year
Amount in the period
Amount in the same period of last year
Commerce - Medicine wholesale
755,626,160.89
651,785,101.70
718,662,831.64
618,395,338.59
(b) Top five clients in operating revenue of principal business of the Company
Name or rank of clients
Total revenue of principal business
Shenzhen Jianmin Medicine Co., Ltd.
Proportion in the total revenue of principal business of the the Company
116,407,491.84
15.41%
Shenzhen People’s Hospital
42,510,282.42
5.63%
Shenzhen No. 2 People’s Hospital
41,169,033.00
5.45%
38,276,337.29
Shenzhen Accord Pharmaceutical Chains Co., Ltd.
5.07%
Shenzhen Hospital Affiliated to Beijing University
32,911,264.32
4.36%
7.5 Investment income
Item
Amount in the period
Income from long-term equity investment
Amount in the same period of last year
(1) Recognized with cost method (13 companies in total)
177,066,870.99
64,719,714.95SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 89
(2) Recognized with equity method (2 companies in total)
3,496,170.53
400,955.15
(3) Investment income from disposal of long-term equity investment
15,271,949.88
---
Total
195,834,991.30
65,120,670.10
Among which:
(1) Income from long-term equity investment recognized with cost method includes:
Name of invested unit
Amount in the period
Zhijun Pharm.
Amount in the same period of last year
85,812,844.18
63,172,883.92
Zhijun Medicine Trade
828,538.78
197,121.50
Jianmin Medicine
580,312.43
---
Accord Medical Materials
1,641,503.37
1,008,897.99
Accord Logistics
119,049.45
11,961.59
Sinopharm Guangzhou
66,867,908.99
---
Accord Drugstore
27,088.83
328,849.95
Guangxi Accord Pharm.
54,026.63
---
Sinopharm Liuzhou
5,100,000.00
---
Huixin Investment
11,035,034.81
---
Guangdong Yuexing Pharm.
4,756,630.35
---
Hengchang Logistics
128,507.18
---
Sinopharm Foshan
115,425.89
---
Total
177,066,870.89
64,719,714.95
(2) Income from long-term equity investment recognized with equity method includes：
Name of invested unit
Amount in the period
Sinopharm Holdings Shenzhen Chinese Medicine Co., Ltd.
Amount in the same period of last year
-806,693.16
400,955.15 Shenzhen Main Luck Pharmaceuticals Co., Ltd.
3,740,178.25
---
Total
2,933,485.09
400,955.15
(3) Income from disposal of long-term equity investment
Name of invested unit
Amount in the period
Guangdong Accord Drugstore Co., Ltd.
Amount in the same period of last year
15,271,949.88
---
The Company has no material restriction of receiving investment income above.
7.6 Supplementary information of cash flow statementSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 90
Item
Amount in the period
1. Adjust net profit to the cash flow of operating activities
Amount in the same period of last year
Net profit
191,002,210.11
63,749,899.63
Plus: Provision for asset impairment
---
-624,297.94
Depreciation of fixed assets, depletion of oil and natural gas assets and depreciation of bearer biological assets
2,788,534.15
2,703,822.35
Amortization of intangible assets
665,232.92
637,678.61
Amortization of long-term deferred expenses
16,515.36
17,731.88
Loss from disposals of fixed assets, intangible assets and other long-term assets (income is listed with “- ”)
26,362.97
13,489.41
Loss on discarding of fixed assets (income is listed with “- ”)
---
Loss from changes in fair values (income is listed with “- ”)
---
Financial expenses (income is listed with “- ”)
615,973.65
795,087.66
Investment loss (income is listed with “- ”)
-195,834,991.30
-65,120,670.10
Decreases in deferred income tax assets (increase is listed with “- ”)
---
Increases in deferred income tax liabilities (decrease is listed with “- ”)
---
Decreases in inventories (income is listed with “- ”)
5,351,947.20
-8,063,572.98
Decreases in operating receivables (increase is listed with “- ”)
-11,144,718.07
-70,616,045.58
Increases in operating payables (decrease is listed with “- ”)
92,854,083.74
103,403,226.26
Others
---
Net cash flows from operating activities
86,341,150.73
26,896,349.20
2. Significant investment and financing activities unrelated to cash income and payment
---
Debts transformed into assets
---
Convertible bonds of the Company which will be mature within one year
---
Financing of fixed assets on lease
---
3. Net changes in cash and cash equivalents
---
Ending balance of cash
83,065,822.65
103,962,060.24
Deduct: Beginning balance of cash
62,369,583.65
54,841,676.10
Plus: ending balance of cash equivalents
---
Deduct: beginning balance of cash equivalents
---
Net increases of cash and cash equivalents
20,696,239.00
49,120,384.14
8 Related party and related party transactions
8.1 Related party with controlling relationshipSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 91
(a) Related party with controlling relationship
Related party controlling the Company
Company
Registered address
Principal business
Relationship
Economic nature
Legal
representative
Organization bar code
Sinopharm Medicine Holding Co., Ltd
6F, No. 221, Fuzhou Rd., Huangpu District, Shanghai
Enterprise investment holdings, pharmaceutical enterprise management engagement and asset restructuring, wholesale of Chinese patent drugs, chemical medicine, etc, domestic trading (except specialized permission required), logistics and relevant consultation
Controlling shareholder of the Company
Limited liability company (state-owned controlling)
She Lulin
74618434-4
The proportion of shareholding and voting power held by the parent company in the Company are 38.33% and 38.33% respectively. The ultimate holding company of the Company is China National Pharmaceutical Group Corporation
For related parties controlled by the Company, see Note 5.
(b) Registered capital and changes in registered capital of related party with controlling relationship (in RMB ’0000)
Name of company
Amount in year-begin
Increases
Decreases
Amount in period-end
Sinopharm Medicine Holding Co., Ltd.
163,704
---
---
163,704
Shenzhen Zhijun Pharmaceutical Co., Ltd.
6,900
---
---
6,900
Shenzhen Jianmin Medicine Co., Ltd.
