深圳一致药业股份有限公司
Shenzhen Accord Pharmaceutical Co., Ltd.
二○一○年半年度报告
Semi-Annual Report 2010
August 2010Contents
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-------------------------------8
Section VI. Significant Events-------------------------------------------------------------15
Section VII. Financial Report--------------------------------------------------------------24
Section VIII. Documents Available for Reference---------------------------------------105SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
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. Independent Director Ms. He Zhiyi did not attend the 18th meeting of 5th Board of Directors on
auditing the Semi-Annual Report but entrusted Independent Director Ms. Peng Juan to vote on his
behalf.Director Mr. Wei Yulin did not attend the meeting due to business, but he entrusted Director
Wu Aimin to attend and vote on his behalf.Director Ms. Fu Mingzhong did not attend the meeting due
to business, but she entrusted Director Shi Jinming to attend and vote on her 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 2010
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 Province
Office Address: Accord Pharm. Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen,
Guangdong Province
Post Code: 518029
The Company’s InternetWebsite: 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 Commercial Daily
InternetWebsite 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 Directors
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/decrea
se at the end of
this report
period
compared with
that in
period-end of
last year (%)
Before adjustment After adjustment After adjustment
Total assets 5,741,019,273.10 5,233,489,407.09 5,233,489,407.09 9.70%SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
4
Owners’ equity attributable to
shareholders of the listed company 915,472,186.04 822,666,137.68 822,666,137.68 11.28%
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)
3.177 2.855 2.855 11.28%
This report period
(Jan. to Jun.) The same period of last year
Increase/decrea
se in this report
period
year-on-year
(%)
Before adjustment After adjustment After adjustment
Total operating income 6,216,124,135.23 5,038,480,670.21 5,047,344,974.65 23.16%
Operating profit 159,064,173.16 135,395,010.28 135,249,627.55 17.61%
Total profit 166,519,142.54 137,410,012.64 137,292,595.55 21.29%
Net profit attributable to shareholders of
the listed company 121,620,988.36 98,783,895.04 98,664,296.15 23.27%
Net profit attributable to shareholders of
the listed company after deducting
non-recurring gains and losses
113,266,697.99 95,269,012.77 95,269,012.77 18.89%
Basic earnings per share (RMB/Share) 0.422 0.343 0.342 23.39%
Diluted earnings per share (RMB/Share) 0.422 0.343 0.342 23.39%
Return on equity (%) 13.77% 13.42% 13.92% -0.15%
Net cash flow arising from operating
activities 216,358,926.82 151,069,889.91 151,029,033.06 43.26%
Net cash flow per share arising from
operating activities (RMB/Share) 0.751 0.524 0.524 43.32%
[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 1,817,154.83
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
standard
5,239,721.55
Reversal of impairment provision of account receivable that
impairment testing individually 4,145,110.09
Other non-operating income and expenditure beside for the
aforementioned items -7,491.30
Impact on income tax -735,584.40
Influenced amount of minority shareholders’ gains/losses -2,104,620.40
Total 8,354,290.37 -
(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 121,620,988.36 121,620,988.36
Equities attributable to the
owners of parent company 915,472,186.04 915,472,186.04
[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 AccountingSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
5
Standards.
(III) Supplemental profit statement
[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 2010) 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
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
Capitalizati
on of
Public
reserve
Other Sub-total Amount Proportion
I. Restricted shares 6,286 0.00% -1,572 -1,572 4,714 0.00%
1. State-owned shares
2. State-owned legal
person’s shares
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 6,286 0.00% -1,572 -1,572 4,714 0.00%
II. Unrestricted
shares
288,143,11
4 100.00% 1,572 1,572 288,144,68
6 100.00%
1. RMB Ordinary
shares
233,257,51
4 80.95% -55,572,57
6
-55,572,57
6
177,684,93
8 61.66%
2. Domestically listed
foreign shares 54,885,600 19.05% 55,574,148 55,574,148 110,459,74
8 38.33%
3. Overseas listed
foreign shares
4. Others
III. Total shares 288,149,40
0 100.00% 288,149,40
0 100.00%
Explanation on the change of share capital: In the report period, the change was brought by the shares
held by senior executives have been decreased.
Profit in the report period Weighted average Return on
equity（%）
Earnings per share (RMB)
Basic earnings per
share
Diluted earnings per
share
Net profit attributable to common
shareholders of the Company 13.77% 0.422 0.422
Net profit attributable to common
shareholders of the Company
deducting non-recurring gains and
losses
12.82% 0.393 0.393SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
6
II. About shareholders
1. Ended June 30, 2010, the Company had totally 10,782 shareholders, including 6,020 shareholders
of A-share and 4,762 shareholders of B-share.
2. Particulars about shares held by the top ten shareholders (ended as June 30, 2010)
Unit: Share
Total shareholder 10,782
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 GROUP
CO., LTD.
State-owned
legal person 38.33% 110,459,748 0 0
HTHK/CMG
FSGUFP-CMG FIRST
STATE CHINA
GROWTH FD
Oversea
legal person 2.44% 7,032,720
Agricultural Bank of
China－Greatwall Anxin
Return Mixed Fund
Domestic
non-state-o
wned legal
person
2.43% 7,000,000
Industrial and
Commercial Bank of
China－Zhongyin
Sustainable Growth
Stock Securities
Investment Fund
Domestic
non-state-o
wned legal
person
2.05% 5,911,810
CHINA INDUSTRIAL
AND COMMERCIAL
BANK－GUANGFA
JUFENG STOCK
FUND
Domestic
non-state-o
wned legal
person
1.90% 5,479,011
Bank of China—Jiashi
Steady Open Securities
Investment Fund
Domestic
non-state-o
wned legal
person
1.86% 5,349,588
Industrial and
Commercial Bank of
China－Boshi Selected
Stock Securities
Investment Fund
Domestic
non-state-o
wned legal
person
1.72% 4,963,365
Bank of
Communications—Hua’
an Strategy Optimum
Stock Securities
Investment Fund
Domestic
non-state-o
wned legal
person
1.39% 4,002,783
Bank of China—
Franklin Guohai
Potential Mix Stock
Securities Investment
Fund
Domestic
non-state-o
wned legal
person
1.33% 3,827,202
Industrial and
Commercial Bank of
China－E-Fund Value
Growth Mix Securities
Investment Fund
Domestic
non-state-o
wned legal
person
1.28% 3,677,799SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
7
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
HTHK/CMG FSGUFP-CMG FIRST
STATE CHINA GROWTH FD 7,032,720 Domestically listed foreign
shares
Agricultural Bank of China—Great wall
Anxin Return Mix Securities Investment
Fund
7,000,000 RMB common share
Industrial and Commercial Bank of
China－Zhongyin Sustainable Growth
Stock Securities Investment Fund
5,911,810 RMB common share
INDUSTRIALAND COMMERCIAL
BANK of CHINA－GUANGFA
JUFENG STOCK FUND
5,479,011 RMB common share
Bank of China—Jiashi Steady Open
Securities Investment Fund 5,349,588 RMB common share
Industrial and Commercial Bank of
China－Boshi Selected Stock Securities
Investment Fund
4,963,365 RMB common share
Bank of Communications—Hua’an
Strategy Optimum Stock Securities
Investment Fund
4,002,783 RMB common share
Bank of China— Franklin Guohai
Potential Mix Stock Securities
Investment Fund
3,827,202 RMB common share
Industrial and Commercial Bank of
China－E-Fund Value Growth Mix
Securities Investment Fund
3,677,799 RMB common share
Explanation on
associated relationship
or accordant action
among the aforesaid
shareholders
There has no associated relationship between the large shareholder of the Company
and other shareholders. 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 Executives
I. Changes in shares held by Directors, Supervisors and Senior Executives in report period:
Name Title
Shares
held at
year-begi
n
Increased
shares
held in
this
period
Decrease
d shares
held in
this
period
Shares
held at
period-en
d
Including
: Amount
of
restricted
shares
held
Amount
of stock
option
held at
period-en
d
Reasons
for change
Chen
Changbing
Secretary
of the
Board
6,286 0 1,572 4,714 4,714
Legitimate
Reducti
on
II. Alteration in directors, supervisors and senior executives of the Company in the report period:
On 20 March 2010, the 15th Meeting of 5th Board of Directors approved that Mr. Jiang Ning no longer
in the position of Directors of the Company and nominated Ms. Tian Werxing as the candidate ofSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
8
Director of 5th Board of Directors, submitted to Shareholders General Meeting 2009 held on 16 April
2010 for election and have been approved.
On 20 March 2010, the Board of Directors received a written resignation report from independent
director—Mr. Liao Li. Due to the busy works, Mr. Liao Li no longer in the position of independent
director of the Company. Board of Directors has accepted the resigned application.
On 11 June 2010, the 17th Meeting of 5th Board of Directors agreed to nominate Mr. He Zhiyi as the
candidate of independent directors of 5th Board of Directors and submitted to the 2nd Extraordinary
Shareholders’ General Meeting of 2010 held on 28 June 2010 for election and have been approved.
On 11 June 2010, the 15th Meeting of 5th Board of Directors received a notice from the larger
shareholders of the Company—SINOPHARM GROUP CO., LTD. that Mr. Song Tingfeng no longer
in the position of supervisory committee’s convener and supervisor of the Company. By the
recommendation from large shareholder, Mr. Jiang Xiuchang was agreed to be newly added into the
supervisor candidate of 5th Supervisory Committee and submitted to 2nd Extraordinary Shareholders’
General Meeting of 2010 held on 28 June 2010 for election and have been approved.
Section V. Discussion and Analysis of the Management
I. Overall operation and management of the Company in the report period
2010 was the last year of Eleventh Five-Year Plan that the Company has been in implementing.
Under the correctness leadership of Board of the Directors and operational team of the Company,
surrounded the annual theme of “seized opportunity, enlarge the industrial platform with perfected the
distribution network and promoted the rapidly development of Accord Pharm”, seizing the
opportunity from industry integration and medical reform actively, continually promoted the
unification of management-controlling, distributed operation and industrial chain, distribution break
the bottleneck of increased sales and hindrance of market expansion, emphasized the termination
sales; concerning the industrial, promoted the supporting of industrial chain, cooperation between
upstream and downstream, adjustment of product structure and development of third termination.
Greatly finished each operational indexes, the Company has a rapidly and steady trend towards
booming.
The various key works accomplished in the first half year:
(I) Pharmaceutical industry surrounding the “industrial chain, production line, product quality and
product technical”, perfecting the various works of current operational and future development
1. Implemented the function of R&D center, promoted the R&D integration of Accord Pharm. In first
half year, focus on clinic trial promotion on gastric drug—Revanex. Jointly organized relevant
specialists with CRO for research and discussion, make out a scientific and reasonable plan of clinic
trial. Recently, the work of clinic trial has fully in progress.
2. Perfected the system of industrial operation management, promoted the industrial affiliated work.
(1) perfected the system of data-transition and analysts strengthen the monitor in operating, correction
in timely ensured the accomplishment of predicted indexes; (2) Improving the communication
between various industrial enterprise, coordinated the business connection between industrial
enterprises for promoting the industrial affiliates.
3. Organized a team for industrial construction and technical reform of the Accord Pharm. Planning
and promoting the construction of Pingshan Base under the name of Accord Pharm, Zhijun
Pharmaceutical Phase-In and Zhijun Wangqing Phase-III totally. Relevant plans and prophase
preparation are in smoothly progress.
(II) Industry integration of medical distribution sustainable being promoted. Rapidly the process of
unification of marketing operational consolidated and expended the area of distribution market,SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
9
improving the market quota and market position.
1. Perfected the distribution network, speed up the layout in Guangdong and Guangxi. (1) Purchase
Zhanjiang Tianfeng Pharmaceutical Co., Ltd. successfully and changed the name to SINOPHARM
Medicine Holding Zhanjiang Co., Ltd.; (2) Attempts the newly expansion mode of distribution
business, purchase the medicine business of Nanning Medicine Company successfully; (3)
Restructuring the Yanfeng Medicine, consolidate and expansion the market quota and position in
Shenzhen step more; (4) Purchase Meizhou Xinte Medicine Co., Ltd. and established SINOPHARM
Medicine Holding Meizhou Co., Ltd. for completing the layout in eastern of Guangdong; (5)
Promoted the communication and negotiation between every target enterprise in prefectural-level
cities. Every project is being in smoothly progress.
2. Rapid up the integration of Guangxi distribution, the purchase and functional management realized
unified management. At present, Guangxi distribution has been exceed the counterpart enterprise in
Nanning Medicine market, and probably to be the leading enterprise in Guangxi.
3. Sustainable optimized the structure of industry; strengthen in promoting the hospital sale-only
business. The hospital sale-only business occupied over 50% of the business in Company first time,
sales scale reached at RMB 3128 million.
4. Deal with the pressure and risk from the changes of commercial market environment actively,
accomplished the integration of commercial expansion and Shenzhen commercial, promoted the
varieties resource sharing between Guangzhou and Shenzhen, realized unified operation and
controlling, effectively lower the potential operational risk.
(III) Medical logistic focus on “fine management, deepening service, innovated development and
network operation” and has a greatly effects
1. Constructed logistic site on time: Shenzhen Logistic has been moved and on-line on 5 July. Every
business has been in progress recently; Nanning Logistic finished many bidding work of steel
structure etc, and expected in construction in August; Liuzhou Logistic is in the plan of site-choose;
Dongguan and Zhanjiang Logistic are in the smoothly promotion in transformation.
2. “One storage” pattern has been approved by the Provincial Bureau, and then Guangzhou, Shenzhen
and Foshan have been qualified for the third-party logistics operation.
(IV) We exert the control and management functions as managements of operation, financing, human
resources and administration; provide expertise, excellent and effective support and service to
promote the business the orderly and effective business development.
1. As for operation management, we take the fine projects management as the priority, and standardize
the operation unity.
2. As for financial management, we focus on the “ever optimization and thorough elevation” to
promote all control and management in accounting.
(1) We rationally schedule the bank grantee credit sum to satisfy the corporate development. (2) We
accomplish the Company’s NC system upgrade and project acceptance. By the implementation of NC
financial system of “Unified Plan and Schedule, Concentrated Control and Regulation”, we forcefully
promote the management information of the financial group in Accord Pharmacy. (3) We strengthen
the cohesion between the Company’s business integration and newly acquired company’s financial
management to promote the new company to blend into the Accord Financial management.
3. As for the human resource management, we pay attention to the elevation of organizational
competence in support of the fast and healthy business growth.
4. As for administrative management, we pay attention to the improvement of service quality and
work efficiency, and the elevation of operation efficiency of administrative service platform to
embody the service value.
II. Analysis on the main operating results and financial statusSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
10
(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/decre
ase in
operating
income
year-on-year
(%)
Increase/decre
ase in
operating cost
year-on-year
(%)
Increase/decrea
se in gross
profit ratio
year-on-year
(%)
Industry－medicine 77,257.57 57,416.75 25.68% 39.75% 39.01% 0.39%
Commerce －
medicine wholesales
536,168.08 504,967.31 5.82% 27.72% 27.23% 0.36%
Commerce －
medicine retail 1,730.34 1,504.23 13.07% -93.26% -92.85% -4.92%
Non-medicine trade 1,015.61 608.64 40.07% 504.60% 65.94% 158.42%
Lease 443.87 153.99 65.31% 129.96% 334.51% -16.33%
Total 616,615.47 564,650.92 8.43% 23.05% 22.84% 0.15%
Main operations classified according to products
Respiratory
antitussive medicines 7,099.05 1,399.87 80.28% -3.75% 2.88% -1.27%
Cef- series products 69,194.72 55,662.12 19.56% 75.28% 68.92% 3.03%
Including: the amount
of related transaction 1,583.13 1,161.06 26.66% -61.46% -44.70% -22.22%
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
483,220,000.
2. Income from main operations classified according to areas
Unit: RMB’0000
Area operating income Increase/decrease in operating
income year-on-year (%)
Domestic sales 616,226.96 23.09%
Oversea sales 388.51 -20.76%
Total 616,615.47 23.05%
(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 200 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, 2010, the total assets of the company amounted to RMB 822.2 million.
It realized main business income of RMB 604.17million and net profit of RMB 54.95 million in the
first half year of 2010.
2. SINOPHARM Medicine Holding (Guangzhou) Co., Ltd.: wholly-owned subsidiary of theSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
11
Company with registered capital amounting to RMB 400 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, 2010,
the total assets of the company amounted to RMB 2781.38 million. It realized main business income
of RMB 3286.14 million and net profit of RMB 56.87 million in the first half year of 2010.
3. SINOPHARM Medicine Holding (Nanning) Co., Ltd.: a wholly-owned subsidiary of the Company
with registered capital of RMB 100 million. It mainly deals with operation of Chinese patent
medicine, chemical preparation, diagnosis medicine, and biological products of diagnostic treatment,
self-operation and various products agent together with import-export of technology. Ended 30 June
2010, total assets of the company amounted to RMB 479.77 million and realized main business
income of RMB 537.32 million and net profit of RMB 8.07 million in first half year of 2010.
(IV) 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
Amount of
increase/decreased
Change rate of
increase/decre
ase
Income from main operations 6,166,154,739.81 5,011,062,539.67 1,155,092,200.14 23.05%
Profit from main operations 511,011,407.86 408,442,493.47 102,568,914.39 25.11%
Net profit attributable to owners
of parent company 121,620,988.36 98,664,296.15 22,956,692.21 23.27%
Items Amount at
period-end
Amount at
year-begin
Amount of
increase/decreased
Change rate of
increase/decre
ase
Total assets 5,741,019,273.10 5,233,489,407.09 507,529,866.01 9.70%
Owners’ equity attributable to
parent company 915,472,186.04 822,666,137.68 92,806,048.36 11.28%
[Notes]:
(1) Income from main operations: increased by RMB 1,155,092,200 and 23.05% year-on-year, mainly
due to the harmony development of whole distribution, the production and selling have a busy status
and the sale scale had a further expansion.
(2) Profit from main operations: increased by RMB 102,568,900 and 25.11% 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 22,956,700 and 23.27%
year-on-year, mainly due to the Company did good in sales and controlled cost reasonably, which
enhanced entire benefit.
(4) Total assets: increased by RMB 507,529,900 at period-end, 9.70% up compared to that of
year-begin. On one hand mainly due to the assts’ scale expansion from the favorable growing trend of
sales and profit; on the other hand materially influenced by the purchase of Shenzhen Yanfeng
Medical Co., Ltd.
(5) Owners’ equity attributable to parent company: increased by RMB 92,806,000 at period-end,
11.28% up compared to that of year-begin. On one hand, the Company’s profit made the owners’
equity attributable to parent company increased RMB 121,621,000; on the other hand, the dividend
distribution made RMB 28,814,900 decreased.
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
proportionSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
12
taken in total
Amount (RMB) profit
Proportion
taken in total
profit
Amount (RMB)
Proportion
taken in total
profit
Main business
profit 511,011,407.86 306.88% 408,442,493.47 297.50% 9.38%
Other business
profit 29,437,812.27 17.68% 23,253,207.56 16.94% 0.74%
Period expense -375,365,885.79 -225.42% -313,399,118.17 -228.27% 2.85%
Assets devaluation
loss -15,311,631.56 -9.20% -6,302,775.23 -4.59% -4.60%
Investment
income 9,292,470.38 5.58% 23,255,819.92 16.94% -11.36%
Net non-operating
income and
expenditure
7,454,969.38 4.48% 2,042,968.00 1.48% 3.00%
Total profit 166,519,142.54 100.00% 137,292,595.55 100.00% 0.00%
*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) Other business profit: Other business profit in Period is RMB 29.4378 million, a year-on-year
increase of RMB 6.1846 million, a year-on-year increase of 0.74% accounting for total profit. The
main reason for increase is the net return of RMB 2.974 million from the disposal of investment
property by Zhijun Pharmaceutical – the Company’s subsidiary as result of the increase of RMB
2.3514 million in property lease income.
(2) Period expense: Expenses in the Period are RMB 375.3659 million, a year-on-year increase of
RMB 61.9668 million, a year-on-year decrease of 2.85% accounting for total profit. The expenses in
the Period, is under the sound control, with little influence on the profit, and main factors for the
absolute value are: the year-on-year increase of RMB 7,6283 million in human resources expenses
due to the factors as increase in staff; the year-on-year increase of RMB 36.1169 million in the market
development expenses with the further development of Zhijun Good Present Project of Zhijun
Pharmacy and the deepening of the third terminal market exploration; the year-on-year increase of
RMB 16.1215 million in the R&D expenses with forceful promotion of industrial products R&D and
the technology innovation.
(3) Assets devaluation loss: the total of assets devaluation loss accrued in the Period is RMB15.3116
million, a year-on-year increase of 4.61% accounting for the total profit. The main reason for the
increase is specific accrual provision for bad debts in Guangdong Liyuan Company in the Period.
(4) Investment income: Investment return: The total investment income obtained in the Period is
RMB 9.2925 million, a year-on-year decrease of RMB 13.9633 million, a year-on-year decrease of
11.36% accounting for the total profit. The main influence factor is the disposal return of RMB
14.1955 million from the transfer of stock in Guangdong Accord Pharm Store Co., Ltd. and Guangxi
Accord Medicine Chain Co., Ltd. and yet no substantive income from equity disposal in the Period.
(5) Net non-operating income and expenditure: the net non-operation income/expenditure obtained in
the Period is RMB 7.455 million, a year-on-year increase of RMB 5.412 million, a year-on-year
increase of 11.36% accounting for the total profit. The main influence factors are the technology
reform capital of 2.75 million and old property disposal return of RMB 2.1613 million ZhijunSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
13
Pharmaceutical – the subsidiary in the Period.
(V)There was no other operation business which influenced greatly upon net profit in the report
period
(VI)Main working plan for the later half year
(I) Pharmacy Industry: Deepen further the integration and platform construction, strengthen
operation and planning management and improve the core corporate competition competence in the
industry.
1. Promote the “Two-center, Five-platform” construction, namely construct R&D center and
marketing center, by the unification of planning, control and management, and brands, and focusing
on the “Four-dimension”, construct the five platforms as chemical pharmaceutics, raw medicine,
biological medicine, OTC health products, and Chinese traditional medicine, to pave the way for the
great industrial development.
2. Improve the R&D and the work. Comb the R&D current situations and needs in Yizhi Pharm,
cooperate further with Shanghai Medical Industry Institute and the institute in Chuangkang; promote
the international R&D development and take as the priority the promotion of cooperation with the
Liuhan Institute in South Korea.
3. Perfect the industrial operation management system, strengthen the management and service in all
industrial enterprises, and quicken up the industrial matching in Zhijun Pharmaceutical and Zhijun
Wanqing.
4. Promote the “Three-base” project construction. (1) Accomplish the “Second Term” plan of Zhijun
Pharmacy to make sure the start up before the Year-end; (2) Accomplish the Accord Pingshan Base
plan and the prophase procedures to solve the relevant issues as the municipality planning of the
industrial estate to strive for the start up before the Year-end; (3) Form the “Third-period” plan of
ZhijunWanqing, and quicken the project progress.
(II) Medicine distribution: Perfect the network of distribution step forward. Stabilized and broaden the
area of distribution realizing the growth both in distribution scale and profitability
1. Quicken the network layout in the prefecture-level cities, and do well the second acquisition in the
networked cities.
2. Take the purchase integrity as the priority in the second half, (1) Optimize the purchase
organizational structure, unify the purchase structure and performance appraisal in Shenzhen and
Guangzhou and clarify issues as that the purchase center deal with the problem products of all
subsidiaries; (3) Promote the “One Storage” construction, make effective the “One-storage,
Several-warehouse” function, unify the storage plan, unify the function of the delivery direction query;
(3) Unify the purchase approval procedures and systems.
3. Allocated resources reasonably, speed up the growth-up of subsidiaries. (1) Enhance network
allocation of human resource and logistics; (2) Take function of self-purchasing in dependency of
products of the Company; (3) Boost financing ability of subsidiaries.
4. Conducted market research of variety of basic medicine, make integrated plan and
comprehensively develop. In the second half year, with all the effort carry out well the distribution
bidding, earnestly improve the market share of basic medicine, customer satisfaction rate, thus
upgrade sales volume of basic medicine.
(III) Logistic: faced with significant change and reform of logistic environment, innovate work ideas,
try new methods, constantly upgrade logistic network, stabilize basic service, fine the work
management.
1.Optimize logistic network, fine network planning of inventory, standardize the operating procedures
set by allocation center in various regions, make the solution of new sites of Dongguan and Meizhou
as well as setting sites in central region.
