Stock Code: 000028/200028 Notice No.: 2019-31
Short Form of the Stock: Sinopharm Accord /Accord B
China National Accord Medicines Corporation Ltd.
Summary of Semi-Annual Report 2019
I. Important Notice
The summary of semi-annual report is excerpted from the full text of the semi-annual report. For the details, investors should
carefully read the full text of the semi-annual report published on Juchao Information website (www.cninfo.com.cn) and Shenzhen
Stock Exchange Website etc., appointed by CSRC.
Objection statement of directors, supervisors and senior executives
Name Position Content and reason
Statement
Other directors attending the M eeting for annual report deliberation except for the followed
Name of director absent Title for absent director Reasons for absent Attorney
Prompt of modified auditing opinion
□ Applicable √ Not applicable
Profit distribution pre-plan of common stock or capitalizing of common reserves pre-plan deliberated by the Board in the reporting
period
□ Applicable √ Not applicable
The Company plans not to carry out cash dividend and bonus distribution and capitalizing of common reserves
Profit distribution pre-plan of preferred stock deliberated and approved by the Board in the reporting period
□ Applicable √ Not applicable
II. Basic information of the company
1. Company profile
Short form of the stock Sinopharm Accord, Accord B Stock code 000028, 200028
Stock exchange for listing Shenzhen Stock Exchange
Person/Way to contact Secretary of the Board Rep. of security affairs
Name Chen Changbing Wang Zhaoyu
Accord Pharm. Bldg., No. 15, Ba Gua Si Accord Pharm. Bldg., No. 15, Ba Gua Si
Office add. Road, Futian District, Shenzhen, Road, Futian District, Shenzhen,
Guangdong Province Guangdong Province
Tel. +(86)755 25875195 +(86)755 25875222
E-mail gyyzinvestor@sinopharm.com gyyz0028@sinopharm.com
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2. Main financial data and index
Whether it has retroactive adjustment or re-statement on previous accounting data
□Yes √No
Increase/decrease in this
Current Period Same period of last year report y-o-y
Operating income (RM B) 25,228,147,377.43 20,778,425,602.22 21.42%
Net profit attributable to shareholders of
650,833,360.40 641,727,034.93 1.42%
the listed company (RMB)
Net profit attributable to shareholders of
the listed company after deducting 639,700,447.95 623,296,339.34 2.63%
non-recurring gains and losses (RM B)
Net cash flow arising from operating
1,163,757,581.35 225,357,709.20 416.40%
activities (RM B)
Basic earnings per share (RM B/Share) 1.52 1.50 1.33%
Diluted earnings per share (RM B/Share) 1.52 1.50 1.33%
Weighted average ROE Decline 1.18 percentage
5.44% 6.62%
points
Increase/decrease in this
End of current period End of last period report-end over that of
last period-end
Total assets (RMB) 33,539,598,682.94 28,930,300,519.97 15.93%
Net assets attributable to shareholder of
12,140,439,917.48 11,618,432,603.28 4.49%
listed company (RM B)
3. Number of shareholders and share-holding
In Share
Total preference
shareholders with voting
Total common shareholders at
19,108 rights recovered at end of 0
period-end
reporting period (if
applicable)
Top ten shareholders
Proportion Shares pledged/frozen
Full name of Nature of Amount of Amount of restricted shares
of shares State of
Shareholders shareholder shares held held Amount
held share
Sinopharm
State-owned
Group Co., 56.06% 239,999,991 55,057,700
corporate
Ltd
Hong Kong
Overseas
Securities 4.33% 18,521,557
corporate
Clearing
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Company Ltd
HTHK/CM G
FSGUFP-CM
G FIRST Overseas
STATE 2.68% 11,469,644
corporate
CHINA
GROWTH
FD
China
National
State-owned
Pharmaceutic 1.24% 5,323,043 5,323,043
corporate
al Foreign
Trade Corp.
Fidelity
Investment
Overseas
M anagement
1.07% 4,582,909
(Hong Kong) corporate
Limited -
Client’s fund
China United
Property
Insurance
Domestic non
Company
state-owned 1.01% 4,313,024
Limited –
corporate
Traditional
Insurance
Products
# Beijing
Haoqing
Fortune
Investment
M anagement Domestic non
Co., Ltd. – state-owned 0.96% 4,118,716
Haoqing corporate
Value Stable
No.8
Investment
Fund
Central Huijin
State-owned
Investment 0.89% 3,804,400
corporate
Ltd.
Basic Domestic non
endowment
insurance state-owned 0.77% 3,294,334
fund- corporate
portfolio 1003
BBH BOS Overseas
S/A 0.76% 3,246,061
corporate
FIDELITY
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FD - CHINA
FOCUS FD
Sinopharm Group Co., Ltd. and China National Pharmaceutical Foreign Trade Corporation
Explanation on associated have the same actual controller, which is China National Pharmaceutical Group Corporation. It
relationship among the is unknown that there exists no associated relationship or belongs to the consistent actionist
aforesaid shareholders among the other tradable shareholders regulated by the M anagement M easure of Information
Disclosure on Change of Shareholding for Listed Companies.