500
---
---
500
Shenzhen Accord Medical Materials Co., Ltd.
600
---
---
600
Shenzhen Zhijun Pharmaceutical Trade Co., Ltd.
189
---
---
189
Shenzhen Medicines Trade Co.
188
---
---
188
Shenzhen Accord Medicine Logistics Co., Ltd.
100
---
---
100
Sinopharm Holdings Guangzhou Co., Ltd.
5,000
---
---
5,000
Sinopharm Holdings Guangdong Xinlong Co., Ltd.
2,000
---
---
2,000
Sinopharm Holdings Liuzhou Co., Ltd.
2,053.06
---
---
2,053.06
Guangxi Accord Chinese Herbal Pieces Co., Ltd.
200
---
---
200
Guangdong Huixin Investment Co., Ltd.
5,000
---
---
5,000
Sinopharm Holdings Foshan Co., Ltd.
200
---
---
200
Guangdong Yuexing Pharmaceutical Co., Ltd.
300
---
---
300
Guangdong Hengchang Logistics Co., Ltd.
54
---
---
54
Training Center
3
---
---
3SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 92
Name of company
Amount in year-begin
Increases
Decreases
Amount in period-end
Guangxi Accord Pharmaceutical Co., Ltd.
500
---
---
500
Dongguan Accord Pharmaceutical Co., Ltd.
280
---
---
280
Suzhou Zhijun Wanqing Pharmaceutical Co., Ltd.
3,900
4,100
---
8,000
Sinopharm Holdings Nanning Co., Ltd.
2,900
---
---
2,900
(c) Shareholdings and changes in shareholdings of related parties with controlling relationship (in RMB ’0000)
Name of Company
Amount in year-begin
Increases
Decreases
Amount in period-end
Amount
Percentage (%)
Amount
Percentage (%)
Amount
Percentage (%)
Amount
Percentage (%)
Sinopharm Medicine Holding Co., Ltd.
11,278.64
39.14
---
---
232.67
0.81
11,045.97
38.33
Shenzhen Zhijun Pharmaceutical Co., Ltd.
6,900.00
100
---
---
---
---
6,900.00
100
Shenzhen Jianmin Medicine Co., Ltd.
500.00
100
---
---
---
---
500.00
100
Shenzhen Accord Medical Materials Co., Ltd.
600.00
100
---
---
---
---
600.00
100
Shenzhen Zhijun Pharmaceutical Trade Co., Ltd.
189.00
100
---
---
---
---
189.00
100
Shenzhen Accord Pharm. Chains Co., Ltd.
1,080.00
100
---
---
1,080.00
100
---
---
Shenzhen Accord Drugstore Co., Ltd.
5,000.00
100
---
---
5,000.00
100
---
---
Shenzhen Medicines Trade Co.
188.00
100
---
---
---
---
188.00
100
Shenzhen Accord Medicine Logistics Co., Ltd.
100.00
100
---
---
---
---
100.00
100
Sinopharm Holdings Guangzhou Co., Ltd.
5,000.00
100
---
---
---
---
5,000.00
100
Sinopharm Holdings Guangdong Xinlong Co., Ltd.
2,000.00
100
---
---
---
---
2,000.00
100
Sinopharm Holdings Liuzhou Co., Ltd.
1,047.06
51
---
---
---
---
1,047.06
51
Guangxi Accord Pharm. Chains Co., Ltd.
200.00
100
---
---
200.00
100
---
---
Guangxi Accord Chinese Herbal Pieces Co., Ltd.
200.00
100
---
---
---
---
200.00
100
Guangdong Huixin
5,000.00
100
---
---
---
---
5,000.00
100SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 93
Name of Company
Amount in year-begin
Increases
Decreases
Amount in period-end
Amount
Percentage (%)
Amount
Percentage (%)
Amount
Percentage (%)
Amount
Percentage (%)
Investment Co., Ltd.
Sinopharm Holdings Foshan Co., Ltd.
200.00
100
---
---
---
---
200.00
100
Guangzhou Accord Pharm. Chains Co., Ltd.
200.00
100
---
---
200.00
100
---
---
Guangdong Yuexing Pharmaceutical Co., Ltd.
300.00
100
---
---
---
---
300.00
100
Guangdong Hengchang Logistics Co., Ltd.
54.00
100
---
---
---
---
54.00
100
Training Center
3.00
100
---
---
---
---
3.00
100
Guangxi Accord Pharmaceutical Co., Ltd.
500.00
100
---
---
---
---
500.00
100
Dongguan Accord Pharmaceutical Co., Ltd.
---
---
280.00
100
---
---
280.00
100
Suzhou Zhijun Wanqing Pharmaceutical Co., Ltd.
---
---
6,000.00
75
---
---
6,000.00
75
Sinopharm Holdings Nanning Co., Ltd.
2,900.00
100
---
---
---
---
2,900.00
100
(d) Related parties without controlling relationship
Name of company
Beijing Zhongxin Pharmaceutical Co.
Relationship
Same ultimate controlling shareholder
Guangdong East Uptodate & Special Medicines Co.
Same ultimate controlling shareholder
Guangdong Renbo Medical Equipment Co., Ltd.
Same ultimate controlling shareholder
Guangdong Tianliang Pharmaceutical Co., Ltd.
Same ultimate controlling shareholder
Guangxi Wuzhou Huawu Medicine Co., Ltd.
Same ultimate controlling shareholder
Sinopharm Beijing Medical Treatment Equipment Co., Ltd.
Same ultimate controlling shareholder
Sinopharm Chemical Reagent Co., Ltd.
Same controlling shareholder
Sinopharm Chemical Reagent Co., Ltd. (Suzhou)
Same controlling shareholder
Union China National Medical Equipment Corp.
Same ultimate controlling shareholder
Sinopharm Beijing Medical Equipment Co., Ltd.
Same ultimate controlling shareholder
Sinopharm Shanghai Medical Equipment Co., Ltd.
Same ultimate controlling shareholder
China National Phamaceutical Industry Co., Ltd.