2. Promote projects construction of Nanning logistic center and Liuzhou logistic on schedule, make
sure a smooth processing of subsequent events after the removal of Shenzhen Logistic.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
14
3. Formulate allocation strategy and method of inventory scientifically, improve function efficient of
logistic; unify information platform of transportation scheduling and delivery tracking, realize overall
implementation of self-carrying method and timely feedback of delivery information in Guangdong.
4. Attach importance to conduct work surrounding three aspects of “Feedback Management, Time
Limit of Returning Goods, and Operational Transferring-Delivery Center”, combine fine management
to further boost basic quality of service.
(IV) Concerning the management and controlling, involve service in management, deeply promote
support and service function for operation management, financial management, human resource
management and administration management.
1. In aspect of risk and operation management, pay attention to the Twelfth Fifth plan, progress the
orderly, healthy development of operation business.
(1) Build leaders and work team of the Twelfth Fifth plan of Accord Pharmaceutical, in accordance
with business plan formulate corresponding human resource, logistic, finance and IT planning,
conscientiously promote the conduction of plan.
(2) In accordance with the Twelfth Fifth plan of Accord Pharmaceutical, organize to compile the
operation plan report of 2011 Accord Pharmaceutical, complete editing work of over budget of the
Company.
(3) Perfect organization function of risk management and control, establish standard of risk
management and control, and through business management and control, rules and procedure, IT
system, risk management and so on, conduct well risk management and control in all aspects.
2. Make overall planning well; comprehensively improve the financial management level
(1) Constantly normalize basic accounting, improve basic accounting level, lay emphasis on
supervision of corporate enterprises, emphasize details of work, try our best to develop the weak
section.
(2) Continuously perfect construction of finance system grouping, improve efficiency and accuracy of
compiling of budget via the system.
(3) In accordance with external audit, intensify the internal audit function, organize Booklet of
Internal Control, training of Internal Self-estimation, and for the first time conduct Self-estimation.
Through optimization of internal control, conduct anti-risk in all aspects.
(4) Participate in purchase project of industry and distribution; establish resource reserve of finance
management and efficient output mechanism, form replicable finance management system, effectively
take resource output of financial management to subsidiaries.
3. Speed up the organizing ability, rapidly fuse, create integrated organization atmosphere
Build sustainable development plan of human resource, perfect talents allocation mechanism.
According to sustainable development of corporation and change requirement of business adjustment,
combining with the twelfth fifth plan, clear the ability goal and requirements of organization revise
and perfect human resource plan.
4. Implement Frontier Management, Benchmarking Management, further boost efficiency of
administration service platform, fine the administration affairs management for the operation and
development of enterprise for better, organize and conduct Frontier Management, Benchmarking
Management, turn the Preserve work into Promotion work, earnestly improve quality and level of
administration service.
III. Investment of the Company
(I)Main equity investment
1. The Company signed Equity Transfer Contract with Shenzhen Kai Jiefeng Industrial Co., Ltd.
concerning purchasing 51% equities of Shenzhen Yanfeng Pharmaceutical Co., Ltd. dated 6 April
2010. The transaction price was confirmed as RMB27, 848,500. The equity transfer was
accomplished on 26 April 2010.
2. Subordinated of the Company –Shenzhen Zhijun Pharmaceutical Co., Ltd. signed Contract ofSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
15
Property Transaction with Shenzhen Kingworld Industrial Co., Ltd. on 26 February 2010 concerning
transferring 0.1759% equity of China Associated (Group) Co., Ltd. The transaction price was
confirmed as RMB325,400. The equity transfer was accomplished on 26 April 2010.
(II)Application of raised proceeds
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
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, standardizes operation, strengthened management
work of information disclosure 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 Fully and Deeply Carry
out the Specific Activity on Basic Works of Financial Accounting of Listed Company in Shenzhen
(SZJGSZ [2010] No.109). 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 2009 was approved in the Shareholders’ General Meeting of 2009 held on 16
April 2010: 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). On 21 June 2010, the profit distribution
was accomplished and cash dividends of RMB 28,814,940.00 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 Group 410,542,658.60 265,826,487.48
Shanghai Sinopharm Wai Gao Qiao Co.,
Ltd. 91,574,957.49 217,185,865.82
China National Medicines Co., Ltd. 66,174,479.55 53,010,106.57SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
16
Name of related parties Amount in this
period
Amount in the
same period of
last year
Guangdong South Pharmaceutical
Foreign Trade Co., Ltd. 47,307,288.33 29,424,950.56
China National Pharmaceutical Foreign
Trade Corporation 5,382.42 11,822,212.14
Guangdong East Uptodate & Special
Medicines Co.Ltd 0.00 7,747,728.78
Union China National Medical Equipment
Corp. 4,953,338.18 6,678,974.80
Shenzhen Wanle 2,040,268.75 2,506,758.77
Sinopharm Medicine Holding Suzhou Co.,
Ltd 1,036,020.40 1,806,047.49
Sinopharm Medicine Holding Hunan Co.,
Ltd. 0.00 474,645.81
China National Group Co. of Traditional &
Herbal Medicine 0.00 469,476.92
Sinopharm Medicine Holding Shanghai
Co., Ltd. 1,158,885.50 417,809.22
China National Pharmaceutical Industry
Corporation 0.00 152,759.53
Sinopharm Shanghai Medical Equipment
Co., Ltd 360,035.85 129,015.37
Sinopharm Group 19,748.37 97,531.81
Sinopharm Chemical Reagent Co., Ltd. 175,864.10 93,777.77
Sinopharm Chemical Reagent Suzhou
Co., Ltd. 412,739.88 25,692.89
China National Pharmaceutical Industry
Co., Ltd. Beijing Branch 3,297,802.44 21,162.82
Sinopharm Medicine Southwest
Pharmaceutical Co., Ltd. 546,489.34 13,530.47
Sinopharm Medicine Holding Shanghai
Co., Ltd. 0.00 30.35
Accord Drugstore 480,111.43 0.00
Sinopharm Medicine Holding Beijing Kang
chen Biological Pharmaceutical Co., Ltd. 214,358.97 0.00
Sichuan Jiangyou Zhongba Fuzi
Technology Co., Ltd. 190,924.77 0.00
Chendu Rongsen Pharmaceutical co.,Ltd 69,743.59 0.00
Xinjiang Uptodate & Special Medicines
National Pharmaceutical Limited
Liability Company
22,222.22
0.00
Guangdong Tianliang Medicine Co., Ltd. -2,824.62 0.00
Sinopharm Medicine Baida
Pharmaceutical Co., Ltd. 1,500,598.30 0.00
Shenzhen Chinese Medicine 796,197.09 -231.92
Sinopharm Medicine Holding Tianjing Co.,
Ltd. 0.00 -8,838.42
Total 632,877,290.95 597,895,495.03
[Note]: The purchasing price is confirmed according to the market price. Till Jun. 30, 2010, the total
amount that the Company purchased from its related parties took 40.83% of the limits granted by the
shareholders’ general meeting held at year begin.
3. Goods sold to related parties:
Unit: RMBSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
17
Name of related parties Amount in this
period
Amount in the same
period of last year
Sinopharm Medicine Holding Shenyang
Co., Ltd. 76,992,166.31 128,254,395.95
Sinopharm Medicine Holding Hubei Co.,
Ltd. 45,165,657.00 43,925,158.98
Sinopharm Medicine Holding Hunan
Co., Ltd. 39,832,046.00 39,167,791.58
Sinopharm Medicine Holding Tianjing
Co., Ltd. 25,160,009.96 34,448,422.73
Sinopharm Medicine Holding Tianjing,
Neimeng Affiliate 1,215,387.54 223,220.51
Sinopharm Medicine Holding Tianjin
Co., Ltd. Tongliao Dongmeng Affliate 0.00 -24,384.62
Sinopharm Medicine Southwest
Pharmaceutical Co., Ltd. 36,560,858.55 33,667,452.39
Sinopharm Medicine Holding Beijing
Co., Ltd. 33,524,670.92 23,830,112.15
Sinopharm Medicine Holding Hubei
Yibao Co., Ltd. 3,461,335.95 13,605,968.75
Sinopharm Medicine Holding Ningxia
Co., Ltd. 4,810,646.30 8,019,553.91
Sinopharm Medicine Holding Beijing
Huahong Co., Ltd. 11,400,406.00 7,894,944.68
Sinopharm Medicine Holding Henan
Co., Ltd. 9,153,540.40 6,109,133.55
Tianjin East Bokang Medicine Trade
Co., Ltd. 14,616,408.55 5,924,107.52
Sinopharm Group Co., Ltd. 10,482,002.59 5,809,967.15
Guangxi Guoda Drugstore Chain Co.,
Ltd. 0.00 5,201,274.94
Guangdong Tianliang Medicine Co., Ltd. 0.00 3,539,682.74
Sinopharm Medicine Holding Jiangsu
Co., Ltd. 3,614,203.64 3,134,522.69
Sinopharm Medicine Holding Shanxi
Co., Ltd. 4,117,163.65 2,750,136.22
Sinopharm Medicine Northwest
Pharmaceutical Co., Ltd. 0.00 1,517,425.64
Sinopharm Medicine Holding Anhui Co.,
Ltd. 2,187,163.80 1,346,222.52
China National Medicines Co., Ltd. 4,302,247.12 1,277,393.29
Guangdong East Uptodate & Special
Medicines Co.,Ltd 5,023,571.69 1,256,350.10
Sinopharm Medicine Holding Zhenjiang
Co., Ltd. 1,320,586.48 494,443.74
Sinopharm Medicine Holding Guoda
Drugstore Co., Ltd. 671,978.60 180,403.69
Ningxia Guoda Drugstore Chain Co.,
Ltd. 12,393.18 98,787.31
Guangxi Wuzhou Huawu Medicine Co.,
Ltd. 40,160.09 73,990.31
Shenzhen Chinese Medicine 7,384.07 955.75
Sinopharm Medicine Holding Suzhou
Co., Ltd. 241,248.55 -7,402.14
Shanghai Sinopharm Wai Gao Qiao Co.,
Ltd. 0.00 -1,317,212.30
Accord Drugstore 49,493,288.14 0.00
Sinopharm Medicine Holding Hainan
Co., Ltd. 17,435,235.51 0.00SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
18
[Note]: The selling
price is confirmed
according to the market
price. Till Jun. 30,
2010, the total amount
that the Company sold
to its related parties
took 38.63% of the
limits granted by the
shareholders’ general
meeting held at year
begin.
V. Significant contract
and its
implementation
(I) significant
contract
1. No external
investment contract has
been signed with
wholly/partially
un-implemented and
relevant financial
expenses.
2. No issuing
contract with major
amount has been
signed with
under-implemented or
ready-implemented.
3. Equipment
purchase contract with
major amount that has been signed with under-implemented or ready-implemented.
Zhijun Pharmaceutical—the subsidiary of the Company entered into a contract of equipment
purchase, the detail account plans to paid are followed, the account belongs to the necessary expense
of normal operating activity:
Period Amount payable
Within 1 year RMB 12,030,300
4. Leasing contract that has been signed with under-implemented or ready-implemented and its
financial influence.
The property rented by subsidiary of the Company, payable accounts comply with the signed
leasing contract is followed. The expenses belong to the necessary expense of normal operating
activity:
Period Amount of rent
payable
Within 1 year RMB13,543,450
1 to 2 years RMB 5,324,400
2 to 3years RMB5,256,300
Guangxi Accord Chain Drugstore Co.,
Ltd. 15,824,491.37 0.00
Xinjiang Uptodate & Special Medicines
National Pharmaceutical Limited Liability
Company
14,469,474.54 0.00
Xinjiang Uotodate& Special Western
Medicine Limited Liability Company 10,169,660.19 0.00
Sinopharm Holdings Yunnan Chinese
Medicine Co., Ltd 9,694,300.25 0.00
Sinopharm Holdings Fujian Chinese
Medicine Co., Ltd 8,798,711.08 0.00
Guangxi Guoda Drugstore Chain
Co., Ltd. 6,035,750.12 0.00
Sinopharm Holdings Northwest Chinese
Medicine Co., Ltd. 5,264,302.90 0.00
Sinopharm Holdings Shandong Chinese
Medicine Co., Ltd. 3,389,699.08 0.00
Sinopharm Medicine Logistics Co., Ltd. 2,159,612.95 0.00
Sinopharm Medicine Holding Hebei Co.,
Ltd. 2,014,432.48 0.00
Shenzhen Accord Pharmaceutical Chain
Co., Ltd 1,509,727.40 0.00
Guangdong South Pharmaceutical
Foreign Trade Co. 787,588.06 0.00
China National Medicines Guorui Co.,
Ltd. 631,470.09 0.00
Sinopharm Medicine Holding Gansu
Chinese Medicine Co., Ltd. 559,063.76 0.00
Sinopharm Medicine Holding Jiangxi
Co., Ltd. 401,831.99 0.00
Tianjin East Bokang Medicine Trade
Co., Ltd. 151,794.87 0.00
Sinopharm Medicine Holding Fuzhou
Chinese Medicine Co., Ltd. 126,078.12 0.00
Sinopharm Medicine Holding Shenyang
Co., Ltd. Changchun Affliate 12,000.00 0.00
Total 482,841,749.841 370,402,819.73SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
19
Over 3 years RMB 36,870,300
Total RMB60,994,500
5. No merger agreement has been signed with under-implemented or ready-implemented.
6. No re-structure plan has been signed with under-implemented or ready-implemented.
7. Other significant financial commitment.
Particulars about pledged assts
Items
No. of pledged
property right
certificate
Location of pledgeOriginal book
value of pledge
Loan amount
of pledge Pledge term
(1) Real estate
pledge SFD Zi No.
5000357449
Northwest side,
Xianhu Road,
Guanlan Street,
Bao’an District
107,380,589.15 RMB30
million 2009.4.30-2011.7.21
(2) Land pledge 8,029,575.57
8. Implementation of the previously commitment
All have been implemented according to the contract.
(II) Significant Guarantees
Unit: RMB’0000
Particulars about the external guarantee of the Company (excluding the guarantee for the subsidiaries)
Name of the
Company
guaranteed
Related
announcem
ent date
and No. of
the
guarantee
amount
Amount of
guarantee
Date of
happening
(Date of
signing
agreement)
Actually
guarantee
amount
Guarantee
type
Guarantee
term
Complete
implement
ation or
not
Guarantee
for related
party (Yes or
no)
Shenzhen
Accord
Pharmaceutica
l Co., Ltd.
20 March
2010
No.:2010-0
7
37,500.00 21 June
2010 16,830.95 Guarantee
2010.06.21
-2011.06.2
1
No Yes
Shenzhen
Accord
Pharmaceutica
l Co., Ltd.
20 March
2010
No.:
2010-07
5,000.00 1 June 2010 440.85 Guarantee
2010.06.01
-2011.06.0
1
No Yes
Shenzhen
Accord
Pharmaceutica
l Co., Ltd.
20 March
2010
No.:2010-0
7
5,000.00
18
December
2009
2,778.55 Guarantee
2009.12.18
-2010.12.1
8
No Yes
Shenzhen
Accord
Pharmaceutica
l Co., Ltd.
20 March
2010
No.:2010-0
7
16,000.00 23 April
2010 1,323.94 Guarantee
2010.04.23
-2010.12.3
1
No Yes
Shenzhen
Accord
Pharmaceutica
l Co., Ltd.
20 March
2010
No.:2010-0
7
10,000.00
30
December
2009
5,883.68 Guarantee
2009.12.30
-2010.12.3
0
No Yes
Shenzhen
Zhijun
Pharmaceutica
l Trade Co.,
Ltd.
20 March
2010
No.:2010-0
7
2,040.00 10 July 2009 769.25 Guarantee
2009.07.10
-2010.07.1
0
No Yes
Total balance of approved
external guarantee in the
report period(A1)
58,500.00
Total actually balance of
external guarantee in the
report period(A2)
48,169.91
Total balance of approved 75,540.00 Total actually balance of 28,027.22SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
20
external guarantee at the
end of the report period(A3)
external guarantee at the
end of the report period(A4)
Guarantee of the Company for its subsidiaries
Name of the
Company
guaranteed
Related
announcem
ent date
and No. of
the
guarantee
amount
Amount of
guarantee
Date of
happening
(Date of
signing
agreement)
Actually
guarantee
amount
Guarantee
type
Guarantee
term
Complete
implement
ation or
not
Guarantee
for related
party (Yes or
no)
Shenzhen
Zhijun
Pharmaceutica
l Co., Ltd.
20 March
2010
No.:2010-0
7
6,000.00 21 August
2008 3,000.00 Guarantee
\mortgage
2008.08.21
-2011.08.2
1
No Yes
Shenzhen
Zhijun
Pharmaceutica
l Co., Ltd.
20 March
2010
No.:2010-0
7
5,000.00 1 June 2010 0.00 Guarantee
2010.06.01
-2011.06.0
1
No Yes
Shenzhen
Zhijun
Pharmaceutica
l Co., Ltd.
20 March
2010
No.:2010-0
7
10,000.00
18
December
2009
4,625.58 Guarantee
2009.12.18
-2010.12.1
8
No Yes
SUZHOU
ZHIJUN
WANGQING
PHARMACE
UTICAL CO.,
LTD,
Shenzhen
Zhijun
Pharmaceutica
l Co., Ltd.,
Sinopharm
Medicine
Holding
Nanning Co.,
Ltd., and
Sinopharm
Medicine
Holding
Liuzhou Co.,
Ltd.
20 March
2010
No.:2010-0
7
25,000.00 30 June
2009 19,809.86 Guarantee
2009.12.30
-2010.12.3
0
No Yes
Sinopharm
Medicine
Holding
Guangzhou
Co., Ltd.
20 March
2010
No.:2010-0
7
65,000.00 13 March
2010 39,392.86 Guarantee
2010.03.13
-2011.03.1
3
No Yes
Sinopharm
Medicine
Holding
Guangzhou
Co., Ltd.
20 March
2010
No.:2010-0
7
22,500.00 13 April
2010 10,131.49 Guarantee
2010.04.13
-2011.04.1
3
No Yes
Guangdong
Yuexing
Pharmaceutica
l Co., Ltd.
20 March
2010
No.:2010-0
7
3,500.00 13 April
2010 214.14 Guarantee
2010.04.13
-2011.04.1
3
No Yes
Sinopharm
Medicine
Holding
Guangzhou
20 March
2010
No.:2010-0
7
10,000.00 1 March
2010 8,500.00 Guarantee
2010.03.01
-2011.03.0
1
No YesSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
21
Co., Ltd.
Sinopharm
Medicine
Holding
Guangzhou
Co., Ltd.
20 March
2010
No.:2010-0
72010-07
10,000.00 29 July 2009 6,010.50 Guarantee
2009.07.29
-2010.07.2
8
No Yes
Sinopharm
Medicine
Holding
Guangzhou
Co., Ltd.
20 March
2010
No.:2010-0
7
18,000.00 18 June
2010 7,859.95 Guarantee
2010.06.18
-2011.06.1
8
No Yes
Sinopharm
Medicine
Holding
Guangzhou
Co., Ltd.
20 March
2010
No.:2010-0
7
5,000.00 5 November
2009 5,000.00 Guarantee
2009.11.05
-2010.11.0
4
No Yes
Sinopharm
Medicine
Holding
Guangzhou
Co., Ltd.
20 March
2010
No.:2010-0
7
10,000.00 30 April
2010 9,264.37 Guarantee
2010.04.30
-2011.04.3
0
No Yes
Sinopharm
Medicine
Holding
Nanning Co.,
Ltd.
20 March
2010
No.:2010-0
7
6,000.00 13 January
2010 5,269.16 Guarantee
2010.01.13
-2011.01.1
3
No Yes
Note: External guarantee of the Company consists of guarantee to the Company from subsidiaries and guarantee
between the subsidiaries
(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
Accounts receivable from
affiliated units (debtor) 58,772.11 16,557.29
Other accounts receivable from
affiliated units (debtor) 67.69 121.50
Accounts paid in advance by
affiliated units (debtor) 3,203.98 274.26
Accounts payable to affiliated
units (lender) 0.00 146,949.14 17,242.80
Other accounts payable to
affiliated units (lender) 0.00 262.19 614.43
Accounts received in advance
from affiliated units (lender) 0.00 16.03 0.00
Total 62,043.78 22,441.26 147,227.36 43,249.90
(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) Other significant contract
There are no other significant contracts in this report period.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
22
VI. Certified Public Accountants engaged by the Company
According to rules of Notice on Publishing Answers for Related Problems about Financial Account
and Audit of Central Enterprises (State-owned Office Evaluation [2006] 23) issued by SAC and
Notice on Work Rules of Financial Account and Audit of Central Enterprises (State-owned Office
Evaluation [2004] 173), “The engagement limit time of the same accounting firm taking over
financial account and audit of central enterprise couldn’t exceed 5 years”. Regarding that the Lixin
Accounting Firm has worked for the Company for over 5 years, so the Company had to choose a new
accounting firm instead.
On 16 August 2010, the 18th Meeting of the 5th Board of Directors of the Company decided to engage
Price Water House Coopers CPA Co., Ltd. as the auditing institutions for the year 2010. The
engagement change had been handed over to Shenzhen Securities Regulatory Bureau for record in
accordance with related rules of Engagement System of Accounting Firm for Annual Auditing of
Accord Pharmaceutical, and it will be submitted to Shareholders’ General Meeting to be discussed
and approved.
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, supervisory
committee and supervisors 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:
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 2010
There is no shareholder who hold higher than 5% equities of the Company adding restricted shares
commitment in 2010.
XII. Index for information notice on significant events
In the report period, notices were disclosed on Securities Times, Hong Kong Commercial Daily,
Shenzhen Stock Exchange website http://www.szse.cn and Juchao website
http://www.cninfo.com.cn.:
1. On 26 January 2010, Announcement of Purchase the Medical Business of Nanning Medical CO.,SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
23
LTD. and Corresponding Assets and Liabilities and Announcement on holding the 1st Extraordinary
Shareholders’ General Meeting of 2010 were disclosed;
2. On 11 February 2010, Resolution Announcement on the 1st Extraordinary Shareholders’ General
Meeting of 2010 and Legal Opinion Letter of the 1st Extraordinary Shareholders’ General Meeting of
2010 were disclosed;
3. On 23 March 2010, Resolution Announcement on the 15th Meeting of 5th Board of Directors,
Resolution Announcement on the 13th Meeting of 5th Supervisory Committee, Enterprises’ Social
Responsibility Report of 2009, Annual Auditing Report of 2009, Summary of Annual Report 2009,
Auditing Report of Capital Intercourse of Related Parties, Self-estimation Report of Internal Control
of 2009, Annual Report of 2009, Independent Directors’ Opinion on Directors Supplementation,
Reporting Management System for External Enterprise, Responsibility Investigation System on
Significant Errors in Annual Information Disclosure, Announcement on Independent Directors’
Opinion, Work Report of Independent Directors in 2009, Announcement on 2010 Application of
General Credit Limit and Guarantee Arrangement to the Bank, Announcement on Daily Related
Transaction Between the Company/Subordinate and Related Parties, Announcement on External
Investment, Accord Pharm: Announcement on Holding the Shareholders’ General Meeting of 2009,
Announcement on Resignation of Independent Directors and Announcement on 51% Equity
Acquisition of Shenzhen Yanfeng Medical Co., Ltd. and Capital Increased were disclosed;
4. On 17 April 2010, Resolution Announcement on Shareholders’ General Meeting of 2009 and Legal
Opinion Letter of the 2009 Shareholders’General Meeting were disclosed;
5. On 27 April 2010, Full Text of First Quarterly Report of 2010 was disclosed;
6. On 5 June 2010, Announcement on Implementation of Profit Distribution 2009 was disclosed;
7. On 12 June 2010, Resolution Announcement on 17th Meeting of 5th Board of Directors, Resolution
Announcement on 15th Meeting of 5th Supervisory Committee, Candidate Statement of Independent
Director (HE ZHI YI), Nominator Statement of Independent Director and Announcement on Holding
the 2nd Extraordinary Shareholders’ General Meeting 2010 were disclosed;
8. On 29 June 2010, Article of Association, Resolution Announcement on 2nd Extraordinary
Shareholders’ General Meeting 2010 and Legal Opinion Letter of 2nd Extraordinary Shareholders’
General Meeting 2010 were disclosed.