Explanation on shareholders
involving margin business Beijing Haoqing Fortune Investment M anagement Co., Ltd. – Haoqing Value Stable No.8
about top ten common stock Investment Fund holds shares of the Company through margin trading and negotiable
shareholders with un-restrict securities account that is 4,118,716 shares in total.
shares held (if applicable)
4. Changes of controlling shareholders or actual controller
Changes of controlling shareholders in reporting period
□ Applicable √ Not applicable
Changes of controlling shareholders had no change in reporting period.
Changes of actual controller in reporting period
□ Applicable √ Not applicable
Changes of actual controller in reporting period had no change in reporting period.
5. Total preferred stock shareholders of the Company and shares held by top ten shareholders with
preferred stock held
□ Applicable √ Not applicable
The Company had no shareholders with preferred stock held in the reporting.
6. Corporate bonds
Whether the Company has a corporation bonds that issuance publicly and listed on stock exchange and without due on the date when
semi-annual report approved for released or fail to cash in full on due
No
III. Discussion and analysis by the Management Team
1. Introduction of operation in the reporting period
Whether the Company needs to comply with the disclosure requirements of the particular industry
Yes
Retailing industry
In the first half of 2019, the growth rate of China's pharmaceutical market slowed dow n, and the growth of major
terminals continued to differentiate, the growth rate of primary medical care and retail terminals was higher than
that of hospital terminals. In the first half year, the industrial policy continued to deepen the medical reform w ith
the core thoughts of "adjusting the structure, strengthening the grassroots and strict supervision", and the pace of
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reform in the medical field was accelerated; the "4+7" collection and linkage was rapidly advanced, the national
medical insurance standardization work was officially launched, the payment method reform pilot has been
advanced, and the market regulation was becoming stricter.
Under the new situation, Sinopharm Accord conformed to the industry and policy trends, maintained strategic
strength, sought transformation and innovation and development, and continuously promoted the strategic
measures and technological transformation with wholesale and retail integration as the core, focused on four
business directions, and created a "new" Guoda. Under the guidance and support of the company's board of
directors, with the joint efforts of more than 25,000 employees, we focused on the increase in share and the scale
expansion, the company's scale and growth rate in the first half of the year was better than the overall level of the
industry, and achieved steady and rapid growth in performance.
(i) Performance completion
In first half of 2019, Sinopharm Accord achieved a revenue from operation amounted as 25.228 billion Yuan with
a y-o-y growth 21.42%; net profit attributable to shareholders of parent company comes to 651 million Yuan with
1.42% up on a y-o-y basis. The distribution business has operation revenue of 19.477 billion Yuan with y-o-y
growth of 22.66%; net profit attributable to shareholders of parent company has 382 million Yuan with y-o-y
growth of 15.41%. Guoda Drugstore achieved a revenue from operation amounted to 6.108 billion Yuan with a
y-o-y growth of 18.75% and net profit attributable to shareholders of parent company amounted as 150 million
Yuan, a 7.81% up on a y-o-y basis.
(ii) The main work
1. Stabilize growth - performance improvement and scale expansion
The company actively grasped industry opportunities, optimized investment M&A decision-making efficiency,
accelerated industry resource integration and store network layout, and ensured scale development. As of the first
half of the year, the company had a total of 107 subsidiaries, and the number of retail outlets of Guoda Drugstore
was 4,593, with a net increase of 318 stores. During the reporting period, the company invested in the
establishment of the Sinopharm Guoda Drugstore Bayannao’er Co., Ltd., Inner Mongolia Guoda Pharmaceuticals
Co., Ltd., and Sinopharm Guoda Drugstore Yongxingtang Chain (Chaoyang) Co., Ltd.
2. Promote strategy - integration of wholesale and retail, and technology empowerment
The company researched and grasped environmental changes, deepened the development plan for the next five
years, and carried out strategic rolling revisions. With the core measures of "technology empowerment, service
upgrading, integration of wholesale and retail, and industry and finance dual drive", we provided full-service
solutions for the upstream and downstream industry chain through customer value driving and upgrades of supply
chain model, and transformed the pharmaceutical distributors into the solution providers and service providers so
as to create a leading international medicine health service platform.
The company integrated resources to promote the synergy of wholesale and retail. In the first half of the year, the
distribution launched the logistics planning of wholesale and retail integration, and the sales of wholesale and
retail synergies increased by 54% on a year-on-year basis, and the part outside of Guangdong and Guangxi
provinces increased by 64% on a year-on-year basis; Guoda Drugstore got supports from WBA global strategic
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cooperation manufacturers’ resources, and improved the Catalogue of Integration of Wholesales and Retails, at the
same time, promoted the construction of provincial platforms, at present, the provincial platform in Inner
Mongolia has been completed, and the provincial platform project in Shenyang has passed the project approval.