Same ultimate controlling shareholderSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 94
Name of company
Sinopharm Medicine Northwest Pharmaceutical Co., Ltd.
Relationship
Same controlling shareholder
Sinopharm Medicine Southwest Pharmaceutical Co., Ltd.
Same controlling shareholder
China National Medicines Co., Ltd.
Same controlling shareholder
Sinopharm Medicine Logistics Co., Ltd.
Same controlling shareholder
Sinopharm Medicine Holding (Zhengzhou) Jiurui Co., Ltd.
Same controlling shareholder
Sinopharm Medicine Holding Beijing Huahong Co., Ltd.
Same controlling shareholder
Sinopharm Medicine Holding Beijing Co., Ltd.
Same controlling shareholder
Sinopharm Medicine Holding Guoda Drugstore Co., Ltd.
Same controlling shareholder
Sinopharm Medicine Holding Hubei Co., Ltd.
Same controlling shareholder
Sinopharm Medicine Holding Hunan Co., Ltd.
Same controlling shareholder
Sinopharm Medicine Holding Jiangsu Co., Ltd.
Same controlling shareholder
Sinopharm Medicine Holding Shanxi Co., Ltd.
Same controlling shareholder
Sinopharm Medicine Holding Shanghai Co., Ltd.
Same controlling shareholder
SinoPharm Holdings Shenzhen Chinese Medicine Co., Ltd.
Same ultimate controlling shareholder and joint venture
Sinopharm Medicine Holding Shenyang Co., Ltd.
Same controlling shareholder
Sinopharm Medicine Holding Suzhou Co., Ltd.
Same controlling shareholder
Sinopharm Medicine Holding Tianjin Co., Ltd.
Same controlling shareholder
Sinopharm Medicine Holding Zhejiang Co., Ltd.
Same controlling shareholder
Hebei Medicinal Material Company
Same ultimate controlling shareholder
Hubei Yibao International Medicine Co., Ltd.
Same ultimate controlling shareholder
Shanghai Sinopharm Wai Gao Qiao Co., Ltd.
Same controlling shareholder
Shenzhen Main Luck Pharmaceuticals Co., Ltd.
Joint venture
Sichuan Industrial Institute of Antibiotics Co., Ltd.
Same ultimate controlling shareholder
Tianjin East Bokang Medicine Trade Co., Ltd.
Same controlling shareholder
China National Group Co. of Traditional & Herbal Medicine
Same ultimate controlling shareholder
China National Pharmaceutical Foreign Trade Corporation
Same ultimate controlling shareholder
China National Pharmaceutical Shanghai Corporation
Same controlling shareholder
China Medicine Industry Co., Ltd.
Same ultimate controlling shareholder
Guangxi Zhuang Autonomous Region Nanning Pharmaceutical Wholesale Station
Same ultimate controlling shareholder
Guangxi Guoda Drugstore Chain Co., Ltd.
Same ultimate controlling shareholder
China Pharmaceutical Foreign Trade Co., Ltd.
Same ultimate controlling shareholder
Ningxia Guoda Drugstore Chain Co., Ltd.
Same controlling shareholder
Guangdong Accord Drugstore Co., Ltd
Same controlling shareholder
Shenzhen Accord Pharmaceutical Chains Co., Ltd.
Same controlling shareholder
Guangzhou Accord Drugstore Chains Co., Ltd.
Same controlling shareholder
Guangxi Accord Drugstore Chains Co., Ltd.
Same controlling shareholder
SinoPharm Holdings Ningxia Co., Ltd.
Same controlling shareholderSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 95
Name of company
Reed Sinopharm Exhibitions Co., Ltd.
Relationship
Same ultimate controlling shareholder
8.2 Related party transactions
(a) Transactions between subsidiaries controlled and consolidated and such subsidiaries with their parent companies have been eliminated
(b) Market price is adopted as the pricing policy related party transaction
(c) Purchases from related parties
Unit: (RMB) Yuan
Name of Company
Amount in the period
Amount in the same period of last period
Sinopham Medicine Holding Co
265,826,487.48 .,Ltd.
-620.26
Shanghai Sinopharm Wai Gao Qiao Co., Ltd.
217,185,865.82
475,856,945.20
China National Medicines Co., Ltd.
53,010,106.57
54,560,198.67
Guangdong South Pharmaceutical Foreign Trade Corporation
29,424,950.56
17,729,497.75
China Pharmaceutical Foreign Trade Co., Ltd.
11,822,212.14
8,230,670.82
Sinopharm Medicine Holding Guoda Drugstore Co., Ltd.
7,513,429.43
6,189,818.91
Guangdong East Uptodate & Special Medicines Co.
6,678,974.80
5,211,228.25
Union China National Medical Equipment Co., Ltd.
2,506,758.77
1,544,615.93
Shenzhen Main Luck Pharmaceuticals Co., Ltd.
1,806,047.49
---
Sinopham Medicine Holding Suzhou Co
474,645.81 .,Ltd.
---
Sinopham Medicine Holding Hunan Co
469,476.92 .,Ltd.
---
China National Group Co. of Traditional & Herbal Medicine
417,809.22
1,027,165.18
Sinopham Medicine Holding Shanghai Co
152,759.53 .,Ltd.
6,478,850.82
China Medicine Industry Co., Ltd.
129,015.37
---
Sinopharm Shanghai Medical Equipment Co., Ltd.
97,531.81
83,825.76
Sinopharm Chemical Reagent Co., Ltd.
93,777.77
119,145.29
Sinopharm Chemical Reagent Co., Ltd. (Suzhou)
25,692.89
---
Beijing Zhongxin Pharmaceutical Co.
21,162.82
---
Sinopharm Medicine Southwest Pharmaceutical Co., Ltd.
13,530.47
2,041,846.19
Sinopham Medicine Holding Co
30.35 .,Ltd., Shanghai Branch
309,936.18
Guangdong Tianliang Pharmaceutical Co., Ltd.
---
-41.02
Hubei Yibao International Medicines Co., Ltd.
---
14,010.00
China Medicine Industry Co., Ltd.