Section VII. Financial Report (Un-audited)
Balance sheet
Prepared by Shenzhen Accord Pharmaceutical Co., Ltd. June 30, 2010 Unit: RMB
Items June 30, 2010 December 31, 2009
Consolidated Company Consolidated Company
Current assets:
Cash at bank and in hand 593,620,718.33 118,507,341.56 579,471,913.48 125,541,203.80
Settlement provisions - - - -
Capital lent - - - -
Financial assets held for trading - - - -
Notes receivable 407,889,727.75 5,770,981.23 359,419,752.39 1,758,275.85
Accounts receivable 2,758,122,703.10 322,242,676.89 2,438,526,944.67 301,349,886.88
Advances to suppliers 100,402,178.71 661,275.44 85,646,539.08 1,042,226.64
Insurance receivable - - - -
Reinsurance receivables - - - -
Contract reserve of reinsurance
receivable - - - -SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
24
Interest receivable - - - -
Dividends receivable 8,271,829.94 - 8,271,829.94 -
Other receivables 52,827,068.36 478,342,691.19 48,175,405.78 379,622,614.20
Purchase restituted finance assets - - - -
Inventories 944,397,948.26 92,524,902.20 903,934,387.58 96,332,120.70
Current portion of non-current
assets - - - -
Other current assets - - - -
Total current assets 4,865,532,174.45 1,018,049,868.51 4,423,446,772.92 905,646,328.07
Non-current assets:
Granted loans and advances - - - -
Available-for-sale financial assets - - - -
Held-to-maturity investments - - - -
Long-term receivables - - - -
Long-term equity investments 89,366,527.35 1,228,517,011.06 80,399,471.97 642,597,981.98
Investment properties 70,640,184.82 7,130,881.19 57,973,532.97 7,572,670.36
Fixed assets 442,515,241.78 26,669,279.26 418,780,207.51 28,578,457.35
Construction in progress 39,191,273.10 253,886.24 46,146,183.50 253,886.24
Engineering materials - - - -
Fixed assets pending for disposal - - - -
Productive biological assets - - - -
Oil and gas assets - - - -
Intangible assets 124,800,102.49 29,055,015.55 116,232,435.65 29,653,420.36
Development costs 246,745.01 - 235,375.01 -
Goodwill 51,021,672.76 - 34,153,027.89 -
Long-term prepaid expenses 6,648,806.10 80,841.11 6,717,663.30 184,277.86
Deferred income tax assets 12,214,114.10 - 12,871,196.24 -
Other non-current assets 38,842,431.14 - 36,533,540.13 -
Total non-current assets 875,487,098.65 1,291,706,914.41 810,042,634.17 708,840,694.15
Total assets 5,741,019,273.10 2,309,756,782.92 5,233,489,407.09 1,614,487,022.22SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
25
Balance sheet (continued)
Items June 30, 2010 December 31, 2009
Consolidated Company Consolidated Company
Current liabilities:
Short-term loans 1,240,992,606.99 450,150,855.59 944,189,604.46 347,023,220.37
Loan from central bank - - - -
Absorbing deposit and interbank
deposit - - - -
Capital borrowed - - - -
Financial liabilities held for
trading - - - -
Notes payable 1,048,909,494.09 131,202,678.98 1,104,950,330.28 167,985,468.09
Accounts payable 1,926,188,436.56 286,185,576.64 1,701,543,860.48 246,909,317.09
Advances from customers 31,408,102.46 678,016.57 81,860,595.37 7,015,577.03
Selling financial asset of repurchase - - - -
Commission charge and
commission payable - - - -
Employee benefits payable 97,902,654.84 23,704,369.91 107,396,041.96 21,952,780.15
Taxes payable 48,810,807.10 3,459,024.08 36,327,948.81 122,667.32
Interests payable 321,489.00 - 589,050.00 361,845.00
Dividends payable 1,651,617.12 - - -
Other payables 247,642,230.49 671,195,632.56 244,895,882.94 263,570,295.56
Reinsurance payables - - - -
Insurance contract reserve - - - -
Security trading of agency - - - -
Security sales of agency - - - -
Current portion of non-current
liabilities - - 30,000,000.00 -
Other current liabilities - - - -
Total current liabilities 4,643,827,438.65 1,566,576,154.33 4,251,753,314.30 1,054,941,170.61
Non-current liabilities:
Long-term loans 30,000,000.00 30,000,000.00
Debentures payable
Long-term payables 43,398.60 46,019.40
Special payable 2,555,000.00 1,320,000.00 2,555,000.00 1,320,000.00
Provisions
Deferred income tax liabilities 24,120,811.82 3,773,319.00 25,525,421.76 3,773,319.00
Other non-current liabilities 45,455,791.61 45,478,550.21
Total non-current liabilities 102,175,002.03 5,093,319.00 103,604,991.37 5,093,319.00
Total liabilities 4,746,002,440.68 1,571,669,473.33 4,355,358,305.67 1,060,034,489.61
Shareholders’ equity:
Share capital 288,149,400.00 288,149,400.00 288,149,400.00 288,149,400.00
Capital surplus 5,030,338.57 13,828,726.93 5,030,338.57 13,828,726.93
Less: Treasury shares - - - -
Specific reserve
Surplus reserve 17,573,057.11 17,573,057.11 17,573,057.11 17,573,057.11
General risk provision
Retained earnings 604,719,390.36 418,536,125.55 511,913,342.00 234,901,348.57
Difference on translation of
foreign currency financial statements - - - -
Total equity attributable to share
holders of the Company 915,472,186.04 738,087,309.59 822,666,137.68 554,452,532.61
Minority interest 79,544,646.38 - 55,464,963.74 -
Total shareholders’ equity 995,016,832.42 738,087,309.59 878,131,101.42 554,452,532.61
Total liabilities and shareholders’ equity 5,741,019,273.10 2,309,756,782.92 5,233,489,407.09 1,614,487,022.22SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
26
Income statement
Prepared by Shenzhen Accord Pharmaceutical Co., Ltd. The period from January 1, 2010 to June 30, 2010
Unit: RMB
Items Six month ended 30 June, 2010 Six month ended 30 June, 2009
Consolidated Company Consolidated Company
I. Total operating income 6,216,124,135.23 878,820,036.10 5,047,344,974.65 757,466,776.66
Including: Operating income 6,216,124,135.23 878,820,036.10 5,047,344,974.65 757,466,776.66
Interest income - - - -
Insurance gained - - - -
Commission charge and
commission income - - - -
II. Total operating cost 6,066,352,432.45 893,063,499.98 4,935,351,167.02 762,308,233.99
Including: Operating cost 5,667,040,733.52 837,870,829.36 4,609,554,367.08 718,827,487.61
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 - - - -
Taxes and surcharges 8,634,181.58 510,783.37 6,094,906.54 435,425.94
Selling and distribution
expenses 197,065,351.52 24,267,048.59 180,665,640.22 22,428,701.92
Administration expenses 140,631,688.06 23,236,060.60 111,758,743.62 19,227,720.11
Financial expenses – net 37,668,846.21 9,264,750.17 20,974,734.33 615,973.65
Asset impairment losses 15,311,631.56 -2,085,972.11 6,302,775.23 772,924.76
Add: Profit arising from changes in
fair value (Loss is listed with
“-”)
- - - -
Investment income (Loss is
listed with “-”) 9,292,470.38 227,429,131.22 23,255,819.92 195,834,991.30
Including: Share of profit of
associates
and joint ventures
9,251,229.08 9,251,229.08 8,560,339.50 2,933,485.09
Exchange income (Loss is
listed with “-”) - - - -
III. Operating profit (Loss is listed with
“-”) 159,064,173.16 213,185,667.34 135,249,627.55 190,993,533.97
Add: Non-operating income 8,302,512.00 904,633.10 2,291,343.33 25,372.99
Less: Non-operating expenses 847,542.62 1,800.00 248,375.33 16,696.85
Including: Losses on disposal of
non-current assets 471,610.41 - 179,478.97 6,568.35
IV. Total Profit (Loss is listed with “-”) 166,519,142.54 214,088,500.44 137,292,595.55 191,002,210.11
Less: Income tax expenses 41,320,797.05 1,638,783.46 34,025,006.74 -
V. Net profit (Net loss is listed with “-”) 125,198,345.49 212,449,716.98 103,267,588.81 191,002,210.11
Attributable to shareholders of the
Company 121,620,988.36 212,449,716.98 98,664,296.15 191,002,210.11
Minority interest 3,577,357.13 - 4,603,292.66 -
VI. Earnings per share
i. Basic earnings per share 0.422 0.342
ii. Diluted earnings per share 0.422 0.342
VII. Other comprehensive income - - - -
VIII. Total comprehensive income 125,198,345.49 212,449,716.98 103,267,588.81 191,002,210.11
Attributable to shareholders of the
Company 121,620,988.36 212,449,716.98 98,664,296.15 191,002,210.11
Minority interest 3,577,357.13 - 4,603,292.66 -SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
27
Cash Flow Statement
Prepared by Shenzhen Accord Pharmaceutical Co., Ltd. The period from January 1,2010 to June 30, 2010 Unit: RMB
Items Six month ended 30 June, 2010 Six month ended 30 June, 2009
Consolidated Company Consolidated Company
I. Cash flows from operating
activities:
Cash received from sales of
goods or rendering of services 6,228,666,031.09 950,771,563.38 5,062,055,683.88 851,316,918.82
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 - - - -
Refund of taxes and surcharges 687,076.01 - 318,538.52 -
Cash received relating to other
operating activities 93,876,588.71 19,063,545.41 80,945,381.43 9,309,029.97
Sub-total of cash inflows 6,323,229,695.81 969,835,108.79 5,143,319,603.83 860,625,948.79
Cash paid for goods and services 5,596,440,489.67 794,080,168.78 4,503,050,715.03 721,175,411.43
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 and on behalf of
employees 185,675,698.18 16,118,524.94 177,856,455.27 18,350,407.15
Payments of taxes and
surcharges 136,117,990.50 12,587,965.84 94,890,318.90 11,009,193.46
Cash paid relating to other
operating activities 188,636,590.64 45,606,788.37 216,493,081.57 23,749,786.02
Sub-total of cash outflows 6,106,870,768.99 868,393,447.93 4,992,290,570.77 774,284,798.06
Net cash flows from operating
activities 216,358,926.82 101,441,660.86 151,029,033.06 86,341,150.73SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
28
Cash Flow Statement (continued)
Items Six month ended 30 June, 2010 Six month ended 30 June, 2009
Consolidated Company Consolidated Company
II. Cash flows from investing activities:
Cash received from disposal of
investments - 45,000,000.00 - -
Cash received from returns on
investments - 32,048,822.01 - 77,532,274.50
Net cash received from disposal of
fixed assets, intangible assets and
other long-term assets
5,434,321.08 800.00 5,370,470.44 5,172,565.12
Net cash received from disposal of
subsidiaries and other business
units
325,415.00 - 59,957,664.50 65,613,100.00
Other cash received relating to other
investing activities - 1,611,038.60 - -
Sub-total of cash inflows 5,759,736.08 78,660,660.61 65,328,134.94 148,317,939.62
Cash paid to acquire fixed assets,
intangible assets and other
long-term assets
84,120,920.82 467,045.37 39,040,628.03 1,956,908.40
Cash paid to acquire investments 10,200,000.00 593,660,000.00 - -
Net increase of mortgaged loans - - - -
Net cash paid to acquire subsidiaries
and other business units 13,693,496.50 36,186,250.63 105,629,510.42 171,581,650.00
Cash paid relating to other investing
activities 64,330,110.00 481,252.34 2,067,342.50 17,877,392.31
Sub-total of cash outflows 172,344,527.32 630,794,548.34 146,737,480.95 191,415,950.71
Net cash flows from investing
activities -166,584,791.24 -552,133,887.73 -81,409,346.01 -43,098,011.09
III. Cash flows from financing activities
Cash received from capital
contributions - - - -
Including: Cash received from capital
contributions
by minority shareholders of
subsidiaries
- - - -
Cash received from loans 1,062,035,652.93 690,000,000.00 334,449,691.57 140,000,000.00
Cash received from issuance of
debentures - - - -
Cash received relating to other
financing activities - 1,130,772,148.98 219,141,489.35 503,689,875.93
Sub-total of cash inflows 1,062,035,652.93 1,820,772,148.98 553,591,180.92 643,689,875.93
Cash repayments of loans 1,027,077,912.57 727,023,220.37 344,381,770.26 70,000,000.00
Cash payments for interest expenses
and distribution
of dividends or profits
56,018,809.98 39,053,285.95 62,586,461.96 30,950,376.85
Including: Cash payments for
dividends or profit to
minority shareholders of
subsidiaries
- - - -
Cash payments relating to other
financing activities 14,562,551.78 611,035,671.52 99,263,914.42 565,286,399.72
Sub-total of cash outflows 1,097,659,274.33 1,377,112,177.84 506,232,146.64 666,236,776.57
Net cash flows from financing
activities -35,623,621.40 443,659,971.14 47,359,034.28 -22,546,900.64
IV. Effect of foreign exchange rate
changes on cash
and cash equivalents
-1,709.33 -1,606.51 -28.64 -
V. Net increase in cash and cash
equivalents 14,148,804.85 -7,033,862.24 116,978,692.69 20,696,239.00
Add: Cash and cash equivalents at
beginning of the period 579,471,913.48 125,541,203.80 381,663,418.93 62,369,583.65
VI. Cash and cash equivalent at end of
the period 593,620,718.33 118,507,341.56 498,642,111.62 83,065,822.65SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010 29
Statement on Changes of Shareholders' Equity (Consolidated)
Prepared by Shenzhen Accord Pharmaceutical Co., Ltd. June 30, 2010 Unit: RMB
Items
Current period Prior year
Owners' equity attributable to shareholder of the Company
Minorit
y
interest
Total
sharehol
ders’
equity
Owners' equity attributable to shareholder of the Company
Minorit
y
interest
Total
shareho
lders’
equity
Share
capital
Capital
surplus
Less:
Treas
ury
Stock
Specif
ic
reserv
e
Surplus
reserve
Gener
al risk
provis
ion
Retained
earnings
Oth
ers
Share
capital
Capital
surplus
Less:
Treas
ury
Stock
Specif
ic
reserv
e
Surplu
s
reserve
Gener
al risk
provis
ion
Retaine
d
earnings
Oth
ers
I. Balance at the
end of last
period/(year)
288,149,
400.00
5,030,3
38.57
17,573,
057.11
511,913,
342.00
55,464,
963.74
878,131,
101.42
288,149,
400.00
31,624,
522.44
9,303,0
64.31
330,460,
963.41
21,383,4
63.30
680,921,
413.46
Add: Changes in
accounting
policies
Correction of
errors
Others
II. Balance at the
beginning of this
period/(year)
288,149,
400.00
5,030,3
38.57
17,573,
057.11
511,913,
342.00
55,464,
963.74
878,131,
101.42
288,149,
400.00
31,624,
522.44
9,303,0
64.31
330,460,
963.41
21,383,4
63.30
680,921,
413.46
III.
Increase/(decreas
e)
92,806,0
48.36
24,079,
682.64
116,885,
731.00
-26,594,
183.87
8,269,9
92.80
181,452,
378.59
34,081,5
00.44
197,209,
687.96
(I) Net profit 121,620,
988.36
3,577,3
57.13
125,198,
345.49
192,713,
805.92
5,545,79
8.21
198,259,
604.13
(II) Other
comprehensive
income
Subtotal of items
(I) and (II)
121,620,
988.36
3,577,3
57.13
125,198,
345.49
192,713,
805.92
5,545,79
8.21
198,259,
604.13
(III) Capital
injection
20,502,
325.51
20,502,3
25.51
-26,568,
683.87
-9,303,
064.31
-4,497,7
99.33
33,460,2
02.23
-6,909,3
45.28
1. Capital
contribution by
the owners
20,502,
325.51
20,502,3
25.51
33,460,2
02.23
33,460,2
02.23
2. Share-based
payment chargedSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
30
to equity
3. Others -26,568,
683.87
-9,303,
064.31
-4,497,7
99.33
-40,369,
547.51
(IV) Appropriation -28,814,
940.00
-28,814,9
40.00
17,573,
057.11
-46,401,
076.97
-4,900,0
00.00
-33,728,
019.86
1. Transfer to
surplus reserve
17,573,
057.11
-17,573,
057.11
2. General risk
provision
3. Dividends -28,814,
940.00
-28,814,9
40.00
-28,828,
019.86
-4,900,0
00.00
-33,728,
019.86
4. Others
(V) Transfer within
equity
-25,500.
00
39,637,4
48.97
-24,500.
00
39,587,4
48.97
1. From capital
surplus to share
capital
2. From surplus
reserve to share
capital
3. From surplus
reserve to
retained earnings
4. Others -25,500.
00
39,637,4
48.97
-24,500.
00
39,587,4
48.97
(VI) Specific
reserve
1. Accrual
2. Utilisation
IV. Balance at the
end of the
period/(year)
288,149,
400.00
5,030,3
38.57
17,573,
057.11
604,719,
390.36
79,544,
646.38
995,016,
832.42
288,149,
400.00
5,030,3
38.57
17,573,
057.11
511,913,
342.00
55,464,9
63.74
878,131,
101.42SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
31
Statement on Changes of Shareholders’ Equity(Parent Company)
Prepared by Shenzhen Accord Pharmaceutical Co., Ltd. June 30, 2010 Unit: RMB
Items
Current period Prior year
Share
capital
Capital
surplus
Less:
Treas
ury
Stock
Specif
ic
reserv
e
Surplus
reserve
Gener
al risk
provis
ion
Retained
earnings
Total
shareholde
rs’ equity
Share
capital
Capital
surplus
Less:
Treasury
Stock
Specifi
c
reserve
Surplus
reserve
General
risk
provision
Retained
earnings
Total
sharehold
ers’
equity
I. Balance at the
end of last
period/(year)
288,149,4
00.00
13,828,7
26.93
17,573,05
7.11
234,901,3
48.57
554,452,5
32.61
288,149,4
00.00
2,508,76
9.94
12,781,30
1.82
121,657,2
69.56
425,096,7
41.32
Add: Changes in
accounting
policies
Correction of
errors
Others
II. Balance at the
beginning of this
period/(year)
288,149,4
00.00
13,828,7
26.93
17,573,05
7.11
234,901,3
48.57
554,452,5
32.61
288,149,4
00.00
2,508,76
9.94
12,781,30
1.82
121,657,2
69.56
425,096,7
41.32
III.
Increase/(decreas
e)
183,634,7
76.98
183,634,7
76.98
11,319,9
56.99
4,791,755
.29
113,244,0
79.01
129,355,7
91.29
(I) Net profit 212,449,7
16.98
212,449,7
16.98
175,730,5
71.10
175,730,5
71.10
(II) Other
comprehensive
income
Subtotal of items
(I) and (II)
212,449,7
16.98
212,449,7
16.98
175,730,5
71.10
175,730,5
71.10
(III) Capital
injection
11,319,9
56.99
-12,781,3
01.82
-16,085,4
15.12
-17,546,7
59.95
1. Capital
contribution by
the owners
2. Share-based
payment chargedSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
32
to equity
3. Others 11,319,9
56.99
-12,781,3
01.82
-16,085,4
15.12
-17,546,7
59.95
(IV) Appropriation -28,814,9
40.00
-28,814,94
0.00
17,573,05
7.11
-46,401,0
76.97
-28,828,0
19.86
1. Transfer to
surplus reserve
17,573,05
7.11
-17,573,0
57.11
2. General risk
provision
3. Dividends -28,814,9
40.00
-28,814,94
0.00
-28,828,0
19.86
-28,828,0
19.86
4. Others
(V) Transfer within
equity
1. From capital
surplus to share
capital
2. From surplus
reserve to share
capital
3. From surplus
reserve to
retained earnings
4. Others
(VI) Specific
reserve
1. Accrual
2. Utilisation
IV. Balance at the
end of the
period/(year)
288,149,4
00.00
13,828,7
26.93
17,573,05
7.11
418,536,1
25.55
738,087,3
09.59
288,149,4
00.00
13,828,7
26.93
17,573,05
7.11
234,901,3
48.57
554,452,5
32.61SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010 33
Breakdown of assets impairment
Prepared by Shenzhen Accord Pharmaceutical Co., Ltd. Unit: RMB
Item As at December
31, 2009 Increases Decreases As at June 30,
Reversal Write-off 2010
I. Provision for bad debts 47,709,543.35 19,463,511.61 4,350,162.26 3,522,731.89 59,300,160.81
II. Provision for declines in the
value of inventories 9,003,148.08 5,707,791.09 4,142,744.12 49,527.81 10,518,667.24
III. Provision for impairment of
financial assets available for sales
IV. Provision for impairment of
held-to-maturity investments
V. Provision for impairment of
long-term equity investments 7,689,226.69 7,689,226.69
VI. Provision for impairment of
investing properties
VII. provision for impairment of
fixed assets 1,300,000.00 1,300,000.00
VIII. Provision for impairment of
engineering materials
IX. Provision for impairment of
construction in progress
X. Provision for impairment of
productive biological assets
Including: Provision for
impairment of mature productive
biological assets
XI. Provision for impairment of
oil assets
XII. Provision for impairment of
intangible assets
XIII. Provision for impairment of
goodwill
XIV. Other
Total 65,701,918.12 25,171,302.70 8,492,906.38 3,572,259.70 78,808,054.74SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
34
1. General information
Shenzhen Accord Pharmaceutical Co., Ltd. (‘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 (including 16.5 million public shares, 3.5 million employee shares
and 10 million corporation shares) and 20 million B-shares. After this issuance, the Company’s share
capital was Rmb105 million. Through transfer of capital surplus to share capital and bonus issues for
years, the share capital of the Company increased to Rmb288,149,400 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 entered into an Assets Exchange Agreement with Shenzhen
Investment Management Company, the original main shareholder of the Company, to exchange all the
assets and liabilities of the Company as of August 31, 2000 for Shenzhen Investment Management
Company’s 100% equity interests in 11 pharmaceutical companies and certain properties as well as
51% equity interests in Shenzhen Tefa Modern Computer Co., Ltd. On December 29, 2000, the above
assets exchange proposal was approved 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., and belongs to the pharmaceutical
manufacturing industry.
On February 18, 2004, the Company’s original main shareholder, Shenzhen Investment Management
Company, entered into a Stock Transfer Agreement with Sinopharm Group Co., Ltd. (formerly known
as Sinopharm Group Medicine Holding Co., Ltd, hereinafter referred to as “Sinopharm Group”) to
transfer its 43.33% shares in the Company to Sinopharm Group. The legal procedures of the above
equity transfer were completed on 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 Group 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. As at June 30, 2010, there were 288,149,400 shares in total and all are shares without selling
restriction.
The Company is registered with Shenzhen Administration for Industry & Commerce. Its business
license number is 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 Rmb288,149,400. The legal representative of the Company is Shi Jinming.
The scope of business of the Company includes: wholesale of Chinese patent drugs, raw materials for
chemical medicine, chemical material drugs, antibiotics, bio-chemical drugs and biological products
(including vaccines); trade of health food; 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 bySHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
35
laws, administrative regulations, or the State Council. The restricted items can only be traded after
obtaining a license).
The Company is incorporated in Shenzhen, China. The address of its registered office is Accord Pharm.
Bldg., No. 15, Ba Gua Si Road, Futian District, Shenzhen, Guangdong. The company's basic
organizational structure is:
Operation
dept.
Financial
dept.
HR dept. Adminstration Distribution
dept.
Pharmacy
dept.
Logistics
dept.
Board of Supervisors
AGM
Board of Directors
Senior management
2 Summary of significant accounting policies and accounting estimates
2.1 Basis for the preparation
The Company adopted the Accounting Standards for Business Enterprises (comprising one basic
standard and 38 specific standards) promulgated by the Ministry of Finance on 15 February 2006, the
application guidance and interpretation to the Accounting Standards for Business Enterprises and other
relative regulations subsequently promulgated by Ministry of Finance (here in after collectively as
referred to the “CAS”).
2.2 Statement of compliance with the Accounting Standards for Business Enterprises
The consolidated financial statements of the Company and its subsidiaries (the “Group”) for the
reporting period truly and completely present the financial position of the Group and the Company as of
June 30, 2010 and the operating results and cash flows of the Group and the Company for the six
months then ended in accordance with the CAS.
2.3 Accounting period
The Company’s accounting year starts on 1 January and ends on 31 December.
2.4 Recording currency
The recording currency is Renminbi (“RMB”).
2.5 Business combination
(a) Business combinations involving enterprises under common control
The assets and liabilities that the Company obtained in a business combination shall be measured on the
basis of their carrying amount in the combined party on the combining date. As for the balance between
the carrying amount of the net assets obtained by the combining party and the carrying amount of the
consideration paid by it (or the total par value of the shares issued), the additional paid-in capital shall
be adjusted. If the additional paid-in capital is not sufficient to be offset, the retained earnings shall be
adjusted.