Centering on the "digital transformation", the company launched IT planning, promoted intelligent logistics and
intelligent supply chain optimization, and energized the business development in multiple dimens ions.
3. Consolidate foundation - management upgrade, risk control guarantee
The company straightened out the governance relationship of subsidiaries, regulated the management of its
subsidiaries, and enhanced its overall governance capabilities. The company optimized the organizational
structure, created a diversified incentive mechanism, improved the talent development system, strengthened
leadership, stimulated organizational vitality and innovation, and promoted organizational management
transformation. The headquarters gave play to resource allocation and control functions, strengthened professional
capabilities, improved service awareness, implemented risk prevention and control, and escorted the business
development. We promoted key projects such as controls of claims and inventory balances, loss -making enterprise
governance, and innovation first, and improved quality and efficiency for healthy development.
4. Promote transformation – service driven, model innovation
Distribution business: The company maintained strategic strength, actively responded to changes in market
policies, and consolidated the integrated operational foundation, the four major businesses developed rapidly and
built new competitive advantages. In the first half of the year, traditional bus iness grew by 22% on a year -on-year
basis, retail direct sales increased by 30% on a year-on-year basis, equipment consumables increased by 52% on a
year-on-year basis, retail medical treatment increased by 80% on a year-on-year basis, and primary care increased
by 34% on a year-on-year basis.
(1) The company actively responded to environmental changes, strengthened communication with the government,
responded to the government's demand for medical reform, actively participated in and provided professional
advice to enhance the company's influence. In terms of GPO policy, Guangzhou Company completed bargaining
reports for seven batches of products, and the bargaining list coverage rate reached 91%, at the same time, it
actively took countermeasures against new GPO areas such as Meizhou, Heyuan, Shanwei and Maoming. In the
implementation of "4+7" quantity procurement, with the professional service capability and network coverage
advantage, Shenzhen Company has obtained distribution rights of 22 varieties, accounting for 84%; Guangzhou
Company has obtained distribution rights of 24 varieties, accounting for 96%.
(2) Retail direct sales business: combined with the characteristics of retail terminals, continued to promote
customer expansion, regional sinking, and actively promoted the integration of wholesale and retail and the
platform construction. In terms of sales growth, in the first half of 2019, the retail direct sales business achieved
rapid growth, among them, retail pharmacy customer sales increased by 40% on a year-on-year basis, and
small-scale private medical sales increased by 29% on a year-on-year basis. Actively integrated Guoda chain and
private single-store and small chain resources, and promoted the construction of the core network of the terminal
network member store + the hospital circumjacent store through the "network self-built + cooperative
development" dual-track mode, and continued to expand the construction of the third terminal medical network. In
terms of B2B platform construction and service innovation, the company built OTC resource platforms, realized
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online payment of B2B platform, upgraded member management functions, optimized APP module construction,
focused on end customer needs, and created special services.
(3) Retail medical treatment business: Continued to promote the distribution of professional pharmacies in
Guangdong and Guangxi, and sales have increased significantly. In the first half of the year, the sales revenue of
professional pharmacies in the first half of the year increased by 80%, and 13 new pharmacies were opened.
Currently, the distribution points in 20 cities of Guangdong and 12 cities of Guangxi have been completed. As of
June, there were 29 hospital circumjacent pharmacies with sales growth of 122% on a year -on-year basis, and 25
DTP pharmacies with sales growth of 60% on a year-on-year basis. While advancing the layout of professional
pharmacies, we have continuously obtained various types of medical insurance qualifications: in the first half of
2019, Shenzhen Pharmacy and Hexie Road Pharmacy became the major and serious disease supplementary
medical insurance drug retail pharmacies of Shenzhen; Huizhou Pharmacy obtained the qualification of serious
disease medical insurance of Huizhou, while Zhuhai Pharmacy has obtained the qualification of additional
supplementary medical insurance project.
(4) Equipment consumables business: With the gradual advancement of medical reform policies, the medical
device industry supervision has become increasingly strict, and the management advantages of distribution for the
device business have emerged. In the first half of 2019, the sales of equipment business increased by more than
50%. In the sales of equipment, combined with the needs of hospitals, continuously improved the viscosity of
hospital customers through platform construction and deep personalized service, formed a variety of SPD project
customized solutions, and promoted through the creation of SPD model hospital; explored medical supplies
counter sales and consignment sales model, and promoted the hospital bidding process; the sales of SPD projects
in the first half of the year increased by 181% on a year-on-year basis.