---
33,511.11SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 96
Name of Company
Amount in the period
Amount in the same period of last period
Sinopham Medicine Holding Hunan Tianjian Co
--- .,Ltd.
188,295.73
China National Pharmaceutical Foreign Trade Corporation Sales Affiliate
---
645,286.67
SinoPharm Holdings Shenzhen Chinese Medicine Co., Ltd.
-231.92
1,159,668.58
Sinopham Medicine Holding Tianjin Co
-8,838.42 .,Ltd.
7,496,898.31
Total
597,661,195.68
588,920,754.07
(d) Sales to related parties
Unit: (RMB) Yuan
Name of Company
Amount in the period
Amount in the same period of last period
Sinopharm Medicine Holding Shenyang Co., Ltd.
128,254,395.95
112,178,235.64
Sinopharm Medicine Holding Hubei Co., Ltd.
43,925,158.98
44,003,218.39
Sinopharm Medicine Holding Hunan Co., Ltd.
39,167,791.58
441,128.21
Sinopharm Medicine Holding Tianjin Co., Ltd.
34,448,422.73
28,760,352.32
Sinopharm Medicine Holding Tianjin Co., Ltd. Mongolia Branch
223,220.51
496,820.51
Sinopharm Medicine Holding Tianjin Co., Ltd. Tongliao Dongmeng Branch
-24,384.62
---
Sinopharm Medicine Southwest Pharmaceutical Co., Ltd.
33,667,452.39
29,641,958.74
Sinopharm Medicine Holding Beijing Co., Ltd.
23,830,112.15
15,223,096.16
Hubei Yibao International Medicines Co., Ltd.
13,605,968.75
19,637,697.90
SinoPharm Medicine Holdings Ningxia Co., Ltd.
8,019,553.91
---
Sinopharm Medicine Holding Beijing Huahong Co., Ltd
7,894,944.68
3,395,463.61
Sinopharm Medicine Holding Henan Co., Ltd.
6,109,133.55
---
Tianjin East Bokang Medicine Trade Co., Ltd.
5,924,107.52
3,810,580.75
Sinopharm Medicine Holding Co., Ltd.
5,809,967.15
2,046,077.70
Guangxi Guoda Drugstore Chain Co., Ltd.
5,201,274.94
5,518,954.54
Guangdong Tianliang Pharmaceutical Co., Ltd.
3,539,682.74
49,706.84
Sinopharm Medicine Holding Jiangsu Co., Ltd.
3,134,522.69
3,111,625.80
Sinopharm Medicine Holding Shanxi Co., Ltd.
2,750,136.22
1,689,533.92
Sinopharm Medicine Northwest Pharmaceutical Co., Ltd.
1,517,425.64
-570.26
Guotou Pharmaceutical Anhui Co., Ltd.
1,346,222.52
---SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 97
Name of Company
Amount in the period
Amount in the same period of last period
China National Medicines Co., Ltd.
1,277,393.29
1,768,348.17
Guangdong East Uptodate & Special Medicines Co. Ltd.
1,256,350.10
1,275,485.23
Sinopharm Medicine Holding Zhejiang Co., Ltd.
494,443.74
55,823.58
Sinopharm Medicine Holding Guoda Drugstore Co., Ltd.
180,403.69
2,157.54
Ningxia Guoda Drugstore Chain Co., Ltd.
98,787.31
---
Guangxi Wuzhou Huawu Medicine Co., Ltd.
73,990.31
114,260.93
SinoPharm Holdings Shenzhen Chinese Medicine Co., Ltd.
955.75
---
Sinopharm Medicine Holding Suzhou Co., Ltd.
-7,402.14
190,068.38
Shanghai Sinopharm Wai Gao Qiao Co., Ltd.
-1,317,212.30
---
Sinopharm Medicine Holding Hunan Tianjian Co., Ltd.
---
30,911,000.93
Sinopharm Medicine Holding Hubei Xinlong Medicine Co., Ltd. (Note)
---
2,593,198.24
Guangdong Erbo Medical Equipment Co., Ltd.
---
29,204.00
Guangdong South Pharmaceutical Foreign Trade Co. Ltd.
---
2,374.78
Total
370,402,819.73
306,945,802.55
Note: the company has become unrelated party this year.
(e) Balance of current account of related parties
Item
Amount in the period-end (’0000)
Or: Percentage in total receivables (payables) (%)
June 30, 2009
Dec. 31, 2009
June 30, 2009
Dec. 31, 2009
Notes receivable:
Sinopharm Medicine Holding Hunan Co., Ltd.
1,340.34
---
0.06
---
Sinopharm Medicine Holding Tianjian Co., Ltd.
238.08
---
0.01
---
Sinopharm Medicine Holding Shenyang Co., Ltd.
3,385.62
---
0.15
---
Hubei Yibao International Medicine Co., Ltd.
40.00
---
---
---
Total
5,004.04
---
0.22
---
Account receivables:
Sinopharm Medicine Holding Shenyang Co., Ltd.
4,461.10
5,601.39
2.01
2.99
Sinopharm Medicine Holding Hunan Co., Ltd.
1,566.58
1,321.52
0.71
0.70
Shenzhen Accord Medicine Chain Co., Ltd.
1,525.41
---
0.69
---
Sinopharm Medicine Southwest Pharmaceutical Co.,
1,391.98
1,321.60
0.63
0.70SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 98
Item
Amount in the period-end (’0000)
Or: Percentage in total receivables (payables) (%)
June 30, 2009
Dec. 31, 2009
June 30, 2009
Dec. 31, 2009
Ltd.
Sinopharm Medicine Holding Hubei Co., Ltd.
1,269.03
5.64
0.57
0.00
Sinopharm Medicine Holding Beijing Co., Ltd.
956.48
809.73
0.43
0.43
Guangdong Accord Drugstore Co., Ltd
924.12
---
0.42
---
Sinopharm Medicine Holding Tianjin Co., Ltd.