The direct cost for the business combination of the Company shall, including the expenses for audit,SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
36
assessment and legal services, be recorded into the profits and losses at the current period.
The handling fees, commissions and other expenses for the issuance of equity securities for the business
combination shall be credited against the surplus of equity securities; if the surplus is not sufficient, the
retained earnings shall be offset.
Where the accounting policy adopted by the combined parties is different from that adopted by the
Company, the Company, according to accounting policy it adopts, adjust the relevant items in the
financial statements of the combined parties, and shall, pursuant to the CAS, recognize them on the
basis of such adjustment.
(b) Business combinations involving enterprises not under common control
The Company shall, on the acquisition date, measure the assets given and liabilities incurred or assumed
by an enterprise for a business combination in light of their fair values, and shall record the balances
between them and their carrying amounts into the profits and losses at the current period.
The Company shall distribute the combination costs on the acquisition date.
The Company shall recognize the positive balance between the combination costs and the fair value of
the identifiable net assets it obtains from the acquiree as business reputation. When the combination
costs are less than the fair value of the identifiable net assets it obtains from the acquiree, the balance
should be recorded into the profits and losses of the current period.
As for the assets other than intangible assets acquired from the acquiree in a business combination (not
limited to the assets which have been recognized by the acquiree), if the economic benefits brought by
them are likely to flow into the Company and their fair values can be measured reliably, they shall be
separately recognized and measured in light of their fair values. As for any intangible asset acquired in a
combination, if its fair value can be measured reliably, it shall be separately recognized as an intangible
asset and shall measured in light of its fair value.As for the liabilities other than contingent liabilities
acquired from the acquiree, if the performance of the relevant obligations are likely to result in any
out-flow of economic benefits from the Company, and their fair values can be measured reliably, they
shall be separately recognized and measured in light of their fair values. As for the contingent liabilities
of the acquiree obtained in a combination, if their fair values can be measured reliably, they shall
separately recognized as liabilities and shall be measured in light of their fair values.
2.6 Preparation of consolidated financial statements
The scope of the Company's consolidated financial statements is determined based on control. All
subsidiaries are included in the scope of consolidation.
The accounting policies, accounting period adopted by consolidated subsidiaries included in the scope
of the consolidated financial statements are in line with those by the company. As a subsidiary adopted
inconsistent accounting policies, accounting period with the Company, the necessary adjustments should
be made based on the accounting policies, accounting period of the Company when preparing the
consolidated financial statements.
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, influence of insider transactions took place between the Company and each
subsidiary, and subsidiaries on consolidated balance sheet, consolidated income statement, consolidated
cash flow statement and consolidated statement of changes in owners’ equity will be offset.
Where losses applicable to the minority exceed the minority interest in the beginning equity of the
relevant subsidiary, the excess, deducts from owners’ equity of the Company unless there is no
requirement that the minority has a binding obligation to losses in the Company’s Article or Agreement.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
37
On the contrary, there is requirement that the minority has a binding obligation to losses in the
Company’s Article or Agreement, the excess deducts from minority shareholders' equity.
During the reporting period, where subsidiary increases in a business combination under the common
control, the opening consolidated balance sheet should be adjusted. Income, expenses, profit, in the
course of the beginning of the combination to the end of the reporting period, will be incorporated in the
consolidated income statement. Cash flow statement in the corresponding period will be incorporated in
the consolidated cash flow statement.
During the reporting period, where subsidiary increases in a business combination not under the
common control, the opening consolidated balance sheet should not be adjusted. Income, expenses,
profit, in the course of date of acquisition to the end of the reporting period, will be incorporated in the
consolidated income statement. Cash flow in the corresponding period will be incorporated in the
consolidated cash flow statement.
During the reporting period, where the Company disposes of a subsidiary, income, expenses, profit, in
the course of the beginning of the period to the date of the disposal, will be incorporated in the
consolidated income statement. Cash flow in the corresponding period will be incorporated in the
consolidated cash flow statement.
2.7 Cash and cash equivalents
In preparing the cash flow statement, cash on hand and deposits that are available for payment at any
time are confirmed as cash. The cash equivalents of the Company refers to short-term and highly liquid
investments(it usually expires within three months from the purchase date) that are readily convertible
to know amount of cash and which are subject to an insignificant risk of change in value.
2.8 Foreign currency translation
Foreign currency transactions are translated into RMB 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 translated in accordance with the exchange rate prevailing
on the balance sheet date. The translation differences arising from those specific borrowings are to be
capitalized. Translation differences arising from other accounts are accounted into current profit or loss.
Value of non currency item recorded at historical cost by foreign currency is translated 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 translated in
accordance with the exchange rate prevailing on fair value confirm date, with the translation differences
accounted into current profit or loss, or capital surplus.
2.9 Financial instruments
Financial instruments comprise financial assets, financial liabilities and equity instruments.
(a) Classification of financial instruments
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 financial assets
held for trading or financial liabilities (and financial assets, financial liabilities which are measured at
their fair values and of which the variation is included in the current profits or losses); the
held-to-maturity investments; receivables; available-for-sale financial assets; and other financial
liabilities, etc.
(b) Recognition and measurement of financial instrumentsSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
38
(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 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 recognition 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, other receivables, notes receivable, advances to suppliers, etc, the prices specified in the
contracts or agreements with the purchasers are deemed as the initial recognition 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 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 are deemed as the initial recognition amount.
The interests and cash dividends generated during the holding period are recognized as investment
income. At year end, available-for-sale financial assets are calculated in the fair values and the changes
in fair values are recorded in the capital reserves (other capital reserves).
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 fair value and relevant transaction expenses are the initial recognition amount. The subsequent
calculation adopts the amortized cost method.
(c) Recognition and measurement of transform of financial assets
The Company should terminate recognizing these financial assets when the almost all risk and return ofSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
39
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.
Substance is over form when judging whether the transform meets the requirements of the financial
assets termination 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 total 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).
(c) Recognition and measurement of transform of financial assets
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 total 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 criterias of termination, the financial assets
remain recognition and the consideration received is recognized as financial liabilities.
(d) Termination of financial liabilities
Only when the prevailing obligations of a financial liability are relieved in all or in part may the the
financial liability be derecognized in all or partly. Where an enterprise (debtor) enters into an
agreement with a creditor so as to substitute the existing financial liabilities by way of any new
financial liability, and if the contractual stipulations regarding the new financial liability is
substantially different from that regarding the existing financial liability, it shall derecognize the
existing financial liability, and shall at the same time recognize the new financial liability.
Where an enterprise makes substantial revisions to some or all of the contractual stipulations of the
existing financial liability, it shall derecognize the existing financial liability or part of it, and at the
same time recognize the financial liability after revising the contractual stipulations as a new financial
liability.
Where a financial liability is totally or partially derecognized, the enterprise concerned shall include
into the profits and losses of the current period the differences between the carrying amount of the
derecognized financial liability and the considerations it has paid (including the non-cash assets it has
transferred out and the new financial liabilities it has assumed should be charged to the income
statement).
Where the Company repurchased part of its financial liabilities, it shall distribute, on the repo day, the
carrying amount of the whole financial liabilities in light of the comparatively fair value of the part
that continues to be recognized and the part whose recognition has already been terminated. The gap
between the carrying amount which is distributed to the part whose recognition has terminated and the
considerations it has paid (including the noncash assets it has transferred out and the new financial
liabilities it has assumed) shall be recorded into the profits and losses of the current period.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
40
(e) Measurement on fair values of 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.
(f) Impairment loss on financial assets
(1) Impairment of available-for-sale financial assets:
At the year end, when 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.
2.10 Accounts receivable
(a) Recognition and provision of bad debt provision on receivable accounts with significant amount
Debtors with significant balance refer to those with individual amount over RMB5 million.
Individual impairment test will be performed. Differences between its future cash flow and carrying
amount are charged to the income statement.
(b) Recognition and providing of bad debt provisions on receivable accounts individually with
insignificant balance but of higher credit risk when grouped with others with similar credit risk
characteristic
Debtors with insignificant balance but of higher credit risk when grouped with others with similar
credit risk characteristic refer to those insignificant debtors aged over 3 years. The specific provision
ratio refer to provision ratio of account receivables and other receivables with age of 3 years or above
in aging analysis method.
(c) Rate of bad debt provisions provided on account ageing basis
Ageing Rate for accounts
receivables
(%)
Rate for other
receivables
(%)
Within 1 year - -
1 to 2 years 5 5
2 to 3 years 10 10
More than 3 years 20 20
2.11 Inventories
(a) Categories of inventories
Inventories include raw materials, packaging materials, low-value consumption goods, consigned
processing materials, work in progress, finished goods and goods in transit.
(b) Costing method of inventories
Inventories are recognized upon delivery at the end of each month, using weighted average method
at the end of the month.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
41
(c) Recognition basis of realizable net value of inventory and providing basis of inventory
provision 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 realizable
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.
(d) System of stock inventories
The perpetual inventory system is adopted.
(e) Amortizing basis of low-value consumable materials
Low-value consumables are amortized on one-off basis.
2.12 Long-term Equity Investment
(a) Initial Recognition
(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.
(a) Initial Recognition (continued)
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 accruedSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
42
to the enterprise merger cost.
(2) Other long-term equity investments
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 of
the obtained equities will be deemed as the initial investment cost.
(b) Subsequent measurement and income recognition
(1) Subsequent measurement
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 which the Company has joint control or significant influence is recorded
under the equity method. 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.
(b) Subsequent measurement and income recognition (continued)
(1) Subsequent measurement (continued)
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.
(2) Income recognitionSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
43
Under the cost method, in addition to the purchase price actually when acquiring investment or the
profits or cash dividends declared to distribute in the payment, the Company shall, in accordance with
the profits or cash dividends declared to distribute, recognize the investment profits or losses.
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.
(c) 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.
(d) Impairment test method and provision method
Under significant influence, 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 addition to goodwill in business combination, which has
signs of possible impairment exist, 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.
Impairment tests are performed on goodwill arises from business combinations regardless of whether
signs of possible impairment exist.
Once the depreciation loss of long-term equity investment is confirmed, they will not be reversed.
2.13 Investment properties
Investment properties are defined as the properties 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 properties. For investment properties for
lease accounted for under the cost model, the same depreciation policies as those of the Company’s
fixed assets are adopted. For land use rights 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.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
44
Once the asset impairment loss is recognized, it is not allowed to be reversed for the value recovered
in the subsequent periods.
2.14 Fixed assets
(a) Recognition 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) Depreciation of fixed assets
Depreciation of fixed assets is provided for on a straight-line basis. The depreciation rate is
determined in accordance with category, estimated useful lives and estimated residual values of fixed
assets.
Fixed assets improvements 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.
The estimated useful lives, the estimated residual values expressed as a percentage of cost and the
annual depreciation rates are as follows:
Category Estimated useful
life (year)
Estimated net
residual value rate
(%)
Annual depreciation
rate(％)
Buildings 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 improvements Within 5 - Above 20%
(c) Impairment test method and provision method of fixed assets
For fixed assets, the Company assesses whether signs of possible impairment exist at end of each year.
For fixed assets with signs of impairment, recoverable amounts are estimated. Recoverable amounts are
determined as the fair value of the fixed assets after netting off costs of disposal, and the current value
of projected future cash flows generated by the fixed assets, whichever is higher.
When the recoverable amount of a fixed asset is lower than the book value of the fixed asset, the book
value of the fixed asset is reduced to its recoverable amount. The amount reduced is recognized as
impairment loss on fixed assets in the current profit and loss statement, and provision for impairment
loss on fixed assets is recorded at the same time.
Future depreciation of fixed assets is adjusted after recognition of impairment loss so that the adjusted
book value of the fixed assets (after the deduction of estimated residual value) is amortized
systematically over their remaining useful life.
Impairment loss on fixed assets shall not be reversed once recognized.
Where there is any evidence indicating a possible impairment of fixed assets, the Company shall, on the
basis of single item fixed assets, estimate the recoverable amount. Where it is difficult to do so, it shall
determine the recoverable amount of the group fixed assets on the basis of the fixed asset group to
which the fixed asset belongs.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
45
(d) Finance lease
Where a lease agreement articles signed by the Company and a lessor satisfy one or more of the
following criteria, it shall be recognized as a finance lease:
(1) The ownership of the leased asset is transferred to the Company when the term of lease expires.
(2) The Company has the option to buy the leased asset at a price which is expected to be far lower
than the fair value of the leased asset at the date when the option becomes exercisable.
(3) The lease term covers the major part of the use life of the leased asset.
(4) In the case of the lessee, there is no significant difference between the present value of the
minimum lease payments on the lease beginning date and the fair value of the leased asset on the
lease beginning date.
On the lease beginning date, the Company shall record the lower one of the fair value of the leased
asset and the present value of the minimum lease payments on the lease beginning date as the entering
value in an account, recognize the amount of the minimum lease payments as the entering value in an
account of long-term account payable, and treat the balance between the recorded amount of the
leased asset and the long-term account payable as unrecognized financing charges.
2.15 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.
(c) Impairment test method and provision method of construction in progress
For construction in progress, the Company assesses whether signs of possible impairment exist at end
of each year.
For construction in progress with signs of impairment, recoverable amounts are estimated.
Recoverable amounts are determined as the fair value of construction in progress after netting off costs
of disposal, and the current value of projected future cash flows generated by construction in progress,
whichever is higher.
When the recoverable amount of construction in progress is lower than the book value of construction
in progress, the book value of construction in progress is reduced to its recoverable amount. The
amount reduced is recognized as impairment loss on construction in progress in the current profit and
loss statement, and provision for impairment loss on construction in progress is recorded at the same
time.
Impairment loss on construction in progress shall not be reversed once recognized.
Where there is any evidence indicating a possible impairment of construction in progress, theSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
46
Company shall, on the basis of single item construction in progress, estimate the recoverable amount.
Where it is difficult to do so, it shall determine the recoverable amount of the group construction in
progress on the basis of the construction in progress group to which the construction in progress
belongs.
2.16 Loan expenses
(a) 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.
(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.
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
Where each part of a asset under acquisition and construction or production is completed separately
and is ready for use or sale during the continuing construction of other parts, but it can not be used or
sold until the asset is entirely completed, the capitalization of the borrowing costs shall be ceased
when the asset is completed entirely.
(c) Suspended of capitalization period
Where the acquisition and construction or production of a qualified asset is interrupted abnormally and
the interruption period lasts for more than 3 months, the capitalization of the borrowing costs shall be
suspended. If the interruption is a necessary step for making the qualified asset under acquisition and
construction or production ready for the intended use or sale, the capitalization of the borrowing costs
shall continue. The borrowing costs incurred during such period shall be recognized as expenses, and
shall be recorded into the profits and losses of the current period, till the acquisition and construction
or production of the asset restarts.
(d) Calculation of capitalized loan expenses
For interests (minus the income of interests earned on the unused borrowing loans as a deposit in the
bank or as a temporary investment)and the ancillary expense incurred to a specifically borrowed loan,
those incurred before a qualified asset under acquisition, construction or production is ready for the
intended use or sale shall be capitalized at the incurred amount when they are incurred, and shall be
recorded into the costs of the asset eligible for capitalization.
The Company shall calculate and determine the to-be-capitalized amount of interests on the generalSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
47
borrowing by multiplying the weighted average asset disbursement (average at the ending balance of
every month) of the part of the accumulative asset disbursements minus the general borrowing by the
capitalization rate of the general borrowing used. The capitalization rate shall be calculated and
determined in light of the weighted average interest rate of the general borrowing.
Where there is any discount or premium, the amount of discounts or premiums that shall be amortized
during each accounting period shall be determined by the real interest rate method, and an adjustment
shall be made to the amount of interests in each period.
2.17 Intangible assets
(a) Measurement of intangible assets
(1) Initial measurement at cost method
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.
The cost of intangible asset internal developed includes consumed materials, service expenses incurred,
registered fees, amortization of patent and franchise, capitalize loan expenses and other direct
expenditure incurred.
(2) Subsequent measurement
The Company should estimate the useful lives of the intangible assets when initially obtained.
An intangible asset with a finite useful life is amortized using the straight line method 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.
(b) Useful life and amortization of intangible assets
Category Useful lives
Software within 5 years
Trademarks over beneficial period and within 5 years
Land use rights The shorter between useful period stipulated in the certificate and
operation period of the CompanySHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
48
Proprietary technology useful period stipulated in the certificate and within 5 years
At the end of each year, the Company will recheck the usage life of intangible assets with the limited
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.
(c) Determination basis of uncertain useful life of intangible assets
At the end of each year, the Company will recheck the usage life of intangible assets with no limited
usage life and amortization method will be rechecked.
After the rechecking, the usage life of intangible assets is also uncertain.
(d) Impairment test on intangible assets and providing of impairment provision
Intangible assets with uncertain useful life are tested for impairment at each period end.
Intangible assets with finite useful life are tested for impairment if there is any indication that an asset
may be impaired at the balance date. If the result of the impairment test indicates that the
recoverable amount of the asset is less than its carrying amount, a provision for impairment and an
impairment loss are recognized for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and
the present value of the future cash flows expected to be derived from the asset. Once the asset
impairment loss mentioned above is recognized, it is not allowed to be reversed for the value
recovered in the subsequent periods. A provision for asset Impairment is determined and recognized
on an individual asset basis. If it is not possible to estimate the recoverable amount of an individual
asset, the recoverable amount of the group of assets to which the asset belongs is determined.
(e) Classification standard of research phase and development phase expenses for its internal
research and development projects
Research phase: refers to the phase that the creative and planned investigation and research to acquire
and understand new scientific or technological knowledge.
Development phase: refers to the phase that the application of research achievements and other
knowledge to a certain plan or design, prior to the commercial production or use, so as to produce any
new material, device or product, or substantially improved material, device and product.
The research expenditures for its internal research and development projects of an enterprise shall be
recorded into the profit or loss for the current period.
(f) Specific standard of research phase expenses eligible for capitalization
Expenditure on the development phase is capitalized only if all of the following conditions are
satisfied:
(1) it is technically feasible to complete the intangible asset so that it will be available for use;
(2) management intends to complete the intangible asset and use or sell it;
(3) it can be demonstrated how the intangible asset will generate economic benefits;
(4) adequate technical, financial and other resources to complete the development and the ability to
use or sell the intangible asset; and
(5) the expenditure attributable to the intangible asset during its development phase can be reliably
measured.
2.18 Long-term prepaid expenses
(a) Amortization method
Long-term prepaid expenses are amortized evenly over the beneficial period.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
49
(b) Amortization period
(1) Prepaid rental of leasehold improvement for operation is amortized evenly over the period
stipulated in the leasing contract;
(2) Leasehold improvement for operation on leased property is amortized evenly over the remaining
leasing period or the remaining useful life whichever is shorter.
2.19 Provisons
When the company involved in litigation, debt guarantees, loss of contracts, restructuring matters, in
case it is likely to cause to deliver assets provide services and the amount of the obligation can be
measured in a reliable way, the amount will be recognized as an estimated debt if it can be reliably
measured.
(a) Recognition
The obligation pertinent to a Contingency shall be recognized as an estimated debt when the following
conditions are satisfied simultaneously:
That obligation is a current obligation of the Company.
It is likely to cause any economic benefit to flow out of the Company as a result of performance of the
obligation.
The amount of the obligation can be measured in a reliable way.
(b) Measurement
The estimated debts shall be initially measured in accordance with the best estimate of the necessary
expenses for the performance of the current obligation.
To determine the best estimate, the Company shall take into full consideration of the risks, uncertainty,
time value of money, and other factors pertinent to the Contingencies. If the time value of money is of
great significance, the best estimate shall be determined after discounting the relevant future outflow
of cash.
The best estimate shall be conducted in accordance with the following situations, respectively:
If there is a sequent range for the necessary expenses and if all the outcomes within this range are
equally likely to occur, the best estimate shall be determined in accordance with the middle estimate
within the range.
If there is not a sequent range for the necessary expenses, or there is a sequent range for the necessary
expenses but the likelihood of various outcomes are not the same, if the Contingencies concern a
single item, it shall be determined in the light of the most likely outcome. If the Contingencies concern
two or more items, the best estimate should be calculated and determined in accordance with all
possible outcomes and the relevant probabilities.
When all or some of the expenses necessary for the liquidation of an estimated debts of the Company
is expected to be compensated by a third party, the compensation should be separately recognized as
an asset only when it is virtually certain that the reimbursement will be obtained. The amount
recognized for the reimbursement should not exceed the book value of the estimated debts.
2.20 Revenue
(a) Income from sales 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 alreadySHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
50
occurred or are going to occur can be measured reliably.
(b) Income from transferring assets use rights
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.
2.21 Government subsidies
(a) Category
A government subsidy means the monetary or non-monetary assets obtained free by the Company
from the government. Government subsidies consist of the government subsidies pertinent to assets
and government subsidies pertinent to income.
(b) Accounting treatment
The government subsidies pertinent to assets, such as fixed assets or intangible assets, etc, shall be
recognized as deferred income and included in non-operating profit.
The government subsidies pertinent to incomes used for compensating the related future expenses or
losses of the enterprise shall be recognized as deferred income and shall included in non-operating
profit during the period when the relevant expenses are recognized. Those subsidies used for
compensating the related expenses or losses incurred to the enterprise shall be directly included in
non-operating profit.
2.22 Deferred income tax assets and deferred income tax liabilities
(a) Deferred income tax assets
An enterprise shall recognize the deferred income tax assets from a deductible temporary difference to
the extent of the amount of the taxable income which it is most likely to obtain and which can be
deducted from the deductible temporary difference.
(b) Deferred income tax liabilities
An enterprise shall recognize the taxable temporary differences of the current period and prior periods
as deferred income tax liabilities, excluding the taxable temporary differences comes from business
reputation, transaction which is not business combination and the accounting profits will not be
affected, nor will the taxable amount (or the deductible loss) be affected at the time of transaction.
2.23 Operating leases
Accounting Treatment of Operating lease
(1) The rents paid by the Company for leasing assets shall be amortized by using the straight-line
method over each period of the lease term (does not deduct rent-free period) and recorded in the
profits and losses of the current period. The initial direct costs incurred related to lease transactions
shall be recognized as the profits and losses of the current period. If lessor of assets assumes expenses
associated with the lease, which should be assumed by the Company, the cost shall be deducted from
the total amount of rents. The Company shall amortize the rent after deducting the cost over the lease
term and recognized as the profits and losses of the current period.
(2) The rents received by the Company for leasing assets shall be amortized by using the
straight-line method over each period of the lease term (does not deduct rent-free period) and recordedSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
51
as leasing earning in the current period. The initial direct costs incurred related to lease transactions
shall be recognized as the profits and losses of the current period. Where the amount is significant, it
shall be capitalized and recorded in the profits of the current period on the same basis of recognizing
lease earning.
If the Company assumes expenses associated with the lease, which should be assumed by lessee, the
cost shall be deducted from the total amount of rents. The Company shall amortize the leasing earning
after deducting the cost over the lease term and recognized as the profits and losses of the current
period.
2.24 Changes in significant accounting policies and accounting estimations
There is no significant accounting policies and accounting estimations changes for the period ended
June 30, 2010.
2.25 Correction of accounting errors
There is no correction of prior year accounting error.
3 Taxation
3.1 Main types and rates of taxes
Type Taxable base Tax rate
Value added tax Sales revenue of the products 17%，13%，6%，0%
Business tax Leasing income, storage income etc. 5%
Business tax Transportation and conveyance
incomes 3%
Urban maintenance
andconstruction tax Amount of turnover tax 1% or 7%
Education surcharge Amount of turnover tax 3% or 4%
Corporate Income tax Taxable income 15%、22% or 25%
3.2 Tax reduction
In accordance with SKX [2008] No. 325 document, Shenzhen Zhijun Pharmaceutical Co., Ltd
d(hereinafter referred to as ‘Zhijun Pharm’), 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 TKZ[2009] No. 33 document, Suzhou Zhijun Wanqing Pharmaceutical Co., Ltd
d(hereinafter referred to as ‘Zhijun Wanqing’), 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 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 22% in
2010. Therefore, the Company and its subsidiaries, Shenzhen Zhijun Pharmaceutical Trade Co.,
Ltd(hereinafter referred to as ‘Zhijun Trade’), Shenzhen Accord Pharmaceutical Material Co.,
Ltd(hereinafter referred to as ‘Accord Material’), Shenzhen Jianmin Pharmaceutical Co.,
Ltd(hereinafter referred to as ‘Jianmin Pharm’), Shenzhen Accord Pharmaceutical Logistics Co.,
Ltd(hereinafter referred to as ‘Accord Logistics’) and Shenzhen Yanfeng Medicall Co., Ltd(hereinafter
referred to as ‘Yanfeng Medical’), are subject to a tax rate of 22%.