In addition, it actively acquired the qualifications for wholesales and retails of medical devices, developed retail
medical device models, and improved retail busin ess processes and retail system platforms, in addition, expanded
4D business around the supply chain service upgrades, the businesses of new type of business company (including
equipment consumables, equipment management, disinfection center, etc.) have been gradually carried out in an
orderly manner.
Guoda Drugstore: Promote the company's brand upgrade, optimize the management foundation, strengthen the
professional pharmacy service capabilities, and create new models.
(1) According to the company's strategic planning and deployment, implement the new brand strategy,
successively complete the "Guoda" upgrades and "Guozhi" brand integration plan, expand the brand upgrade
ideas, form a number of landing plans, and continue to promote brand upgrades in the sec ond half of the year.
(2) The "New Concept" pilot pharmacy jointly launched by Guoda Drugstore and Walgreens Boots Alliance
th
opened on January 20 at Shangnan Road, Pudong New District of Shanghai. Up to now, sales have increased by
34.8% on a year-on-year basis, and the number of transactions has increased by 31.5% on a year-on-year basis.
The pilot pharmacy has integrated and implemented a new business operation model with advanced design and
operation management concept of Walgreens Pharmacy and Boots Pharmacy. Introduced varieties and cooperated
with a number of global brand suppliers, set parameters vital signs detector, and the touch advertising machine
provided physical intelligent detection and online drug purchasing services; launched "cloud hospital" project,
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sothat customers can experience internet medical services such as remote consultation, electronic kitchen, chronic
disease management, self-test medication, and appointment registration.
(3) Professionalization of pharmaceutical service capabilities. Strengthened professional competence, and carried
out training courses for licensed pharmacists; opened Elearning platform to promote online learning; carried out
the "Guoda Drugstore Service Improvement" project; explored a sustainable and replicab le basic service
management system.
(4) Built an Internet + medical e-commerce model. Improved the value-added service system, optimized the
self-operated OTO platforms such as WeChat Mall and APP, created a pharmacy + Internet O2O model, enhanced
the front-end customer experience, and launched the e-commerce national customer service. In the first half of the
year, the number of effective members nationwide was 11.436 million, an increase of 8% over the same period
last year.
5. Strengthen party building - party building is strong foundation, don’t forget the initial heart
Guided by the party's political construction, strengthened the theme education of "not forgetting the initial heart,
keeping the mission in mind" and the special action of "party building is strong foundation", focused on the
company's development strategy and central tasks, focused on the consolidation of basic organization, basic
team, and group organization construction.
6. Cultivate internal strength - cultural practice, and sedimentary accretion of brand
Carried out various cultural activities, gathered heart and strength together, promoted corporate culture
propaganda and practice, focused on brand building, gave play to brand value, and cultivated the driving force of
enterprise development. Sinopharm Accord Corporate Culture Communication Project won the Best Learning
Project Award in the China Talent Development Elite Award (2018-2019). At the same time, Sinopharm Accord
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also won the 16 "Shenzhen Famous Brand" and the excellent enterprise in Guangdong Province, and also won
the most social responsibility award of Gelonghui's 2019 A-share listed companies.
2. Matters relevant to financial report
(1) Particulars about the changes in aspect of accounting policy, estimates and calculation method
compared with the accounting period of last year
√Applicable □ Not applicable
On December 7, 2018, the Ministry of Finance issued the revised "Accounting Standards for Business Enterprise
No. 21 - Leases", enterprises listed both domestically and overseas at the same time and enterprises listed overseas
and using IFRS or ASBE to prepare financial statements have implemented it since January 1, 2019; other
enterprises that implement enterprise accounting standards shall come into force on January 1, 2021. As the parent
company of the Company, Sinopharm Group Co., Ltd. ("Sinopharm") is listed overseas (H shares), in order to
unify the accounting policy of the parent company Sinopharm, the Company has implemented the new leasing
standards on January 1, 2019. According to the new and old standards conversion requirements, the enterprise
shall adjust the retained earnings at the beginning of the period and the amount of other related items in the
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financial statements according to the cumulative impact number of the implementation of the standard for the first
time, and the information for the comparable period shall not be adjusted. This accounting policy change has
increased the company's total assets and total liabilities, and the asset-liability ratio on January 1, 2019 was about
2.51 percentage points higher than it on December 31, 2018. This accounting policy change is not expected to
have a significant impact on the company's owner's equity or net profit.
(2) Particulars about retroactive restatement on major correction for accounting errors in reporting period
□ Applicable √ Not applicable
There is no particular about retroactive restatement on major correction for accounting errors in reporting period
(3) Particulars about the change of consolidation range compared with the accounting report of last year
√Applicable □ Not applicable
Particulars about the change of consolidation range see Financial Report Note-VIII.
China National Accord Medicines Corporation Ltd.
Legal representative: Lin Zhaoxiong
24 August 2019
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