823.52
916.92
0.37
0.49
Sinopharm Medicine Holding Beijing Huahong Co., Ltd
367.96
84.95
0.17
0.05
Tianjin East Bokang Medicine Trade Co., Ltd.
311.43
133.58
0.14
0.07
Sinopharm Medicine Holding Ningxia Co., Ltd.
304.43
100.53
0.14
0.05
Sinopham Medicine Holding Co
269.78 ., Ltd
103.73
0.12
0.06
Hubei Yibao International Medicines Co., Ltd.
255.72
387.98
0.12
0.21
Guangdong Tianliang Pharmaceutical Co., Ltd.
226.14
---
0.10
---
Sinopharm Medicine Holding Shanxi Co., Ltd.
105.81
171.73
0.05
0.10
Sinopharm Medicine Northwest Pharmaceutical Co., Ltd.
103.10
17.41
0.05
0.01
Sinopharm Medicine Holding Henan Co., Ltd.
89.82
92.21
0.04
0.05
Sinopharm Medicine Holding Jiangsu Co., Ltd.
87.96
92.81
0.04
0.05
Guangxi Guoda Drugstore Chain Co., Ltd
84.23
0.21
0.04
---
Guotou Pharmaceutical Anhui Co., Ltd.
63.77
---
0.03
---
China National Medicines Co., Ltd.
25.47
38.27
0.01
0.02
Sinopharm Medicine Holding Zhejiang Co., Ltd.
25.25
1.43
0.01
---
Guangdong East Uptodate & Special Medicines Co. Ltd.
22.01
55.11
0.01
0.03
Sinopharm Medicine Holding Guoda Drugstore Co., Ltd.
19.35
40.20
0.01
0.02
Guangzhou Accord Pharm Chain Store Co., Ltd.
14.89
---
0.01
---
Sinopharm Medicine Holding Tianjin Co., Ltd. Mongolia Branch
5.81
---
0.00
---
Guangxi Wuzhou Huawu Medicine Co., Ltd.
1.79
---
0.00
---
Sinopharm Medicine Holding Nanning Co., Ltd.
---
288.86
---
0.15
Shanghai Sinopharm Wai Gao Qiao Co., Ltd.
---
154.11
---
0.09
Sinopharm Medicine Holding Suzhou Co., Ltd.
---
4.54
---
---
Total
15,302.92
11,744.46
6.89
6.26
Advance to suppliers:
Shanghai Sinopharm Wai Gao Qiao Co., Ltd.
586.14
---
14.77
---SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 99
Item
Amount in the period-end (’0000)
Or: Percentage in total receivables (payables) (%)
June 30, 2009
Dec. 31, 2009
June 30, 2009
Dec. 31, 2009
China National Medicines Co., Ltd.
15.35
---
0.39
---
Reed Sinopharm Exhibitions Co., Ltd.
0.66
---
0.02
---
Total
602.15
---
15.58
---
Notes payable:
China National Medicines Co., Ltd.
1,323.64
---
0.01
---
Shanghai Sinopharm Wai Gao Qiao Co., Ltd.
21,737.76
---
0.24
---
Sinopharm Medicine Holding Co., Ltd.,
13,141.37
---
0.14
---
China National Pharmaceutical Foreign Trade Corporation
261.82
---
---
---
Sinopharm Medicine Union Medical Treatment Equipment Company Limited
101.77
---
---
---
Total
36,566.35
---
0.40
---
Accounts payable:
Sinopharm Medicine Group Shanghai Co., Ltd.
0.73
---
0.00
---
China Medicine Industry Co., Ltd.
5.73
---
0.00
---
China National Pharmaceutical Foreign Trade Corporation
464.22
535.92
0.29
0.37
China National Group Corp. of Traditional & Herbal Medicine
12.21
---
0.01
---
Shenzhen Main Luck Pharmaceutical Co. Ltd,
358.05
47.09
0.22
0.03
Shanghai Sinopharm Wai Gao Qiao Co., Ltd.
1,506.94
11,022.08
0.95
7.69
Hubei Yibao International Medicines Co., Ltd.
0.67
---
0.00
---
Sinopham Medicine Holding Co
34.50 .,Ltd., Shanghai Branch
---
0.02
---
Sinopham Medicine Holding Tianjin Co
0.16 .,Ltd.
80.64
0.00
0.06
Sinopham Medicine Holding Suzhou Co
55.55 .,Ltd.
---
0.03
---
SinoPharm Holdings Shenzhen Chinese Medicine Co., Ltd.
1.02
0.93
0.00
---
Sinopham Medicine Holding Nanning Co
--- .,Ltd.
252.86
0.00
0.18
Sinopham Medicine Holding Jiangsu Co
0.37 .,Ltd.
---
0.00
---
Sinopharm Medicine Holding Guoda Drugstore Co., Ltd.
25.00
344.36
0.02
0.24
Sinopharm Medicine Holding Co., Ltd.
8,969.04
1,850.56
5.63
1.29
Sinopham Medicine Holding Beijing Co
2.86 .,Ltd.
0.40
0.00
---
Sinopharm Medicine Logistics Co., Ltd.
18.25
---
0.01
---SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 100
Item
Amount in the period-end (’0000)
Or: Percentage in total receivables (payables) (%)
June 30, 2009
Dec. 31, 2009
June 30, 2009
Dec. 31, 2009
China National Medicines Co., Ltd.
738.36
641.80
0.46
0.45
Sinopharm Medicine Southwest Pharmaceutical Co., Ltd.
0.00
---
0.00
---
Sinopharm Shanghai Medical Equipment Co., Ltd.
7.45
1.62
0.00
---
Union China National Medical Equipment Co., Ltd.
31.55
-21.08
0.02
-0.01
Sinopharm Chemical Reagent Co., Ltd.
1.89
---
0.00
---
Sinopharm Chemical Reagent Co., Ltd. (Suzhou)
2.57
---
0.00
---
Sinopharm Beijing Medical Equipment Co., Ltd.
0.88
0.88
0.00
---
Guangxi Wuzhou Huawu Medicine Co., Ltd.