Guangdong Accord Pharmaceutical Vocational Skills Training Center (hereinafter referred to as
‘Training Center’) belongs to the education industry and tax applicable is calculated by 10% of
income and then corporate income tax is subject to a tax rate of 25%.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010 52
4 Business combination and the consolidated financial statements
Figures in this section are in RMB ’0000 unless otherwise stated.
4.1 Subsidiaries
(a) Subsidiaries acquired through business combination under the same control
Full name of
subsidiaries
Enterprise
Type
Registered
place
Principal
activities
Registered
capital Principal business
Period-End
balance of
investment
Other assets
constitute
investment
in substance
Attributabl
e equity
interest
(%)
Voting
right
(%)
Consolidat
ed or not
Minority
interest
Zhijun Pharm Limited
company
Shenzhen Industry 20,000
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
23,706.17 100 100 Yes
Jianmin Pharm
Limited
company
Shenzhen Commercia
l industry 500
Wholesale of chemical agent,
antibiotics agent, chemical
and biological agent, blood
products, raw material of
chemical product, Chinese
medicine and diagnosis
products
5,348.29 100 100 Yes
Shenzhen
Medicine Trade
Co., Ltd.(1)
Limited
company Shenzhen Commercia
l industry 188 Wholesale and retail of drugs
and textiles 847.85 100 100 No
Accord Material
Limited
company Shenzhen Commercia
l industry 600
Chinese patent medicine,
western medicine, medicine
treatment apparatus
816.74 100 100 Yes
Zhijun Trade
Limited
company
Shenzhen Commercia
l 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.
373.40 100 100 YesSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
53
Full name of
subsidiaries
Enterprise
Type
Registered
place
Principal
activities
Registered
capital Principal business
Period-End
balance of
investment
Other assets
constitute
investment
in substance
Attributabl
e equity
interest
(%)
Voting
right
(%)
Consolidat
ed or not
Minority
interest
Accord Logistics
Limited
company Shenzhen Service
industry 100
Storage service, convey,
liquidation of cargo external
package and common
transportation of road
101.91 100 100 Yes
Training Center Limited
company Shenzhen Service
industry 3 Training 3.00 100 100 Yes
Sinopharm
Medicine
Holding
Guangzhou Co.,
Ltd.
(Hereinafter
refer to as
“Sinopharm
Guangzhou”)
Limited
company
Guangzhou Commercia
l industry 40,000
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.
48,388.83 100 100 Yes
Guangdong
Accord
Hengxing
Pharmaceutical
Co., Ltd.
(Hereinafter
refer to as
“Guangdong
Hengxing”) (2)
Limited
company
Guangzhou Commercia
l industry 2,000 Drugs, medical apparatus
sales 1,714.17 100 100 Yes
Guangxi Accord
Pharmaceutical
Co., Ltd.
(hereinafter
refer to as
“Guangxi
Accord“)
Limited
company
Nanning Commercia
l industry 500 Drug sales 498.79 100 100 YesSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
54
Full name of
subsidiaries
Enterprise
Type
Registered
place
Principal
activities
Registered
capital Principal business
Period-End
balance of
investment
Other assets
constitute
investment
in substance
Attributabl
e equity
interest
(%)
Voting
right
(%)
Consolidat
ed or not
Minority
interest
Sinopharm
Medicine
Holding
Liuzhou Co., Ltd.
(Hereinafter
refer to as
“Sinopharm
Liuzhou”)
Limited
company
Liuzhou Commercia
l 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 51 51 Yes 2,214.5
0
Guangxi Accord
Chinese Herbal
Pieces Co., Ltd.
(Hereinafter
refer to as
“Guangxi
Chinese Herbal
Pieces”) (3)
Limited
company
Liuzhou Industry 200 Chinese herbal pieces - - - Yes
Guangdong
Huixin
Investment Co.,
Ltd.
(Hereinafter
refer to as
“Huixin
Investment”)
(4)
Limited
company
Guangzhou Service
industry 500
Project investment, property
management and leasing,
medical information
consultancy, car park
management
6,441.69 100 100 Yes
Sinopharm
Medicine
Holding
Foshan Co., Ltd.
(Hereinafter
refer to as
“Sinopharm
Foshan”) (5)
Limited
company
Guangzhou Commercia
l industry 200 Drug sales 699.51 100 100 YesSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
55
Full name of
subsidiaries
Enterprise
Type
Registered
place
Principal
activities
Registered
capital Principal business
Period-End
balance of
investment
Other assets
constitute
investment
in substance
Attributabl
e equity
interest
(%)
Voting
right
(%)
Consolidat
ed or not
Minority
interest
Guangdong
Yuexing
Medicine
Co., Ltd.
(Hereinafter
refer to as
“Yuexing
Medicine”) (4)
Limited
company
Guangzhou Commercia
l industry 3,000 Sales of medicine and
medical treatment apparatus 4,345.93 100 100 Yes
Guangdong
Hengchang
Logistics Co.,
Ltd.
(Hereinafter
refer to as
“Hengchang
Logistics”) (5)
Limited
company
Guangzhou Service
industry 500 Storage loading and
unloading 559.60 100 100 Yes
Sinopharm
Medicine
Holding
Nanning Co., Ltd.
(Hereinafter
refer to as
“Sinopharm
Nanning”)
Limited
company
Nanning Commercia
l industry 10,000
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.
10,404.90 100 100 Yes
Guangxi Huiqin
Investment Co.,
Ltd.
(Hereinafter
refer to as
“Huiqin
Investment”)
(6)
Limited
company
Nanning Commercia
l industry 710.07
Project investment, property
management and leasing,
medical information
consultancy, car park
management
Yes
Note 1: Shenzhen Medicine Co., Ltd ceased operation since 2003 and is not consolidated.
Note 2: Hengxing Pharm, formerly known as Sinopharm Guangdong Xinlong Co., Ltd, is held by the Company with 49% shares and Sinopharm Guangzhou with 51% sharesSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
56
respectively. In 2009, the Company acquired 51% of the shares from Sinopharm Guangzhou. Since then, Hengxing Pharm became a wholly-owned subsidiary of the Company.
Note 3: Guangxi Chinese Herbal Pieces is a wholly-owned subsidiary of Sinopharm Liuzhou.
Notes 4: These companies were wholly-owned subsidiaries of Sinopharm Guangzhou formerly, which is a subordinate subsidiary of the Company. In 2009, the Company acquired
100% of the shares previously held by Sinopharm Guangzhou. Since then, these companies became wholly-owned subsidiaries of the Company.
Note 5: These companies were wholly-owned subsidiaries of Huixin Investment formerly, a subordinate subsidiary of the Company. In 2009, the Company acquired 100% of the shares
previously held by Huixin Investment. Therefore, these companies became wholly-owned subsidiaries of the Company.
Note 6: Huixin Investment is a wholly-owned subsidiary of Sinopharm Nanning.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
57
(b) Subsidiaries acquired through business combination under different control
Full name of
subsidiaries Enterprise
Type
Registered
place
Principal
activities
Registered
capital Principal business
Period-En
d balance
of
investment
Other
assets
constitute
investment
in
substance
Attributa
ble
equity
interest
(%)
Voting
right
(%)
Consolidate
d or not
Minority
interest
ZhijunWanqing Limited
company 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
13,425 75 75 Yes 3,669.33
Dongguan Accord
Pharmaceutical Co.,
Ltd. (Hereinafter
refer to as
“Dongguan
Accord”)
Limited
company 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
274.20 100 100 Yes
Zhanjing Tianfeng
Pharmaceutical Co.,
Ltd.(Hereinafter
refer to as
“Zhanjiang
Tianfeng”)
Limited
company Zhanjiang Commercial 60 Wholesale of medicine 136.99 100 100 Yes
Yanfeng Medicine Limited
company Shenzhen Commercial 3,000
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
3,820.78 51 51 Yes 2,070.63SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010 58
4.2 Changes in consolidation scope during current period
1. The Company acquired Yanfeng Medicine in April 2010.
2. Since the Company acquired Huiqin investment through business combination under common control,
the consolidation scope included Huiqing investment and its subsidiary Guangxi Guoda Drugstore
Chain Co., Ltd.. when preparing the comparative financial statements of 2009.
4.3 Newly acquired subsidiaries during current period
Names of subsidiaries Net assets at period end Net profit in current period
Yanfeng Medicine 42,257,817.11 416,336.47
4.4 Subsidiaries acquired through business combination not under common control
Names of subsidiaries Goodwill Calculation of goodwill
Yanfeng Medicine 16,868,644.87
Goodwill is the excess of the cost of
acquisition over the Group’s share of the fair
value of the identifiable net assets acquired in
the business combination not under the
common control.
5 Notes to financial reports
(Amounts expressed in RMB unless specific description.)
5.1 Cash at bank and in hand
Item As at June 30, 2010 As at December 31, 2009
Cash in hand 52,001.33 332,939.70
Cash at bank 492,445,381.53 461,716,777.43
Other monetary funds 101,123,335.47 117,422,196.35
Total 593,620,718.33 579,471,913.48
Other monetary funds include:
Item As at June 30, 2010 As at December 31, 2009
Deposits for bank acceptance
notes 100,914,087.21 111,646,177.34
Other deposits 209,248.26 5,776,019.01
Total 101,123,335.47 117,422,196.35
5.2 Notes receivable
(a)
Item As at June 30, 2010 As at December 31, 2009
Bank acceptance notes 188,960,132.35 198,146,148.04
Trade acceptance notes 218,929,595.40 161,273,604.35
Total 407,889,727.75 359,419,752.39SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
59
(c)Top five bills which have been endorsed to other parties but are not yet due at the end of the period:
Issuer Amount Issuing date Expire date
AstraZeneca(wuxi)Andelslag Co.,Ltd 3,792,958.30 2010.04.27 2010.07.27
Guangdong Jointown Pharmaceutical Co.,Ltd 3,303,485.23 2010.04.29 2010.07.29
Guangdong Jointown Pharmaceutical Co.,Ltd 2,868,183.43 2010.05.27 2010.08.27
Siping Fine Chemicals Co.,Ltd 2,670,520.00 2010.02.01 2010.08.01
Jiangsu Hengrui medicine sale co.,Ltd 2,290,000.00 2010.06.24 2010.09.24
(c).As at June 30, 2010, notes receivable due from related parties amounted to Rmb54,882,069.25, which
accounts for 13.466% of the total balance at the period-end。
5.3 Dividends receivable
Items
As at
December 31,
2009
Increases Decreases As at June 30,
2010
Reason for
unsettlement Impairment
Within 1 year 8,271,829.94 8,271,829.94
Including :Shenzhen
Wanle 8,271,829.94 8,271,829.94 The company
not yet paid No
5.4 Accounts receivable
(a) Accounts receivable classified by nature
Category
As at June 30, 2010 As at December 31, 2009
Book value Bad debt provision Book value Bad debt provision
Amount Proportio
n% Amount Proportio
n% Amount Proportio
n% Amount Proportio
n%
Debtors with
significant balance 1,242,557,084.83 44.37 26,871,913.84 2.16 1,168,401,898.12 47.39 10,587,970.07 0.91
Debtors with
insignificant
balance but of
higher credit risk
when grouped
with others with
similar credit risk
characteristic
9,807,688.59 0.35 9,771,717.60 99.63 0.00 0.00 0.00 0.00
Others with
insignificant
balance
1,548,122,199.43 55.28 5,720,638.31 0.37 1,297,095,614.08 52.61 16,382,597.46 1.26
Total 2,800,486,972.85 100.00 42,364,269.75 2,465,497,512.20 100.00 26,970,567.53
(b) Details of insignificant balance but of higher credit risk when grouped with others with similar credit risk
characteristic
Ageing
As at June 30, 2010 As at December 31, 2009
Book value Bad debt
provision
Book value Bad debt
Amount Proporti provision
on% Amount Proporti
on%
Over 3 year 9,807,688.59 100.00 9,771,717.60
Total
9,807,688.59 100.00
9,771,717.60SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
60
(c) The Company has written off the accounts receivable amounting to Rmb2,691,971.30 in the current period.
(d) As at June 30, 2010, accounts receivable due from shareholders with more than 5% (including 5%) of the
Company’s shares amounted to Rmb3,330,779.56.
Shareholder As at June 30, 2010 As at December 31, 2009
Book value Bad debt provision Book value Bad debt provision
Sinopharm Group 3,330,779.56 3,148,058.02
(e) Top five accounts receivable
Name of the companies Relationship with
the Company Amount Ageing Portion in total
receivables
No. 3 Hospital Affiliated to Sun
Yat-sen University Non-related 41,089,828.69 within 1 year 1.47%
No. 1 Hospital Affiliated to
Guangxi Medical University
Non-related 33,077,017.77 within 1 year 1.18%
Shenzhen People’s Hospital Non-related 31,166,514.19 within 1 year 1.11%
Guangdong People’s Hospital Non-related 30,548,047.50 within 1 year 1.09%
Guangdong Disease Control and
prevention Center
Non-related 30,272,470.00 within 1 year 1.08%
Total 166,153,878.15 5.93%
(e) As at June 30, 2010, accounts receivable due from related parties amounted to Rmb165,572,995.38, which
accounts for 5.91% of the total balance at the period-end.
5.5 Other receivables
(a) Other receivables classified by nature
Category
As at June 30, 2010 As at December 31, 2009
Book value Bad debt provision Book value Book balance
Amount Proporti
on% Amount Proportio
n% Amount Proportio
n% Amount Proporti
on%
Debtors with
significant
balance
8,980,000.00 12.87 8,980,000.00 100.00 23,393,155.40 33.95 8,980,000.00 38.39
Debtors with
insignificant
balance but of
higher credit risk
when grouped
with others with
similar credit
risk
characteristic
150,900.00 0.22 7,545.00 5.00 20,229.50 0.03 4,045.90 20.00
Others with
insignificant
balance
60,632,059.42 86.91 7,948,346.06 13.11 45,500,996.70 66.02 11,754,929.92 25.83
Total 69,762,959.42 100.00 16,935,891.06 68,914,381.60 100.00 20,738,975.82
(b) Details of bad debt provisions for the accounts receivable which are material or not material but having been
specifically assessed for impairment
Company Book value Provision Percentage Reason for provision
provided
Shenzhen Yinghai
Technology investment 8,980,000.00 8,980,000.00 100.00 Uncertainty of recoverabilitySHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
61
Co.,Ltd
(c) Details of insignificant balance but of higher credit risk when grouped with others with similar credit risk
characteristic
Ageing
As at June 30, 2010 As at December 31, 2009
Book value Bad debt
provision
Book value Bad debt
Amount Proportion% Amount Proportion% provision
Over 3 years 150,900.00 100.00 7,545.00 20,229.50 100.00 4,045.90
Total 150,900.00 100.00 7,545.00 20,229.50 100.00 4,045.90
(d) Reversal of material provisions that had been provided in prior periods
Debtor Amount
recovered
Original
provision
Reason for reversal
Basis and
Reasonableness
of original
provision
Shenzhen
Medicines And
Health Products
Imp.&exp Co, Ltd
3,004,579.90 2,704,121.91 Debtor has been collected Long aged
receivable
(e) The Company has written off the other receivables amounting to Rmb830,760.59 in the current period.
(e) As at June 30, 2010, other receivables due from shareholders with more than 5% (including 5%) of the
Company’s shares :
Shareholder As at June 30, 2010 As at December 31, 2009
Book value Bad debt provision Book value Bad debt provision
Sinopharm Group - - 731,846.06 -
(f) Top five other receivables
Company Relationship with
the Company Amount Ageing
Portion in total
other
receivables
Nature or Content
Shenzhen Yinghai
Technology investment Co.,
Ltd.
Non-related 8,980,000.00 Over 3 years 12.87 Receivable from
equity transaction
Guangdong JianHai
Hvac&R Equipment Co.,
Ltd.
Non-related 3,750,000.00 Within 1 year 5.38
Advance for
construction
project
Beijing Materials Handing
Research Institute Non-related 3,480,000.00 Within 1 year 4.99
Advance for
construction
project
Sino-American Shanghai
Squibb Pharmaceuticals
Ltd.
Non-related 3,480,000.00 Within 1 year 4.99 Purchase rebate
Shenzhen Ke Leng Commer
cial Equipent co.,Ltd Non-related 3,212,000.00 Within 1 year 4.60
Advance for
construction
project
Total 22,902,000.00 32.83
(g) As at June 30, 2010, other receivables due from related parties amounted to Rmb1, 215,000.00, which accounted
for 1.74% of the total other receivables at the period end.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
62
5.6 Advances to suppliers
(a) Ageing of advances to suppliers
Ageing As at June 30, 2010 As at December 31, 2009
Amount Proportion% Amount Proportion%
Within 1 year 96,252,290.73 95.87 82,117,104.13 95.88
1-2 years 465,334.10 0.46 3,529,434.95 4.12
2-3 years 3,550,417.85 3.54
Over 3 years 134,136.03 0.13
Total 100,402,178.71 100.00 85,646,539.08 100.00
As at June 30, 2010, the balances of Rmb20,982.90 and Rmb134,136.03 aged between 2 to 3 years and aged over 3
years respectively resulted from the acquisition Yanfeng Pharm in April 2010.
(b) Top five advances to suppliers
Name of the companies Relationship with
the Company Amount Ageing Reason for unsettlement
Tongzhou Jianzong Group
Co.,Ltd Non-related 6,460,000.00 Within 1 year Advance for
construction project
Haoke Shijiazhuang
Pharmaceutical equipment
Co.,Ltd
Non-related 3,980,594.00 Within 1 year
Advance for
construction project
Baosheng Science
Technology Innovation
Co.,Ltd
Non-related 3,880,000.00 Within 1 year
Advance for
construction project
Shanghai Ideal Sanitary
System Engineering
Co.,Ltd
Non-related 3,693,000.00 Within 1 year
Advance for
construction project
Korea Liuhai Yanghang
Corporation Non-related 3,529,434.95 2-3 years
Advances for patent
cooperation
Total 21,543,028.95
(c) There is no prepayment due from shareholders that holds more than 5% (including 5%) shares of the Company.
5.7 Inventories
(a) Inventories classified by nature
Item
As at June 30, 2010 As at December 31, 2009
Book value Provision for
write-down Net book value Book value Provision for
write-down Net book value
Raw materials 83,836,076.25 3,683,414.02 80,152,662.23 102,776,375.43 2,039,571.51 100,736,803.92
Packaging
materials 41,400.21 41,400.21
Consigned
processing
materials
1,111,728.92 1,111,728.92 2,778,197.17 2,778,197.17
Work in
progress 24,432,065.56 24,432,065.56 18,302,128.38 18,302,128.38
Finished goods 823,259,774.25 6,413,582.52 816,846,191.73 733,054,749.97 6,328,062.81 726,726,687.16
Goods in transit 21,713,730.20 421,670.70 21,292,059.50 55,570,869.33 635,513.76 54,935,355.57
Low-value
consumption
goods
563,240.32 563,240.32 413,815.17 413,815.17
Turnover
materials
Consuming
biological assetsSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
63
Total 954,916,615.50 10,518,667.24 944,397,948.26 912,937,535.66 9,003,148.08 903,934,387.58
(b) Provisions for declines in the value
Item As at December
31, 2009 Increases Decreases in this period As at June 30,
Reverse Write-off 2010
Raw materials 2,039,571.51 2,132,377.95 440,825.25 47,710.19 3,683,414.02
Finished goods 6,328,062.81 3,153,742.44 3,066,405.11 1,817.62 6,413,582.52
Goods in transit 635,513.76 421,670.70 635,513.76 - 421,670.70
Total 9,003,148.08 5,707,791.09 4,142,744.12 49,527.81 10,518,667.24SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010 64
5.8 Investment in associate and joint ventures
Investee Enterprise
type Reg. Add. Legal
representative Business
Registered
capital
Shares
held
by the
Company
(%)
Voting power
of the
Company in
the entity (%)
Total assets at
period end
Total liabilities
at
period end
Net asset at
period end
Revenue in the
current period
Net profit
in the current
period
Associates
Sinopharm Holdings
Shenzhen Chinese
Medicine Co., Ltd.
(Hereinafter refer to as
Shenzhen Chinese
Medicine)
Domestic
company Shenzhen Chen
Changqing
Manufactor
y 50,000,000.00 47.39 47.39 56,915,450.00 10,307,063.83 46,608,386.17 21,506,756.02 -4,246,135.4
9
ShenzhenWanle Foreign-in
vested
enterprise
Shenzhen Yan Zhigang Manufactor
y 26,277,832.33 35.195 35.195 404,202,997.3
9 208,884,440.05 195,318,557.34 210,540,901.72 35,563,994.1
7
5.9 Long-term equity investments
Investee Accounting
method Initial costs As at December
31, 2009
Increases/(De
creases)
As at June 30,
2010
Shares held
by the
Company
(%)
Voting
power
of the
Company in
the entity
(%)
Explanation on
differences
between the
percentage of
share holding
and
voting rights
Provision for
impairment
Impairment
charged in
this period
Cash dividends
in the current
period
Shenzhen Chinese
Medicine
Equity
method 20,939,177.10 22,064,631.02 -2,012,243.51 20,052,387.5
1 47.39 47.39
ShenzhenWanle Equity
method 4,457,400.00 58,050,667.25 11,263,472.5
9
69,314,139.8
4 35.195 35.195
Sub-total 80,115,298.27 9,251,229.08 89,366,527.3
5
China Associate Co.,Ltd. Cost
method 284,173.70 284,173.70 -284,173.70 -
Shenzhen Medicine
Trade Co., Ltd. (Note) Cost
method 7,689,226.69 7,689,226.69 7,689,226.69 100.00 100.00 7,689,226.6
9
Sub-total 7,973,400.39 -284,173.70 7,689,226.69 7,689,226.6
9
Total 88,088,698.66 8,967,055.38 97,055,754.0
4
7,689,226.6
9
Note: ShenZhen Medical Trade Co., Ltd has ceased operation for years and 100% provision had been provided.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010 65
5.10 Investment properties
Item As at December
31, 2009 Increases Decreases As at June 30, 2010
I. Total cost 107,608,544.28 30,602,808.98 1,163,684.30 137,047,668.96
1. Buildings 104,031,242.27 24,327,238.15 1,163,684.30 127,194,796.12
2. Land use rights 3,577,302.01 6,275,570.83 9,852,872.84
II. Total accumulated depreciation and
amortization 49,635,011.31 17,354,671.26 582,198.43 66,407,484.14
1. Buildings 49,127,409.74 16,370,180.48 582,198.43 64,915,391.79
2. Land use rights 507,601.57 984,490.78 1,492,092.35
III. Total book value 57,973,532.97 70,640,184.82
1. Buildings 54,903,832.53 62,279,404.33
2. Land use rights 3,069,700.44 8,360,780.49
IV. Total provision for impairment
1. Buildings
2. Land use rights
V. Total net book value 57,973,532.97 70,640,184.82
1. Buildings 54,903,832.53 62,279,404.33
2. Land use rights 3,069,700.44 8,360,780.49
The depreciation and amortization charged in the period was Rmb17,354,671.26.
5.11 Fixed assets
Item
As at
December 31,
2009
Increases Decreases As at June 30,
2010
I. Total of original book value 661,622,281.03 65,650,816..26 27,573,935.94 699,699,161.35
Buildings 303,588,009.41 10,981,994.16 25,446,859.40 289,123,144.17
Machinery equipments 199,108,251.32 25,203,098.43 426,563.56 223,884,786.19
Transportation equipments 38,982,624.03 11,948,141.36 1,164,230.00 49,766,535.39
Other equipments 104,983,111.62 7,098,001.65 536,282.98 111,544,830.29
Fixed assets improvements 14,960,284.65 10,419,580.66 - 25,379,865.31
II. Total of accumulated depreciation 241,542,073.52 28,148,633.08 13,806,787.03 255,883,919.57
Buildings 88,783,116.92 4,949,353.07 11,854,600.51 81,877,869.48
Machinery equipments 77,960,620.96 9,681,431.22 395,221.11 87,246,831.07
Transportation equipments 19,094,919.10 3,636,279.27 1,033,767.26 21,697,431.11
Other equipments 49,591,427.41 8,082,999.75 523,198.15 57,151,229.01
Fixed assets improvements 6,111,989.13 1,798,569.77 7,910,558.90
III. Total of net book value of fixed assets 420,080,207.51 443,815,241.78
Buildings 214,804,892.49 207,245,274.69
Machinery equipments 121,147,630.36 136,637,955.12
Transportation equipments 19,887,704.93 28,069,104.28
Other equipments 55,391,684.21 54,393,601.28
Fixed assets improvements 8,848,295.52 17,469,306.41
IV. Total of impairment provision 1,300,000.00 1,300,000.00
Buildings 1,300,000.00 1,300,000.00
Machinery equipments
Transportation equipments
Other equipments
Fixed assets improvements
V. Total of book value of fixed assets 418,780,207.51 442,515,241.78
Buildings 213,504,892.49 205,945,274.69
Machinery equipments 121,147,630.36 136,637,955.12
Transportation equipments 19,887,704.93 28,069,104.28
Other equipments 55,391,684.21 54,393,601.28
Fixed assets improvements 8,848,295.52 17,469,306.41SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
66
Depreciation charged in this period was Rmb26,801,954.31.
The original cost transferred from construction in progress to fixed assets was Rmb31,941,878.43.
As at June 30, 2010, fixed assets with net book value of Rmb107,380,589.15 had been pledged for bank borrowings.
5.12 Construction in progress
Item
As at June 30, 2010 As at December 31, 2009
Book value
Impairmen
t
provision
Net book
value Book value
Impairme
nt
provision
Net book
value
Chepuo Project 6,915,595.20 6,915,595.20 6,750,695.20 6,750,695.20
Planting Project 253,886.24 253,886.24 253,886.24 253,886.24
Medicine R&D base
phase II project 510,304.55 510,304.55 456,232.55 456,232.55
Boiler renovation
project 449,149.00 449,149.00 449,149.00 449,149.00
Technical Innovation - - 28,734,111.57 28,734,111.57
Sterile cephalosporin
API workshop and
public works
expansion
reconstruction
project
24,165,909.24 24,165,909.24 5,329,363.10 5,329,363.10
Pei-nan Project 5,168,427.08 5,168,427.08 4,084,005.74 4,084,005.74
Renovation of old
buildings - - 19,812.00 19,812.00
Nanning logistic
Centre project 1,659,073.69 1,659,073.69 -s -
Others 68,928.10 68,928.10 68,928.10 68,928.10
Total 39,191,273.10 39,191,273.10 46,146,183.50 46,146,183.50
Changes of major construction projecSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010 67
Item
Budget
(million
)
As of
December 31,
2009 Increase
Transfer to
fixed assets
Other
decreases
Proportion
of project
input in
budget (%)
Project
progress
Accumulated
capitalized
interest
expense
Including:
capitalized
interests in
current
period
Annual
interest
capitalization
rate in current
periodr (%)
Fund
resources
As of June
30, 2010
Chepuo Project 11.81 6,750,695.20 164,900.00 Self funds 6,915,595.20
Planting
Project Nil 253,886.24
Fiscal
appropriation 253,886.24
Medicine R&D
base phase 2
project Nil 456,232.55 54,072.00 Self funds 510,304.55
Boiler
renovation
project 0. 45 449,149.00 Self funds 449,149.00
Technical
Innovation 58.11 28,734,111.57 3,187,954.86 31,922,066.43 84.49% Completed 2,529,419.34 611,550.00
Self funds and
loan from
financial
institution
Sterile
cephalosporin
API workshop
and public
works
expansion
reconstruction
project
90 5,329,363.10 19,252,546.14 416,000.00 Self funds 24,165,909.24
Pei-nan Project 30 4,084,005.74 1,084,421.34 Self funds 5,168,427.08
Renovation of
old buildings 2.95 19,812.00 19,812.00 Self funds
Nanning
logistic Centre
project
147.33 1,659,073.69 1,659,073.69
Others Nil 68,928.10 Self funds 68,928.10
Total 46,146,183.50 25,402,968.03 31,.941,878.43 416,000.00 2,529,419.34 611,550.00 39,191,273.10SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010 68
5.13 Intangible assets
(a) Details of intangible assets
Item
As at December 31,
2009 Increases Decreases As at June 30, 2010
I. Total cost 166,941,605.53 21,784,854.09 23,851,723.82 164,874,735.80
1.Land use rights 104,808,837.97 21,421,295.45 23,851,723.82 102,378,409.60
2.Softwares 9,651,984.23 313,558.64 - 9,965,542.87
3.Trademarks 196,850.00 - - 196,850.00
4. Proprietary
technology 52,283,933.33 50,000.00 - 52,333,933.33
II. Total accumulated
amortization 50,709,169.88 7,776,305.87 18,410,842.44 40,074,633.31
1.Land use rights 23,755,277.42 934,282.90 18,410,842.44 6,278,717.88
2.Softwares 6,294,623.33 684,195.23 - 6,978,818.56
3.Trademarks 106,768.26 12,084.49 - 118,852.75
4. Proprietary
technology 20,552,500.87 6,145,743.25 - 26,698,244.12
III. Total book value 116,232,435.65 124,800,102.49
1.Land use rights 81,053,560.55 96,099,691.72
2.Softwares 3,357,360.90 2,986,724.31
3.Trademarks 90,081.74 77,997.25
4. Proprietary
technology 31,731,432.46 25,635,689.21
IV. Total provision for
impairment - - - -
1.Land use rights - - - -
2.Softwares - - - -
3.Trademarks - - - -
4. Proprietary
technology - - - -
V. Total net book value 116,232,435.65 124,800,102.49
1.Land use right 81,053,560.55 96,099,691.72
2.Softwares 3,357,360.90 2,986,724.31
3.Trademarks 90,081.74 77,997.25
4. Proprietary
technology 31,731,432.46 25,635,689.21
The amortization charged in the period was Rmb7,776,305.87.
As at June 30, 2010, certain land use rights with net book value of Rmb8,029,575.57 had been pledged for bank
borrowings.
As at June 30, 2010, a land use right with net book value of Rmb27,155,592.63 had obtained the land use right
certificate in May 2006. It is under planning for further development.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
69
(b) Development cost
Item
As at
December 31,
2009 Increases
Decreases
As at June 30,
Charge into 2010
income statement
Capitalized as
intangible assets
R&D expenses 235,375.01 11,370.00 - - 246,745.01
5.14 Goodwill
Investee As at December
31, 2009 Increases Decreases As at June 30,
2010 Impairment
ZhijunWanqin 33,869,393.32 - - 33,869,393.32 -
Dongyuan Accord 1,499.02 - - 1,499.02 -
Zhanjiang Tianfeng 282,135.55 - - 282,135.55 -
Yanfeng Pharmacy - 16,868,644.87 - 16,868,644.87 -
Total 34,153,027.89 16,868,644.87 - 51,021,672.76 -
The above goodwill arises in the acquisition not under common control. It is the excess of the cost of acquisition
over the Group’s share of the fair value of the identifiable net assets acquired.
Calculation of goodwill:
Investee Cost of acquisition
The share of fair value of the
identifiable net assets acquired at
transaction date
Goodwill
ZhijunWanqin 103,500,000.00 69,630,606.68 33,869,393.32
Dongyuan Accord 2,742,000.00 2,740,500.98 1,499.02
Zhanjiang Tianfeng 1,369,864.65 1,087,729.10 282,135.55
Yanfeng Pharmacy 38,207,800.00 21,339,155.13 16,868,644.87
Total 145,819,664.65 94,797,991.89 51,021,672.76
After impairment test, there is no indicator and no provision was accrued.
5.15 Long-term deferred expenses
Item As at December
31, 2009 Increases Amortization Other
decrease
As at June
30, 2010
Improvement
on fixed
assets 6,219,765.91 1,610,792.1
2 1,814,886.60 - 6,015,671.4
3
Others 497,897.39 358,993.07 223,755.79 - 633,134.67
Total 6,717,663.30 1,969,785.1
9 2,038,642.39 - 6,648,806.1
0
5.16 Deferred income tax assets and deferred income tax assets liabilities
(a) Deferred income tax assets and deferred income tax liabilities have not been offset.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
70
(1) Breakdown of deferred income tax assets and deferred income tax liabilities
Item As at June 30, 2010 As at December 31, 2009
Deferred income tax assets
Bad debt provision for accounts receivable 3,837,152.81 1,577,809.81
Bad debt provision for other receivables 385,652.58 177,714.93
Provision for declines in the value of
inventories 1,122,619.34 1,188,969.56
Provision for impairment of long-term equity
investments - -
Provision for impairment loss of fixed assets 179,656.30 181,351.17
Accrual selling expenses 3,025,194.53 2,931,780.74
Employee benefits payable (unpaid) 3,535,821.31 6,540,926.89
Compensation for retired employees 141,212.11
Accrual early-retired expenditure -
Medical insurance for retired employees - -
Social management fees for retired employees - -
Deferred revenue 128,017.24 131,431.03
Sub-total 12,214,114.10 12,871,196.24
Deferred income tax liabilities
Depreciation differences on asset revaluation 20,347,492.82 21,752,102.76
Differences on internal equity transfer 3,773,319.00 3,773,319.00
Sub-total 24,120,811.82 25,525,421.76
(2) Temporary differences for the deferred tax assets and liabilities
Item Temporary differences
Deferred income tax assets
Bad debt provision for accounts receivable 15,558,890.73
Bad debt provision for other receivables 2,270,193.88
Provision for declines in the value of inventories 6,691,648.21
Provision for impairment of long-term equity
investments -
Provision for impairment loss of fixed assets 718,625.20
Accrual selling expenses 18,167,963.53
Employee benefits payable (unpaid) 16,485,273.67
Compensation for retired employees -
Accrual early-retired expenditure -
Medical insurance for retired employees -
Social management fees for retired employees -
Deferred revenue 853,448.27
Sub-total 60,746,043.49
Deferred income tax liabilities
Depreciation differences on asset revaluation 96,487,269.82
Differences on internal equity transfer 15,093,275.99
Sub-total 111,580,545.81SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
71
5.17 Assets impairment
Item
As at
December
31, 2009
Increases
Decreases As at June
Reversal Write off 30, 2010
Provision for bad
debts 47,709,543.35 19,463,511.61 4,350,162.26 3,522,731.89 59,300,160.81
Provision for
declines in the value
of inventories
9,003,148.08 5,707,791.09 4,142,744.12 49,527.81 10,518,667.24
Provision for
impairment of long
term equity
investments
7,689,226.69 7,689,226.69
Provision for
impairment of fixed
assets
1,300,000.00 1,300,000.00
Total 65,701,918.12 25,171,302.70 8,492,906.38 3,572,259.70 78,808,054.74
5.18 Other non-current assets
Item As at June 30, 2010 As at December 31, 2009
Specific reserved medicine 38,842,431.14 36,533,540.13
5.19 Short-term loans
Item As at June 30, 2010 As at December 31, 2009
Entrusted loans 300,000,000.00 250,000,000.00
Guaranteed loans 634,172,093.46 272,264,397.43
Credit loans 16,500,000.00 50,000,000.00
Mortgage loans 3,059,874.44 -
Discounted bank acceptance notes 172,756,453.79 199,716,470.06
Discounted trade acceptance notes 114,504,185.30 172,208,736.97
Total 1,240,992,606.99 944,189,604.46
5.20 Notes payable
(a)
Category As at June 30, 2010 As at December 31, 2009
Bank acceptance notes 719,699,895.06 756,090,155.83
Trade acceptance notes 329,209,599.03 348,860,174.45
Total 1,048,909,494.09 1,104,950,330.28
(b)As at June 30, 2010, notes payable due to related parties amounted to Rmb253,926,635.89。
5.21Accounts payable
(a)
Item As at June 30, 2010 As at December 31, 2009
Accounts payable 1,926,188,436.56 1,701,543,860.48
(b) As at June 30, 2010, accounts payable due to shareholder with more than 5% (including 5%) of the Company’s
shares
Shareholder As at June 30,2010 As at December 31, 2009
Sinopharm Group 120,974,230.58 88,316,715.03
(c) As at June 30, 2010, accounts payable due to related parties amounted to RMB172,427,946.80.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
72
5.22 Advances from customers
(a)
Item As at June 30, 2010 As at December 31, 2009
Advances from customers 31,408,102.46 81,860,595.37
(b) As at June 30, 2010, no advances were from the shareholder with more than 5% (including 5%) of the
Company’s shares.
5.23 Employee benefits payable
Item
As at
December
31,2009
Additions Payment As at June
30,2010
1. Salary, bonus and allowance 84,341,431.30 141,389,831.87 151,599,230.84 74,132,032.33
2.Welfare expenses for staff 500,000.00 10,912,545.35 10,931,247.27 481,298.08
3. Social insurance fees 945,122.80 14,981,657.54 14,756,187.83 1,170,592.51
including：(1) Medical insurance 94,512.14 3,689,196.63 3,572,694.43 211,014.34
(2) Basic pensions 746,289.45 10,380,197.54 10,307,827.56 818,659.43
(3)Annuity payment
(4) Unemployment insurance 36,660.21 395,790.64 370,223.04 62,227.81
(5)Work injury insurance 34,764.35 213,225.27 208,969.06 39,020.56
(6) Maternity insurance 32,896.65 303,247.46 296,473.74 39,670.37
4. Housing fund 508,311.23 3,444,605.80 3,116,234.44 836,682.59
5. Labor union funds and
employee education funds 8,150,696.63 3,684,939.62 2,615,348.54 9,220,287.71
6. Non-monetary welfare 0.00 0.00 0.00
7.Compensation for the
termination of employment 11,967,977.06 84,875.60 786,120.48 11,266,732.18
8. Staff welfare and incentive
funds 0.00 0.00 0.00
9. Others 982,502.94 405,346.02 592,819.52 795,029.44
Total 107,396,041.96 174,903,801.80 184,397,188.92 97,902,654.84
5.24 Taxes payable
Item As at June 30,2010 As at December
31,2009
Value-added tax 12,957,269.51 2,706,249.15
Business tax 1,237,269.64 1,455,787.73
City maintenance and construction tax 662,858.18 481,490.24
Income tax 26,741,102.73 24,756,367.71
Real estate tax 242,179.67 390,791.68
Stamp duty 429,976.11 669,629.79
Land use tax 189,448.22 189,448.22
Individual income tax 3,753,535.51 2,279,452.39
Education surcharge 361,391.57 361,979.65
River maintenance expenses 615.81 1,768,478.55
Flood prevention and security funds 2,216,245.50 148,805.72
Others 18,914.65 1,119,467.98SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
73
Item As at June 30,2010 As at December
31,2009
Total 48,810,807.10 36,327,948.81
5.25 Interests payable
Item As at June 30,2010 As at December 31,2009
Interests of short-term loans 321,489.00 589,050.00
5.26 Dividends payable
Name of investor As at June 30,2010 As at December
31,2009
Reason for unpaid
above 1 year
Shenzhen Kaijiefeng Co.,
Ltd. 1,651,617.12
5.27 Other payables
Item As at June 30,2010 As at December 31,2009
Other payables 247,642,230.49 244,895,882.94
Total 247,642,230.49 244,895,882.94
(a) As at June 30, 2010, other payables due to shareholder with more than 5% (including 5%) of the Company’s
shares
Shareholder As at June 30,2010 As at December 31, 2009
Sinopharm Group 3,893,939.65 1,962,961.71
(b)As at June 30, 2010, other payables due to related parties amounted to RMB6,144,371.03.
(c) Significant other payables as at June 30, 2010
Item Amount Nature/Content
Selling expenses 149,294,363.37 Unpaid sales expenses
Huize investment Co., Ltd. 8,000,000.00
Deposit of Rmb3,000,000 and advances of
Rmb5,000,000 for the sales of Chebei
construction projects
Bidding commission fee 3,941,497.55 Bidding commission charges
Shenzhen Kaijiefeng Co., Ltd. 3,159,300.00
Accrual consideration for the acquisition of
Yanfeng
Shenzhen Shatoujiao Trading Co.,
Ltd 2,700,000.00 Proceeds from the sale of a building
5.28 Current portion of non-current liabilities
(a)
Item As at June 30,2010 As at December 31, 2009
Long-term loan due within
one year
- 30,000,000.00
(b) Current portion of long-term loans
Item As at June 30,2010 As at December 31, 2009
Guaranteed loan - 30,000,000.00
5.29 Long-term loanSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
74
(a) Long-term loans classified by nature
Category of loan As at June 30,2010 As at December 31, 2009
Mortgage loan 30,000,000.00 30,000,000.00
Guaranteed loan - -
Total 30,000,000.00 30,000,000.00
(b) Top five long-term loans
Lender Commence
date
Terminate
date Currency Interest
rates %
As at June
30,2010
As at
December 31,
2009
Anlian Branch of
China Merchants
Bank 2009.4.30 2011.7.21 RMB 4.86 30,000,000.00 30,000,000.00
5.30 Long-term payables
Item As at June 30,2010 As at December 31, 2009
Compensation to employees 43,398.60 46,019.40
5.31 Special payables
Item
As at December
31, 2009 Increases Decreases As at June
30,2010
Government grant 2,555,000.00 2,555,000.00
5.32 Other non-current liabilities
Item As at June 30,2010 As at December 31, 2009
Central medicine reserve funds (a) 35,061,743.31 44,602,343.31
Deferred revenue (b) 853,448.30 876,206.90
Local medicine reserve funds 9,540,600.00 -
Total 45,455,791.61 45,478,550.21
Description of other non-current liabilities:
(a) Central medicine reserve funds refer to reserves occupied by the Central Medical Department for the medicine
commitment.
(b) It represented the interest subsidy of Rmb880,000.00 granted to Zhijun Pharm in 2009 for the technical
improvement project (domestic powder injection lines). The deferred revenue is amortized over the estimated useful
lives of the technical improvement project.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010 75
5.33 Share capital
Items As at December
31, 2009
Increases(+)or Decreases(-)
As at June
Issuance of 30,2010
new shares Gift share Shares transferred
from public reserve
fund
Other Subtotal
1. Shares with trading restriction
(1) State-owned shares
(2) State-owned legal entity shares
(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
Total shares with trade restriction
2. Shares with no trade restriction
(1) RMB ordinary shares 233,263,800.00 233,263,800.00
(2) Domestically listed foreign hares 54,885,600.00 54,885,600.00
(3) Overseas listed foreign shares
(4) Others
Total shares with no selling restriction 288,149,400.00 288,149,400.00
3．Total shares 288,149,400.00 288,149,400.00SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010 76
5.34 Capital reserves
Item As at
December 31,
2009
Increases Decreases As at June 30,
2010
1. Capital surplus(share surplus)
- Impact of business combination under
common control
Subtotal
2. Other capital reserves
- Share of the changes in equity other than
profits and losses of investees 2,380,016.57 2,380,016.57
- Others 2,650,322.00 2,650,322.00
Subtotal 5,030,338.57 5,030,338.57
Total 5,030,338.57 5,030,338.57
5.35 Surplus reserve
Item As at December
31, 2009 Increases Decreases As at June 30,
2010
Statutory Surplus Reserve 17,573,057.11 17,573,057.11
5.36 Retained earnings
Item
Amount Proportion of
extract and
distribution
Undistributed profit at the beginning of the year before adjustment 511,913,342.00
Adjustment of Undistributed profit at the beginning
Undistributed profit at the beginning of the year after adjustment 511,913,342.00
Plus：Net profit attributable to the parent company of current year 121,620,988.36
Minus：Extract for statutory surplus reserves
Common Stock dividends payable 28,814,940.00
Plus: other transfers
Undistributed profit at the end of the year 604,719,390.36
5.37 Operating revenue and cost
(a) Operating revenue
Item Current period The same period of
previous year
Principal business 6,166,154,739.81 5,011,062,539.67
Other business 49,969,395.42 36,282,434.98
Total 6,216,124,135.23 5,047,344,974.65
(b) Operating revenue and cost listed by category of principal business
Item
Current period The same period of previous year
Operating revenue Operating cost Operating revenue Operating cost
Manufacturing of
medicine 772,575,722.31 574,167,442.53 552,838,081.32 413,108,053.44
Wholesales of medicine 5,361,680,838.99 5,049,673,137.02 4,197,953,192.68 3,968,890,230.84
Retails of medicine 17,303,351.77 15,042,291.10 256,661,224.45 210,504,664.31
Non-medicine trading 10,156,106.84 6,086,418.27 1,679,832.32 3,667,821.32
Lease 4,438,719.90 1,539,861.45 1,930,208.90 354,369.75
Total 6,166,154,739.81 5,646,509,150.37 5,011,062,539.67 4,596,525,139.66SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
77
(c) Income from top five customers
Customer Total revenue in
principal business
Proportion in the revenue of
principal business (%)
Guangdong People’s Hospital 117,965,949.41 1.90
The First Affiliated Hospital of Guangxi
Medical University 79,942,839.18 1.29
Sinopharm Medicine Holding Shenyang
Co., Ltd. 76,992,166.34 1.24
Shenzhen People’s Hospital 69,627,575.92 1.12
South Hospital 68,345,791.87 1.10
5.38 Taxes and surcharges
Item Current period The same period of
previous year
Business taxes
2,596,413.49
3,125,124.10
City maintenance and construction tax 3,719,898.71
985,236.21
Education surcharge
2,152,810.54
1,334,386.49
Others
165,058.84
650,159.74
Total 8,634,181.58 6,094,906.54
5.39 Investment income
(a) Breakdown of investment income
Item Current period The same period of
previous year
Share of profit of investees under equity method of
accounting 9,251,229.08 8,560,339.50
Income from disposal of long-term equity investments 41,241.30 14,695,480.42
Total 9,292,470.38 23,255,819.92
(b) Income from long-term equity investment recognized with equity method includes
Investee Current period The same period of
previous year
Shenzhen Chinese Medicine -2,012,243.51 -806,693.16
ShenzhenWanle 11,263,472.59 9,367,032.66
Total 9,251,229.08 8,560,339.50
(c) Income from disposal of long-term equity investments
Investee Current period The same period of
previous year
Guangdong Accord Drugstore Co.,
Ltd.(Hereinafter refer to “Accord Drugstore”)
(including Shenzhen Accord Pharmaceutical
Chain Co., Ltd and Guangzhou Accord Drugstore
Chain Co., Ltd.) - 8,247,542.74
Guangxi Accord Pharmaceutical Chain Co., Ltd. - 5,947,938.68
Guangxi Guoda Drugstore Chain Co., Ltd. - 499,999.00
China Associate (Group) Co., Ltd 41,241.30 -
Total 41,241.30 14,695,480.42
(d) The long-term investments of the Company are not subject to any restriction on conversion into cash and
investment income remittance.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
78
5.40 Assets impairment losses
Item Current period The same period of
previous year
Bad debts 14,273,360.36
2,940,392.92
Inventory impairment losses 1,038,271.20 3,362,382.31
Total 15,311,631.56 6,302,775.23
5.41 Financial expenses
Item Current period The same period of
previous year
Interest expenses 36,029,531.10 18,713,836.03
Less: Interest income 2,036,657.72 883,332.46
Exchange gain or loss -32,170.23 -328,032.23
Others 3,708,143.06 3,472,262.99
Total 37,668,846.21 20,974,734.33
5.42 Non-operating income
(a)
Item Current period The same period of
previous year
1. Income from disposal of non-current assets 2,247,523.93 44,010.30
Including:Income from disposal of fixed assets 2,247,523.93 44,010.30
2. Government grants 5,686,547.15 1,661,972.22
3. Others 368,440.92 585,360.81
Total 8,302,512.00 2,291,343.33
(b) Details of government grants
Item Current period The same period of
previous year
Medicine reserve funds - 572,590.20
Financial support for the R & D expenditure - 500,000.00
Financial support to enterprise technical center - -
Industrial financial supports 50,000.00 -
Subsidies for new product developments 20,000.00 -
Funds for industrial improvement 2,750,000.00 570,000.00
Others 2,866,547.15 19,382.02
Total 5,686,547.15 1,661,972.22
5.43 Non-operating expenses
Item Current period The same period of
previous year
Losses for disposals of non-current assets 471,610.41 179,478.97
Including: loss for disposal of fixed assets 471,610.41 179,478.97
Donation 268,786.00
Others 107,146.21 68,896.36
Total 847,542.62 248,375.33SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
79
5.44 Income tax expenses
Item Current period The same period of
previous year
Current income tax 42,068,324.85 32,027,403.02
Deferred income tax -747,527.80 1,997,603.72
Total 41,320,797.05 34,025,006.74
5.45 Calculation of basic and diluted earnings per share
(a) Basic earnings per share
(1) Basic earnings per share
= P0÷S
= P0÷(S0 ＋ S1 ＋ Si×Mi÷M0 － Sj×Mj÷M0－Sk)
= 121,620,988.36÷288,149,400.00
= 0.422
(2) Basic earnings per share (after deducting non-recurring gain or loss)
= P0÷S
= P0÷(S0 ＋ S1 ＋ Si×Mi÷M0 － Sj×Mj÷M0－Sk)
= 113,266,697.99÷288,149,400.00
= 0.393
Where: P0 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.