0.28
---
0.00
---
Guangdong Accord Drugstore Co., Ltd.
1.43
---
0.00
---
Guangdong Tianliang Pharmaceutical Co., Ltd.
1.98
---
0.00
---
Guangdong Renbo Medical Equipment Co., Ltd.
0.05
0.05
0.00
---
Guangdong South Pharmaceutical Foreign Trade Co., Ltd.
19.49
---
0.01
---
Guangdong East Uptodate & Special Medicines Co. Ltd.
232.49
234.70
0.15
0.16
Beijing Zhongxin Pharmaceutical Co.
24.97
7.14
0.02
---
Sinopharm Medicine Group Shanghai Co., Ltd.
0.73
---
0.00
---
China Medicine Industry Co., Ltd.
5.73
---
0.00
---
China National Pharmaceutical Foreign Trade Corporation
464.22
535.92
0.29
0.37
China National Group Corp. of Traditional & Herbal Medicine
12.21
---
0.01
---
Sinopham Medicine Holding Shanghai Co
--- .,Ltd.
438.81
---
0.31
Total
12,518.68
14,999.94
7.86
10.47
Account received in advance:
Ningxia Guoda Pharmacy Chains Co., Ltd.
---
---
---
---
Other payables:
Sinopharm Medicine Holding Co., Ltd.
16,864.43
6,000.00
47.40
19.45
Sinopharm Medicine Holding Guoda Drugstore Co., Ltd.
192.21
192.21
0.54
0.62
Guangxi Zhuang Autonomous Region Nanning Pharmaceutical Wholesale Station
158.37
---
0.45
---
Sinopham Medicine Holding Shanghai Co
144.20 .,Ltd.
---
0.41
---
Sinopharm Medicine Logistics Co., Ltd.
80.00
80.00
0.22
0.26SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 101
Item
Amount in the period-end (’0000)
Or: Percentage in total receivables (payables) (%)
June 30, 2009
Dec. 31, 2009
June 30, 2009
Dec. 31, 2009
SinoPharm Holdings Shenzhen Chinese Medicine Co., Ltd.
2.49
2.49
0.01
---
Sinopharm Medicine Group Shanghai Co., Ltd.
---
1,533.06
---
4.97
Sichuan Industrial Institute of Antibiotics Co., Ltd.
---
285.18
---
0.92
Total
17,441.70
8,092.94
49.03
26.24
Note 1: The aging of all current accounts with related parties is within one year, and thus they are not provided for bad debt.
(f) other related party transactions
(1) Refer to Note 9 for details of guarantees provided for related parties.
(2) Sinopharm Holdings Guangzhou Co., Ltd. , a subsidiary of the Company, undertakes to bear the buyer’s discount arising from the discounted notes payables issued by the said subsidiary to the following related parties from Jan. to Jun., 2009.: China National Medicines Co., Ltd. RMB 139,100, Shanghai Sinopharm Wai Gao Qiao Co., Ltd. RMB 2,004,500 and Sinopharm Medicine Holding Co., Ltd. RMB 763,600.
(3) Sinopharm Holdings Guangzhou Co., Ltd., a subsidiary of the Company, has capital borrowings from Sinopharm Holdings Co., Ltd. with a total amount of capital occupancy charges RMB 3,927,500 from Jan. to Jun., 2009; Sinopharm Holdings Nanning Co., Ltd., a subsidiary of the Company, has capital borrowings from Sinopharm Holdings Co., Ltd. The total capital occupancy charges for Jan. to Jun., 2009 amount to RMB 1,100,100.
(4) The Company purchases 100% shares of Sinopharm Nanning which were previously held by Sinopharm Medicine Holding Co., Ltd. and Sinopham Medicine Holding Shanghai Co
.,Ltd., with a price of RMB 30,431,700 in this period.
(5) The Company transferred 100 percent equities of Guangdong Accord Drugstore Co., Ltd (including underling Shenzhen Accord Pharmaceutical Chains Co., Ltd. and Guangzhou Accord Drugstore Co., Ltd.) to Sinopharm Medicine Holding Co., Ltd. with the price of RMB 65,613,100 The subsidiary of the Company Sinopharm Medicine Holding Liuzhou Co., Ltd. transferred 100 percent equities of Guangxi Accord Drugstore Chains Co., Ltd. to Sinopharm Medicine Holding Co., Ltd. with the price of RMB 9,960,900.
9 Contingencies
Up to June 30,2009, the contingent liabilities of the Company from providing debt guarantee for related parties and other units are as follows:
Name of Guarantor
Name of Guarantee
Guarantee Amount (RMB’0000)
Start Date of Guarantee
Due Date of Guarantee
Influence on Financial Status of the CompanySHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 102
Name of Guarantor
Name of Guarantee
Guarantee Amount (RMB’0000)
Start Date of Guarantee
Due Date of Guarantee
Influence on Financial Status of the Company
Shenzhen Accord Pharmaceutical Co., Ltd.
Shenzhen Zhijun Pharmaceutical Co., Ltd.
6,000
Aug. 21, 2008
Aug. 21, 2011
No unfavorable influence
Shenzhen Zhijun Pharmaceutical Co., Ltd.
Shenzhen Accord Pharmaceutical Co., Ltd.
10,000
Dec. 29, 2007
Dec. 29, 2009
No unfavorable influence
Shenzhen Zhijun Pharmaceutical Co., Ltd.
Shenzhen Accord Pharmaceutical Co., Ltd.
8,000
Aug. 28, 2008
Aug. 28, 2009
No unfavorable influence
Sinopharm Guangzhou Co., Ltd., Shenzhen Zhijun Pharmaceutical Co., Ltd.
Shenzhen Accord Pharmaceutical Co., Ltd.
30,000
April 30, 2009
April 30, 2010
No unfavorable influence
Shenzhen Zhijun Pharmaceutical Co., Ltd.
Shenzhen Accord Pharmaceutical Co., Ltd.
5,000
May 27, 2009
May 27, 2010
No unfavorable influence
Shenzhen Zhijun Pharmaceutical Co., Ltd.