(b) Diluted earnings per share
(1) Diluted earnings per share
=P1/(S0 ＋ S1 ＋ Si×Mi÷M0 － Sj×Mj÷M0—Sk+ weighted average number of increased ordinary shares
arising from warrants, stock options and convertible debts)
= 121,620,988.36÷288,149,400.00
= 0.422
(2) Diluted earnings per share(after deducting non-recurring gain or loss)
=P1/(S0 ＋ S1 ＋ Si×Mi÷M0 － Sj×Mj÷M0—Sk+ weighted average number of increased ordinary shares
arising from warrants, stock options and convertible debts)
= 113,266,697.99÷288,149,400.00
= 0.393
Where: P1 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 the 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.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
80
5.46 Notes to cash flow statement
(a) Cash received relating to other operating activities
Item Current period
Interest income 1,414,270.59
Government grants 5,686,547.15
Others 86,775,770.97
Total 93,876,588.71
(b) Cash paid related to other operating activities
Item Current period
R&D expenses 24,766,067.19
Transportation expenses 19,210,348.64
Rentals 5,861,996.16
Advertisement expenses 5,316,852.15
Fee surcharges 5,054,175.24
Others 128,427,151.26
Total 188,636,590.64
(c) Cash paid related to other investment activities
Item Current period
Investment on business combination of Nanning Medicine
Co., Ltd. 64,330,100.00
(d) Cash paid related to other financing activities
Item Current period
Repayment for loans due to Sinopharm Logistics Co., Ltd.
Guangzhou Branch 800,000.00
Payments to previous shareholders 13,762,551.78
Total 14,562,551.78SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
81
5.47 Supplementary information of cash flow statement
Items Current period The same period
of previous year
1. Reconciliation of net profit to cash flow from operating activities
Net profit 125,198,345.49 103,267,588.81
Add: Provisions for asset impairment 15,311,631.56 6,302,775.23
Depreciation of fixed assets and investment properties 44,156,625.57 14,937,680.35
Amortization of intangible assets 7,776,305.87 6,867,126.50
Amortization of long-term prepaid expenses 2,038,642.39 3,784,007.44
Loss from disposals of fixed assets, intangible assets and other
long-term assets (income is listed with “- ”) -4,763,820.79 139,917.06
Loss on discarding of fixed assets (income is listed with “- ”) -15,406.07 -
Loss from changes in fair values (income is listed with “- ”) - -
Financial expenses (income is listed with “- ”) 25,199,474.08 18,713,836.03
Investment loss (income is listed with “- ”) -9,292,470.38 -22,755,820.92
Decreases in deferred income tax assets (increase is listed with
“- ”) 657,082.14 3,040,151.80
Increases in deferred income tax liabilities (decrease is listed with
“- ”) -1,404,609.94 6,383,179.25
Decreases in inventories (income is listed with “- ”) -41,979,079.84 26,146,260.72
Decreases in operating receivables (increase is listed with “- ”) -350,593,678.10 -348,496,221.00
Increases in operating payables (decrease is listed with “- ”) 404,069,884.84 332,698,551.79
Net cash flows from operating activities 216,358,926.82 151,029,033.06
2. Investing and financing activities that do not involve cash
receipts and payments - -
Conversion of debt into capitals - -
Reclassification of current portion of convertible bonds to current
liabilities - -
Fixed assets capitalized under finance leases - -
3. Net changes in cash and cash equivalents
Cash at end of period 593,620,718.33 498,642,111.62
Less: cash at beginning of year 579,471,913.48 381,663,418.93
Add: cash equivalents at end of year - -
Less: cash equivalents at beginning of year - -
Net increases in cash and cash equivalents 14,148,804.85 116,978,692.69SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
82
(b) Details of cash and cash equivalents
Items As at June 30,
2010
As at December 31,
2009
1.Cash 593,620,718.38 579,471,913.48
Including: Cash on hand 52,001.33 332,939.70
Bank deposits with high liquidation 492,445,381.53 461,716,777.43
Other monetary funds with high
liquidation 101,123,335.47 117,422,196.35
Deposits in Central Bank ready for payment
Due from banks
Inter-bank offers
2. Cash equivalents
Including: bond investment maturing within three
months
3. Ending balance of cash and cash equivalents 593,620,718.38 579,471,913.48
Note: cash and cash equivalents exclude restricted cash and cash equivalents of the Company and its subsidiaries.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010 83
6 Related party and related party transactions
6.1 Parent company of the Company
Parent
company
Relationship with the
Company
Type of
enterprise
Registered
address
Legal
representati
ve
Principal
business
Registered
capital
Interest held
(%)
Voting right
(%)
Ultimate
holding
company
Organization
bar code
Sinophar
m Group
Controlling
shareholder of the
Company
Limited
company Shanghai She Lulin Commerci
al industry 163,704.00 38.33 38.33
China National
Pharmaceutical
Group
Corporation
74618434-4
6.2 Subsidiaries of the Company are in Note 4.
6.3 Joint ventures and associates are in Note 5.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010 84
6.4 Other related parties
Name of company Relationship with the Company
China National Pharmaceutical Industry Co., Ltd.
Beijing Branch
Under the same ultimate controlling
company
Sinopharm Baida Pharmaceutical Co., Ltd. Under the same ultimate controlling
company
Sinopharm Medicine Holding Industry Co., Ltd. Under the same ultimate controlling
company
Guangdong East Uptodate & Special Medicines Co.,
Ltd.
Under the same controlling
company
Sinopharm Chemical Reagent Suzhou Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Beijing Kang chen
Biological Pharmaceutical Co., Ltd.
Under the same controlling
company
Xinjiang Uptodate & Special Medicines National
Pharmaceutical Limited Liability Company
Under the same controlling
company
Xinjiang Uotodate& Special Western Medicine Limited
Liability Company
Under the same controlling
company
Sinopharm Medicine Holding Hainan Co., Ltd. Under the same controlling
company
Guangxi Accord Pharmaceutical Chain Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Fujian Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Ningxia Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Hubei Yibao Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Shandong Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Hebei Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Gansu Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Jiangxi Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Fuzhou Co., Ltd. Under the same controlling
company
China National Medicine Pharmaceutical Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Shenyang Co., Ltd.
Changchun Affliate
Under the same controlling
company
Sinopharm Medicine Holding Tianjin Co., Ltd. Tongliao
Dongmeng Affliate
Under the same controlling
company
Chendu Rongsen Pharmaceutical Co., Ltd. Under the same ultimate controlling
company
Guangdong South Pharmaceutical Foreign Trade Co.,
Ltd.
Under the same ultimate controlling
company
Guangdong Tianliang Pharmaceutical Co., Ltd. Under the same ultimate controlling
company
Accord Drugstore Under the same controlling
company
Guangxi Guoda Drugstore Chain Co., Ltd. Under the same controlling
company
GuangxiWuzhou Huawu Medicine Co., Ltd. Under the same controlling
company
Guangzhou Accord Drugstore Chain Co., Ltd. Under the same controlling
company
Sinopharm Beijing Medical Treatment Equipment Co., Under the same ultimate controllingSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
85
Name of company Relationship with the Company
Ltd. company
Sinopharm Chemical Reagent Co., Ltd. Under the same controlling
company
Union China National Medical Equipment Corp. Under the same ultimate controlling
company
Sinopharm Shanghai Medical Equipment Co., Ltd Under the same ultimate controlling
company
Sinopharm Medicine Northwest Pharmaceutical Co.,
Ltd.
Under the same controlling
company
Sinopharm Medicine Southwest Pharmaceutical Co.,
Ltd.
Under the same controlling
company
China National Medicines Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Shanghai Co., Ltd. Under the same controlling
company
Sinopharm Medicine Logistics Co., Ltd. Under the same controlling
company
Sinopharm Logistics Co., Ltd. Guangzhou Branch Under the same controlling
company
Sinopharm Medicine Holding Anhui Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Beijing Huahong Co.,
Ltd.
Under the same controlling
company
Sinopharm Medicine Holding Beijing Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Guoda Drugstore Co.,
Ltd.
Under the same controlling
company
Sinopharm Medicine Holding Henan Co., Ltd Under the same controlling
company
Sinopharm Medicine Holding hubei Yibao Co.,Ltd Under the same controlling
company
Sinopharm Medicine Holding Hubei Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Hunan Co., Ltd Under the same controlling
company
Sinopharm Medicine Holding Jiangsu Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Shanxi Co., Ltd. Under the same controlling
company
Shenzhen Chinese Medicine
Under the same ultimate controlling
company /Associate of the
Company
Sinopharm Medicine Holding Shenyang Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Suzhou Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Tianjing Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding .Tianjing, Neimeng
Affiliate
Under the same controlling
company
Sinopharm Medicine Holding Yunnan Co., Ltd. Under the same controlling
company
Sinopharm Medicine Holding Zhejiang Co., Ltd. Under the same controlling
company
Ningxia Guoda Drugstore Chain Co., Ltd. Under the same controlling
company
Shanghai SinopharmWai Gao Qiao Co., Ltd. Under the same controlling
company
Shenzhen Accord Pharmaceutical Chain Co., Ltd Under the same controllingSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
86
Name of company Relationship with the Company
company
ShenzhenWanle Associate of the Company
Sichuan Jiangyou Zhongba Fuzi Technology Co., Ltd. Under the same ultimate controlling
company
Tianjin East Bokang Medicine Trade Co., Ltd. Under the same controlling
company
China National Group Co. of Traditional & Herbal
Medicine
Under the same ultimate controlling
company
China National Pharmaceutical Foreign Trade
Corporation
Under the same ultimate controlling
company
Guangxi Guoda Drugstore Chain Co., Ltd. Under the same ultimate controlling
company
China National Pharmaceutical Industry Corporation Under the same ultimate controlling
company
Sinopharm Wuhan Pharmaceutical Industry Design
Institute
Under the same ultimate controlling
company
Reed Sinopharm Exhibitions Co.,Ltd Under the same ultimate controlling
company
China National Pharmaceutical Shanghai Corporation Under the same controlling
company
Yang Qiaoming Minority shareholder of a
subsidiary of the Company
6.5 Related party transactions
6.5.1 Transactions within the Group have been eliminated.
6.5.2 Purchase of goods and service d from related parties
Name of company Type of trade Pricing policy Current period Previous period
Amount Amount
Sinopharm Group Purchase of
goods Market price 410,542,658.60 265,826,487.48
Shanghai Sinopharm Wai Gao Qiao
Co., Ltd.
Purchase of
goods Market price 91,574,957.49 217,185,865.82
China National Medicines Co., Ltd. Purchase of
goods Market price 66,174,479.55 53,010,106.57
Guangdong South Pharmaceutical
Foreign Trade Co., Ltd.
Purchase of
goods Market price 47,307,288.33 29,424,950.56
China National Pharmaceutical
Foreign Trade Corporation
Purchase of
goods Market price 5,382.42 11,822,212.14
Guangxi Guoda Drugstore Chain Co.,
Ltd.
Purchase of
goods Market price 0.00 7,747,728.78
Guangdong East Uptodate & Special
Medicines Co.Ltd
Purchase of
goods Market price 4,953,338.18 6,678,974.80
Union China National Medical
Equipment Corp.
Purchase of
goods Market price 2,040,268.75 2,506,758.77
ShenzhenWanle Purchase of
goods Market price 1,036,020.04 1,806,047.49
Sinopharm Medicine Holding Suzhou
Co., Ltd
Purchase of
goods Market price 0.00 474,645.81
Sinopharm Medicine Holding Hunan
Co., Ltd.
Purchase of
goods Market price 0.00 469,476.92
China National Group Co. of
Traditional & Herbal Medicine
Purchase of
goods Market price 1,158,885.50 417,809.22
Sinopharm Medicine Holding
Shanghai Co., Ltd.
Purchase of
goods Market price 0.00 152,759.53
China National Pharmaceutical Purchase of Market price 360,035.85 129,015.37SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
87
Industry Corporation goods
Sinopharm Shanghai Medical
Equipment Co., Ltd
Purchase of
goods Market price 19,748.37 97,531.81
Sinopharm Chemical Reagent Co.,
Ltd.
Purchase of
goods Market price 175,864.10 93,777.77
Sinopharm Chemical Reagent Suzhou
Co., Ltd.
Purchase of
goods Market price 412,739.88 25,692.89
China National Pharmaceutical
Industry Co., Ltd. Beijing Branch
Purchase of
goods Market price 3,297,802.44 21,162.82
Sinopharm Medicine Southwest
Pharmaceutical Co., Ltd.
Purchase of
goods Market price 546,489.34 13,530.47
Sinopharm Medicine Holding
Shanghai Co., Ltd.
Purchase of
goods Market price 0.00 30.35
Accord Drugstore Purchase of
goods Market price 480,111.43 0.00
Sinopharm Medicine Holding Beijing
Kang chen Biological
Pharmaceutical Co., Ltd.
Purchase of
goods Market price 214,358.97
0.00
Sichuan Jiangyou Zhongba Fuzi
Technology Co., Ltd.
Purchase of
goods Market price 190,924.77 0.00
Chendu Rongsen Pharmaceutical
co.,Ltd
Purchase of
goods Market price 69,743.59 0.00
Xinjiang Uptodate & Special
Medicines National
Pharmaceutical Limited Liability
Company
Purchase of
goods Market price 22,222.22
0.00
Guangdong Tianliang Medicine Co.,
Ltd.
Purchase of
goods Market price -2,824.62 0.00
Sinopharm Medicine Baida
Pharmaceutical Co., Ltd.
Purchase of
goods Market price 1,500,598.30 0.00
Shenzhen Chinese Medicine Purchase of
goods Market price 796,197.99 -231.92
Sinopharm Medicine Holding
Tianjing Co., Ltd.
Purchase of
goods Market price 0.00 -8,838.42
Total 632,877,291.49 597,895,495.03SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
88
6.5.3 Sales of goods and provision of service to related parties
Name of company Type of trade Pricing
policy
Current year Previous year
Amount Amount
Sinopharm Medicine Holding
Shenyang Co., Ltd.
Sales of
goods Market price 76,992,166.31 128,254,395.95
Sinopharm Medicine Holding Hubei
Co., Ltd.
Sales of
goods Market price 45,165,657.00 43,925,158.98
Sinopharm Medicine Holding Hunan
Co., Ltd.
Sales of
goods Market price 39,832,046.00 39,167,791.58
Sinopharm Medicine Holding Tianjing
Co., Ltd.
Sales of
goods Market price 25,160,009.96 34,448,422.73
Sinopharm Medicine Holding Tianjing,
Neimeng Affiliate
Sales of
goods Market price 1,215,387.54 223,220.51
Sinopharm Medicine Holding Tianjin
Co., Ltd. Tongliao Dongmeng
Affliate
Sales of
goods Market price 0.00 -24,384.62
Sinopharm Medicine Southwest
Pharmaceutical Co., Ltd.
Sales of
goods Market price 36,560,858.55 33,667,452.39
Sinopharm Medicine Holding Beijing
Co., Ltd.
Sales of
goods Market price 33,524,670.92 23,830,112.15
Sinopharm Medicine Holding Hubei
Yibao Co., Ltd.
Sales of
goods Market price 3,461,335.95 13,605,968.75
Sinopharm Medicine Holding Ningxia
Co., Ltd.
Sales of
goods Market price 4,810,646.30 8,019,553.91
Sinopharm Medicine Holding Beijing
Huahong Co., Ltd.
Sales of
goods Market price 11,400,406.00 7,894,944.68
Sinopharm Medicine Holding Henan
Co., Ltd.
Sales of
goods Market price 9,153,540.40 6,109,133.55
Tianjin East Bokang Medicine Trade
Co., Ltd.
Sales of
goods Market price 14,616,408.55 5,924,107.52
Sinopharm Group Co., Ltd. Sales of
goods Market price 10,482,002.59 5,809,967.15
Guangxi Guoda Drugstore Chain Co.,
Ltd.
Sales of
goods Market price 0.00 5,201,274.94
Guangdong Tianliang Medicine Co.,
Ltd.
Sales of
goods Market price 0.00 3,539,682.74
Sinopharm Medicine Holding Jiangsu
Co., Ltd.
Sales of
goods Market price 3,614,203.64 3,134,522.69
Sinopharm Medicine Holding Shanxi
Co., Ltd.
Sales of
goods Market price 4,117,163.65 2,750,136.22
Sinopharm Medicine Northwest
Pharmaceutical Co., Ltd.
Sales of
goods Market price 0.00 1,517,425.64
Sinopharm Medicine Holding Anhui
Co., Ltd.
Sales of
goods Market price 2,187,163.80 1,346,222.52
China National Medicines Co., Ltd. Sales of
goods Market price 4,302,247.12 1,277,393.29
Guangdong East Uptodate & Special
Medicines Co.,Ltd
Sales of
goods Market price 5,023,571.69 1,256,350.10
Sinopharm Medicine Holding
Zhenjiang Co., Ltd.
Sales of
goods Market price 1,320,586.48 494,443.74
Sinopharm Medicine Holding Guoda
Drugstore Co., Ltd.
Sales of
goods Market price 671,978.60 180,403.69
Ningxia Guoda Drugstore Chain Co.,
Ltd.
Sales of
goods Market price 12,393.18 98,787.31
Guangxi Wuzhou Huawu Medicine
Co., Ltd.
Sales of
goods Market price 40,160.09 73,990.31
Shenzhen Chinese Medicine Sales of
goods Market price 7,384.07 955.75SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
89
Name of company Type of trade Pricing
policy
Current year Previous year
Amount Amount
Sinopharm Medicine Holding Suzhou
Co., Ltd.
Sales of
goods Market price 241,248.55 -7,402.14
Shanghai Sinopharm Wai Gao Qiao
Co., Ltd.
Sales of
goods Market price 0.00 -1,317,212.30
Accord Drugstore
Sales of
goods Market price 49,493,288.14 0.00
Sinopharm Medicine Holding Hainan
Co., Ltd.
Sales of
goods Market price 17,435,235.51 0.00
Guangxi Accord Chain Drugstore Co.,
Ltd.
Sales of
goods Market price 15,824,491.37 0.00
Xinjiang Uptodate & Special
Medicines National Pharmaceutical
Limited Liability Company
Sales of
goods Market price 14,469,474.54 0.00
Xinjiang Uotodate& Special Western
Medicine Limited Liability
Company
Sales of
goods Market price 10,169,660.19 0.00
Sinopharm Holdings Yunnan Chinese
Medicine Co., Ltd
Sales of
goods Market price 9,694,300.25 0.00
Sinopharm Holdings Fujian Chinese
Medicine Co., Ltd
Sales of
goods Market price 8,798,711.08 0.00
Guangxi Guoda Drugstore Chain
Co., Ltd.
Sales of
goods Market price 6,035,750.12 0.00
Sinopharm Holdings Northwest
Chinese Medicine Co., Ltd.
Sales of
goods Market price 5,264,302.90 0.00
Sinopharm Holdings Shandong
Chinese Medicine Co., Ltd.
Sales of
goods Market price 3,389,699.08 0.00
Sinopharm Medicine Logistics Co.,
Ltd.
Sales of
goods Market price 2,159,612.95 0.00
Sinopharm Medicine Holding Hebei
Co., Ltd.
Sales of
goods Market price 2,014,432.48 0.00
Shenzhen Accord Pharmaceutical
Chain Co., Ltd
Sales of
goods Market price 1,509,727.40 0.00
Guangdong South Pharmaceutical
Foreign Trade Co.
Sales of
goods Market price 787,588.06 0.00
China National Medicines Guorui Co.,
Ltd.
Sales of
goods Market price 631,470.09 0.00
Sinopharm Medicine Holding Gansu
Chinese Medicine Co., Ltd.
Sales of
goods Market price 559,063.76 0.00
Sinopharm Medicine Holding Jiangxi
Co., Ltd.
Sales of
goods Market price 401,831.99 0.00
Tianjin East Bokang Medicine Trade
Co., Ltd.
Sales of
goods Market price 151,794.87 0.00
Sinopharm Medicine Holding Fuzhou
Chinese Medicine Co., Ltd.
Sales of
goods Market price 126,078.12 0.00
Sinopharm Medicine Holding
Shenyang Co., Ltd. Changchun
Affliate
Sales of
goods Market price 12,000.00 0.00
Total 482,841,749.84 370,402,819.73SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
90
6.5.4 Other related party transactions
(1) Details of guarantees provided to related parties are in Note7.
(2) Sinopharm Guangzhou, a subsidiary, has accepted the discounted notes payable issued by the following
subsidiaries and has born relevant discounted interests: China National Medicines Co., Ltd.Rmb128,900,
Shanghai SinopharmWai Gao Qiao Co., Ltd. Rmb2,300,000, Sinopharm Group Rmb3,240,000.
(3) Sinopharm Guangzhou, a subsidiary, has leased buildings from Sinopharm Medicine Logistics Co., Ltd. and the
rental expenses in the current period amounted to Rmb7,290,000.
(4) The Company has an entrusted loan due from Sinopharm Group through Shanghai Bank of Communication.
The loan principal was Rmb15 million and the interest expenses for the current period were
Rmb4,020,400.00.
Sinopharm Guangzhou, a subsidiary, has an entrusted loan due from Sinopharm Group through Shanghai
Bank of Communication. The loan principal was Rmb15,000,000 and the interest expenses for the current
period were Rmb3,000,000.
(5) Sinopharm Liuzhou, a subsidiary, had a rental income of Rmb524,200 charged to Guangxi Accord
Pharmaceutical Chain Co., Ltd. in the current period.
(6) In the current period, the Company has rental income charged to Shenzhen Accord Pharmaceutical Chain Co.,
Ltd. and Guangdong Accord Drugstore Co., Ltd., amounting to Rmb228,300 and Rmb186,500 respectively.
In the current period, Huixin Investement, a subsidiary, had a rental income charged to Guangzhou Accord
Drugstore Chain Co., Ltd. and Union China National Medical Equipment Corp., amounting to Rmb217,000
and Rmb87,600 respectively.
(7) Accord Logistics, a subsidiary, has provided delivery and transportation services to Accord Drugstore, and
charged the service fee of Rmb426,800 in the current period.
In the current period, Hengchang Logsitics, a subsidiary, has provided delivery and transportation services
to Guangdong Accord Drugstore Co., Ltd., Sinopharm Medicine Logistics Co., Ltd. and Sinopharm Group
and charged the service fee of Rmb1,330,000, Rmb2,160,000 and Rmb750,000 respectively.
(8) Huiqin Investment, a subsidiary has charged rental income of Rmb80.2 thousand to both Guangxi Accord
Pharmaceutical Chain Co., Ltd. and Guangdong Accord Drugstore Co., Ltd., respectively. It paid the design
and production fee of Rmb220,000 to Sinopharm Wuhan Pharmaceutical Industry Design Institute for its
logistic project.