Shenzhen Accord Pharmaceutical Co., Ltd.
5,000
March 13, 2009
March 13, 2010
No unfavorable influence
Shenzhen Zhijun Pharmaceutical Co., Ltd.
Shenzhen Accord Pharmaceutical Co., Ltd.
8,000
May 26, 2009
Dec. 26, 2009
No unfavorable influence
Shenzhen Accord Pharmaceutical Co., Ltd., Shenzhen Zhijun Pharmaceutical Co., Ltd.
Shenzhen Accord Pharmaceutical Co., Ltd., Shenzhen Zhijun Pharmaceutical Co., Ltd.
10,000
Dec. 10, 2008
Dec. 10, 2009
No unfavorable influence
Shenzhen Accord Pharmaceutical Co., Ltd.
Sinopharm Liuzhou Co., Ltd.
3,000
Dec. 17, 2008
Dec. 16, 2009
No unfavorable influence
Shenzhen Accord Pharmaceutical Co., Ltd.
Sinopharm Liuzhou Co., Ltd.
5,000
April 1, 2009
Aril 1, 2010
No unfavorable influence
Shenzhen Accord Pharmaceutical Co., Ltd.
Sinopharm Guangzhou Co., Ltd.
40,000
April 13, 2009
April 13, 2010
No unfavorableSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 103
Name of Guarantor
Name of Guarantee
Guarantee Amount (RMB’0000)
Start Date of Guarantee
Due Date of Guarantee
Influence on Financial Status of the Company
influence
Shenzhen Accord Pharmaceutical Co., Ltd.
Sinopharm Guangzhou Co., Ltd.
22,500
April 13, 2009
April 13, 2010
No unfavorable influence
Shenzhen Accord Pharmaceutical Co., Ltd.
Sinopharm Guangzhou Co., Ltd.
8,000
Sep. 1, 2008
Sep. 1, 2009
No unfavorable influence
Shenzhen Accord Pharmaceutical Co., Ltd., Sinopharm Medicine Holding Co., Ltd.
Sinopharm Guangzhou Co., Ltd.
21,000
Sep. 3, 2008 (the guarantee expiration for Sinopharm Medicine Holding); Nov. 11, 2008 (the guarantee expiration of RMB 50,000,000 for Shenzhen Accord Pharmaceutical Co., Ltd.
Sep. 3, 2009
No unfavorable influence
10 Commitments
10.1 There are no investment contracts and related financial expenditure signed but not yet executed or not fully executed.
10.2 Significant outsourcing contracts signed and being or to be executed:
Amount payables under significant outsourcing contracts of workshop renovation for Shenzhen Zhijun Pharmaceutical Co., Ltd., a subsidiary of the Company and office building decoration for Sinopharm Liuzhou are as follows. This is a necessary expenditure in the normal course of the Company’s operation.
Period
Within one year
Amount payable
1-2 years
6,685,600
338,000
Total
7,023,600
10.3 Significant equipment purchasing contracts signed and being or to be executed:
Amount payables under an equipment purchasing contract signed by the subsidiaries of the Company, Shenzhen Zhijun Pharmaceutical Co., Ltd. and Suzhou Zhijun Wanqing Pharmaceutical Co., Ltd., are as follows. This is a necessary expenditure in the normal course of the Company’s operation.
Period
Amount payableSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 104
Within one year
5,967,000
10.4 Lease contracts signed and being or to be executed and their financial impacts:
Amount payables under lease contracts signed by subsidiaries of the Company for leased properties are as follows. This is a necessary expenditure in the normal course of the Company’s operation.
Period
Within one year
Amount payable
6,796,000
1-2 years
976,400
2-3 years
976,400
Above 3 years
1,122,800
Total
9,871,600
10.5 There are no acquisition agreements signed and being or to be executed.
10.6 There are no restructuring plans signed and being or to be executed.
10.7 Other significant financial commitments
Shenzhen Zhijun Pharmaceutical Co., Ltd., a subsidiary of the Company, has pledged fixed asset such as house and building with original cost of RMB 52,466,044.11 as of June 30, 2009 to provide guarantee for the long-term bank loan of RMB 60,000,000.00. Meanwhile the loan was guaranteed by the Company.
10.8 Execution of prior commitments
All have been executed according to the contracts.
11 Future balance sheet accounting
There is no future balance sheet accounting
matters
matters
should be explained.
12 Other events
The Company purchased Sinopham Medicine Holding Nanning Co
.,Ltd. under the same control in this period. According to Accounting Standard for BusinessEnterprise No. 20—Enterprise Merger, the Company made retroactive adjustment to the consolidated amount of the profit sheet and cash flow statement disclosed in Semi-annual report 2008 and the consolidated amount of balance sheet and statement of owners’ equity changes in 2008 annual report.
13 Supplementary Materials
13.1 Non-recurring profit and loss attributable to ordinary shareholders of the year (profit +, loss－):
Item
Amount
1. Profit and loss of non-current assets disposal, including the offset amount which has been provided for asset impairment loss
-137,017.06
2. Tax refund and exemption without authorized approval or formal approval document
---
3. Government subsidy recorded into profit and loss of current year，with the exception of the government subsidy closely related to company business and obtained by quota and quantity, according to the national unification standard
1,126,000.00
4.Fund possession cost reported in the current profit and loss and charged by non-financial enterprises
---SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 105
Item
Amount
5.The investment cost in the acquisition of subsidiaries and joint ventures is smaller than the amount of the profit and loss generated by the fair value of net identifiable assets of the invested units enjoyed by the Company
---
6. Non-currency assets exchange profit and loss
---
7. Profit and loss of assets entrusted for investment or management
---
8. Accrual of provision for assets impairment of all kinds of irresistible factors ,such as natural disasters
---
9. Profit and loss of debt restructure
---
10.Company recombination expenses, such as expenses for resettling employees, integration expenses and etc.
---
11. Profit and loss of the part created by obviously unfair transaction price over fair value
---
12. Net profit and loss of subsidiary in the current year created by enterprise merger under the same control from beginning of the fiscal year to the date of the merger
2,483,497.55
13. Profit and loss caused by contingencies borne no relation to the main operation of the company
---
14. Except the effective hedge related to normal business operations, gains and losses arising from changes in the fair value of the tradable financial assets and liabilities held by the Company, as well as the return on investment during the disposal of tradable financial assets and liabilities, and financial assets available for sale.
---
15. Return of provision for impairment of the accounts receivable which are subject to separate impairment test.
---
16. Profit and loss obtained in commissioned external loans
---
17. Profit and loss arising from changes in the fair value of investment real estate which adopts the fair value model in the follow-up calculation.
---
18. Influences on current profit and loss of the one-time adjustment to the current profit and loss in accordance with the requirements of tax and accounting laws and regulations.
---
19.Trustee fee gained during entrusted operation
---
20. Other operating revenues and expenditures in addition to the above items
328,704.81
21. Other items of profit and loss that meet the definition of non-recurring profit and loss
---
22. Influence of minority shareholders’ profit and loss
-74,948.29
23. Influence of income tax
-211,354.74
Total
3,514,882.27
13.2 Return on equity and earnings per share
Profit of the reporting period
Return on equity
Earnings per share (Yuan)
Fully diluted
Weighted average
Basic earnings per share
Diluted earnings per share Net profit attributable to ordinary shareholders of the Company
13.42%
13.96%
0.343
0.343
Net profit attributable to ordinary shareholders of the Company after
12.94%
13.47%
0.331
0.331SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 106
deducting non-recurring gain or loss
(a) Calculation process
The above data is calculated using the following formulae:
Fully diluted return on equity
Fully diluted return on equity = P/E
Where: P is net profit attributable to ordinary shareholders of the Company or net profit attributable to ordinary shareholders of the Company after deducting non-recurring gain or loss; E is the year end equity attributable to ordinary shareholders of the Company. Net profit attributable to ordinary shareholders of the Company does not include the amount of gain or loss of minority shareholders. For net profit attributable to ordinary shareholders of the Company after deducting non-recurring gain or loss, non-recurring gain or loss of parent company (after taking into consideration the income tax effects) and the proportion of non-recurring gain or loss (after taking into consideration the income tax effects) of all subsidiaries owned by ordinary shareholders of parent company are deducted on the basis of consolidated net profit after deducting gain or loss of minority shareholders. The year end equity attributable to ordinary shareholders of the Company does not include equity of minority shareholders.
Weighted average return on equity
Weighted average return on equity = P/(E0+NP/2+Ei*Mi/M0–Ej*Mj/M0+-Ek*Mk/M0)
Where: P is net profit attributable to ordinary shareholders of the Company or net profit attributable to ordinary shareholders of the Company after deducting non-recurring gain or loss; E0 is the year beginning equity attributable to ordinary shareholders of the Company; Ei is increased equity attributable to ordinary shareholders of the Company which arises from new issuance of shares or conversion of debt instruments to stocks in the reporting period; Ej is reduced equity attributable to ordinary shareholders of the Company due to stock repurchase or cash dividend in the reporting period; M0 is the number of months of the reporting period; Mi is the number of months from the next month that equity is increased to the year end of the reporting period; Mj is the number of months from the next month that equity is decreased to the year end of the reporting period; Ek is the change of equity resulting from other transactions or events; Mk is the number of months from the next month that other change of equity occurs to the year end of the reporting period.
Basic earnings per share
Basic earnings per share = P/S
S = S0+S1+Si*Mi/M0-Sj*Mj/M0-Sk
Where: P is net profit attributable to ordinary shareholders of the Company or net profit attributable to ordinary shareholders of the Company after deducting non-recurring gain or loss; S is weighted average number of ordinary shares outstanding; S0 is the total number of shares at the beginning of the year; S1 is the number of increased shares as a result of capitalization of reserves or scrip dividend during the reporting period; Si is the number of increased shares as a result of new issuance of shares or conversion of debt instruments to stocks during the reporting period; Sj is the number of reduced shares as a result of stock repurchase; Sk is the number of consolidated shares in the reporting period; M0 is the number of months of the reporting period; Mi is the number of months from the next month that the number of shares is increased to the year end of the reporting period; Mj is the number of months from the next month that the number of shares is decreased to the year end of the reporting period.
Diluted earnings per share
Diluted earnings per share = [P+(any recognized interest related to dilutive potential ordinary shares-conversion expenses)*(1-income tax rate)]/(S0+S1+Si*Mi/M0-Sj*Mj/M0-Sk +weighted average number of increased ordinary shares arising from warrants, stock options and convertible debts)
Where: P is net profit attributable to ordinary shareholders of the Company or net profit attributable to ordinary shareholders of the Company after deducting non-recurring gain or loss. In calculating theSHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 107
diluted earnings per share, the Company has taken into consideration the effects of all dilutive potential ordinary shares, until the diluted earnings per share reach the lowest amount.
(b) Potential ordinary shares which are not diluted in this report period but probably become diluted in following periods
14 Approval of Financial Statement
This financial statement was passed and issued by the Board of Directors of the Company on August 27, 2009.
Shenzhen Accord Pharmaceutical Co., Ltd.
August 27, 2009SHENZHEN ACCORD PHARMACEUTICAL CO., LTD. SEMI-ANNUAL REPORT 2009 108
SECTION VIII. DOCUMENTS AVAILABLE FOR REFERENCE
1. Accounting Statement carrying the signatures and seals of the legal representative, financial chief and person in charge of accounting;
2. Originals of all the documents and notifications of the Company ever disclosed in the report period in Securities Times and Hong Kong Wen Wei Po designated by CSRC;
3. Original of the Semi-annual Report carrying the signature of the Chairman of the Board.
4. The Place Where the document placed: Office of Secretariat of the Board of Directors,
Accord Pharm Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen;
Chairman of the Board: Shi Jinming
Board of Directors of
Shenzhen Accord Pharmaceutical Co., Ltd.
August 28, 2009