(9) In the current period, Zhijun Wanqin, a subsidiary, has paid the exhibition fee of Rmb22,800 and Rmb77,000 to
Reed Sinopharm Exhibitions Co., Ltd. and China National Pharmaceutical Industry Corporation
respectively.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
91
6.5.5 Balance of receivable and payables of related parties
Item Name of company As at June 30,
2010(Rmb’0000)
As at December
31,
2009(Rmb’000
0)
Accounts
receivable
Sinopharm Medicine Holding Shenyang Co.,
Ltd. 480.61 5,996.19
Sinopharm Medicine Southwest
Pharmaceutical Co., Ltd. 1,395.45 1,835.52
Sinopharm Medicine Holding Beijing Co., Ltd. 1,729.14 1,738.06
Sinopharm Medicine Holding Hubei Co., Ltd. 1,296.92 1,643.74
Sinopharm Medicine Holding Hunan Co., Ltd. 1,548.62 1,633.59
Accord Drugstore 2,531.21 1,254.23
Shenzhen Accord Pharmaceutical Chain Co.,
Ltd. 1.57 963.68
Guangxi Accord Pharmaceutical Chain Co.,
Ltd. 537.46 901.38
Sinopharm Medicine Holding Beijing Huahong
Co., Ltd. 672.64 598.44
Sinopharm Medicine Holding Tianjing Co.,
Ltd. 712.71 557.31
Tianjin East Bokang Medicine Trade Co., Ltd. 535.77 379.01
Sinopharm Medicine Holding Hubei Yibao
Co., Ltd. 79.66 326.29
Sinopham Group 333.08 314.80
Sinopharm Medicine Holding Yunnan Co., Ltd. 254.70 271.53
China National Medicines Co., Ltd. 119.27 253.53
Sinopharm Medicine Holding Jiangsu Co., Ltd. 120.71 134.25
Sinopharm Medicine Holding Shanxi Co., Ltd. 151.20 119.76
Sinopharm Medicine Holding Henan Co., Ltd. 101.44 106.05
Sinopharm Medicine Northwest
Pharmaceutical Co., Ltd. 143.88 93.44
Sinopharm Medicine Holding Anhui Co., Ltd. -0.80 45.98
Guangdong East Uptodate & Special
Medicines Co., Ltd. 160.98 36.89
Sinopharm Medicine Holding Guoda Drugstore
Co., Ltd. 76.94 29.09
Sinopharm Medicine Holding .Tianjing,
Neimeng Affiliate 10.36 17.12
Guangzhou Accord Drugstore Chain Co., Ltd. 103.76 9.62
Sinopharm Medicine Holding Suzhou Co., Ltd. 6.19 9.36
Sinopharm Medicine Holding Zhejiang Co.,
Ltd. 121.73 1.99
Guangxi Accord Pharmaceutical Chain Co.,
Ltd. 271.30 1.61
Xinjiang Uptodate & Special Medicines
National Pharmaceutical Limited Liability
Company
592.53 0.00
Xinjiang Uotodate& Special Western Medicine
Limited Liability Company 408.19 0.00
Ningxia Guoda Drugstore Chain Co., Ltd. 0.80 0.00
China National Medicine Pharmaceutical Co.,
Ltd. 73.88 0.00
Sinopharm Baida Pharmaceutical Co., Ltd 2.75 0.00
GuangxiWuzhou Huawu Medicine Co., Ltd. 2.27 0.00
Guangdong South Pharmaceutical Foreign
Trade Co., Ltd. 25.14 0.00SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
92
Item Name of company As at June 30,
2010(Rmb’0000)
As at December
31,
2009(Rmb’000
0)
Sinopharm Medicine Holding Shenyang Co.,
Ltd. Changchun affiliate 1.40 0.00
Shenzhen Chinese Medicine 0.83 0.00
Sinopharm Medicine Holding Shandong Co.,
Ltd. 353.61 0.00
Sinopharm Medicine Holding Ningxia Co.,
Ltd. 296.97 0.00
Sinopharm Medicine Holding Jiangxi Co., Ltd. 11.83 0.00
Sinopharm Medicine Holding Hebei Co.,
Ltd. 158.48 0.00
Sinopharm Medicine Holding Henan Co.,
Ltd. 559.97 0.00
Sinopharm Medicine Holding Gansu Co.,
Ltd. 18.52 0.00
Sinopharm Medicine Holding Fuzhou Co.,
Ltd. 13.39 0.00
Sinopharm Medicine Holding Fujian Co.,
Ltd. 437.02 0.00
Sinopharm Medicine Logistics Co., Ltd. 103.21 0.00
Total 16,557.29 19,272.46
Advances from
suppliers
Guangdong South Pharmaceutical Foreign
Trade Co., Ltd. 108.66 1,303.66
Union China National Medical Equipment
Corp. 131.22 15.69
Sinopharm Chemical Reagent Co., Ltd. 1.80 0.00
Sinopharm Chemical Reagent Suzhou Co., Ltd. 32.58 0.00
Total 274.26 1,319.35
Other
receivables
Sinopharm Medicine Logistics Co., Ltd. 121.50 121.50
Sinopharm Group 73.18
Accord Drugstore 0.17
Yang Qiaoming 717.25
Total 121.50 912.10
Accounts
payable
Sinopharm Group 12,097.42 8,831.67
Shanghai SinopharmWai Gao Qiao Co., Ltd. 2,071.22 2,612.69
China National Medicines Co., Ltd. 698.42 958.55
China National Pharmaceutical Foreign Trade
Corporation 0.09 299.68
Guangdong South Pharmaceutical Foreign
Trade Co. 1,035.50 283.82
Guangdong East Uptodate & Special
Medicines Co., Ltd. 109.63 91.05
Sinopharm Medicine Logistics Co., Ltd. 2.88 45.85
Sinopharm Medicine Holding Suzhou Co., Ltd. 0.00 45.30
Sinopharm Medicine Holding Guoda Drugstore
Co., Ltd. 0.00 41.03
China National Pharmaceutical Industry
Corporation 11.16 11.31
Sinopharm Logistics Co., Ltd. Guangzhou
Branch 0.00 9.64SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
93
Item Name of company As at June 30,
2010(Rmb’0000)
As at December
31,
2009(Rmb’000
0)
China National Pharmaceutical Industry Co.,
Ltd. Beijing Branch 43.14 9.30
Sichuan Jiangyou Zhongba Fuzi Technology
Co., Ltd. 21.74 8.69
Sinopharm Shanghai Medical Equipment Co.,
Ltd. 4.69 4.54
Shenzhen Chinese Medicine 37.82 4.40
Sinopharm Medicine Southwest
Pharmaceutical Co., Ltd. 50.33 3.56
China National Group Co. of Traditional &
Herbal Medicine 121.38 2.95
Sinopharm Medicine Holding Beijing Co., Ltd. 2.86 2.86
Sinopharm Beijing Medical Treatment
Equipment Co., Ltd. 0.88 0.88
Guangdong Tianliang Pharmaceutical Co., Ltd. 1.70 0.87
Sinopharm Medicine Holding Hubei Yibao
Co., Ltd. 0.00 0.67
GuangxiWuzhou Huawu Medicine Co., Ltd. 0.28 0.28
Accord Drugstore 47.35 0.04
Union China National Medical Equipment
Corp. 117.83 -52.44
Sinopharm Baida Pharmaceutical Co., Ltd. 175.57
Xinjiang Uptodate & Special Medicines
National Pharmaceutical Limited Liability
Company
2.60
Sinopharm Medicine Holding Jiangsu Co., Ltd. 0.37
ShenzhenWanle 403.92
China National Pharmaceutical Industry
Corporation Beijing Branch 153.12
Sinopharm Chemical Reagent Co., Ltd. 2.98
Sinopharm Chemical Reagent Suzhou Co., Ltd. 27.71
Sinopharm Medicine Holding Industry Co.,
Ltd. 0.16
Guangdong Erbo Medical Equipment Co., Ltd. 0.05
Total 17,242.80 13,217.19
Other payables
Yang Qiaoming 1,664.23
Sinopharm Group 389.39 196.30
Sinopharm Medicine Holding Shanghai Co.,
Ltd. 166.04 166.04
Sinopharm Medicine Logistics Co., Ltd.
Guangzhou Branch 80.97
Sinopharm Medicine Logistics Co., Ltd. 59.00
Total 614.43 2,107.54
Advances from
customers
Guangdong South Pharmaceutical Foreign
Trade Co., Ltd. - 4.55
7 Contingencies
As at June 30, 2010, guaranteed loans provided by the Company for related parties are as follows.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
94
8 Commitments
Guarantor Guarantee Total Amount
in guarantee
contract
Amount
utilised
Maturity
date of
guarantee
contract
Financial impact to
the Company
the Company Zhijun Pharm
60,000,000.00 30,000,000.00 2011.08.21 No unfavorable
impact
the Company Zhijun Pharm
50,000,000.00 - 2011.06.01 No unfavorable
impact
the Company Zhijun Pharm
100,000,000.00 46,255,849.24 2010.12.18 No unfavorable
impact
the Company Zhijun Wanqin,
Zhijun Pharm,
Sinopharm
Nanning,
Sinopharm
Liuzhou
250,000,000.00
198,098,598.3
4 2010.12.30
No unfavorable
impact
the Company Sinopharm
Guangzhou 650,000,000.00
393,928,598.2
4 2011.03.13 No unfavorable
impact
the Company Sinopharm
Guangzhou 225,000,000.00 101,314,911.21 2011.04.13 No unfavorable
impact
the Company Yuexing
Medicine 35,000,000.00 2,141,352.00 2011.04.13 No unfavorable
impact
the Company Sinopharm
Guangzhou 100,000,000.00 85,000,000.00 2011.03.01 No unfavorable
impact
the Company Sinopharm
Guangzhou 100,000,000.00 60,105,007.44 2010.07.28 No unfavorable
impact
the Company Sinopharm
Guangzhou 180,000,000.00 78,599,489.40 2011.06.18 No unfavorable
impact
the Company Sinopharm
Guangzhou 50,000,000.00 50,000,000.00 2010.11.04 No unfavorable
impact
the Company Sinopharm
Guangzhou 100,000,000.00 92,643,678.61 2011.04.30 No unfavorable
impact
the Company Sinopharm
Nanning 60,000,000.00 52,691,600.00 2011.01.13 No unfavorable
impact
the Company ZhijunWanqin 60,000,000.00 29,340,343.82 2010.10.22 No unfavorable
impact
the Company ZhijunWanqin 40,000,000.00 39,390,861.57 2011.04.22 No unfavorable
impact
Zhijun Pharm,
Sinopharm
Guangzhou
the Company
375,000,000.00 168,309,469.6
6 2011.06.21
No unfavorable
impact
Zhijun Pharm the Company 50,000,000..00 4,408,509.66 2011.06.01 No unfavorable
impact
Zhijun Pharm the Company 150,000,000.00 27,785,471.80 2010.12.18 No unfavorable
impact
Zhijun Pharm the Company 160,000,000.00 13,239,386.37 2010.12.31 No unfavorable
impact
Zhijun Pharm the Company 100.000.000.00 58.836.807.78 2010.12.30 No unfavorable
impact
Zhijun Pharm Zhijun Trade USD3,000,000.0
0
USD1,131,244
.00 2010.07.10 No unfavorable
impact
8.1 Commitments
8.1.1 There are no investment contracts signed but not yet executed or not fully executed, and no related financial
expenditure.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
95
8.1.2 There are no significant outsourcing contracts signed and being or to be executed.
8.1.3 Significant equipment purchasing contracts signed and being or to be executed:
Capital expenditures contracted for at the balance sheet date but not recognized in balance sheet are analyzed
as follows:
Period
As at June 30 ,2010
RMB’000
Within one year 12,030,30
8.1.4 Operating lease commitments
The future minimum lease payments due under the signed irrevocable operating leases contracts are
summarized as follows:
As at June 30 ,2010
RMB’000
Within one year 13,543.50
1-2 years 5,324.40
2-3 years 5,256.30
Over 3 years 36,870.30
Total 60,994.50
8.1.5 There are no acquisition agreements signed and being or to be executed.
8.1.6 There are no restructuring plans signed and being or to be executed.
8.1.7 Other significant financial commitments:
Details of mortgaged properties
Item
Certification No.
of property rights
mortgaged
Location of
mortgaged
Property
Book value of
mortgaged
Property
Amount of
mortgage
loans
(Rmb‘000)
Term of
mortgage
loans
Real Estates
Shenfangdizidi
No.5000357449
Northwest,
xianhu road,
guanlan street,
bao’an district,
Shenzhen
107,380,589.15
30,000 2009.4.30 to
Land use right 8,029,575.57 2011.7.21
8.2 Execution of prior commitments:
The Group has fulfilled the commitments as of June 30, 2010 according to the relevant contracts.
9 Significant events after balance sheet date
There is no significant event after balance sheet date.
10 Other significant events
No other significant events need to be disclosed.
11 Notes to the main items of financial statement of parent company
11.1 Accounts receivable
(a) Accounts receivable classified by natureSHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
96
Category
As at June 30, 2010 As at December 30, 2009
Book value Bad debt provision Book value Bad debt provision
Amount Proportio
n% Amount Proportio
n% Amount Proportio
n% Amount Proportio
n%
Debtors with
significant balance
199,314,852
.73 60.96 1,389,140.
29 0.70 156,719,739
.14 51.40 1,389,140.
29 0.89
Debtors with
insignificant balance
but of higher credit
risk when grouped
with others with
similar credit risk
characteristic
Others with
insignificant
balance
127,667,296
.11 39.04 3,350,331.
66 2.62 148,200,533
.76 48.60 2,181,245.
73 1.47
Total 326,982,148
.84 100.00 4,739,471.
95
304,920,272
.90 100.00 3,570,386.
02
(b) As at June 30, 2010, there is no accounts receivable due from shareholder holding 5% or over of the Company’s
shares.
(c) Top five receivable accounts
Name of the companies Relation with
the Company Amount Ageing Portion in total
receivables
Shenzhen People’s Hospital Non-related 25,956,829.03 within 1 year 7.94%
No. 2 Shenzhen People’s
Hospital
Non-related
21,174,549.09
within 1 year 6.48%
Accord Drugstore Non-related 19,936,223.17 within 1 year 6.10%
Shenzhen Hospital Affiliated to
Peking University
Non-related
17,504,351.13
within 1 year 5.35%
Shenzhen Medicine Hospital Non-related 11,417,752.72 within 1 year 3.49%
(e) As at June 30, 2010, accounts receivable due from related parties amounted to Rmb20,363,461.19, which
accounts for 6.23% of the total accounts receivable at the period-end.
11.2 Other receivables
(a) Other receivables classified by nature
Category
As at June 30, 2010 As at December 30, 2009
Book value Bad debt provision Book value Book balance
Amount Proportio
n% Amount Proportion% Amount Proportio
n% Amount Proportio
n%
Debtors with
significant
balance
463,606,160.94 95.13 8,980,000.00 1.94 376,658,502.14 96.25 8,980,000.00 2.38
Debtors with
insignificant
balance but of
higher credit risk
when grouped
with others with
similar credit
risk
characteristic
Others with
insignificant 23,724,075.25 4.81 7,545.00 0.03 14,656,492.47 3.75 2,712,380.41 18.51SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
97
balance
Total 487,330,236.19 100.00 8,987,545.00 391,314,994.61 100.00 11,692,380.41
(b) Details of bad debt provisions for the other receivables which are material or not material but having been
specifically assessed for impairment
Company Book value Provision Percentage Reason for provision
provided
Shenzhen Yinghai
Technology investment
Co.,Ltd
8,980,000.00 8,980,000.00 100.00 Uncertainty of recoverability
(c) As at June 30, 2010, there are no other receivables due from shareholder that holds more than 5% (including 5%)
shares of the Company.
(d) Top five other receivables
Company Relation with
the Company
Nature
Amount Ageing
Portion in total
other
Receivables (%)
Yuexing Medicine Subsidiary Current account 114,710,116.42 Over 3 years 23.54
Guangdong Hengxing Subsidiary Current account 99,328,195.40 Within 1 year 20.38
Zhanjiang Tianfeng Subsidiary Current account 63,000,000.00 Within 1 year 12.93
Sinopharm Nanning Subsidiary Current account 38,500,000.00 Within 1 year 7.90
Dongguan Accord Subsidiary Current account 36,983,598.65 Within 1 year 7.59
(e) As at June 30, 2010, other receivables due from related parties amounted to Rmb458,865,424.55, which accounts
for 94.16% of the total other receivables at the period-end.SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010 98
11.3 Long-term equity investments
Name of invested
companies Accounting
method
Initial
investment
cost
As at
December 31,
2009
Changes As at June
30, 2010
Shares
in the
register
ed
capital
of the
investe
d
unit(%)
The
Company’s
voting share
in invested
unit of (%)
Explanation of
the difference
between voting
shares and
proportion of
shareholding
Provision
Provisi
on in
current
period
Cash
dividend in
current
period
Shenzhen
Chinese
Medicine
Equity
method 20,939,177.10 22,064,631.02 -2,012,243.51 20,052,387.51 47.39 47.39
ShenzhenWanle Equity
method 40,973,675.99 58,050,667.25 11,263,472.59 69,314,139.84 35.195 35.195
Sub-total equity
method 80,115,298.27 9,251,229.08 89,366,527.35
Zhijun Pharm Cost
method 73,903,284.87 73,903,284.87 131,000,000.00 204,903,284.87 100.00 100.00 81,419,952.44
Jianmin Pharm Cost
method 45,054,911.04 45,054,911.04 45,054,911.04 100.00 100.00 191,951.01
Accord Material Cost
method 5,400,000.00 6,450,875.93 6,450,875.93 100.00 100.00 1,575,155.83
Accord Logistics Cost
method 900,000.00 1,019,062.68 1,019,062.68 100.00 100.00 65,083.22
Sinopharm
Guangzhou
Cost
method 58,283,114.68 85,440,323.63 350,000,000.00 435,440,323.63 100.00 100.00 120,225,327.94
Zhijun Trade Cost
method 3,006,866.42 3,006,866.42 3,006,866.42 100.00 100.00 892,821.17
Guangdong
Hengxing
Cost
method 8,421,544.08 15,763,288.00 15,763,288.00 100.00 100.00 0.00
Training Center Cost
method 30,000.00 30,000.00 30,000.00 100.00 100.00 0.00
Guangxi Accord Cost
method 4,987,919.71 4,987,919.71 4,987,919.71 100.00 100.00 42,072.13
Sinopharm
Liuzhou
Cost
method 21,407,965.79 21,407,965.79 21,407,965.79 51.00 51.00 0.00SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
99
Dongguan
Accord
Cost
method 2,742,000.00 2,742,000.00 2,742,000.00 100.00 100.00 25,480.41
Huixin
Investment
Cost
method 109,416,937.72 109,416,937.72 -45,000,000.00 64,416,937.72 100.00 100.00 3,997,155.94
Hengchang
Logistics
Cost
method 1,269,502.30 1,136,006.21 4,460,000.00 5,596,006.21 100.00 100.00 167,047.70
Yuexing
Medicine
Cost
method 16,459,326.27 16,459,326.27 27,000,000.00 43,459,326.27 100.00 100.00 6,098,357.24
Sinopharm
Foshan
Cost
method 6,995,065.51 6,995,065.51 6,995,065.51 100.00 100.00 34,849.82
ZhijunWanqin Cost
method 134,250,000.00 134,250,000.00 134,250,000.00 75.00 75.00 0.00
Sinopharm
Nanning
Cost
method 33,048,985.28 33,048,985.28 71,000,000.00 104,048,985.28 100.00 100.00 3,442,647.29
Zhanjiang
Tianfeng
Cost
method 1,369,864.65 1,369,864.65 1,369,864.65 100.00 100.00
Shenzhen
Medicine Trade
Co., Ltd.
Cost
method 7,689,226.69 7,689,226.69 7,689,226.69 7,689,226.
69
Yanfeng
Medicine
Cost
method 38,207,806.00 38,207,800.00 38,207,800.00
Sub-total cost
method 570,171,910.40 576,667,800.00 1,146,839,710.
40
7,689,226.
69 218,177,902.14
Total 650,287,208.67 585,919,029.08 1,236,206,237.
75
7,689,226.
69 218,177,902.14SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010 100
11.4 Operating revenue and cost
(a) Operating revenue
Item Current period The same period of
previous year
Principal business 876,932,409.59 755,626,160.89
Other business 1,887,626.51 1,840,615.77
Total 837,870,829.36 718,827,487.61
(b) Operating revenue and cost listed by category of principal business
Item
Current period The same period of previous year
Operating
revenue Operating cost Operating
revenue Operating cost
Wholesales of medicine 876,932,409.59 837,353,345.51 755,626,160.89 651,785,101.70
(c) Income from top five customers
Customer
Total revenue in
principal
business
Proportion in the revenue of
principal business (%)
Shenzhen People’s Hospital 51,812,841.91 5.90
Shenzhen No. 2 People’s Hospital 50,447,784.50 5.74
Shenzhen Hospital Affiliated to Peking University 39,944,137.88 4.54
Accord Drugstore 37,900,560.26 4.31
Shenzhen Nanshan District People’s Hospital 27,741,594.13 3.16
11.5 Investment income
(a) Breakdown of investment income
Item Current period The same period of
previous year
Income from equity investments with cost method 218,177,902.14 177,066,870.99
Share of profit of investees under equity method of
accounting 9,251,229.08 3,496,170.53
Income from disposal of long-term equity investments 0.00 15,271,949.88
Total 227,429,131.22 195,834,991.30SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
101
(b) Income from long-term equity investment recognized with cost method includes
Investee Current period The same period of previous year
Zhijun Pharm 81,419,952.44 85,812,844.28
Zhijun Trade 892,821.17 828,538.78
Jianmin Pharm 191,951.01 580,312.43
Accord Material 1,575,155.83 1,641,503.37
Accord Logistics 65,083.22 119,049.45
Sinopharm Guangzhou 120,225,327.94 66,867,908.99
Accord Drugstore 0.00 27,088.83
Dongguan Accord 25,480.41 0.00
Guangxi Accord 42,072.13 54,026.63
Sinopharm Liuzhou 0.00 5,100,000.00
Huixin Investment 3,997,155.94 11,035,034.81
Yuexing Medicine 6,098,357.24 4,756,630.35
Hengchang Logistics 167,047.70 128,507.18
Sinopharm Foshan 34,849.82 115,425.89
Sinopharm Nanning 3,442,647.29 0.00
Total 218,177,902.14 177,066,870.99
(c) Income from long-term equity investment recognized with equity method includes：
Investee Current period The same period of
previous year
Shenzhen Chinese Medicine -2,012,243.51 -806,693.16
ShenzhenWanle 11,263,472.59 4,302,863.69
Total 9,251,229.08 3,496,170.53
(d) Income from disposal of long-term equity investment
Investee Current period The same period of
previous year
Accord Drugstore 0.00 15,271,949.88SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
102
11.6 Supplementary information of cash flow statement
Item Current period The same period
of previous year
1. Reconciliation of net profit to cash flow from operating activities
Net profit 212,449,716.98 191,002,210.11
Add: Provision for asset impairment -2,085,972.11 -
Depreciation of fixed assets 2,893,418.84 2,788,534.15
Amortization of intangible assets 737,655.76 665,232.92
Amortization of long-term deferred expenses 16,515.36 16,515.36
Loss from disposals of fixed assets, intangible assets and other
long-term assets (income is listed with “- ”) 800.00 26,362.97
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 “- ”) 16,654,752.69 615,973.65
Investment loss (income is listed with “- ”) -227,429,131.22 -195,834,991.30
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 “- ”) 4,357,441.13 5,351,947.20
Decreases in operating receivables (increase is listed with “- ”) -41,879,871.99 -11,144,718.07
Increases in operating payables (decrease is listed with “- ”) 135,726,335.42 92,854,083.74
Others - -
Net cash flows from operating activities 101,441,660.86 86,341,150.73
2. Investing and financing activities that do not involve cash
receipts and payments - -
Conversion of debt into capitals - -
Reclassification of current portion of convertible bonds to current
liabilities - -
Fixed assets capitalized under finance leases - -
3. Net changes in cash and cash equivalents - -
Cash at end of period 118,507,341.56 83,065,822.65
Less: cash at beginning of year 125,541,203.80 62,369,583.65
Add: cash equivalents at end of year - -
Less: cash equivalents at beginning of year - -
Net increases in cash and cash equivalents -7,033,862.24 20,696,239.00SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
103
12 Supplementary materials
12.1 Non-routine items
Item Amount
Net gain on disposal of non-current assets 1,817,154.82
Tax refund and exemption without authorized approval or formal
approval document
Government grants 5,239,721.55
Fund possession cost reported in the current profit and loss and charged
by non-financial enterprises
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
Non-currency assets exchange profit and loss
Profit and loss of assets entrusted for investment or management
Accrual of provision for assets impairment of all kinds of irresistible
factors ,such as natural disasters
Profit and loss of debt restructure
Company recombination expenses, such as expenses for resettling
employees, integration expenses and etc
Profit and loss of the part created by obviously unfair transaction price
over fair value
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
Profit and loss caused by contingencies borne no relation to the main
operation of the company
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
Bad debt provision reversed by individual assessment 4,145,110.09
Profit and loss obtained in commissioned external loans
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
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
Trustee fee gained during entrusted operation
Other non-operating income/(expenses), net -7,491.30
Other items of profit and loss that meet the definition of non-recurring
profit and loss
Tax impact of above non-routine items -2,104,620.40
Share of minority interests of above non-routine items after tax -735,584.40
Total 8,354,290.37SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
104
12.2 Return on equity and earnings per share
Weighted average
return on equity (%)
Earnings per share
Basic earnings
per share
Diluted earnings
per share
Consolidated net profit attributable to
shareholders of the Company 13.77 0.422 0.422
Consolidated net profit attributable to
shareholders of the Company excluding
non-routine items
12.82 0.393 0.393
13 Approval of financial statement
These financial statements were authorised for issue by the Board of Directors of the Company on August
[16], 2010.
Shenzhen Accord Pharmaceutical Co., Ltd.
August 18, 2010SHENZHEN ACCORD PHARMACEUTICAL CO., LTD.
SEMI-ANNUAL REPORT 2010
105
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 Commercial Daily 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 18, 2010
